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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.
McCORD, Circuit Judge.
The Board of Tax Appeals determined a deficiency in gift tax against Anna Eliza Masterson for the year 1935. By cross-petitions for review both the Commissioner and the taxpayer contest the Board’s determination. The decision of the Board is reported, Masterson v. Commissioner, 42 B.T.A. 419.
In stating the facts we substantially follow the findings of the Board: The taxpayer, Anna Eliza Masterson, was born February 5, 1868. She is a resident of Amarillo, Texas, and is the widow of R. B. Masterson, who died August 1, 1931. In addition to his wife, Masterson was survived by two children by a prior marriage and four children by his marriage to the taxpayer. At the time of Master-son’s death, he and his wife, Anna Eliza Masterson, owned a substantial estate, all of which was community property.
On December 6, 1928, Anna Eliza Masterson and her husband, R. B. Master-son, executed a joint will and covenant wherein they expressed the desire to dispose of all their estate in the manner set forth therein, such disposition to take effect at the time of the death of either of them, with further provision for final distribution of the estate upon the death of the survivor. It was mutually agreed that all of the property belonging to either of them was community property, and that in the distribution of such property all six of the children mentioned above would be treated and considered as of the full blood, share and share alike. Other provisions of the joint will and covenant important to decision follow:
“3. In consideration of said mutual agreements, and in consideration of the further mutual agreement that the survivor of us shall in all things be and remain bound by the provisions hereof, and upon our mutual solemn covenant and agreement with each other that neither of us shall hereafter execute any will, other than as mutually agreed, dealing with our said estate, we have entered into this mutual covenant and the execution of this joint will, expressly agreeing and covenanting with each other that the same shall not hereafter, unless by our mutual written consent, be in any manner changed, modified or revoked, and that all the terms, provisions and conditions hereof shall be from and after the execution hereof binding upon us and the survivor of us as the agreed means and method of making effective our desires and directions as to the disposition of our said community estate. And for such purposes, we each waive our respective community rights and interest in said estate, and here agree that the same shall remain intact, subject to the terms, conditions and provisions hereof.
“II. It is our will and desire that the survivor of us, R. B. Masterson or Anna Eliza Masterson, as the case may be, shall, with the rights and authority below given, have all the estate of every description, real, personal, or mixed, which either or both of us may own, to be used, occupied, enjoyed and expended by and during the life of said survivor, with the full management and control thereof, with the right to receive all rents and revenues, invest all moneys of the estate, pay all taxes and assessments, indebtedness and other proper and just claims and charges against said estate and joint property; but with the limitation, however, that neither of us as such survivor shall have the right or power to sell and dispose of any of said estate except for the purpose of (1) paying proper and legal charges and claims against said estate, (2) provide for the maintenance and support of survivor of us, and (3) such sale and distribution * * * may be made * * * for the purpose of distributing said estate share and share alike among the children named in Paragraph 2, Subdivision I, hereof, * * * The survivor, however, shall in any event have the full right, power and authority to make, execute and deliver oil and gas leases or renew or extend existing oil and gas leases * * *.
“2. The survivor of us shall have the right, power and authority at any time when he or she may deem best to distribute one-half of our joint estate to the children hereinabove named in Paragraph 2, Subdivision I, of this will, share and share alike.
“3. In the event of the marriage of the survivor of us one-half of all our estate shall immediately vest in our children, share and share alike * * *.
“III. Upon the death of the survivor of us, or upon our simultaneous death, we mutually agree and here jointly direct that said joint estate shall be disposed of as follows:
* * * * *
Tt2. Thereupon and after payment of said special bequest to our daughter Mary Masterson Fain and the special bequests to Mrs. Bettie McGregor and Mrs. Flora Masterson, we desire and direct that our executors hereinafter named shall as soon as possible consistent with the welfare of said estate divide, transfer, convey and deliver the residue of same, share and share alike, to our children * * * In the event, however, that any of said children should predecease the survivor of us, then in such event the interest in our estate herein devised to such child shall vest in the issue of his or her body, share and share alike * * * Descendants of deceased children, however, shall take under this will per stirpes and not per capita.
“5. We hereby constitute and appoint the survivor of us as independent executor of this our joint will, without bond, with the rights and powers enumerated under Subdivision II hereof * *
R. B. Masterson died on August 1, 1931, and on August 17, 1931, the will was admitted to probate in the County Court of Potter County, Texas. Letters testamentary were issued to Anna Eliza Masterson and she administered the entire estate until August 19, 1935.
On August 19, 1935 Mrs. Masterson executed an instrument purporting to release and relinquish a certain interest in the estate to the six children named in the joint will and covenant. Important excerpts from the instrument provide:
“Whereas, it is the desire of the undersigned, Anna Eliza Masterson, at this time to release and relinquish unto the said R. B. Masterson, Jr., T. B. Masterson, Sallie Lee Scott, Anna Belle Kritser, Fanny Fern Weymouth, and Mary Masterson Fain all of her right, title and interest in and to the limited life estate reserved unto herself in and to the whole community property of herself and deceased husband, R, B. Masterson, with the exceptions hereinafter stated, and desires also to relinquish and release unto said persons any right of control that she might have in and to the accretions to said undivided one-half interest since her husband’s death, so that henceforth she will look only to the limited life estate granted her by said will in the portion of the joint estate formerly belonging to R. B. Master-son for her support and maintenance, and she will have no interest in any of said joint estate, or its accumulations, save the right to manage and control under the terms of said will the one-half of said joint estate formerly belonging to R. B. Masterson, and will look to the residue of said one-half for her future support and maintenance:
“Now Therefore, in consideration of One Dollar ($1.00) to me in hand paid, receipt of which is hereby acknowledged, and the further consideration of the natural love and affection that I bear for the grantees herein, I, Anna Eliza Masterson, a feme sole, of Potter County, Texas, do by these presents release and relinquish unto T. B. Masterson, of Knox County, Texas, Sallie Lee Scott, of Travis County, Texas, and R. B. Masterson, Jr., Anna Belle Kritser, a widow, Fanny Fern Weymouth and Mary Masterson Fain, all of Potter County, Texas, all right, title and interest of any and every nature whatsoever which I have or claim (the same being the limited life estate above described) in and to the undivided one-half interest which represents my entire community interest in and to the community estate of myself and deceased husband, R. B. Masterson, except as to the reservation and exception hereinafter set out, including any right of control or other rights, that I might have in and to the increased value of said community interest that has accrued since the death of my husband, R. B. Masterson; so that henceforth said grantees hereinabove named shall have, own and control said entire interest herein relinquished free and clear of the limited life estate heretofore owned and held by me, Anna Eliza Masterson.
“It is specifically understood that this relinquishment shall be construed to cover my entire community interest in and to the entire community estate of myself and deceased husband, R. B. Masterson, including all property, real, personal and mixed, of any and every nature whatsoever, except as to the reservation and exception hereinafter set out including the increase in value thereof, so that henceforth I shall have no claim of any nature whatsoever in and to said property. It being distinctly specified that this relinquishment relates to my community one-half in the joint estate formerly belonging to R. B. Masterson and myself, and not to the one-half formerly belonging to him.”
Taking into account Sections 501 and 506 of the Revenue Act of 1932, 26 U.S.C.A. Int.Rev.Acts, pages 580, 588 relating to gift tax, the question for decision is what property or property interests constituted the subject matter of the taxpayer’s gifts to the children by the instrument of August 19, 1935?
In determining the value of the gifts, the Board of Tax Appeals held that the subject matter of the gifts was a full life interest in one-half of the original community estate, plus a fee interest in one-half of the net revenues of the estate from the date of the husband’s death to the date of the gifts, “being one-half .of the net revenues not shown to have been withdrawn by her.” In her petition for review the taxpayer contends that upon the death of her husband she was divested of all her community property; that thereafter as survivor she had only the personal right to be supported and maintained for her lifetime; that the 1935 gift to the children consisted “solely of the Taxpayer’s personal right to support and maintenance from one-half of the Master-son property”; and that this right had no market value, or at most had a value not exceeding the total of exemptions and. exclusions allowed by the gift tax act. On the other hand, the Commissioner contends that by the instrument of August 19, 1935, the taxpayer gave the children a full one-half interest in fee in the property formerly constituting the community estate of herself and her deceased husband, together with all accretions since his death. In the alternative, the Commissioner urges affirmance of the decision of the Board of Tax Appeals.
The case will and does become simple if we do not hurry over the controlling facts: (1) The Masterson estate consisted of community property. (2) The instrument executed by the husband and wife in 1928 is both a will and a covenant between the parties. (3) By the terms of the joint will and covenant, when R. B. Masterson died, a life interest in his one-half of the community estate was vested in his wife, Anna Eliza Masterson, and the remainder in fee vested in his six children. (4) When Anna Eliza Masterson had the will of her husband probated, and became independent executrix, and took over the property, and accepted benefits under the will, she thereby waived her original community interest in the property and became bound by the terms of the joint will and covenant made and entered into with her husband. Thereafter she retained only a life interest in the one-half of the community estate formerly belonging to her, and the fee remainder vested in the six children.
It is not necessary to seek citation in support of the contention that Anna Eliza Masterson waived her community interest in the estate, and by acceptance of benefits under the will became bound by the terms and express provisions of the joint will and covenant. The case of Wyche v. Clapp, 43 Tex. 543, which is so strongly urged by the Commissioner as being against this proposition, seems to recognize the soundness of this contention in this language: “But when one of the parties to such an agreement is a married woman, it could have no binding force against her estate, it would seem, unless it was consummated in the manner prescribed by law for the execution of contracts by femes covert, or she had in some way bound or estopped herself from denying it after she became free from coverture.” (Italics ours.) Of course, the instrument executed by the husband and wife in 1928 was not probated as the will of the wife for she was still living, and no contention is made that this could be done. The fact is simply this, Anna Eliza Master-son bound herself by waiving her community interest and accepting in lieu thereof a life interest in all of the property in accordance with the terms of the joint will and covenant. A reference to the Texas cases will disclose that they do not conflict with this holding, but that on the contrary they recognize the rule that the wife can, when free from coverture, waive and abandon her community interest. See Larrabee v. Porter, Tex.Civ.App., 166 S.W. 395; Rossetti v. Benavides, Tex.Civ.App., 195 S. W. 208.
By the instrument of August 19, 1935, Anna Eliza Masterson relinquished and gave to the six children, share and share alike, one-half of what she then owned. All that she then owned was a life estate in all the property, and she, therefore, conveyed to the children one-half of her life estate, plus the accretions earned and on hand from this one-half. The fact that she •designated the gift as a release of a “limited life estate” in and to her “undivided one-half interest” in the entire community estate, adds nothing to and takes nothing from the gift.
The Board properly held that the gift was of a life estate in one-half of the original community estate, plus the net accretions to this one-half.
The motion to enlarge the record so as to include proceedings in the Texas State Court is denied, and those proceedings are not before us as evidence. So far as the legal questions decided by the Texas State Court are concerned we take judicial knowledge of the decision. The case was decided by the Texas District Court subsequent to the decision of the Board of Tax Appeals. The United States was not a party to the suit and could not have been made a party as it never consented to be sued in that court. We are not bound by that decision, and to the extent that it differs from what we have said we do not agree with it.
The petitions of the Commissioner and the taxpayer are denied, and the decision of the Board of Tax Appeals 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:
|
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.
CUMMINGS, Chief Judge.
On June 1, 1982, the Supreme Court,U.S. -, 102 S.Ct. 2288, 73 L.Ed.2d 1297, issued an order in this case granting the petition for a writ of certiorari, vacating the judgment of this Court in the above-titled cause (657 F.2d 909, 7th Cir.) and remanding the case for further consideration in light of Kremer v. Chemical Construction Corp., 456 U.S. -, 102 S.Ct. 1883, 72 L.Ed.2d 262 (1982). We have given careful consideration to the Kremer opinion and the statements filed by the parties pursuant to Circuit Rule 19. Defendant emphasizes the similarity of the Kremer and Unger cases and urges us to dismiss the cases as res judicata. Plaintiff argues that Kremer is distinguishable, or alternatively, that Kremer should not be applied retrospectively. For the reasons articulated below, we have come to the conclusion that this case is controlled by Kremer and that Kremer must be applied retrospectively. Accordingly, we remand the case to the district court with instructions to dismiss the complaint.
I.
The facts of the case are fully set forth in our prior opinion; a brief summary will suffice here. In October 1972, Trudy Un-ger filed a complaint before the Illinois Fair Employment Practices Commission (FEPC) alleging that her first discharge from the employ of Sirena Division of Consolidated Foods Corporation was discriminatory and her second retaliatory. After a hearing, the Hearing Examiner found against plaintiff on the first discharge and in her favor on the second. The full Commission, however, in 1975 concluded that Trudy Unger was not a victim of sex discrimination on either count. She then sought administrative review in the Circuit Court of Cook County, which reversed the FEPC. Sometime in 1976, defendant appealed the state decision to the Illinois Appellate Court, and in February 1977, plaintiff filed a Title VII suit in Federal District Court. In 1978, the Illinois Appellate Court reversed the Circuit Court and reinstated the decision of the Commission. Leave to appeal to the Illinois Supreme Court was denied; the Illinois state case thus concluded in defendant’s favor.
In 1980 in the District Court defendant argued before Judge Roszkowski that plaintiff Unger’s suit was barred by res judica-ta, but the motion to dismiss was denied on Title VII policy grounds and the federal case proceeded to trial. A bench trial before Judge J. Sam Perry resulted in a verdict and judgment in Trudy Unger’s favor. Defendant appealed and we affirmed on both the res judicata issue and on the merits of the case.
Prior to our decision in this case, the Supreme Court granted certiorari in Kremer v. Chemical Construction Corp., 623 F.2d 786 (2d Cir.1980), a Title VII collateral es-toppel case. Soon after this Court’s decision, defendant filed a petition for certiora-ri and moved the Supreme Court to consolidate Unger with Kremer. That motion was denied. On May 17, 1982, the Supreme Court held in Kremer that Title VII does not effect a partial repeal by implication of 28 U.S.C. § 1738. A federal court confronted with a Title VII discrimination complaint must give preclusive effect to a prior state court judgment on the same matter — assuming that the plaintiff previously had a “full and fair opportunity” to litigate.
II.
The ultimate question in this case is whether the prior state court judgment in Unger must be accorded preclusive effect under the collateral estoppel analysis of Kremer. As a threshold matter this Court must consider whether the cases are sufficiently similar that the Kremer analysis may appropriately be applied to Unger. In Kremer, plaintiff filed a complaint before the New York State Division of Human Rights, where, after informal proceedings, his complaint was dismissed for lack of probable cause. That decision was sustained throughout the New York State courts. Only after the end of all state court proceedings did Kremer file a Title VII suit in district court. Kremer is thus a straightforward collateral estoppel case. It is virtually the paradigmatic case in that the only question before the Supreme Court was the preclusive effect of a state court proceeding that concededly was final before the federal suit was filed. Unger is complicated proeedurally by the fact that plaintiff conducted parallel suits in state and federal court; the collateral estoppel effect of the state court proceeding thus varied from time to time. Moreover, while Kremer lost consistently throughout state and federal proceedings and no federal trial was held, Unger won at the Illinois Circuit Court level, defendant’s collateral estoppel argument was rejected in federal district court, and a federal trial was held on the Title VII complaint.
Despite these differences in the sequencing of the state and federal suits in the two cases, it is our conclusion that Kremer is indeed relevant precedent. When the procedural underbrush of Unger is cleared away, it is apparent that a final state judgment preceded the federal trial. As between two actions pending at the same time, the first of two judgments has preclusive effect on the second. 18 Wright, Miller & Cooper, Federal Practice and Procedure § 4404; Restatement (Second) of Judgments, § 14 (res judicata), § 27, Comment 1 (collateral estoppel) (1981). Following this rule and the teaching of Kremer, the district court properly might have granted defendant’s timely motion to dismiss the suit on a collateral estoppel ground at the time of the Illinois Appellate Court’s reversal.
This Court, on remand, is again in the position of reviewing the propriety of the district court’s refusal to dismiss the suit on a collateral estoppel ground. The fact that the case went to trial is itself of no consequence. The denial of the collateral estop-pel motion to dismiss is not a collateral order appealable under 28 U.S.C. § 1291; appeal of the district judge’s decision had to await the end of the trial.
III.
We now turn to the question of whether under- Kremer the Illinois state court decision should bar plaintiff. Three points may be disposed of briefly at the outset. First, according to general preclusion principles, a prior action bars a subsequent action only if the same parties and the same cause of action are involved in both suits. We note that the Illinois prohibition against discrimination in employment, Ill.Rev.Stat. ch. 48, § 853, is at least as broad as that of Title VII, and that plaintiff Unger alleged the same discriminatory conduct in state and federal court; thus the same claims of discrimination as well as the same parties are involved in the state and federal suits. Second, the Illinois proceedings satisfy the due process requirements set forth in Kremer, 102 S.Ct. at 1896-99. At an FEPC hearing the parties may be represented by counsel, testimony is under oath and cross-examination is permitted, the rules of evidence used in Illinois courts apply, and compulsory process is available. See Rules and Regulations of the Illinois Fair Employment Practices Commission (issued pursuant to Ill.Rev.Stat. ch. 48, § 856.05 (1975)). The reviewing court is also empowered to remand the case to the agency for the taking of further evidence. Ill.Rev.Stat. ch. 110, § 275(l)(g). Third, a final judgment of the Illinois Appellate Court on administrative review would be accorded preclusive effect by the Illinois courts. See Lee v. City of Peoria, 685 F.2d 196 (7th Cir.1982). Section 1738 requires the federal court to accord the state court decision a like effect. If plaintiff Unger is to avoid the reach of Kremer, it must be on some other grounds.
Plaintiff Unger argues that Unger and Kremer are distinguishable in terms of the standards of administrative review applied by the Illinois and New York courts. Her contention is that a prior judgment can have preclusive effect only if it was a decision on the very question presented to the second court. The point is essentially that made by Justice Blackmun in his Kremer dissent, 102 S.Ct. at 1903, in which he argued that the New York Appellate Division “made no finding one way or the other concerning the merits of petitioner’s claim” (emphasis in original) because the court was reviewing the agency’s decision process rather than directly addressing the question of whether Rubin Kremer had been discri.minated against. Thus “since the discrimination claim, not the validity of the state agency’s decision, is the issue before the federal court,” the state court decision should not be a bar according to his dissent. Id. Unger maintains that the New York standard of review was so stringent as to amount to a decision on the merits (and thus a decision on the issue raised in the Title VII complaint), while the Illinois courts’ review, being deferential, was a review of the administrative proceeding and thus did not constitute a finding one way or the other as to whether she was a victim of discrimination.
We do not, however, discern any practical difference in the standards of review applied by the Illinois and New York courts. According to the Illinois Appellate Court in Unger, 18 Ill.Dec. at 117-18, 377 N.E.2d at 270-71, “upon review of the dismissal of a charge by the [FEPC], the scope of review is to ascertain from an adequate record whether the commission’s order of dismissal is arbitrary, capricious, or an abuse of discretion.” The Kremer Court surveyed the New York standard of review in footnote 21, 102 S.Ct. at 1896, and quoted language from a number of New York decisions which require that an agency dismissal for lack of probable cause be affirmed if it appears “virtually as a matter of law that the complaint lacks merit.” This might indicate a stringent standard of review. However, one of the quotations describes the standard as requiring only a “rational basis in the record.” It also appears that the Supreme Court majority was picking these quotes selectively in an attempt to counter Justice Blackmun’s objection that the New York decision was not on the merits. The full texts of the cases cited in footnote 21 contain numerous references to the standard of review, such as: “there is evidence in the record,” “substantial evidence,” “arbitrary and capricious or characterized by abuse of discretion” and “clearly unwarranted exercise of discretion.” The New York and Illinois courts thus appear to be applying the same deferential standard of administrative review. Therefore, there is no basis for distinguishing Kremer and Unger in terms of the stringency of administrative review.
Further, there are at least two reasons for rejecting any argument directed to the absence of a state court de novo trial or some “decision on the merits” equivalent. First, the Supreme Court has already done so; the Kremer Court was fully aware that the New York state courts were conducting an administrative review of a state agency proceeding. Second, Unger’s argument proves too much: by her logic, no state court administrative review decision would have to be accorded preclusive effect by the federal courts regardless of whether that state’s courts would do so. That, however, would be clearly inconsistent with Section 1738 which is the statutory version of the full faith and credit clause.
IV.
Plaintiff next argues that if this Court concludes that disposition of her case is governed by Kremer, we nevertheless should decline to apply Kremer retrospectively. We must reject that argument.
If we had initially taken the course followed by the Second Circuit (and adopted by the Supreme Court) and held that under the collateral estoppel doctrine the state court decision bars a Title VII suit, or if Kremer had been decided a few months earlier, Trudy Unger would have no argument that she had been deprived retrospectively of federal vindication of her claims; she would merely have lost. Further, the outcome for two similarly situated plaintiffs should not depend on the happenstance of which case reaches the Supreme Court first. As Justice Douglas put it in an analogous retrospectivity case, when the relative order of the two cases “is largely a matter of chance ... [e]qual justice does not permit a [party’s] fate to depend on such a fortuity.” United States v. Peltier, 422 U.S. 531, 543, 95 S.Ct. 2313, 2320, 45 L.Ed.2d 374 (dissenting opinion).
Under Chevron Oil v. Huson, 404 U.S. 97, 106-107, 92 S.Ct. 349, 355, 30 L.Ed.2d 296, there are three factors to consider in deciding whether a new Supreme Court decision in a civil case should be applied prospectively only:
1. whether the decision establishes a new principle of law, either by overruling clear past precedent on which litigants may have relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed;
2. whether retrospective application will further or retard application of the new rule; and
3. whether retrospective application would result in substantial injustice to the parties.
In Chevron Oil the issue was whether a state law statute of limitations should be applied to a tort claim based on an injury which occurred on a drilling rig. Under some ten years’ precedent within the Fifth Circuit, the Outer Continental Shelf Lands Act had been construed to apply admiralty law and the doctrine of laches to such claims. Plaintiff filed his claim after the Louisiana statute of limitations had expired, but while the suit could have been brought in admiralty. While his suit was pending, the Supreme Court decided a similar case, Rodrigue v. Aetna Casualty & Surety Co., 395 U.S. 352, 89 S.Ct. 1835, 23 L.Ed.2d 360, which held that state law governed such claims. Applying the three criteria noted above, the Supreme Court decided not to apply Rodrigue retrospectively to Huson’s claim against Chevron Oil. First, the Rodrigue decision was an abrupt departure from settled prior law, and plaintiff, having no reason to suspect such a change in the law, had justifiably relied on laches. Second, the Supreme Court had switched from admiralty law to state law so that workers on the drilling rigs (and their attorneys) could use a body of law familiar to them from their on-shore state residences. Since the change in interpretation of the statute was designed to aid workers in Hu-son’s position, the application of the rule would not be advanced by giving Rodrigue retrospective effect and leaving Huson in limbo between admiralty and state law. Third, Huson would have been left with no forum for his claim because of the fortuity of the change in the applicable limitations period. When these three criteria are applied to Unger, it is apparent that the same arguments for prospectivity cannot be made.
A. The State of Prior Precedent
1. Overruling clear precedent: Defendant argues that 28 U.S.C. § 1738 constitutes the applicable precedent, and Trudy Unger thus had no basis for thinking that a state court decision would not be accorded preclu-sive effect. Defendant’s Statement of Position at 20. That argument is a little disingenuous; the issue is whether Title VII overrides § 1738. It is on this issue that Trudy Unger claims that Kremer is a sharp departure from clear prior law on which she had justifiably relied, but any clarity she sees is largely the product of wishful thinking. She claims reliance on three sources of precedent: the language of Title VII, Alexander v. Gardner-Denver, 415 U.S. 36, 94 S.Ct. 1011, 39 L.Ed.2d 147, and our decision in Batiste v. Furnco, 503 F.2d 447 (7th Cir.1974), certiorari denied, 420 U.S. 928, 95 S.Ct. 1127, 43 L.Ed.2d 399 (1975). She cannot seriously argue about the language of Title VII since it is precisely the ambiguities in the statute that the Supreme Court construed in Kremer, and while Gardner-Den ver and Batiste have language broad enough to support her contention that a prior state court judgment should not pre-elude a federal Title VII suit, the holding in each case is much narrower.
In Alexander v. Gardner-Denver, the Supreme Court held that an employee’s statutory right to a federal trial under Title VII may not be foreclosed by prior submission of a claim to binding arbitration under the nondiscrimination clause of a collective bargaining agreement. No state court proceeding was involved. The facts thus provide no support for the proposition that a state court decision would not bar a federal Title VII suit. There is indeed language in the case that could be so construed, but upon closer examination it too fails to support plaintiff’s position. For example, plaintiff cites the Supreme Court’s comment that “in general, submission of a claim to one forum does not preclude a later submission to another.” 415 U.S. at 47-48, 94 S.Ct. at 1019. This statement appears in the context of a comparison between private arbitration and federal de novo trials; state court decisions are nowhere mentioned. Even more telling, however, is the fact that the Supreme Court in a footnote to this statement provided two examples of the principle: EEOC action is not barred by findings and orders of state or local agencies, and an individual’s cause of action is not barred by an EEOC finding of no reasonable cause to believe that Title VII had been violated. 415 U.S. at 48, n. 8, 94 S.Ct. at 1019, n. 8.
We also cannot accept plaintiff’s argument on prospectivity based on Batiste v. Furnco. Plaintiff points specifically to our statement in Batiste that:
We must agree with the ruling in Cooper v. Philip Morris, Inc., 464 F.2d 9 (6th Cir.1972) where the court squarely rejected the application of the doctrines of election of remedies and res judicata to Title VII actions where plaintiffs had litigated their charges to final adjudication in state proceedings.
503 F.2d at 450 (emphasis supplied). Admittedly there is ambiguity on the face of this statement; “proceedings” could refer either to state agency proceedings only or to state court proceedings as well. This Court in Unger chose to adopt the latter interpretation, but that does not dispose of the question of how Trudy Unger justifiably could have interpreted this language in 1975 when she filed suit in the Circuit Court of Cook County.
In Batiste v. Furnco, plaintiff’s complaint was dismissed by the FEPC hearing officer. Plaintiff then filed suit in district court under Title VII and § 1981. Subsequently, the full Commission reversed the hearing officer and granted relief. Defendant then appealed to the county Circuit Court, but at the time of the district court decision (and apparently during our consideration as well) the Circuit Court proceeding was “still pending.” 503 F.2d at 449. It appears that there was never a state court decision, and indeed the parties argued only about the preclusive effect of the FEPC proceeding (defendant also argued election of remedies). Thus while the language in Batiste could be interpreted as including state court judgments under the rubric “proceedings,” nothing in the case had anything to do with state court proceedings. The Court probably did not intend that specific construction of its endorsement of Cooper; if it did, the language can only be characterized as dictum.
The inference that in Batiste we meant to refer only to agency proceedings is strengthened by the fact that we explicitly claimed to be following Cooper v. Philip Morris, supra, on the lack of preclusive effect of state proceedings. In that case, plaintiff prevailed before the Kentucky Commission on Human Rights, and then filed a Title VII suit seeking additional relief. Neither party sought recourse to the Kentucky state courts. The district court granted summary judgment for defendant, finding the Commission judgment to be res judicata. The preclusive effect of the agency proceeding was the only issue before the Sixth Circuit, which reversed. Batiste v. Furnco thus cannot be characterized as “settled precedent” upon which Unger justifiably could have relied for the proposition that state court judgments do not have collateral estoppel effect for purposes of Title VII suits.
2. A case of first impression: Plaintiff Unger has a more plausible argument that Kremer is a case of first impression whose outcome was not clearly foreshadowed. As indicated above, Batiste and Alexander provide no basis for confidence that a plaintiff with an adverse state court judgment would be welcome in federal court. On the other hand, as of 1975 when Trudy Unger filed her state court suit, neither was there any case law saying that such a plaintiff could not bring a Title VII suit. Nevertheless, the Supreme Court’s language in Chevron Oil still provides difficulties for plaintiff. The phrase “an issue of first impression whose resolution was not clearly foreshadowed” suggests the presence of an issue on which opinion differs and for which the prediction about which way the Supreme Court will turn is unclear. In 1975, when the state trial court was asked to decide this case, one could have guessed that the question of whether Title VII effected a partial repeal of Section 1738 eventually had to be decided one way or the other, but at that time there was no conflict among the circuits in need of resolution. The issue simply had not arisen. It is hard to argue reliance when plaintiff could have done no better than a coin toss in predicting how the Title VII override issue would come out.
At the time Kremer was decided, the question of the preclusive effect of state court judgments on Title YII suits had been considerably sharpened at the Court of Appeals level. The only square conflict between the circuits, however, was between ourselves in Unger and the Second in Kremer and Sinicropi v. Nassau Co., 601 F.2d 60 (2d Cir.), certiorari denied, 444 U.S. 983, 100 S.Ct. 488, 62 L.Ed.2d 411 (1979). A common fact pattern was present in these three cases; plaintiff had appealed an adverse state agency decision to the state courts and sought federal relief after losing in state court. The Second Circuit in Sini-eropi (and the Supreme Court in Kremer) also took pains to point out that it was plaintiff who elected to go to state court. After Sinieropi, Unger might thus have anticipated that election of remedies, if not res judicata or collateral estoppel, would create problems.
A different fact pattern was found in other cases reaching the Court of Appeals at about the same time. In Smouse v. General Electric Company, 626 F.2d 333 (3d Cir.1980), it was defendant, not plaintiff, who took the case to state court following a victory for plaintiff at the state agency level; the Third Circuit distinguished Sini-cropi on this ground, although the panel commented that it would have rejected Sin-ieropi anyway on policy grounds. Similarly, the Eighth Circuit in Gunther v. Iowa State Mens Reformatory, 612 F.2d 1079 (8th Cir.), certiorari denied, 446 U.S. 966, 100 S.Ct. 2942, 64 L.Ed.2d 825 (1980), conceded the “normal preclusion” issue but concluded that “it is our view that Title VII has created a ‘special circumstance’ which warrants an exception to the normal rules of preclusion. This is especially true where plaintiff did not seek state court review, but was forced to defend by [defendant’s] appeal.” 612 F.2d at 1085.
Thus from the perspective of either 1975 or 1982, in no case reaching the Court of Appeals to which plaintiffs has drawn our attention had a plaintiff other than Trudy Unger been allowed to proceed with a federal Title VII suit after obtaining state court review of an adverse agency determination.
B. Furtherance of The Rule Adopted
The applicability of the second criterion— policy — is ambiguous. The new rule is simply that as a matter of comity, federal courts must accord preclusive effect to state court judgments; Title VII does not override Section 1738. Retrospective application can only advance this rule. There is no compelling reason for giving only prospective effect to Kremer and allowing one more federal case to proceed to finality in the face of a contrary state decision. On the other hand, the federal trial did proceed and since the duplication in court time has already occurred, that aspect of the preclusion doctrine would not be advanced by retrospective application. However, comity, rather than repose per se, was the main focus of Kremer. Thus it appears that there is no policy reason to apply Kremer prospectively. After Kremer, as well as before, the possibility of an unseemly race to judgment between state and federal courts (as occurred in Unger) remains.
C. Substantial Injustice
On the third criterion — injustice—Unger also does not meet the Chevron Oil test. She was not left without a forum in which to pursue her claims. Rather she received a full and fair hearing before an Illinois agency and judicial review by the Illinois Courts. The essence of her injustice/prospectivity argument is that she obtained inconsistent judgments and would prefer to rest on the one in her favor. In applying Kremer retrospectively, it is indeed unfortunate from Unger’s point of view, but that is not the same thing as substantial injustice. In sum, when Unger is tested against the three Chevron Oil criteria, we find that it does not present a case for denying retrospective effect to Kremer.
This conclusion is also fully consistent with the Supreme Court’s retrospectivity analysis in a recent Fourth Amendment case, United States v. Johnson, - U.S. -, 102 S.Ct. 2579, 73 L.Ed.2d 202 (1982). Writing for the majority, Justice Blackmun decried the unprincipled ad hoc application of retrospectivity in recent Supreme Court criminal cases. He identified three principles which should guide the retrospective application of a new decision: First, any policy on retrospectivity should be predictable procedurally and not be based on the merits of individual cases; a case-by-case balancing of interests leaves no ground for certainty as to when a case should be applied retrospectively. Second, the theory of judicial review itself requires that the court should apply the law as it is at the time of each case as it appears in turn; the court is not a legislative body that is free to give only prospective effect to its decisions. Third, similarly situated parties should be treated alike, with the ultimate outcome not dependent on the speed with which the cases proceeded through the courts.
Justice Blackmun expressly limited his analysis to Fourth Amendment cases, but his reasoning is certainly relevant in a civil context as well. A decision to deny retrospective effect to Kremer would be based not on a principled application of retrospec-tivity principles, but on the view that as a matter of policy a Title VII plaintiff deserves a federal trial regardless of the state court outcome. This, however, is the policy choice specifically rejected by the Supreme Court in Kremer.
V.
For the above reasons, it is our conclusion that Kremer controls Unger. In the absence of any persuasive reason for denying retrospective effect to Kremer, we hold that the Unger case should be remanded to the district court with instructions to dismiss the complaint.
. Unger v. Sirena Division of Consolidated Foods, 60 Ill.App.3d 840, 18 Ill.Dec. 113, 377 N.E.2d 266 (1st Dist. 3d Div.1978).
. There has been some confusion among the parties and courts involved over the terminology in this case, to wit, whether it is res judicata (claim preclusion) or collateral estoppel (issue preclusion) that might preclude the Title VII case. Technically only collateral estoppel is involved. Since the same discriminatory acts were alleged in state and federal proceedings, there is no suggestion that the final state court judgment bars any claim that could have been brought but was not. Therefore henceforth we call the defense collateral estoppel.
. Plaintiff in Kremer, as in the case before us, asserted the same claims in state and federal proceedings, so that claim preclusion was not an issue.
. In the Act of May 26, 1790, Congress required all federal courts to give such preclusive effect to state court judgments “as they have by law or usage in the courts of the State from which they are taken.” In essentially unchanged form, the Act, now codified as 28 U.S.C. § 1738, provides in pertinent part that the “judicial proceedings of any court of any such State . .. shall have the same full faith and credit in every court within the United States ... as they have by law or usage in the courts of such State .. . from which they are taken.”
. Trudy Unger received far more thorough consideration of her claims in both the state agency and the state courts.
. While this technically may be true, as a practical matter the Illinois Appellate Court concluded that the FEPC’s finding that her first discharge was not discriminatory was “amply supported by the record” (18 Ill.Dec. at 118, 377 N.E.2d at 271) and that there was “overwhelming support” for the determination that the second discharge was not retaliatory (18 Ill.Dec. at 119, 377 N.E.2d at 272).
. It is unclear why the majority took up Justice Blackmun’s challenge on this point. Given that the majority Justices found no support in the legislative history of Title VII for a partial repeal of Section 1738, a federal court should be foreclosed from inquiring into the nature of the state court decision if the state would grant it preclusive effect and assuming the due process concerns noted above were satisfied. In any event, Justice Blackmun was apparently not convinced. In his dissent, 102 S.Ct. at 1903, he noted that the New York court “merely found that the agency’s decision was not arbitrary or capricious.” Plaintiff Unger thus adopts Justice Blackmun’s argument for denying collateral estoppel effect to a state court administrative review proceeding, but rejects his characterization of the nature of administrative review in New York.
. According to Justice Blackmun in United States v. Johnson, - U.S. -, 102 S.Ct. 2579, n. 12 at 2587, 73 L.Ed.2d 202, the first factor is the “threshold test for determining whether or not a decision should be applied nonretrospectively.” Once it has been determined that a decision provides the requisite break with the past, the court may go on to consider the other criteria.
. Moreover, arbitration proceedings lack the procedural safeguards available in federal court; there is often no discovery, cross-examination, compulsory process, or testimony under oath, and the federal rules of evidence are not applied. 415 U.S. at 57-58, 94 S.Ct. at 1024. For these reasons alone, the Kremer Court likely would have refused to accord preclusive effect to a state court decision reviewing an agency proceeding of this sort. A state proceeding need not be accorded preclusive effect if the due process clause is not satisfied. 102 S.Ct. at 1898-1899.
. We also note that the district court provided no analysis of the applicability of these cases as precedent controlling the disposition of Un-ger. In the 4-page Memorandum Order denying defendant’s motion to dismiss on res judica-ta, Judge Roszkowski relied merely on the quotations from Batiste and Cooper discussed above. Memorandum Order at 3. He concluded: “This court adopts the above mentioned reasoning in Batiste in denying defendant’s motion for summary judgment.” Id. at 4. There was no reference to the absence of a state court decision in either case, or indeed to any of their facts.
. After Kremer it would appear that Title VII cases of the Smouse and Gunther variety (in which plaintiff had been in state court only because forced to defend) would also have to be dismissed under res judicata or collateral estoppel. Given the Supreme Court’s holding that Title VII does not partially repeal § 1738 and any state court decision must therefore be accorded preclusive effect, it should be immaterial whether plaintiff or defendant initiated the state court review. This is indeed the position taken by the Third Circuit in a § 1981 case, Thelma Davis v. United States Steel Corp., 688 F.2d 166 (3rd Cir.1982) (en banc).
. 1975 was when Unger filed her state court action, and 1982 was when the Supreme Court decided Kremer.
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.
JERTBERG, Circuit Judge:
This case is before the Court on petition of R. J. Lison Company, Inc., pursuant to Sec. 10(f) of the National Labor Relations Act to vacate and set aside the decision and order of the National Labor Relations Board requiring petitioner to reinstate, with back pay, its discharged employees, Curtis Reed and Stuart Taber, members of Teamsters Automotive Workers Local 495, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America.
The Board cross-petitions for enforcement of its order. The Board’s decision and order are reported at 157 N.L.R.B. No. 101. No jurisdictional issue is presented.
Petitioner, a California corporation, sells and services power sweepers, principally as a franchise dealer for Wayne sweeping equipment. As a part of its service it provides maintenance service for about one thousand customers.
In the summer and fall of 1964, petitioner’s management personnel consisted of R. J. Lison, president, Peter McGrath, general manager, and Dick Sheldrick, a supervisor of the work force who was designated as service manager. The work force consisted of four mechanics, one driver and a parts man. Curtis Reed was a mechanic, and Stuart Taber was the parts man.
The record reveals that Reed and Taber contacted an official of the Union in early August of 1964, and received form cards authorizing the Union to represent the employees of petitioner who were members of the work force; that Reed and Taber each signed an authorization card and they secured the signatures of the four other employees of the work force; that pre-election and post-■election meetings were held after work hours in Taber’s home located about a block and a half from petitioner’s plant; and that on one occasion during the noon hour, in the hearing of Sheldrick, Reed announced to the members that a post-election meeting was to be held at Taber’s home.
After all six employees of the work force authorized the Union to represent them, the Union filed a petition for an election. Petitioner consented to the election which the Union won by unanimous vote of all six members of the work force.
On November 13, 1964, the Union was certified as the exclusive bargaining representative of petitioner’s employees who constituted the work force. Petitioner and the Union thereafter engaged in several contract bargaining sessions.
Reed was discharged on December 31, 1964, and Taber was discharged on Jan-nary 22, 1965.
A complaint was filed against petitioner by the General Counsel of the Board, and the Board, based upon the ■charge filed by the Union on February 2, 1965, alleging, in substance, that petitioner’s discharge of Reed and Taber was in violation of Sec. 8(a)(1) and (3) of the Act.
Petitioner filed its answer to the complaint denying the allegations of unfair labor practices.
Following hearing, the Trial Examiner found that petitioner discharged Reed and Taber because each had engaged in protected union activities, thereby violating Sec. 8(a)(3) and Sec. 8 (a)(1) of the Act. He further found that the elimination by petitioner of Taber’s overtime work, at premium pay, on and after October 30, 1964, was violative of Sec. 8(a)(3) and (1) of the Act.
The Board found that the evidence was insufficient to support the latter finding, and dismissed such charge from the complaint. In all other respects, the Board adopted the findings, conclusions and recommendations of the Trial Examiner.
On this review petitioner earnestly contends that the findings of the Board that petitioner discharged Reed and Taber because each had engaged in protected union activities are not supported by substantial evidence in the record, considered as a whole. In support of this contention petitioner asserts that the record as a whole reveals that the discharge of Reed was for an economic reason — rthe falling off of petitioner’s business which dictated a reduction in its work force — and that Taber was discharged because of his failure to properly perform his duties in keeping proper records in inventory control.
The reviewing power of this Court over orders of the Board is set forth in Sec. 10(f) of the Act, which states:
“[T]he findings of the Board with respect to questions of fact if supported by substantial evidence on the record considered as a whole shall in like manner be conclusive.”
The standard of review set forth in that provision is elaborated upon in Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951) and its companion case, N.L.R.B. v. Pittsburgh S.S. Company, 340 U.S. 498, 71 S.Ct. 453, 95 L.Ed. 479 (1951). If the findings are not supported by substantial evidence on the record when considered as a whole, it is our duty to set aside and refuse enforcement of the order of the Board. Universal Camera Corp. v. N.L.R.B., supra; N.L.R.B. v. Isis Plumbing & Heating Co., 322 F.2d 913 (9th Cir. 1963); Lozano Enterprises v. N.L.R.B., 357 F.2d 500 (9th Cir. 1966).
Under the rationale expressed in Universal Camera, supra, it is our duty iii determining the substantiality of evidence supporting a Labor Board decision to take into account contradictory evidence or evidence from which conflicting inferences could be drawn.
“The substantiality of evidence must take into account whatever in the record fairly detracts from its weight.” Universal Camera, supra, 340 U.S. at 488, 71 S.Ct. at 464.
We recognize that an affirmative duty rests upon General Counsel to establish by substantial evidence that, in respect to each discharge, petitioner was motivated to do so because each discharged employee had engaged in protected union activities. The burden is not upon the petitioner to disprove such motivation. See Miller Electric Mfg. Co. v. N.L.R.B., 265 F.2d 225 (7th Cir. 1959); N.L.R.B. v. Rockwell Mfg. Co., 271 F.2d 109 (3rd Cir. 1959); N.L.R.B. v. Minnotte Mfg. Corp., 299 F.2d 690 (3rd Cir. 1962); N.L.R.B. v. Rickel Bros. Inc., 290 F.2d 611 (3rd Cir. 1961).
We are also mindful of the established principle of law that an employer may discharge an employee for good cause, or bad cause, or no cause at all unless the real motivating purpose is to do that which Sec. 8(a)(3) of the Act forbids. N.L.R.B. v. Sebastopol Apple Growers Union, 269 F.2d 705 (9th Cir. 1959); N.L.R.B. v. Isis Plumbing & Heating Co., 322 F.2d 913 (9th Cir. 1963).
The ultimate question presented in this type of case is one of motivation of the employer in discharging an employee. In this case was each discharge motivated by the union activities in which Reed and Taber engaged? Since neither discharge was discriminatory on its face, petitioner’s motivation for each discharge rests entirely upon inferences to be drawn from the record. Inferences can be drawn only after conflicting evidence is resolved. The resolution of conflicting evidence is peculiarly a question for the trier of fact. To make such resolution the Trial Examiner had to decide what part of whose testimony he would believe. In making such resolutions the Trial Examiner had an advantage which we do not have. He saw and heard the witnesses. He had a much better basis for determining credibility than we have.
In support of petitioner’s contention that the findings of the Board are not supported by substantial evidence, petitioner levels its principal attack against the Trial Examiner. It argues that such findings are based on pure speculation rather than substantial evidence, and severely questions the competency of the Trial Examiner to properly weigh and evaluate the evidence, and to determine the credibility of witnesses. It implies bias against the petitioner, on the part of the Trial Examiner, because in certain areas of conflicting testimony he chose to credit portions of the testimony of certain witnesses for the General Counsel and not to credit portions of the testimony of certain witnesses of petitioner. It further argues that the Trial Examiner placed too much emphasis on certain evidence offered by the General Counsel, and disregarded or only put slight emphasis on testimony offered by the petitioner.
It further argues that credibility resolutions made by the Trial Examiner were mere form because of the use by him of language similar to that used by the Trial Examiner in other cases over which the Trial Examiner presided. Finally, it argues he ignored the fact that certain indicia of unlawful discrimination on the part of the employer, which frequently appear in cases of this type, are not present in this case, such as, interrogation of employees by the employer concerning union activities, surveillance by the employer over union activities of its employees, interference by the employer with the union activities of its employees, and prior history of unfair labor practices on the part of the employer.
We have carefully reviewed the entire record in this case, not only in the light of the governing principles of law set forth above in this opinion, but also in light of petitioner’s contentions. We are unable to say that any of the evidence relied upon by the Trial Examiner is inherently incredible, nor do we find the inferences drawn from the record by the Trial Examiner to be unreasonable.
In our view the findings of the Board are supported by substantial evidence in the record considered as a whole, and are therefore conclusive upon us.
The petition to vacate and set aside the decision and order of the Board is denied, the petition is dismissed, and the cross-petition of the Board for enforcement of its order is 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.
MANTON, Circuit Judge.
By order of the District Court, a receiver was appointed for the La Porte Oil & Refining Corporation in a proceeding in equity to conserve its assets. That corporation had a mortgage upon its property, and the’ Guaranty Trust Company was named as trustee in the mortgage. . The corporation authorized and issued 5-year first lien and collateral trust 7 per cent, convertible gold notes giving the mortgage on its property as security therefor. The order appointing the receiver enjoined creditors from instituting or prosecuting claims or suits and further decreed that notice should be sent to the creditors to file their claims with the receiver within 90 days of the date of the order. The statement of claim must be duly sworn to by the creditor and the publication of notice for presentation of claims was ordered for a period of 90 days in a newspaper. The appellee filed a claim for the principal amount of the bonds authenticated, interest thereon, its commissions and expenses. At the hearing before the special master, it was conceded that the amount of the bonds outstanding at the time were of the face value of $467,412. All of the holders of these bonds had filed their claims excepting those of the face value of $122,857, and as to this latter sum, the court below allowed the claim of the appellee.
The appellee in its claim stated that it was a creditor of the corporation, and that the consideration for the bonds issued was moneys loaned to it (the La Porte corporation), “and in consideration of the acceptance or purchase of said notes by the holders or registered owners thereof.” The claim stated that the appellee could not attach the original notes issued on which the claim was based, because the notes were in the possession of the owners or holders thereof, and the claimant could not obtain the same in order that they might be made part of the claim. It referred to the copy of the notes set forth in the debenture or deed of trust in lieu of the original notes issued thereunder. It further stated that, in filing the claim, the appellee did not surrender or release whatever rights it may hold for said debt under the terms of the trust indenture, but filed its claim for the purpose of securing the notes and right to share in dividends in case the security which it held under the deed of trust was insufficient for the payment of the debts, and expressly reserved its right to enforce such security in the same manner and to the same extent as if the claim had not been filed with the receiver. As the claim was finally presented, it was referred to a special master, who held that the appellee could not maintain its claim; but this was reversed by the District Judge, and the receiver seeks a review of that ruling.
The mortgage by its terms in no way confers upon the appellee rights, other than those usual, to enforce payment of the notes, in the event of default, out of the security held by it as trustee. The appellee was not a creditor of the La Porte corporation, nor did it become assignee, by reason of the terms of the mortgage or otherwise, or attorney in fact for the owners or holders of the outstanding notes, with respeet to anything except the mortgaged property. The notes aré payable to the bearer thereof, or, if the notes be registered, to the registered holder thereof on the due date.
We are referred to article 6 of the mortgage, the clause with reference to what may be done in ease of default. Section 3 thereof provides that the trustee in such event may proceed to protect and enforce its rights and the rights of the note holders “under this indenture” by suit in equity or action at law, either for the specific performance of any covenant or agreement contained or in aid of the execution of any power granted, or to foreclose under. the indenture for the interest or for principal or both, and “for the enforcement of any other appropriate legal or "equitable right as the trustee shall deem most effectual in support of its rights or duties hereunder.” It thus appears that the trustee, in representing the note holders and enforcing their rights as such trustee, is restricted to the rights conferred under this indenture “with reference to the mortgaged property.” The purpose of this clause was to permit the foreclosure of the lien held by the trustee for the benefit of the note holders in the event of default, or to take such other action as may be necessary to make valid the lien granted upon the securities and the property transferred to the appellee as security for the payment of the notes.
Article 6, § 4, required the trustee “to take all steps needful for the protection and enforcement of the rights of the trustee and the rights of the holders of the notes hereby secured.” The same clause provides such action be taken upon proper indemnity and upon receiving the written request of 20 per cent, of the note holders outstanding. It is no): alleged or contended that 20 per cent, or more of the note holders made such a request or that proper indemnity was given. This provision gives the trustee no right to file a claim. The evidence of indebtedness is the note — not the instrument of mortgage. The consent of the appellee to reduce its claim when note holders actually filed their claims individually is an admission against the contention made that the sole and exclusive right resides with the appellee to file a claim for note holders. Without the original notes accompanying the mortgage as part of the proof of claim, the order of the District Court was not complied with in the matter of filing claims. As stated by the appellee, it could not do so, for the notes were in possession of the owners and holders.
It was said below that the practice in the District Court.has been to permit the trustee to file the claims of bond, or note holders under the mortgage. Pintsch Compressing Co. v. Buffalo Gas Co. (C. C. A.) 280 F. 830, and Penn. Steel Co. v. N. Y. City Ry. et al., 216 F. 458, 132 C. C. A. 518, are referred to as authorities for such practice. The cited eases do not support such a practice or rule of law. In the Pintseh Case, it was not contended that the trustee could not prosecute its claim on its deficiency judgment. It was claimed that, as the bonds were not in default at the time of the appointment of sequestration receivers, the trustee was not entitled to share in the funds of the sequestration receivership. We held that the bonds were provable at the time of the appointment of the receivers without it being necessary for the trustee or bondholders to first resort to the security given for .the bonds. No question was presented as to whether the trustee or bondholders were the proper parties to prosecute the claim. The question presented was whether it was necessary to first resort to the collateral security. In the opinion there delivered, the writer quoted from the opinion of the special master in Penn. Steel Co. v. N. Y. City Ry. Co., supra, where the special master said:
“The claimant trustee under the two Metropolitan mortgages have an unquestionable right under the authorities, federal and state, to prove claims to the extent of the face value of bonds secured, against general assets of the insolvent Metropolitan Company, subject only to the limitation that the amount-of the deficiency decrees to be hereafter entered will suggest a maximum amount to be paid on the claims allowed.”
There the master was considering two mortgages which contained provisions other than those in the case at bar, one of which contained a covenant that the railway company would pay to the trustee, for the benefit of the holders of the bonds and coupons that may be secured and then outstanding, the whole sum due and payable on all such bonds and coupons for the principal or interest, or both. And, in case the railway company failed to pay the sum, “the trustee in its own name, and as trustee of an express trust, shall be entitled to recover judgment against the railway company for the whole amount so due and unpaid,” and the master held that, by virtue of such express authority, the other claimant was authorized to file and approve the claims on behalf of all the owners and holders of bonds as trustees of the express trust. The master’s report was approved by the District Judge. There the trustee was a payee of the bonds, and by virtue of the express authority conferred by the mortgage, was duly authorized to file and. approve the claim on behalf of the owners and holders of the bonds.
The cases are distinguishable. Here the appellee is not the payee named in the notes, nor is it made such a creditor under the terms of the mortgage. It has been judicially recognized that a provable debt under a deed of trust is represented by the bonds secured thereby, and, in the absence of authority granted to the trustee by the. terms of the mortgage,, the right to file a claim resides in the note or bond holders only. United States-Trust Co. v. Gordon, 216 F. 929, 133 C. C. A. 117; Mackay v. Randolph Macon Coal Co., 178 F. 881, 102 C. C. A. 115; In re U. S. Leatheroid & Rubber Co. (D. C.) 285 F. 884. Under the mortgage here considered, since the trustee is neither the holder nor the payee of the note, it could not maintain an action at law for the collection of any of the notes. Its authority to proceed under the mortgage to collect the principal and interest of the bonds has reference to the collection of or the enforcement of the security.
The right to maintain a suit is a matter of law, and not subject to be controlled by private conventions of the parties. Suits must be in the name of the real parties in interest. The only exception to this rule is where a trustee of an express trust may maintain an action in his own' name on behalf of the beneficiaries. There the trustee must be the holder of the property or obligation out of which the action arises, or a person with whom or in whose name a contract is made-for the benefit of another may maintain an action upon the contract. A trustee under a mortgage comes within this exception as to the security, but not as to the bonds or notes, for they are not payable to the trustee. Mackay v. Randolph Macon Coal Co., supra. The mere fact that a trustee holds legal title to security does not make it in equity a creditor with respect to the debt itself. United States Trust Co. v. Gordon, 216 F. 929, 133 C. C. A. 117.
A distinction is to be noted between allowing a deficiency judgment in foreclosure proceedings and filing a claim as a creditor in either equity or - bankruptcy proceedings. Where there is a mere foreclosure, affecting a portion only of the corporation’s property, it is advisable, in order to avoid multiplicity of suits arising out of the deficiency judgment and number of note holders, that the-trustee collect and distribute pro rata the entire deficiency. But, where an equity receivership or bankruptcy intervenes, there is-no longer a reason for allowing the trustee to act for the benefit of the note holders. Particularly is this true where there has been no foreclosure, and where the' claim is based solely upon the obligation represented by the notes, which were not owned or held by the trustee, other than the rights conferred by the terms of the deed of trust.
Order reversed.
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.
MAGILL, Circuit Judge.
Gregory Murdock appeals his conviction for two counts of bank robbery, one count of armed bank robbery, and two counts of using a firearm during the commission of a bank robbery. Murdock claims that the identification procedures and evidence violated his fifth amendment rights; that the district court’s refusal to sever the counts forced him to incriminate himself; that his fourth amendment rights were violated when the police requested and received bags which Murdock kept at an acquaintance’s apartment; and that the police lacked reasonable articulable suspicion when they stopped his car. We reject these arguments and affirm the convictions. Murdock also claims that he received ineffective assistance of counsel. Because only an incomplete record has been developed on this issue, we dismiss this claim without prejudice.
I.
On September 20, 1989, Murdock was charged with two counts of bank robbery, two counts of armed bank robbery, and two counts of using a gun during the commission of a bank robbery. All four robberies took place between August 16, 1989, and September 6, 1989.
On August 16, 1989, an undisguised man entered the First Star Metrobank in Minneapolis, Minnesota, and demanded money from the senior teller, Thomas Faust. Faust described the robber as a light-skinned, clean-shaven, black man, 28 to 30 years old, with salt and pepper hair and a high hairline. The robber was wearing a black and white striped shirt with short sleeves. Faust testified that the robber was approximately one to two feet away from him and that he looked into the robber’s eyes at least three times. On the same day, only three hours after the Minneapolis First Star bank was robbed, the First Wisconsin National Bank of Milwaukee, located in Milwaukee, Wisconsin, was robbed. The teller identified Murdock as the robber when she was shown a stack of nine photographs.
On August 22, 1989, an undisguised man entered the First Minnesota Bank in St. Paul, Minnesota, and demanded money from a bank teller, Julia Asuncion. She described the robber as a slim, tall, black man with short hair and a thin mustache, who was wearing a dark, short-sleeved shirt of velour or sweatshirt-like material. Asuncion testified that the robber stood a couple of feet away from her and that she looked into the robber’s eyes at least two or three times. Three other First Minnesota employees witnessed the robbery: Diane Conney, Gary Chatlain and Todd Peterson. Neither Asuncion, Conney, nor Chatlain was able to identify Murdock in a lineup held on September 14, 1989. Peterson did not attend the lineup, but did identify Mur-dock in the courtroom during Murdock’s trial.
On August 28, 1989, an undisguised man entered the Twin City Federal Bank in Minneapolis, Minnesota, pointed a two-barreled derringer at the teller, Carol Dudley-Trask, and demanded money. Dudley-Trask described the robber as an unshaven black man, 25 to 30 years old, with a large, pointy nose, and a high forehead, who was wearing a blue dress shirt with a white collar. She testified that she looked at the robber three or four times. Nancy Tate, another teller, described the robber as a lean, clean-shaven black man, approximately 5' 8" to 5' 10" and weighing 147 to 160 pounds. The bank camera photographed the robbery as it happened, producing a picture that was admitted as evidence in Murdock’s trial. Neither Dudley-Trask nor Tate attended a lineup, but both positively identified Murdock in court.
On September 5, 1989, an undisguised individual entered Norwest Midland Bank in Minneapolis, pointed a two-barreled derringer at the teller, Mary Schaefer, and demanded money. Schaefer described the robber as a black man with a short, flat-top hair cut, 6' tall, weighing 150 to 175 pounds, and about 30 years old. Schaefer did not attend a lineup nor was she shown a photo array, but she did identify Murdock in court.
Later that day, Special Agent John Fos-sum of the Minnesota Bureau of Criminal Apprehension (BCA) saw a black male passenger in a brown Lincoln Continental counting a large sum of money. Fossum believed the money was drug-related and radioed a description of the ear to the Minneapolis Police Department when heavy traffic prevented him from following the car.
The next day, September 6, Officers Shoua Cha and Michael Simmons of the St. Paul Police Department saw the same Lincoln Continental that Fossum had reported. Cha recognized Murdock, who was riding in the Lincoln, as the robber in the photograph obtained during the Twin City Federal Bank robbery. He pulled the vehicle over and called for backup. When the backup arrived, the officers approached the car and questioned the occupants. The officers then arrested Murdock and Richardson, the driver of the car. During the post-arrest search, the officers discovered a two-barreled derringer on Murdock.
The police then went to the apartment of one of Murdock’s friends, Glenn King. Because Murdock had spent three nights at King’s apartment, Murdock had left some of his belongings there. Murdock had both a key to the apartment and a key to the security door of the apartment building. However, Murdock was not authorized to enter the apartment without King’s presence and permission. King testified that he gave Murdock a set of keys because he did not want to “run up and down to check the door.” King also testified that Mur-dock had only used the key to the apartment when he had King’s express, contemporaneous approval.
After the police arrested Murdock, several officers went to the Kings’ residence. Mrs. King invited the police into the apartment. The police requested and received permission from the Kings to take Mur-dock’s possessions. Mrs. King had washed Murdock’s clothing and stored it alongside their own clothing. Mr. King later testified that he and his wife consented to the police request because they did not believe they had a choice. He also testified that the police did not threaten either of them in any way, nor did police indicate that they would retaliate against the Kings if they did not comply. Among the possessions taken into custody was a blue dress shirt with a white collar. This shirt fit the description of the shirt worn by the robber in the August 28 robbery.
At trial, Murdock attempted to sever the counts claiming that he would be prejudiced by the cumulative effect of the evidence presented by the government. Furthermore, Murdock claimed that failure to sever would violate his fifth amendment rights. Murdock failed to make a specific allegation about how these rights would be violated. Murdock also attempted to suppress the evidence obtained by the police pursuant to his arrest and pursuant to their visit to the Kings’ apartment. All of these motions were denied.
Murdock was convicted of all but the August 22 robbery. The court sentenced him to a total of 420 months. Murdock filed a motion for a new trial under Rule 33 and a petition for habeas corpus relief under 28 U.S.C. § 2255. The court denied his motion for a new trial and dismissed the habeas petition as premature.
II.
On appeal, Murdock raises six issues. He claims that the overly suggestive identification procedures violated his due process rights; that the court’s refusal to sever the counts forced him to incriminate himself; that the court’s failure to scrutinize the reliability of the eyewitness identifications violated his due process rights; that he received ineffective assistance of counsel since his attorney failed to adequately investigate the underlying facts; that the police violated the fourth amendment when they took his clothing from the Kings’ apartment; and that the police violated the fourth amendment when they detained him without reasonable articulable suspicion.
A.
Murdock first claims that the government’s identification procedures violated his due process rights because they were impermissibly suggestive and unreliable. In addressing these claims we must apply the two-part test the Supreme Court adopted in Manson v. Brathwaite, 432 U.S. 98, 97 S.Ct. 2243, 53 L.Ed.2d 140 (1977). See also Graham v. Solem, 728 F.2d 1533 (8th Cir.1984); United States v. Manko, 694 F.2d 1125 (8th Cir.1982). First, we must decide whether the challenged confrontation was impermissibly suggestive. If it was, we must then determine whether, under the totality of the circumstances, the suggestive procedures created “a very substantial likelihood of irreparable misidentification.” Manson, 432 U.S. at 116, 97 S.Ct. at 2254. In making this second determination, reviewing courts must consider: “the opportunity of the witness to view the criminal at the time of the crime, the witness’ degree of attention, the accuracy of the witness’ prior description of the criminal, the level of certainty demonstrated by the witness at the confrontation, and the time between the crime and the confrontation.” Manson, 432 U.S. at 114, 97 S.Ct. at 2253 (citing Neil v. Biggers, 409 U.S. 188, 199-200, 93 S.Ct. 375, 382-83, 34 L.Ed.2d 401 (1972)).
Murdock’s first identification claim arises out of the fact that three of the four witnesses who positively identified him did so for the first time in court. Murdock argues that this testimony was tainted by the fact that he was sitting at the defense table and was the only African-American in the room. Since this court does not require in-trial identifications to be preceded by pretrial lineups, see United States v. Wade, 740 F.2d 625, 628 (8th Cir.1984), the only issue is whether Murdock’s presence at the defense table, combined with his being the only African-American in the courtroom at the time of the identification, constituted impermissibly suggestive procedures. It is significant to note that Murdock did not request special seating or object to the ethnic composition of the courtroom at the time of the identification. Furthermore, the witnesses’ identifications were open to attack on cross-examination. Therefore, while the procedure may have been suggestive, it was not im-permissibly suggestive. Even if the procedure was impermissibly suggestive, under the totality of the circumstances, there was no substantial likelihood of misidentification. All four witnesses had a substantial amount of time to view the robber at the time of the crime; each was fairly attentive during the crime; each was very certain about Murdock’s identity; and each identification took place within a reasonable period after the crime. Therefore, even though some of the witnesses’ descriptions of the robber were not extremely detailed or accurate, their in-trial identifications were reliable under the totality of the circumstances. See Ford v. Armontrout, 916 F.2d 457 (8th Cir.1990) (impermissibly suggestive pretrial identification did not make in-court identification unreliable where victim had ample opportunity to view defendant, and where victim’s description of her assailants was accurate and where she did not hesitate in her identification of defendant).
Murdock also claims that his constitutional rights were violated when the police used impermissibly suggestive identification procedures when obtaining Faust’s identification. The police showed Faust a single photograph of an individual, taken during the robbery of Twin City Federal, and informed Faust that this man had robbed at least one other bank. Murdock correctly points out that single photograph arrays are considered impermissibly suggestive in the Eighth Circuit. Ruff v. Wyrick, 709 F.2d 1219, 1220 (8th Cir.1983). However, since we have already determined that Faust’s identification was reliable under the totality of the circumstances, Murdock’s constitutional rights were not violated by this procedure.
B.
Murdock next argues that the district court’s refusal to grant him a separate trial for the different robbery counts forced him to incriminate himself in violation of the fifth amendment. Murdock claims that by not severing the counts, he was required to present evidence of the Wisconsin robbery to defend himself against the Minneapolis First Star robbery. As a threshold matter, we note that the Eighth Circuit grants district courts wide discretion in ruling on motions for severance. See United States v. Mendoza, 876 F.2d 639 (8th Cir.1989). Consequently, we review the district court’s refusal to sever Murdock’s counts under an abuse of discretion standard. Since the separate counts of Murdock’s indictment covered robberies carried out over a short period of time and since all five robberies were performed using a similar modus operandi, it was not unreasonable for the district court to refuse to sever the counts. Furthermore, since Murdock had options available to him other than presenting evidence of the Wisconsin robbery charge, he was not forced to incriminate himself.
C.
Murdock raises a claim of prosecutorial misconduct based on an alleged pretrial “dress rehearsal" held by the prosecutor to ensure favorable testimony from the eyewitnesses. Murdock refers to a pretrial meeting held by the prosecutor and an FBI agent to interview potential witnesses. Murdock argues that since the witnesses were presented with evidence that was ultimately shown to them at trial, the prosecutor was required to inform him of the details of this meeting, including what was shown and what the witnesses’ initial reactions to the evidence were. See United States v. Bagley, 473 U.S. 667, 105 S.Ct. 3375, 87 L.Ed.2d 481 (1984). Murdock claims that he could have used such information to impeach the eyewitnesses on cross-examination. However, Bagley does not require the prosecution to reveal such information. Under Bagley, constitutional error only occurs when information withheld by the prosecutor results in an unfair trial. Bagley, 473 U.S. at 678, 105 S.Ct. at 3381-82. In this case, Murdock attempted to impeach the eyewitnesses by asking them about the “dress rehearsal” on cross-examination. Therefore, since the jury heard about Murdock’s “dress rehearsal” theory and since Murdock did not show that he had an unfair trial, this claim fails.
D.
We refuse to address Murdock’s ineffective assistance of counsel claim since it is more properly raised in a petition for habeas corpus. See United States v. Schmidt, 922 F.2d 1365, 1369 (8th Cir.1991) (per curiam). Even though the district court dismissed this claim in Murdock’s Rule 33 motion, we still believe that it would be better for the district court to develop a more complete record on this issue and, therefore, we dismiss this claim without prejudice.
E.
Murdock further claims that the police violated the fourth amendment when they searched and seized his belongings which were kept at the apartment of acquaintances. The government argues that Murdock did not have a reasonable expectation of privacy in the Kings’ apartment and that therefore Murdock does not have standing to raise a fourth amendment claim. Furthermore, the government argues that no fourth amendment violation occurred because the police asked for and received consent from the Kings to search the apartment and to take the items they found.
However, even if we assume that Murdock had a reasonable expectation of privacy, the police obtained the Kings’ consent to take Murdock’s clothing. While Murdock’s control over his possessions in the Kings’ apartment may be questionable, there is no doubt that the Kings had, at a minimum, common authority over these possessions and that they were capable of giving consent to the police to take them into custody. See United States v. Matlock, 415 U.S. 164, 170-71, 94 S.Ct. 988, 992-93, 39 L.Ed.2d 242 (1974) (“consent of one who possesses common authority over premises or effects is valid as against the absent, nonconsenting person with whom that authority is shared”).
P.
Finally, Murdock claims that the police violated the fourth amendment in their initial encounter with him because they seized him without reasonable suspicion. The government argues that the initial encounter was justified by probable cause and was therefore well within the bounds of the fourth amendment.
Shortly after the robbery of Norwest Midland Bank on September 5, Special Agent Fossum of the BCA saw Murdock riding in a Lincoln Continental. The car caught Fossum’s attention because of its erratic driving pattern. When Fossum approached the car, he saw Murdock counting a considerable amount of ten and twenty dollar bills. Fossum made note of the car’s vanity license plates (“DAVID 0”) and tried to follow the car. Because of the traffic, Fossum lost sight of the car. Fos-sum then reported the incident to the FBI, stating that he believed that the car had been used in the robbery of the Norwest Midland Bank. Approximately fourteen hours later, Officer Cha sighted the Lincoln Continental described by Fossum. In addition to Fossum’s description of the car, Officer Cha had a surveillance photo from the Norwest Midland Bank robbery. He compared the robber in the photo with the passenger in the Lincoln Continental and concluded that they were the same person. Based on this information, Officer Cha had probable cause to stop the Lincoln Continental and take Murdock into custody. See United States v. Marin-Gifuentes, 866 F.2d 988 (8th Cir.1989). Therefore, Mur-dock’s fourth amendment claim fails.
III.
For the foregoing reasons, Murdock’s conviction on all counts is affirmed.
. The Honorable Edward J. Devitt, Senior United States District Judge for the District of Minnesota.
. Ms. Asuncion testified that she thought Mur-dock "might be" the robber, but could not "positively say.”
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
MEANOR, District Judge.
On September 12, 1974, plaintiff’s decedent, Brian O’Hanlon, was a passenger in an automobile being operated by a Michael Ryan. Ryan and the operator of a never identified vehicle engaged in a drag race. Ryan’s car, without making contact with the unidentified vehicle, was forced off the road where it collided with apparently immovable objects. Brian O’Hanlon suffered devastating personal injuries from which his death ensued on the second anniversary of the accident. These events gave rise to an automobile liability insurance controversy of considerable magnitude and complexity, only part of which has survived for appellate review here.
Suit was brought against Hartford Accident and Indemnity Company, Insurance Company of North America (INA), the appellant here, and Nationwide Mutual Insurance Company. Nationwide insured the Ryan car. Hartford covered in one policy four vehicles owned by Patrick J. O’Hanlon, father of Brian. INA had provided to Patrick J. O’Hanlon an “umbrella policy” which included automobile liability coverage and also a separate primary auto policy which covered a pick-up truck owned by O’Hanlon. In the latter policy, the named insured was designated as Coe Management Company, a trade name under which O’Hanlon conducted business.
Nationwide paid its liability limit, $25,-000. Recovery was sought under the Uninsured Motorist (UM) coverage of the Nationwide policy. UM recovery was also sought on the Hartford policy, the INA policy issued with Coe Management as named insured and the INA umbrella policy. The Hartford policy had $100,-000/$800,000 ($100/$300) liability limits and it was asserted that under Delaware law the insurer was required to offer UM coverage in this amount, but had failed in its legal duty to do so. Reformation of the Hartford policy to increase UM coverage to $100/$300 was sought. As to the INA Coe Management policy, it was contended that although Delaware law required that UM coverage be offered, INA did not make such coverage available. Reformation of that policy was sought to include UM coverage therein. The INA Coe Management policy had liability limits of $100/$300 and further reformation of this policy was claimed so as to provide UM coverage in that amount.
The INA umbrella policy provided UM coverage. Plaintiff asserted that this policy likewise was required by Delaware law to provide UM coverage, and consequently sought its reformation to UM limits of $300,000. This policy, as written, provided UM coverage up to $35,000 after deduction of a “retained limit”. INA contended that because of payments made by other insurers, it owed nothing. Plaintiff asserted, however, that in light of an ambiguity in the UM coverage provisions of this policy INA owed at least the full $35,000.
Proceedings in the district court produced two reported decisions. O’Hanlon v. Hartford Accident & Indem. Co., 439 F.Supp. 377 (D.Del.1977) (O’Hanlon I); O’Hanlon v. Hartford Accident & Indem. Co., 457 F.Supp. 961 (D.Del.1978) (O’Hanlon II). There was a clause in the Nationwide and Hartford policies attempting to restrict UM coverage where the identity of the owner or operator of the uninsured vehicle could not be ascertained, thereby making the accident one involving a “hit-and-run” vehicle, to instances where there was a physical contact with the “hit-and-run” vehicle. The same clause would have been in the INA Coe Management policy had UM coverage been provided therein, as INA conceded was required under Delaware law. The district court held this limitation of UM coverage invalid. O’Hanlon I, 439 F.Supp. at 381. Nationwide has not appealed this determination and has paid its UM coverage limit. The district court further held that the plaintiff was entitled to “stack” UM coverages and that Hartford, since its policy provided UM coverage on four separate vehicles for which four premiums were paid, was liable with respect to four separate UM coverages. Hartford paid these claims and settled by additional payment the claim that its policy should be reformed to provide UM coverage with limits of $100/$300. Hence, Hartford is not involved in this appeal.
With respect to the issues surrounding the INA policies that are brought here by appeal and cross-appeal, the district court first held that the INA Coe Management policy which, as written, did not provide UM coverage but which concededly should have so provided pursuant to Delaware law, was not a policy having UM coverage that inured to the benefit of Brian O’Hanlon. Following an evidentiary hearing, the district court also determined that the INA umbrella policy was not a policy required by 10 Del.Code tit. 18, § 3902 to provide UM coverage. This rendered moot plaintiff’s claim that that policy should be reformed to provide UM coverage with $300,000 limits. Thereafter in an unreported opinion, the court held that because of an ambiguity in the UM coverage provisions contained in the INA umbrella policy, INA was required to pay its full limit of $35,000 pursuant to the UM coverage contained in that policy.
Thus, the remaining issues before us may be defined as follows:
1. Whether INA policy CAL 15 38 48, covering a 1973 GMC pick-up truck and designating Coe Management Company as named insured was a policy whose statutorily mandated UM coverage inures to the benefit of Brian O’Hanlon.
2. Whether INA policy XIM 30 82 80, i.e., the INA umbrella policy, which in fact provides UM coverage, is a policy required by 10 Del.Code tit. 18, § 3902 to contain UM coverage.
3. Whether the “retained limit” as defined in INA’s umbrella policy should be deducted from INA’s maximum exposure of $35,000, as INA contends, or should be deducted from “all sums which the insured or his legal representative shall be legally entitled to recover from the owner or operator of an uninsured automobile” as the plaintiff contends. Subsidiary to this issue is the question whether the umbrella policy coverage language is ambiguous, with the result that any ambiguity must be resolved in favor of the insured.
I.
INA policy CAL 15 38 48 listed Coe Management Company as named insured and covered a 1973 GMC pick-up truck. INA concedes that it breached its statutory duty under 10 Del.Code tit. 18, § 3902 by not providing UM coverage in this policy and that the policy must be construed and enforced as though the mandated UM coverage had been contained in it. The endorsement that INA would have used to provide UM coverage within this policy is contained in the record, and there is no dispute that we are obligated to read this policy as though that endorsement had been present when the policy was issued.
Coe Management Company is a trade name under which Patrick J. O’Hanlon conducted business. The truck insured under INA policy CAL 15 38 48 was used by an employee of O’Hanlon who normally had the truck in his possession. He was under instructions to use the truck only in the course of his employment.
The Coe Management policy is a commercial automobile liability policy. It was written to cover a business vehicle as distinguished from a private passenger family automobile. It seems to have been designed to cover business entities rather than natural persons. For example, in defining “persons insured” the policy refers to the named insured and “any partner or executive officer thereof.” The use of the pickup truck described under the heading “owned automobiles” is listed as “business.” These considerations led the district court to conclude that O’Hanlon never intended to protect his family and personal interests under this policy, but rather intended the policy to cover only his business related risks. O’Hanlon I. 489 F.Supp. at 387-88.
On the other hand, the application for the policy, although listing Coe Management Company as named insured, also notes that the insured is an individual. The UM coverage endorsement which we must construe as part of this policy, reads as though it were designed for use with a policy that covered a natural person as named insured. The UM endorsement provided to us contains a blank space in which the name of the named insured is to be inserted. If this endorsement had been contained within the policy, obviously the name Coe Management Company would have been inserted as the named insured. There can be no question but that INA knew that this was a trade name synonymous with Patrick J. O’Hanlon. The UM endorsement defined “Persons Insured”, in part, as “the Named Insured ... and, while residents of the same household, the spouse and relatives of ... [the Named Insured.]”
The district court is undoubtedly correct in its conclusion that Policy No. CAL (commercial automobile liability) 15 38 48 issued to Coe Management Company was never intended by either O’Hanlon or INA to apply to other than business related risks. Under the liability features of this policy, Brian O’Hanlon did not qualify as a person insured thereunder by being a relative of the named insured living in the same household, as he did under UM coverage endorsement that should have been a part of this policy. Basically, if Brian were to achieve insured status under the Coe Management policy, that could only result from his operation of an owned or hired automobile with the permission of the named insured. However, if the description of named insured in the UM coverage endorsement of the policy as Coe Management Company is to be read as synonymous with Patrick J. O’Hanlon, then it is plain that Brian O’Hanlon did in fact achieve status as a person insured under the UM endorsement simply by being a relative of Patrick J. O’Hanlon residing in the same household.
We believe that we are obliged to read the designation of the named insured in the UM endorsement as a synonym for Patrick J. O’Hanlon, or at least as though the UM endorsement had identified the named insured as “Patrick J. O’Hanlon, trading as Coe Management Company.”
The issue whether a policy that insures an individual under a trade name insures the same person as would a policy issued to that person under his given name has arisen most frequently with respect to non-owned or temporary substitute automobile coverage.
In Samples v. Georgia Mutual Insurance Co., 138 S.E.2d 463, 464, 110 Ga.App. 297 (Ga.App.1964), the plaintiff was driving a vehicle purchased by her husband in the trade name under which he owned and operated a business. The plantiff had procured a policy from the defendant in her own name, and was driving the vehicle registered in her husband’s trade name at a time when her vehicle, which was covered by defendant’s policy, was temporarily out of commission. It is inferable that the vehicle registered in the trade name was not insured; while operating it, plaintiff was involved in an accident. After defending that suit, she brought an action against Georgia Mutual in an effort to recover attorneys fees and litigation expenses. In so doing, plaintiff relied on the temporary substitute automobile coverage of the Georgia Mutual policy, which defined a temporary substitute vehicle for which coverage would be provided as a vehicle “not owned by the named insured or [her] spouse.” If the vehicle registered in the trade name was not owned by the spouse of the plaintiff, then there was temporary substitute coverage available to plaintiff. Conversely, if that vehicle was, in fact, owned by plaintiff’s spouse, then there was no temporary substitute coverage.
The court denied coverage. It pointed out that a trade name “is merely a name assumed or used by a person recognized as a legal entity,” and that “a judgment against one in an assumed or trade name is a judgment against him as an individual.” Id. at 465. The court stated:
The fact that the plaintiff’s husband purchased this automobile in the name that he used in doing business does not contra-diet the fact that he owned the automobile as an individual.
Id
In Gabrelcik v. National Indemnity Co., 269 Minn. 445, 131 N.W.2d 534 (1964), the plaintiff insured her taxicab with defendant under a policy that defined a temporary substitute automobile as “an automobile not owned by the named insured or his spouse if a resident of the same household.” Id. at 535. The plaintiff’s husband was in the used-car business and had in stock a Ford automobile registered in the name of Frank’s Used Cars, a trade name under which plaintiff’s husband conducted his business. While the taxi was undergoing repair, plaintiff used the Ford in her taxi business. A passenger was injured and plaintiff sought coverage under the temporary substitute coverage of the policy issued to her by defendant. The court noted that an obvious purpose of excluding temporary substitute coverage as to vehicles owned by the spouse of the named insured residing in the same household “is to prevent the same policy from being used to provide coverage for vehicles other than those for which a premium was paid.” Id.
The court also considered whether the vehicle registered in the name of Frank’s Used Cars was owned by the plaintiff’s husband. It so held, stating:
We fail to see how the fact that plaintiff’s spouse is the owner of the vehicle in question is changed for insurance purposes by the manner in which it is registered with the state. Whether the vehicle is registered in the husband’s name or in the name of the business which he owns and operates as a sole proprietorship, the result is the same; namely, that this vehicle was owned by the insured’s spouse who resided in the same household.
Id. at 536.
INA argues that it would be error to apply the doctrine of reformation or to create an ambiguity where none exists in order to equate Coe Management and Patrick J. O’Hanlon. We agree that application of either theory to this case would be contrived. We are persuaded by the cases arising under non-owned and temporary substitute coverage which use neither reformation nor ambiguity in holding that an insured’s trade name and given name should be equated. We, therefore, hold, as do the cases cited and discussed above, that where an insured purchases a policy in a trade name, the policy will be viewed as if issued in his given name. To do otherwise would, as a general principle, frustrate the unambiguous underwriting intent underlying the usual definitions of non-owned and temporary substitute automobiles.
INA’s primary argument in denying UM coverage under the Coe Management policy is that Patrick J. O’Hanlon should not be considered the named insured thereunder. It also argues that under 10 Del. Code tit. 18, § 3902 the Coe Management policy was not required to afford UM coverage to Brian O’Hanlon. That section requires that any “policy insuring against liability arising out of the ownership, maintenance or use of any motor vehicle ...” shall include UM coverage “for the protection of persons insured thereunder ...” unless the UM coverage is rejected in writing by the insured. INA correctly reads the reference to “persons insured thereunder” to refer to those persons insured under the liability features of the policy. As we have stated above, Brian O’Hanlon was not a defined insured under the terms of the liability provisions in the Coe Management policy. It is quite true that there was no statutory obligation on the part of INA to include Brian O’Hanlon within the UM coverage of that policy. However, nothing in section 3902 prevents INA from providing UM coverage to persons outside the class of liability insureds as defined in the underlying policy. That is exactly what INA has done, for the UM endorsement that it was required to include within the Coe Management policy covers “the Named Insured .. . and, while residents of the same household, the ... relatives of [the Named Insured].” Once it is established that the named insured is Patrick J. O’Hanlon, the policy is unambiguous and plainly affords UM coverage to Brian O’Hanlon.
The judgment in favor of INA on plaintiff’s claim under the policy issued with Coe Management Company as named insured is reversed. Plaintiff is entitled to the statutory insurance of $10,000 in UM coverage on this policy and to further proceedings to resolve his claim that the UM limits on this policy should be reformed to provide UM coverage of $100/$300.
II.
In O’Hanlon II, 457 F.Supp. 961, supra, the district court held that INA’s umbrella policy was not a policy required by 10 Del. Code tit. 18, § 3902 to contain UM coverage. Hence, the court dismissed plaintiff’s claim that this policy should be reformed to increase UM coverage to limits of $300,000.
Plaintiff correctly notes that an objective of subsection (b) of section 3902 was to provide a purchaser of insurance with the opportunity to protect himself from the risk posed by an uninsured driver to the extent of his liability limits or $300,000, whichever is less.
There is no point in construing a statute to require that something be done superfluous to its objectives. Section 3902 expresses a legislative command that automobile liability policies issued in Delaware provide UM coverage as a matter of course with limits at least equal to those required “under the motorist financial responsibility laws” with the option on the part of the insured to reject UM coverage in writing, or to obtain increased UM coverage equal to liability limits, but not to exceed $300,000.
Policies such as the INA umbrella policy under consideration here, with respect to their automobile coverages, would not exist but for underlying primary auto policies to which they provide excess liability insurance. Primary insurance policies in Delaware, by their very existence, provide insureds with all of the benefits accorded under section 3902. To place umbrella policies within the ambit of section 3902 would be to apply that section to require UM coverage in addition to that provided by primary policies. We do not believe that section 3902 can be so read, and hold that it is not applicable to policies that provide excess liability insurance.
III.
There is no dispute that the UM coverage contained in the INA umbrella policy is applicable to Brian O’Hanlon. The UM coverage in that policy is entitled “Coverage B” and the pertinent portions of the coverage clause as well as of the definition of “retained limit” are set forth in note 3, supra.
The district court held, and it is not argued to the contrary here, that the amount of the retained limit in this case is $75,000. This sum is the aggregate of the $25,000 that Nationwide paid on its liability coverage, the $10,000 Nationwide paid under its UM coverage, and the liability limit of $10,-000 each on the four separate UM coverages contained in the Hartford policy.
INA’s interpretation of this language requires that the amount of the retained limit be ascertained, here $75,000, and that this amount be deducted from $35,000, with the result that the company is liable only for the difference. Such an application of the policy terms would result in no payment.
Plaintiff’s interpretation requires that, first the total loss or damage suffered by the insured be ascertained: Second, the amount of the retained limit is to be calculated. Following these steps, the amount of the retained limit is deducted from the total loss leaving INA to pay the difference up to $35,000.
We believe that the plaintiff’s construction of the UM coverage of the umbrella policy is the correct one. At least, the policy is ambiguous, and under well-settled doctrine the ambiguity must be resolved in favor of the insured. Transport Indemnity Co. v. Home Indemnity Co., 535 F.2d 232 (3d Cir. 1976); Novellino v. Life Insurance Co. of North America, 216 A.2d 420 (Del. 1966).
One cannot read the UM provisions of the umbrella policy without coming to the conclusion that INA is promising to pay, under some circumstances, up to $35,000 in UM coverage. Conversely, under INA’s view of the policy, it would never pay more than $25,000.
This is because the policy states two alternative sums as the retained limit. One is the gross amount of other UM and liability insurance payable to the insured. The other is “the minimum amount specified by the financial responsibility laws of the state in which the accident shall occur.” The latter amount as specified by Delaware law is $10,000. This sum is the minimum to be deducted and would be deducted even if not paid.
We doubt that there is any ambiguity with respect to the issues before us concerning INA’s UM umbrella policy coverage, and we think INA has misconstrued its own policy. It seems clear that the INA has agreed to pay, up to a maximum of $35,000, “all sums ... which the INSURED . .. shall be legally entitled to recover as damages from the owner or operation of an uninsured automobile” after the retained limit is deducted from the damages to which the insured is legally entitled. The retained limit is then defined as the total of other insurance payable or the minimum limit specified by the applicable financial responsibility laws, whichever is greater.
This, it seems to us, requires: first, that the total damages of the insured be ascertained; second, that the retained limit be calculated; and third, that the retained limit be deducted from the total damages leaving INA to pay the difference, if any, but not to exceed $35,000.
INA argues that application of basic grammatical rules of construction will support its version as the proper interpretation of its policy language “all sums up to $35,-000 less the retained limit.”
It is elementary that a limiting or modifying phrase refers to its immediate antecedent. Such an antecedent may be a noun, or a noun equivalent, such as a phrase. Here the limiting phrase is “less the amount of the retained limit.” INA would have it that this phrase refers only to the figure $35,000. However, we believe that proper construction would apply the limiting phrase to its antecedent phrase — “all sums up to $35,000.” To put it another way, we read $35,000 as a parenthetical description and, if this is done, it is clear that both the mention of the sum of $35,000 and the phrase “less the retained limit” modify the words “all sums”.
Even if we are incorrect, and the intent of the draftsman was as INA asserts, then we are clear that the policy is ambiguous and that ambiguity must be resolved against the insurer.
IV.
For the reasons set forth in this opinion, the judgment of the district court in favor of INA on plaintiff’s claim under policy No. CAL 15 38 48, designating Coe Management Company as named insured, is reversed and remanded for proceedings not inconsistent with this opinion. The district court is directed to enter a judgment in the amount of $10,000 in favor of plaintiff pursuant to this policy and to conduct further proceedings to resolve the question whether the UM limits of this policy should be reformed to provide UM coverage with a limit of $100/$300.
The judgment of the district court in the amount of $25,000 in favor of the plaintiff against INA on plaintiff’s claim under the UM coverage features of its Personal Catastrophe Policy No. XIM 30 82 80 is affirmed.
. We have called this policy an “umbrella policy” for want of a better brief description. INA entitles it a Personal Catastrophe Plan. To call it an excess policy would not be accurate, for it provides some primary coverage for liabilities not arising out of automobile accidents, e.g., libel and slander. With respect to automobile liability insurance it is primarily an excess policy, but does provide some primary auto insurance. For example, most primary auto policies carry a geographical limitation to the continental United States and Canada. The umbrella policy contains no such limitation and would provide primary auto coverage outside the continental United States and Canada.
. Delaware’s uninsured motorist statute, 10 Del.Code tit. 18, § 3902 as amended, provides, in pertinent part:
(a) No policy insuring against liability arising out of the ownership, maintenance or use of any motor vehicle shall be delivered or issued for delivery in this State with respect to any such vehicle registered or principally garaged in this State unless coverage is provided therein or supplemental thereto for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured or hit-and-run motor vehicles for bodily injury, sickness or disease, including death, or personal property damage resulting from the ownership, maintenance or use of such uninsured or hit-and-run motor vehicle. Except, that no such coverage shall be required in or supplemental to a policy where rejected in writing, on a form furnished by the insurer describing the coverage being rejected, by an insured named therein, or upon any renewal of such policy unless the coverage is then requested in writing by the named insured. The coverage herein required may be referred to as “uninsured vehicle coverage.”
(b) The amount of coverage to be so provided shall not be less than the minimum limits for bodily injury, death and property damage liability insurance provided for under the motorist financial responsibility laws of this State. [See n. 14, infra ] The coverage for property damage shall be subject to a $250 deductible for property damage arising out of any 1 accident unless the insurer and the insured agree in writing to a different deductible. Each insured shall be offered the option to purchase additional coverage for personal injury or death up to a limit of $300,000, but not to exceed the limits for personal injury set forth in the basic policy.
As used herein, the term “property damage” shall include the loss of use of a vehicle.
. The UM coverage provisions of INA’s umbrella policy provide in relevant part:
the Company agrees to pay all sums up to $35,000 less the amount of the RETAINED LIMIT which the INSURED or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile .... provided:
(1) the Company’s liability hereunder shall be only in excess of the RETAINED LIMIT,
The policy sets forth a definition of retained limit which in pertinent part states:
With respect to coverage B, the Company’s liability shall be only for loss in excess of the INSURED’S RETAINED LIMIT defined as the greater of:
(1) the total amount of insurance payable to the INSURED under other Uninsured Motorists, ... or Auto Liability insurance; or
(2) the minimum amount specified by the financial responsibility laws of the state in which the accident shall occur; and then up to an amount not exceeding $35,000 as the result of any one accident, provided, such liability shall be reduced by the amount of the RETAINED LIMIT.
. Other issues were decided by the district court. However, their recitation is not necessary to show the origination of the questions presented by the present appeals.
. If the plaintiff prevails on issues 1 or 2 as defined above, a remand will be necessary to resolve the reformation dispute.
. It is conceded that the UM endorsement supplied in the record is the one that INA would have used to provide the statutorily required UM coverage, for it is the only approved form INA had at the time. We do not know if a different form is now in use regarding UM coverage in connection with commercial vehicle policies.
. Actually, the application contained in the record was submitted in connection with a policy insuring the pick-up truck for the year preceding the policy in issue. We take it that the policy before us was a renewal of the policy that issued upon this application. We believe it proper to treat the application as one for the policy before us.
. There is an incongruity between the definition of the persons insured with respect to the liability coverages of this policy and the definition of persons insured under the UM endorsement. If this creates an ambiguity, it must, of course, be resolved in favor of the insured. We believe, however, that the UM endorsement must be construed in a manner uninfluenced by the definitions applicable to the liability coverages. A somewhat similar situation was confronted in Ohio Casualty Ins. Co. v. Fike, 304 So.2d 136 (Fla.App. 1975). There the policy was issued to “Russell C. Fike, Jr. and Robert D. Fike, d/b/a Orange State Painting Company”. The policy contained an endorsement that provided for the payment of medical expenses arising out of automobile accidents sustained by “the named insured, or any relative ... while a pedestrian through being struck by a motor vehicle.” Id., at 137 (emphasis in original). The daughter of Russell Fike was struck by an automobile while a pedestrian, and recovery was sought under the endorsement. The insurer contended that its insurance was issued to a partnership and was limited to that partnership. The court disagreed, holding that the policy covered individual partners as well as the partnership. The court said:
The fact that the defendant insurer issued an amendatory endorsement to the policy in question which provided personal injury protection to “the named insured or any relative” seems inapposite to the insured’s [sic; should read insurer’s] position that the policy in question was intended to be limited to a “partnership”; if anything, the amendatory endorsement is reflective of an intention to insure the individual as well as the partnership.
Id. at 137 (emphasis in original).
. Most automobile policies provide coverage on an excess basis for non-owned and temporary substitute vehicles. A non-owned automobile is usually defined as an automobile not owned by the named insured, his spouse or any relative living in the same household. Coverage for a temporary substitute automobile exists where the described vehicle is temporarily withdrawn from service and another is used in its place. This latter coverage normally defines a temporary substitute automobile as one not owned by the named insured, and in some policies this definition has been expanded to include a vehicle not owned by the named insured’s spouse or any relative if resident of the same household. The thrust of these provisions is to prevent one policy with one described automobile from being applicable to other vehicles owned by members of the same family unit, and, thus, to require a separate premium to be paid for each automobile owned by persons in that unit. For an example of the usual language as to non-owned coverage, see Cox v. Santoro, 94 N.J.Super. 319, 228 A.2d 101 (Law Div.), aff’d, 98 N.J.Super. 360, 237 A.2d 491 (App.Div.1967), and as to temporary substitute coverage, see Kelly v. Craig, 263 F.Supp. 570 (W.D.Mo.1967).
. To the same effect is Kelly v. Craig, 263 F.Supp. 570 (W.D.Mo.1967), which relied on Samples v. Georgia Mutual Ins. Co., supra.
. An insured may own or control a corporation which owns a vehicle or may be a member of a partnership that, as an entity, owns a vehicle. Under these circumstances, an insured might well be covered under the non-owned and temporary substitute coverages of a policy issued in his given name while operating a vehicle owned by the corporation or partnership. This is an underwriting risk, but a minimal one, for it is unlikely that such entities would be formed for the purpose of overloading an insurance policy. The danger of such overloading is much greater as to multiple vehicles owned within the same family unit. See, e.g., Saint Paul-Mercury Indem. Co. v. Heflin, 137 F.Supp. 520 (W.D.Ark. 1956).
We desire to add that the cases which we have discussed and cited, equating for insurance purposes, an insured’s given name and his trade name were not cited to the district court. Nor were they cited here. However, we have a duty to decide upon the application of what appears to us to be the controlling legal precepts.
. Under other circumstances, INA might be able to claim that the UM endorsement should be reformed to remove from its coverage the personal and family risks that, as written, it provides. It seems, however, that INA cannot do this for it has no approved substitute language with which the policy may be reformed. See n.6, supra.
. For aid in interpreting section 3902 on this issue the district court held an evidentiary hearing. See O’Hanlon II, 45 F.Supp. 961. Evidence was taken from a professor of law with expertise in the field of uninsured motorists’ coverage and an INA employee versed in the history and extent of coverage of umbrella policies. No attack has been made upon the propriety of holding such a hearing in order to obtain “legislative facts” and, while we imply no criticism of it, we find that we need not consider the evidence thus adduced in order to resolve the issue whether UM coverage was mandated in the umbrella policy by section 3902.
. Delaware’s Financial Responsibility Law, 21 Del.Code tit. 21, § 2902, as amended, provides in pertinent part:
(a) A “motor vehicle liability policy,” as said term is used in this chapter, shall mean an owner’s or an operator’s policy of liability insurance, certified, as provided in § 2948 or 2949 of this title, as proof of financial responsibility and issued, except as otherwise provided in § 2949 of this title, by an insurance carrier duly authorized to transact business in this State, to or for the benefit of the person named therein as insured.
(b) Such owner’s policy of liability insurance shall:
(1) Designate by explicit description or by appropriate reference all motor vehicles with respect to which coverage is thereby to be granted; and
(2) Insure the person named therein and any other person, as insured, using any such motor vehicle or motor vehicles with the express or implied permission of such named insured, against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of such motor vehicle or motor vehicles within the United states of America or the dominion of Canada, subject to limits exclusive of interest and costs, with respect to each such motor vehicle, as follows: $10,000, because of bodily injury to or death of 1 person in any 1 accident and, subject to said limit for 1 person, $20,000, because of bodily injury to or death of 2 or more persons in any 1 accident, and $5,000, because of injury to or destruction of property of others in any 1 accident.
. Our result is in accord with Trinity Universal Ins. Co. v. Metzger, 360 So.2d 960 (Ala. 1978). Contra, Aetna Cas. & Sur. Co. v. Green, 327 So.2d 65 (Fla.Dist.Ct.App.), cert. denied, 336 So.2d 1179 (Fla.1976).
. It is clear and not disputed that the vehicle with which Ryan engaged in a drag race was an uninsured vehicle within the meaning of this policy. See O’Hanlon I, 439 F.Supp. at 379. The definition of “insured” set forth in the policy includes Brian O’Hanlon.
. INA contended below, at one point, that the retained limit should include as amounts payable the increased limits of the Hartford UM coverage to $100/$300 that the plaintiff alleged the Hartford policy should have provided. That assertion has not been pressed on appeal.
. INA has in fact paid $10,000 to plaintiff under the UM coverage of its umbrella policy. We deduce that this payment was made following payment by Nationwide of its $25,000 liability limit, and before the judicial rulings which led to the payments by Nationwide and Hartford under their UM coverages. INA has not sought recoupment of this $10,000 and its payment is why the district court entered judgment against INA for $25,000 not $35,000 under its umbrella policy UM coverage.
. In view of the extent of Brian O’Hanlon’s injuries it is clear that the addition of $10,000 under the UM coverage of the Coe Management policy will not increase the retained limit to such extent as would render INA’s UM obligation under the umbrella policy less than $35,-000.
Further, we doubt, but cannot be certain, that an increase of the retained limit by a further addition in the amount of $90,000 pursuant to reformation of the Coe Management policy or in the amount of Hartford’s payment made in settlement of its reformation dispute, or both, would alter INA’s liability for the full $35,000 available to appellant under the umbrella policy’s UM coverage. We recognize, however, the possibility that the retained limit could be affected to an extent sufficient to modify, in whole or in part, INA’s liability under the UM provisions of its umbrella policy.
We affirm the district court’s judgment on the umbrella policy with the notation that if INA is ultimately entitled to any reduction of its umbrella UM liability as a result of reformation of the Coe Management policy, either with or without addition of the Hartford settlement amount, that reduction can be credited against the judgment on the Coe Management policy as reformed.
We are not directing the district court to permit INA to advance the argument that the Hartford settlement amount should be added to the retained limit. But in fairness, since we are remanding for disposition the claim that the Coe Management policy should be reformed, we are authorizing the district court, in its discretion, to permit INA to press this argument.
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.
RALPH B. GUY, Jr., Circuit Judge.
This appeal concerns the effect of a bankruptcy proceeding on the Michigan Employment Security Commission’s (MESC) power to assign, to a purchaser of a debtor’s assets, the debtor’s rate of contribution to Michigan’s unemployment trust fund. Debtor Wolverine Radio Company, Inc. (Wolverine) appeals and MESC cross-appeals from an order of the district court reversing the bankruptcy court order prohibiting MESC from assigning the experience rating of Wolverine to Wolverine’s statutory successor, JOSI Broadcasting Company (JOSI), or charging JOSI’s experience account for unemployment compensation paid to former employees of Wolverine who are not employees of JOSI.
Wolverine argues on appeal that (1) the district court erred in its ruling that MESC may assign the debtor’s experience rating and resulting contribution rate to the purchaser of assets when the sale was made in the bankruptcy court free and clear of all liens, claims, and interests, pursuant to 11 U.S.C. § 363; (2) the district court erred in ruling that MESC may include unemployment compensation payments made subsequent to the sale to Wolverine’s former employees when computing the purchaser’s experience rating; and (3) the district court ruled in error that Wolverine’s negative reserve balance, which resulted when the benefits paid to employees of Wolverine exceeded Wolverine’s payment of unemployment taxes, would transfer to the purchaser of assets and should be reduced only by the amount of MESC’s allowed claim for unpaid taxes against the debtor. Wolverine maintains that the negative reserve balance is a debt or right to payment discharged in bankruptcy and must be eliminated in its entirety when calculating the contribution rate of JOSI.
On cross-appeal, MESC argues that the bankruptcy and district courts have no jurisdiction to determine the tax liability of JOSI, a nondebtor, and requests reversal of the district court holding that MESC must treat the debtor’s past-due contribution obligations as paid on the date of discharge, thereby limiting the amount of the negative reserve balance that could be utilized in calculating the experience rating and subsequent contribution rate for JOSI.
For the reasons set forth below, we affirm.
I.
The parties have stipulated to substantially all of the pertinent facts. Wolverine, whose assets included radio broadcast equipment and a radio tower, operated a radio station in Midland, Michigan, under the call letters WRCI. In April 1984, Wolverine filed for protection under Chapter 11 of the Bankruptcy Code, and, in September 1985, the bankruptcy court confirmed the debtor’s plan of reorganization (plan). Included in the confirmed plan was MESC’s claim for unpaid taxes, interest, and penalties, which were allowed in the amount of $7,606.91. The plan also incorporated by reference a letter of intent executed by Wolverine and Patten Corporation providing for “free and clear” sale of Wolverine’s assets. In January 1986, JOSI, as the as-signee of Patten Corporation, acquired the broadcasting equipment and tower of the debtor, and was assigned the radio license of Wolverine by the Federal Communications Commission. The purchaser paid $340,000 for these assets but did not acquire the debtor’s accounts receivable, valued at $19,000, or any cash or pre-paid assets.
The purchase agreement between Wolverine and Patten, pursuant to which the sale was consummated, states in paragraph 11(g):
WOLVERINE will hold at Closing good and marketable title to all property and assets listed or described in attached Exhibits A free and clear of any mortgages, liens, pledges, charges, security agreements, claims or encumbrances.
The purchase agreement also states at paragraphs 12(c), 17, and 23, respectively:
It is specifically understood that PATTEN by implication, by operation of law or any equitable proceedings, or otherwise, does not assume any local, state or federal tax liabilities or any other liabilities and obligations of WOLVERINE, as may result from the sale of its assets and property to PATTEN.
WOLVERINE agrees to and does hereby indemnify PATTEN against and save it harmless from any and all liabilities, loss, cost, expense, damage, set-off or recoupment, including reasonable amounts for attorneys’ fees which may be asserted against PATTEN arising out of the operation of WRCI-FM on or prior to the Closing Date by reason of the purchase and sale hereunder....
This Agreement shall be construed and enforced in accordance with the laws of the State of Michigan.
The plan of reorganization addresses tax claims in pertinent parts of articles II and III, which read as follows:
Classification of Claims and Interests
All claims against and interests in the Debtor will be dealt with by the Plan. Only such claims and interests as are allowed by the Court, pursuant to Section 502(a), shall receive a distribution in accordance with the terms of the Plan. Claims against and interests in the Debt- or are classified as follows:
C. Class 3. Tax Claims. Class 3 shall be comprised of all allowed tax claims of any governmental agency, whether unsecured or secured by property of the Debtor.
Provisions for Satisfying Classes of Claims or Interests
Claims and interests which are not allowed by this Court shall not receive any distribution of any nature whatsoever under the Plan. Allowed claims and interests, including both those classes which are not impaired under the Plan and those classes which are impaired under the Plan, shall be treated as follows:
C. Class 3. The allowed claims included in Class 3 shall be paid in full, in installment payments to be made from the Creditors Fund, over a period of five (5) years from the effective date of the Plan, in twenty (20) equal payments, together with interest at the statutory rates, in accordance with the provisions of Section 1129(a)(9)(C) of the Bankruptcy Code. These claimants shall be secured by an irrevocable letter of credit.
In April 1986, MESC wrote to JOSI to inform the company that its MESC contribution rate (the required rate of payment to the employment security fund) was 2.7 percent based on its status as a new employer. Later that year, however, MESC wrote to JOSI and altered its earlier statement; MESC expressed its intent to treat JOSI as the successor to WRCI, and MESC accordingly pegged JOSI’s contribution rate for 1986 at 10 percent based on WRCI’s poor contribution history when under Wolverine’s ownership. The MESC contribution rate for JOSI was calculated utilizing the prior 60-month debtor’s history of payroll and benefit charges (the chargeable benefits component) and the debtor's negative reserve balance of $18,-293 (the account building component). In 1987, JOSI was notified by MESC that the contribution rate for the calendar year 1987 would continue at 10 percent, but the negative reserve balance had been reduced to $11,130.71 based on payments made by JOSI during the year 1986. JOSI’s reserve account continues to be charged for unemployment benefits being paid to Wolverine’s former employees who were never employed by JOSI.
As a result of the action taken by MESC, Wolverine returned to the bankruptcy court. In response to a motion by Wolverine, the bankruptcy court entered its “ORDER ENFORCING THIS COURT’S ORDER CONFIRMING DEBTOR’S PLAN OF REORGANIZATION AND PROHIBITING THE M.E.S.C. FROM ASSIGNING DEBTOR’S EXPERIENCE RATING TO PURCHASERS.” It is this order that MESC appealed to the district court. After briefing and oral argument, the district court ordered that (1) MESC must treat Wolverine’s past-due contribution obligations, which were recognized in the plan as a claim of $7,601.91 to be paid over a period of five years, as paid on the date of discharge; (2) MESC has the authority to assign Wolverine’s experience rating, used to gauge an employer’s rate of contribution, to JOSI; and (3) MESC has the power to include unemployment compensation payments made to former Wolverine employees in the computation of JOSI’s experience rating and resulting contribution rate. Wolverine appeals from this order and MESC cross-appeals.
II.
We first examine MESC’s argument that the bankruptcy court has no subject matter jurisdiction to determine the tax liability of JOSI. Wolverine’s response to this argument is that MESC consented to jurisdiction when it stipulated to a set of facts admitting to jurisdiction in the bankruptcy court, and that MESC is precluded from raising on appeal for the first time the issue of subject matter jurisdiction. Notwithstanding what transpired in this action prior to the pending appeal, the federal courts are courts of limited jurisdiction and have a continuing obligation to examine their subject matter jurisdiction throughout the pendency of every matter before them. Parties can neither waive nor consent to subject matter jurisdiction, In re Rini, 782 F.2d 603, 608 (6th Cir.1986), and we are duty bound to consider on appeal whether the courts below exceeded their statutory authority by entertaining arguments regarding JOSI’s tax liability to MESC and in entering orders determining that liability. See id. at 609. We review questions of jurisdiction de novo. In re Castlerock Properties, 781 F.2d 159, 161 (9th Cir.1986). For the reasons that follow, we find that the bankruptcy and district courts have jurisdiction over this matter.
A. 11 U.S.C. § 505
Pursuant to 11 U.S.C. § 505(a), bankruptcy courts have jurisdiction to hear and determine the amount and legality of unemployment compensation taxes incurred by debtors or their estate. In re Pine Knob Inv., 20 B.R. 714, 715 (Bankr.E.D.Mich.1982); In re A.C. Williams Co., 51 B.R. 496, 497 (Bankr.N.D.Ohio 1985). Section 505(a)(1) of the Bankruptcy Code provides:
Except as provided in paragraph (2) of this subsection, the court may determine the amount or legality of any tax, any fine or penalty relating to a tax, or any addition to tax, whether or not previously assessed, whether or not paid, and whether or not contested before and adjudicated by a judicial or administrative tribunal of competent jurisdiction.
11 U.S.C. § 505(a)(1).
MESC challenges the bankruptcy court’s jurisdiction to determine the tax liability of JOSI by arguing that 11 U.S.C. § 505(a)(1) limits determinations of tax liability to taxes of the debtor or estate. MESC contends that, where the court is being asked to determine the tax liability of a nondebtor, jurisdiction does not lie pursuant to section 505(a). Several courts have ruled that under appropriate circumstances the bankruptcy court may apply section 505(a) to determine the tax liability of parties other than the debtor. In re Jon Co., 30 B.R. 831 (D.Colo.1983); In re H & R Ice Co., 24 B.R. 28 (Bankr.W.D.Mo.1982); In re Major Dynamics, Inc., 14 B.R. 969 (Bankr.S.D.Cal.1981). However, because the “appropriate circumstances” illustrated by those cases do not exist here, and because recent cases indicate that the consensus has shifted away from extending section 505(a) to parties other than the debtor, we conclude that the bankruptcy court did not have jurisdiction under section 505(a) to adjudicate the tax liability of JOSI.
In Major Dynamics, a creditors committee filed a motion in bankruptcy court seeking to stay IRS audits, assessments, and collections directed at the creditors. The court held that jurisdiction could be exercised under section 505(a) to determine the tax liability of a nondebtor:
[T]he jurisdictional grant to this Court could extend to tax disputes of third parties other than the debtor provided, however, that the IRS activity to be enjoined directly affected the debtor or the estate, and that the exercise of such jurisdiction was necessary to the rehabilitation of the debtor or the orderly and efficient administration of the debtor’s estate.
14 B.R. at 972 (emphasis in original).
In Jon and H & R Ice, the courts were asked to determine the 26 U.S.C. § 6672 tax liability of the debtors’ employees, and, finding the reasoning in Major Dynamics persuasive, they concluded that they had jurisdiction to do so under section 505(a). In re Jon, 30 B.R. at 833; In re H & R Ice, 24 B.R. at 31. However, as the above passage quoted from Major Dynamics illustrates, the reasoning relied upon by these courts qualified the extension of jurisdiction to those disputes directly affecting the debtor or estate and where the exercise of jurisdiction was necessary to the rehabilitation of the debtor or the effective administration of the estate. See In re Jon, 30 B.R. at 833-34 (debtor has standing to challenge a tax penalty assessment against a third party, and bankruptcy court has power under section 505(a)(1) to rule on the third party’s liability where debtor has sufficient personal stake in the outcome of the controversy to ensure concrete adversity and sharply defined issues).
In the case at bar, the debtor has no personal stake in the outcome of the controversy, as the contribution rate assessed to JOSI by MESC has no direct effect on the debtor or the estate and in no way implicates the rehabilitation of the debtor or the administration of the debtor’s estate. JOSI’s prospective tax liability has no practical impact on the implementation of Wolverine’s reorganization plan, and the relief granted by the bankruptcy court results in a pecuniary benefit accruing, not to the debtor, but to the successor, who filed no petition invoking jurisdiction over its status, assets, or estate.
Even if we were to conclude that JOSI’s contribution rate will somehow affect Wolverine, adopting the Major Dynamics rationale would require us to rely on a literal interpretation of the clause stating that a bankruptcy court “may determine the amount or legality of any tax.” 11 U.S.C. § 505(a)(1) (emphasis added). If the bankruptcy court could pass on the legality of any tax, Major Dynamics and its progeny reasoned, then the court could certainly exercise jurisdiction over third parties whose tax liability was somehow related to that of the debtor. However, in the last few years virtually all the courts which have considered the issue have concluded that section 505(a) does not extend the bankruptcy court’s jurisdiction to parties other than the debtor. United States v. Huckabee Auto Co., 783 F.2d 1546 (11th Cir.1986); In re Brandt-Airflex Corp., 843 F.2d 90, 94-96 (2d Cir.1988); In re Interstate Motor Freight Sys., 62 B.R. 805 (Bankr.W.D.Mich.1986). We agree with Interstate Motor Freight, 62 B.R. at 809, that a literal reading of section 505(a) could lead to absurd results: “[TJaken at face value, without recourse to the legislative history, § 505 makes the Bankruptcy Courts a second tax court system, empowering the Bankruptcy Court to consider ‘any’ tax whatsoever, on whomsoever imposed.”
Section 505(a) is described in the legislative history as “permit[ting] determination by the bankruptcy court of any unpaid tax liability of the debtor.” S.Rep. No. 989, 95th Cong., 2d Sess. 67, reprinted in 1978 U.S.Code Cong. & Admin.News 5787, 5853; H.R.Rep. No. 595, 95th Cong., 2d Sess. 356, reprinted in 1978 U.S.Code Cong. & Admin.News 5963, 6312 (emphasis added). The Second Circuit looked to this legislative history and concluded that “it makes far more sense to read § 505(a) as limiting the bankruptcy court’s jurisdiction, than to accord it the unrestricted reading favored by Major Dynamics.” In re Brandt-Airflex, 843 F.2d at 96. The Eleventh Circuit has concluded that under section 505(a), “[t]he jurisdiction of the bankruptcy courts encompasses determinations of the tax liabilities of debtors who file petitions for relief under the bankruptcy laws. It does not, however, extend to the separate liabilities of taxpayers who are not debtors under the Bankruptcy Code.” Huckabee, 783 F.2d at 1549.
We find persuasive the Third Circuit’s analysis of section 505(a) in Quattrone Accountants, Inc. v. IRS, 895 F.2d 921 (3d Cir.1990). Although Quattrone held that section 505 does not grant jurisdiction to determine the tax liability of a nondebtor, it also concluded, contrary to the Second Circuit in Brandt-Airflex, that section 505 does not limit the bankruptcy court to determining only a debtor's tax liability. Quattrone, 895 F.2d at 924-25. Given the legislative history of section 505 and its placement in a chapter of the Bankruptcy Code denoted “Creditors, the Debtor, and the Estate,” section 505 is not applicable where the court is not dealing with the interrelationship and effect of creditors and their claims on the bankrupt debtor. Id. at 925.
B. 28 U.S.C. § 1334
In Quattrone, the court concluded that the bankruptcy court’s jurisdiction over a case involving nondebtors was to be determined solely by 28 U.S.C. § 1334(b). 895 F.2d at 926. We agree with the conclusion of that court.
Section 1334 provides in relevant part:
(a) Except as provided in subsection (b) of this section, the district court shall have original and exclusive jurisdiction of all cases under title 11.
(b) Notwithstanding any Act of Congress that confers exclusive jurisdiction on a court or courts other than the district courts, the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11.
Section 1334 lists four types of matters over which the district court has jurisdiction: (1) “cases under title 11,” (2) “proceedings arising under title 11,” (3) proceedings “arising in” a case under title 11, and (4) proceedings “related to” a case under title 11. The first category refers merely to the bankruptcy petition itself, filed pursuant to 11 U.S.C. §§ 301, 302, or 303. Robinson v. Michigan Consol. Gas Co., 918 F.2d 579, 583 (6th Cir.1990); In re Wood, 825 F.2d 90, 92 (5th Cir.1987). Accordingly, the action before us is not a “case under title 11” within the meaning of section 1334(a). However, we do find that the action was a “proceeding” within the scope of section 1334(b), and thus the bankruptcy court had jurisdiction over this matter.
For the purpose of determining whether a particular matter falls within bankruptcy jurisdiction, it is not necessary to distinguish between the second, third, and fourth categories (proceedings “arising under,” “arising in,” and “related to” a case under title 11). These references operate con-junctively to define the scope of jurisdiction. See In re Wood, 825 F.2d at 93. Therefore, for purposes of determining section 1334(b) jurisdiction, it is necessary only to determine whether a matter is at least “related to” the bankruptcy. Id.
In Robinson, 918 F.2d at 583, we noted that the circuit courts have uniformly adopted an expansive definition of a related proceeding under section 1334(b) and its substantially identical predecessor under the Bankruptcy Reform Act of 1978, 28 U.S.C. § 1471(b). As the Third Circuit held:
The usual articulation of the test for determining whether a civil proceeding is related to bankruptcy is whether the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy. Thus, the proceeding need not necessarily be against the debtor or against the debt- or’s property. An action is related to bankruptcy if the outcome could alter the debtor's rights, liabilities, options, or freedom of action (either positively or negatively) and which in any way impacts upon the handling and administration of the bankrupt estate.
In re Pacor, Inc., 743 F.2d 984, 994 (3d Cir.1984) (emphasis in original; citations omitted). We “have accepted the Pacor articulation, albeit with the caveat that ‘situations may arise where an extremely tenuous connection to the estate would not satisfy the jurisdictional requirement.’ ” Robinson, 918 F.2d at 584 (quoting In re Salem Mortgage Co., 783 F.2d 626, 634 (6th Cir.1986)); accord In re Turner, 724 F.2d 338, 341 (2d Cir.1983).
It may appear initially that, in conducting an inquiry pursuant to the Pacor test, we find ourselves conducting an inquiry tantamount to the one utilized in Major Dynamics for determining whether to extend the jurisdiction of section 505 to tax disputes of third parties. Under both Pa-cor and Major Dynamics, we would be determining the effect of the activity in dispute on the debtor or estate in order to determine if the respective statutory provisions (§ 505 or § 1334) granted to the bankruptcy court jurisdiction over the matter. See In re Major Dynamics, 14 B.R. at 972. However, we read the Pacor test to include a broader range of actions than the activity falling within the Major Dynamics inquiry.'Under Pacor, the court has jurisdiction over proceedings that “could conceivably have any effect” on the debtor or the debtor’s estate, whereas Major Dynamics vested jurisdiction only if the adjudication of tax liability “directly affected” the debtor or estate, and “was necessary” to rehabilitation or administration. Moreover, while courts have recently moved away from an expansive reading of section 505, Brandt-Airflex, 843 F.2d at 95, the circuit courts have uniformly adopted the expansive reading of section 1334(b) articulated by Pacor.
Wolverine argues that property of the estate is at stake in this matter because the purchase agreement between the debt- or and JOSI provides that the debtor will indemnify and hold harmless JOSI “from any and all liabilities, loss, cost, expense, damage, set-off or recoupment, including reasonable amounts for attorneys’ fees which may be asserted against [the purchaser] arising out of the operation of WRCI-FM on or prior to the Closing Date by reason of the purchase and sale hereunder.” Wolverine argues that, to the extent that JOSI could invoke liability under the indemnification section of the purchase agreement, the assets of the debtor and the debtor’s estate would be directly affected as a result of this court’s decision.
Although several circuit courts have adopted the definition of “related to” that is supplied by the Third Circuit in Pacor, the application of that definition has produced varying results. In a case presenting an indemnification scenario similar to the one alleged here by Wolverine, the Ninth Circuit declined to find an effect on the estate being administered in bankruptcy:
In Pacor, we held that a personal injury suit between Higgins and Pacor was not related to the bankruptcy of Johns Manville Corporation (Manville). Higgins filed suit against Pacor claiming personal injuries sustained from exposure to asbestos distributed by Pacor. Pacor then filed a third party claim for indemnification against debtor Manville. The district court ruled that the bankruptcy court had jurisdiction over the Pacor-Manville suit, but not over the Higgins-Pacor suit because it was not a proceeding related to the Manville bankruptcy. We affirmed, reasoning,
the outcome of the Higgins-Pacor action would in no way bind Manville, in that it could not determine any rights, liabilities, or course of action of the debtor_ Even if the Higgins-Pacor dispute is resolved in favor of Higgins (thereby keeping open the possibility of a third party claim), Manville would still be able to relitigate any issue, or adopt any position, in response to a subsequent claim by Pacor. Thus, the bankruptcy estate could not be affected in any way until the Pacor-Manville third party action is actually brought and tried.
Quattrone, 895 F.2d at 926 (quoting Pacor, 743 F.2d at 995).
The court in Quattrone went on to conclude, based upon the Pacor reasoning, that the outcome of the section 6672 liability suit between Phillip Quattrone and the IRS, like the suit between Higgins and Pacor, would in no way affect the debtor’s liability to the IRS under section 6672. Similarly, the outcome of this action to determine MESC’s authority to transfer the debtor’s experience rating to JOSI and to determine JOSI’s liability under the Michigan Employment Security Act (MESA), Mich.Comp.Laws Ann. § 421.1 et seq., will in no way determine any rights, liabilities, or course of action of the debtor nor affect the debtor’s liability under MESA.
However, although Wolverine would not be affected until and unless JOSI invoked the indemnification section of the purchase agreement, we have held that where the parties “are more intertwined than the parties in Pacor... the statute does not require a finding of definite liability of the estate as a condition precedent to holding an action related to a bankruptcy proceeding.” In re Salem, 783 F.2d at 635. In Pacor, the Pacor-Higgins controversy was the precursor to the potential third party claim for indemnification, Pacor, 743 F.2d at 995, but unlike this case, the debtor had not agreed pursuant to the reorganization plan to indemnify the third party whose interest was affected by the action for which jurisdiction was sought. Moreover, in this case, unlike Manville’s situation in the Pacor-Higgins dispute, the debtor could be affected by the MESC-JOSI controversy and could be bound by res judicata or collateral estoppel. Furthermore, having filed no claim against Manville, Higgins was not a creditor, whereas in this case MESC filed a claim and obtained creditor status. Although we acknowledge the possibility that the MESC-JOSI dispute may ultimately have no effect on the debtor, we cannot conclude that it will have no conceivable effect. Accordingly, we find that subject matter jurisdiction exists in the bankruptcy court over the MESC-JOSI dispute.
C. 28 U.S.C. § 157
Having decided that subject matter jurisdiction exists over this proceeding, we must now determine the extent of that jurisdiction. See In re Fietz, 852 F.2d 455, 457 (9th Cir.1988). Our analysis turns to 28 U.S.C. § 157, the response of Congress to the Supreme Court decision in Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982). Section 157 does not give bankruptcy courts full judicial power over all matters over which the district courts have jurisdiction under section 1334. Except for the bankruptcy petition itself, section 157 divides all proceedings into two categories:
Subsection 157(b)(1) gives bankruptcy judges the power to determine “all core proceedings arising under title 11, or arising in a case under title 11” and to enter appropriate orders and judgments. Subsection 157(c)[ (1) ] gives the bankruptcy judge the limited power to hear “a proceeding that is not a core proceeding but that is otherwise related to a case under title 11” and to submit proposed findings of fact and conclusions of law to the district court subject to de novo review.
In re Wood, 825 F.2d at 95 (quoting 28 U.S.C. § 157(b)(1) and (c)(1)). Thus, to determine whether the bankruptcy court had the power to enter the order that MESC appeals, the essential distinction is whether this action is a core or non-core proceeding.
While we determined that this matter was at least “related to” the bankruptcy, that determination was for the purpose of determining whether the matter falls within bankruptcy jurisdiction, and we did not need to distinguish between each of the section 1334(b) categories for that purpose. However, the distinction between categories is relevant for purposes of section 157:
Subsection 157(b)(1) vests full judicial power in bankruptcy courts over “core proceedings arising under title 11, or arising in a case under title 11.” The prepositional qualifications of core proceedings are taken from two of the three categories of jurisdiction set forth in section 1334(b): proceedings “arising under” title 11, “arising in” title 11 cases, and “related to” title 11 cases. Although the purpose of this language in section 1334(b) is to define conjunctively the scope of jurisdiction, each category has a distinguishable meaning. These meanings become relevant because section 157 apparently equates core proceedings with the categories of “arising under” and “arising in” proceedings.
In re Wood, 825 F.2d at 96 (emphasis in original).
The phrase “arising under title 11” describes those proceedings that involve a cause of action created or determined by a statutory provision of title 11, 1 Collier on Bankruptcy ¶ 3.01[l][c][iii], and “arising in” proceedings are those that, by their very nature, could arise only in bankruptcy cases. Id. at ¶ 3.01[l][e][v]. Conversely, if the proceeding does not invoke a substantive right created by federal bankruptcy law and is one that could exist outside of the bankruptcy, then it is not a core proceeding. In re Wood, 825 F.2d at 97. Such a proceeding may be related to the bankruptcy pursuant to sections 1334(b) and 157(c), but it would not be a core proceeding within the meaning of section 157(b).
The court must look to both the form and the substance of the proceeding to determine whether core status exists. In re Wood, 825 F.2d at 97. The proceeding at issue here stands in a rather curious posture. The form of the matter, which began as a motion to enforce the order confirming the reorganization plan, could not exist outside the bankruptcy. Wolverine also invokes on behalf of JOSI a substantive right created by section 363(f) to be free and clear of all claims, interests, and liens. However, the proceeding could also be characterized as one in the nature of a declaratory action attempting to preempt MESC from bringing a state law action pursuant to MESA. In that sense, it is an action that could exist outside of bankruptcy where the essential issue is whether JOSI is liable under state law to MESC for Wolverine’s experience rating despite the purchase agreement made between JOSI and Wolverine. Furthermore, while Wolverine is the named party, the dispute is really between JOSI and MESC, and suits between third parties that affect the administration of the title 11 case are typically considered to fall within the “related to” category. 1 Collier on Bankruptcy 11 3.01[l][c][iv]. Nevertheless, we find that because this action involves issues which arose because of a bankruptcy proceeding — the dischargeability of debts and the confirmation of a plan — and because Wolverine asserts a right based on bankruptcy law, 11 U.S.C. § 363(f), this action is a core proceeding and the bankruptcy court had jurisdiction to enter judgment on the motion. See In re Wood, 825 F.2d at 97.
III.
It is important to emphasize that, having decided that jurisdiction exists, we merely decided the threshold question of whether any judgment which might result from the MESC-JOSI dispute could have a tangible effect on the debtor bankruptcy estate. This jurisdictional inquiry did not involve an inquiry into how the bankruptcy court reached that judgment, or whether that judgment was correct, and therefore does not implicate the merits of the claim itself. Furthermore, although bankruptcy courts have jurisdiction over the matter, this fact alone does not determine what law controls the disposition of the tax liability issue. See Robinson, 918 F.2d at 588.
We now turn to the merits of Wolverine’s argument, which assails the district court’s conclusion that MESC may assign the debtor’s experience rating, including the debtor’s negative reserve balance and liability for former employees, to a purchaser of assets in a sale free and clear of liens, claims, and interests. As this argument raises a question of law, we review de novo the legal conclusions of the bankruptcy and district courts. In re Edward M. Johnson & Assocs., 845 F.2d 1395, 1398 (6th Cir.1988); Wegner v. Grunewaldt, 821 F.2d 1317, 1320 (8th Cir.1987).
The parties are in agreement that under MESA a transfer of the assets of a business to another employing unit transfers all or part of that business’s rating account to the new employer. See Mich.Comp.Laws Ann. § 421.22; In re Pine Knob, 20 B.R. at 716. Conceding that Michigan law imposes successor liability, Wolverine relies on the argument that MESA is preempted by the federal Bankruptcy Code when the transfer is conducted pursuant to a reorganization plan confirmed in a bankruptcy proceeding. Wolverine maintains that the sale to JOSI precludes MESC from assigning the debtor’s contribution rate to the successor because the experience rating is an “interest” that was extinguished in a sale pursuant to 11 U.S.C. § 363(f) of the Bankruptcy Code, which provides for sales “free and clear of any interest in such property.” We agree with the district court that the experience rating is not an “interest” within the meaning of section 363(f), and therefore the debtor’s rating survives the sale of the radio station to JOSI.
The Supreme Court set out the general law of preemption in Louisiana Public Service Comm’n v. Federal Communications Comm’n, 476 U.S. 355, 106 S.Ct. 1890, 90 L.Ed.2d 369 (1986):
Pre-emption occurs when Congress, in enacting a federal statute, expresses a clear intent to pre-empt state law, when there is outright or actual conflict between federal and state law, where compliance with both federal and state law is in effect physically impossible, where there is implicit in federal law a barrier to state regulation, where Congress has legislated comprehensively, thus occupying an entire field of regulation and leaving no room for the States to supplement federal law, or where the state law stands as an obstacle to the accomplishment and execution of the full objectives of Congress. Pre-emption may result not only from action taken by Congress itself; a federal agency acting within the scope of its congressionally delegated authority may pre-empt state regulation.
Id. at 368-69, 106 S.Ct. at 1898-99 (citations omitted). See also Midlantic Nat’l Bank v. New Jersey Dep’t of Envtl. Protection, 474 U.S. 494, 505, 106 S.Ct. 755, 761, 88 L.Ed.2d 859 (1986) (“Congress did not intend for the Bankruptcy Code to preempt all state laws.”)
We find no frustration of federal law by MESC assigning successor liability to JOSI, as MESC’s transfer of Wolverine’s experience rating does not violate the reorganization plan nor clearly conflict with any provisions of the Bankruptcy Code. First, it must be understood, when assessing whether MESA is a barrier to federal objectives, that MESA is part of a comprehensive federal-state system providing for the security of unemployed workers. The tax rate structure utilized by MESC has been certified as complying with the requirements of the Federal Unemployment Tax Act for an experience-based tax rate. 26 U.S.C. § 3301 et seq. The federal law and state plans conforming to that law have been upheld as constitutional. Steward Mach. Co. v. Davis, 301 U.S. 548, 57 S.Ct. 883, 81 L.Ed. 1279 (1937); Carmichael v. Southern Coal & Coke Co., 301 U.S. 495, 57 S.Ct. 868, 81 L.Ed. 1245 (1937).
Second, the reorganization plan does not, contrary to Wolverine’s assertions, indicate that the type of interest at issue here was even contemplated by the parties at the time of confirmation. Title 11 U.S.C. § 1141(a) sets forth that a Chapter 11 plan binds all creditors by its provisions whether or not the creditor is impaired and whether or not the creditor files a claim. Part C of article III of the plan, which Wolverine points to as encompassing the interest at issue here, merely provides the method of payment for allowed tax claims of government agencies. MESC does not dispute that its claim for pre-petition liability in excess of $7,000 and the accompanying five liens were encompassed by this provision. However, it is not at all clear that the plan, when confirmed, was intended to include Wolverine’s experience rating among the claims and interests not allowed by the court. Indeed, the opposite contention is supported by the provision in the purchase agreement, incorporated by the plan, which states that it “shall be construed and enforced in accordance with the laws of the State of Michigan.”
Third, we can find no evidence in the Bankruptcy Code that Congress clearly intended to preempt state attempts to assign liability for employment history to successor purchasers. Although 11 U.S.C. § 1141(c) states that after confirmation “the property dealt with by the plan is free and clear of all claims and interests of creditors, equity security holders, and of general partners in the debtor,” and although confirmation of a plan “discharges the debtor from
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 this case it appears that the Philadelphia & Reading Coal & Iron Company and the Fulton Coal Company owned’ the anthracite coal mining land here involved and leased the same to the Northumber-land Mining Company on a coal royalty per ton for all coal “mined and shipped from the Fulton lands and that may be taken and shipped from the Enterprise culm banks or sold upon the demised, premises." It further provided the lessee each month make a statement of all coal “mined and shipped from or sold upon the demised premises.”
On May 30, 1934, Charles Spruks, the appellee, by written contract with the lessee, agreed to buy approximately 25,000 tons of coal which, when mined, was to be stored on the premises. This was done, Spruks paid for it, and on the huge pile of ■ coal thus paid for and stored on the premises he placed a conspicuous sign reading as follows:
“Notice
“No Trespassing “Property of Charles Spruks “Scranton, Pennsylvania”
Thereafter Northumberland became in arrears for its coal royalty and on November 3, 1934, Reading and Fulton issued a landlord’s warrant and levied on Spruks’ coal.
On November 5, 1934, Northumber-land petitioned the court below to reorganize under section 77B, Bankr.Act (11 U. S.C.A. § 207), and thereupon the court below restrained Reading and Fulton from taking action against Northumberland on the landlord’s warrant. Subsequently Reading and Fulton petitioned for leave to sell the coal. Spruks and Northumber-land denied such right, the former averring that “he purchased and paid for the coal for the purpose of removing it from the premises and selling it to purchasers as fast as orders for it were obtained.” Spruks further averred that, “although the coal in the bank referred to has been fully paid for by him, he has been obliged to leave the coal on the premises until a market for it could be obtained.” In its answer Northumberland averred that “Philadelphia & Reading Coal & Iron Company and the Fulton Coal Company were notified of the storing of said coal upon said premises for the account of said purchasers.”
Subsequently, by consent, it was agreed by all parties that the coal should remain on the premises and Spruks be allowed to sell as he could and pay the money received by him into the registry of the court; that from the money so paid in, Reading and Fulton should be paid the tonnage royalty owing by Northumber-land on Spruk’s coal, and the claims of all parties on the stored coal should attach to the fund.
Upon hearing the proofs and contentions of all parties, the trial judge held the fund paid in by Spruks should be paid to him less the royalty and costs of administration. Did the court below, sitting in bankruptcy, commit error in so decreeing? We are of opinion it did not.
Putting aside the many questions discussed and assuming the right of Reading and Fulton to levy and sell on a landlord’s warrant, we feel that the decisive question is the one on which the court below based its decision, namely, whether the case presented a trade exemption from levy and sale on a landlord’s warrant.
This case concerns the practical operations of a great industry, to wit, the mining and marketing of anthracite coal. The whole object of that industry is twofold, the steady mining of the coal which gives in royalty a continuous income to the land owner, and profit to the lessee arising from continuous mining. Now anthracite is a highly seasonal article and not only is it seasonal in general, but the character of each seasonal period is controlled by the weather conditions of the particular season. In other words, the winter months alone demand coal in large quantities, and unless those winter months are cold, even the seasonal demand drops off. In the face of these adverse trade conditions, it is clear, and a practical minded court will take judicial notice of the fact, that it is to the interest of land owner, lessee operator, miner, and the consuming public that the anthracite industry shall, as far as possible, be placed ón a nonseasonal basis. And this is done by the coal dealer buying coal at a nonseasonal time and avoiding the two handlings of it involved, first, in moving it to his yard, and, secondly, in delivering it to his customers when seasonal needs lead the consumer to buy. This is obviated by mining the coal in the Summer, storing it on the premises as mined, and removing the coal in the seasonal period when coal is in demand. In this way landlord, tenant, miner, coal buyer, and the consumer are benefited and co-ordinated, as far as possible, in making anthracite coal mining a nonseasonal industry.
So regarding, the trial court, in view of the pleadings, facts, and provision quoted which contemplated, as we have noted, coal sold upon the demised premises, held this was a proper' trade exception which exempted stored coal from distraint for royalty rent, all of which was properly stated by it as follows:
“The general exception in favor of trade as stated by the courts and set forth in 36 C.J. 562, § 1647, is as follows: ‘In the interest of trade and commerce, it has become a settled rule that, where the tenant in the course of his business is necessarily put in possession of the property of those with whom he deals or those who employ him, such property, although on the demised premises, is not liable to distress for rent due from the tenant.’ Karns v. McKinney, 74 Pa. 387. In observing this exception, Gibson, Ch. J., in Brown v. Sims, supra [17 Serg. & R. (Pa.) 138], said: ‘Where the course of the business must necessarily put the tenant in possession of the property of his customers, it would be against the plainest dictates of honesty and conscience, to permit the landlord to> use him as a decoy and pounce upon whatever should be brought within his grasp, after having received the price of its exemption in the enhanced value of the rent.'
“The application of the exception in favor of trade must be made in the light of present-day trade and business. The trend of decisions, due to the exigencies of business, has been to broaden the scope of this exception. Manufacturers’ Finance Acceptance Corporation v. Jordan Distributors, Inc., 111 Pa.Super. 448, 170 A. 321. This court feels that the scope of the exception will not be broadened in holding as it does that the facts in the present case come within the exception. In mining coal, as it had the right to do under the lease, the Northumberland Mining Company could not continue business unless it dealt with others to dispose of the coal mined. Due to the exigencies of transportation and market conditions, it frequently happens that coal must be stored on the surface both before and after sale. In the interest of trade and commerce, coal sold by the tenant mining company, but stored and not removed by the purchaser, should not be subject to levy by the landlord. Accordingly, this court holds that the petitioner had no authority to levy on the coal owned by Spruks or to make sale thereof on a landlord’s distress warrant; that the fund in court, representing the proceeds of the said coal, which was owned by Spruks, must be paid to Spruks, the respondent.”
Accordingly, its decree 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.
SKELTON, Senior Judge.
This is an income tax case that involves an appeal by the Commissioner of Internal Revenue (Commissioner or Government) from a decision of the United States Tax Court, and cross-appeals by Putoma Corporation (Putoma), successor by merger of Pro-Mac Company (Pro-Mac), with J. M. Hunt and wife, Inez Hunt, as appellees in the appeal of the Commissioner.
At all times pertinent to this case, Puto-ma Corporation and Pro-Mac Company were Texas corporations using the accrual basis of accounting.
The Commissioner of Internal Revenue appeals from decisions of the Tax Court in which the court ruled that taxpayers Pro-Mac Company and Putoma Corporation did not realize taxable income as the result of the cancellation by J. M. Hunt of their liability for accrued interest due him on Putoma’s notes. The two corporations have filed cross-appeals from the portions of the Tax Court’s decisions disallowing certain deductions claimed for accrued salaries and bonuses for J. M. Hunt and Lee Roy Pursel-ley. The Tax Court filed its findings of fact and opinion on June 30, 1976 (reported at 66 T.C. 652) and entered its decisions on December 15, 1976.
The issues on appeal are as follows:
THE ISSUE PRESENTED BY THE COMMISSIONER IS:
(1) Whether the Tax Court erred in holding that said accrual basis corporations, which previously had accrued and deducted interest which they owed, but never paid, to J. M. Hunt, one of their shareholders, did not realize taxable income when the shareholder cancelled their liability for the accrued interest.
THE ISSUE PRESENTED BY THE TAXPAYERS IS:
(2) Whether the Tax Court erred in holding that said accrual basis corporations, which accrued certain compensation for their officer shareholders, Lee Roy Purselley and J. M. Hunt, under a fixed.formula, but which was not paid, were not entitled to deduct such compensation on the ground that their obligation for same was conditional and not properly accruable during the years in question.
We affirm the decision of the Tax Court on both issues.
We consider first the second issue involving the accrued compensation for officer-shareholders Purselley and Hunt, which was never paid but was deducted by the corporations.
I. DEDUCTIONS FOR ACCRUED UNPAID COMPENSATION.
The facts relevant to this appeal by taxpayers were found by the Tax Court as follows:
At a meeting of Putoma’s directors held in July, 1964, Purselley’s salary was set at $600 per month, retroactive from July 1, 1963. This salary was not to be paid, but was to accrue to his credit until such time as,, in the judgment of the majority of directors, corporate earnings were sufficient to justify payment of the salary. In addition, as part of his compensation, Purselley was to receive 25 percent of the corporation’s net profits. Compensation from July 1, 1964, was to be determined at a future meeting.
. The minutes of the board of directors’ meeting for Putoma held on August 23, 1965, contain the following statement relating to salary:
Upon motion duly made and seconded, the salary of Lee Roy Purselley for the current year was fixed at $2,000.00 per month plus 25% of the net profit of the corporation after deduction of the $2,000.00 monthly salary, but before deduction for any bonus or Federal income taxes. This salary is to be retroactive from July 1, 1965. Such salary in excess of the $2,000.00 per month is not to be paid but to accrue to his credit until such time as in the judgment of the majority of the directors of the company, the company has such cash reserve in order to pay the additional salary.
Upon further motion duly made and seconded, the salary of J. M. Hunt was established at 10% of the net income of the company before the deduction of any bonus or Federal income taxes. This salary is to be retroactive from July 1, 1965. Such salary is not to be paid, but to accrue to his credit until such time as in the judgment of the majority of the directors of the company, the company has sufficient cash reserve in order to pay the salary.
The compensation formula set out above remained unchanged until January 1, 1970. At a meeting of Putoma’s directors held on December 10, 1969, bonuses for Purselley and Hunt were discontinued as of December 31, 1969, and Purselley’s salary was set at $3,000 per month beginning January 1, 1970.
The following schedule shows salary and bonus accruals, and cash payments for Pur-selley and Hunt recorded on Putoma’s books for fiscal years ended June 30, 1964, through calendar year December 31, 1971:
LEE ROY PURSELLEY RECORDED ON BOOKS
PERIOD ENDED YEARLY SALARY YEARLY BONUS CASH PAYMENTS
6/30/64 $ 7,200 $ 2,763.64 $ -
6/30/65 7,200 2,791.59 10,335.94
6/30/66 24.000 21,408.42 11,210.00
6/30/67 24.000 45,115.41 29,909.32
6/30/68 24.000 85,324.03 38,004.57
6/30/69 24.000 43,833.66 33,269.86
6/30/70 30.000 25,480.44
12/30/70 18.000 14,000.00
12/31/71 15.473.75
$158,400 $201,236.75 $177,688.88
J. M. HUNT
6/30/64 $ -
6/30/65
6/30/66 8,563.87
6/30/67 6,711.92
6/30/68 34,129.61
6/30/69 17,533.46
6/30/70
12/31/70
12/31/71
$66,938.86
Pro-Mac was formed on December 1, 1966. Article V, Section 4 of Pro-Mac’s by-laws provides that the salaries of corporate officers are to be fixed by the board of directors. The minutes of the organizational meeting of Pro-Mac’s board of directors, however, contain no mention of officer compensation. Further, there were no board of directors’ minutes for Pro-Mac during the period November 30, 1966, through July 18, 1969. Nevertheless, Pro-Mac’s books and records for that period reflect that the corporation consistently recorded a salary expense of $1,000 per month for both Hunt and Purselley, and further recorded a bonus expense equal to 25 percent of profits for Purselley and bonus expense equal to 10 percent of profits for Hunt. The Tax Court found, however, that the salaries and bonuses for Purselley and Hunt recorded by Pro-Mac on its books were not payable until Pro-Mac’s earnings were sufficient to permit payment.
The first minutes to discuss compensation for Pro-Mac’s officers were those of a directors’ meeting held December 10, 1969. At that time, it was decided to discontinue the bonuses for Purselley and Hunt and to fix Purselley’s salary at $3,000 per month commencing January 1, 1970. At a subsequent meeting held August 27, 1970, a $1,000 per month salary was also voted for Hunt, retroactive to January 1, 1970. Due to the low cash condition of the corporation, Hunt’s salary was to be recorded in his “accrued salary account,” but was not to be paid until a later date when the corporation was “financially able.”
The following schedule shows when salary and bonus amounts and cash payments for Purselley and Hunt were recorded on Pro-Mac’s books for fiscal years ended July 31, 1967, through August 31, 1971 (R. 104):
At a meeting of Putoma’s board of directors on July 9, 1970, a discussion was held concerning the current financial condition of the corporation. It was agreed that in order to reflect a better financial condition to creditors and potential lenders, Hunt and Purselley would be asked to forgive a portion of the salaries shown owing to them on the books. Substantially the same decision was made by Pro-Mac’s board of directors in a meeting held the same day.
On September 15, 1970, Purselley and Hunt forgave the following items shown owing to them on the books and records of Putoma and Pro-Mac:
On September 15, 1970, Purselley’s accrued payroll account on Putoma’s books showed a balance of $194,626.32, before forgiveness, and $106,017.26 after forgiveness. Hunt’s accrued payroll account on Putoma’s books and records showed a balance of $66,-938.36 before forgiveness and $0 after forgiveness.
On September 15, 1970, Purselley’s accrued payroll balance on Pro-Mac’s books showed a balance of $72,064.09 before forgiveness and $27,610.59 after forgiveness. Hunt’s accrued payroll account on Pro-Mac’s books showed a balance of $37,673.76 before forgiveness and $2,000 after forgiveness.
On their returns for the years ip issue, the taxpayer corporations claimed deductions for the salaries and bonuses for Pur-selley and Hunt which they had accrued on their corporate books. The Commissioner disallowed the deductions to the extent they represented accrued but unpaid salaries on the ground that taxpayers’ liability for the accrued salaries and bonuses was contingent and not fixed during the years in question. The Tax Court, in a reviewed opinion with no dissents as to this issue, sustained the Commissioner’s determination.
Ever since the Supreme Court rendered its opinion in United States v. Anderson, 269 U.S. 422, 46 S.Ct. 131, 70 L.Ed. 347 (1926), it has been the rule that accrual taxpayers, such as Putoma and Pro-Mac in the instant case, may deduct an expense in the taxable year in which “all the events” have occurred which determine the fact of liability and which fix with reasonable certainty the amount of such liability. In that case the court said:
“Only a word need be said with reference to the contention that the tax upon munitions manufactured and sold in 1916 did not accrue until 1917. In a technical legal sense it may be argued that a tax does not accrue until it has been assessed and becomes due; but it is also true that in advance of the assessment of a tax, all the events may occur which fix the amount of the tax and determine the liability of the taxpayer to pay it. In this respect, for purposes of accounting and of ascertaining true income for a given accounting period, the munitions tax here in question did not stand on any different footing than other accrued expenses appearing on appellee’s books. In the economic and bookkeeping sense with which the statute and Treasury decision were concerned, the taxes had accrued.” 269 U.S. 440-441, 46 S.Ct. 134.
The “all events” test has been applied many times by various courts since the decision in Anderson was handed down. See Brown v. Helvering, 291 U.S. 193, 54 S.Ct. 356, 78 L.Ed. 725 (1934); Dixie Pine Products Co. v. Commissioner, 320 U.S. 516, 64 S.Ct. 364, 88 L.Ed. 270 (1944); Trinity Construction Co. v. United States, 424 F.2d 302 (5 Cir. 1970); Guardian Investment Corp. v. Phinney, 253 F.2d 326 (5 Cir. 1958); United States v. Consolidated Edison Co., 366 U.S. 380, 385, n. 5, 81 S.Ct. 1326, 6 L.Ed.2d 356 (1961); Clevite Corp. v. United States, 386 F.2d 841, 843, 181 Ct.Cl. 652, 658 (1967); Denver & Rio Grande Western Railroad Co. v. Commissioner, 38 T.C. 557, 572 (1962); Turtle Wax, Inc. v. Commissioner, 43 T.C. 460, 466-67 (1965); Union Pacific R. R. Co. v. United States, 524 F.2d 1343, 208 Ct.Cl. 1 (1975); and Koehring Co. v. United States, 421 F.2d 715, 190 Ct.Cl. 898, 905 (1970). In fact, the test is now included in the Treasury Regulations as follows:
“Under an accrual method of accounting, an expense is deductible for the taxable year in which all the events have occurred which determine the fact of the liability and the amount thereof can be determined with reasonable accuracy.” Treas.Reg. § 1.461-1(a)(2) (1970), promulgated by T.D. 6282,1958-1 Cum.Bull. 215, 22 F.R. 10686, Dec. 25, 1957, 26 C.F.R. § 1.461-1(a)(2) (1970).
Stated conversely, the accrual of an item of expense is improper where the liability for such item in the taxable year is contingent upon the occurrence of future events. Security Flour Mills Co. v. Commissioner, 321 U.S. 281, 64 S.Ct. 596, 88 L.Ed. 725 (1944); Brown v. Helvering, supra. The Supreme Court stated in Brown, supra:
“Except as otherwise specifically provided by statute, a liability does not accrue as long as it remains contingent * * 291 U.S. 200, 54 S.Ct. 360.
This court held in Guardian Investment Corporation v. Phinney, supra :
“A contingent obligation may be a liability, but it is not a debt: and accrual is improper for tax deductions when the liability is contingent.” 253 F.2d 329.
The Court of Claims held in Union Pacific R. R. Co. v. United States, supra :
“So long as a liability remains contingent or if the liability has attached but the amount cannot be reasonably estimated, a business expense deduction is not allowed.” 524 F.2d 1350, 208 Ct.Cl. 18.
The foregoing authorities show that without dispute the all-events test is incorporated in the law. The only question to be answered in this case is whether or not the test has been met. Putoma and Pro-Mac contend that the accrued salaries and bonuses were definite fixed obligations that were mathematically arrived at under an authorized and definite formula, and that only the payment was deferred. They argue that under these facts the all-events test has been complied with. We do not agree.
The minutes of Putoma’s Board of Directors’ meeting held on August 23, 1965, quoted above, show that the Board set Pur-selley’s salary at $2,000 per month month plus a bonus of 25% of the net profit of the corporation. However, the payment of the bonus was made conditional on the financial condition of the corporation by the following minutes:
“Such salary in excess of the $2,000 per month is not to be paid but to accrue to his credit until such time as in the judgment of the majority of the directors of the company, the company has such cash reserve in order to pay the additional salary.”
As a part of the same minutes, the Board set Hunt’s salary at 10% of the net income of the corporation which was not to be paid, like Purselley’s bonus, until such time as in the judgment of the directors, the corporation had sufficient cash reserve in order to pay the salary. In this regard, the minutes provided:
“Upon further motion duly made and seconded, the salary of J. M. Hunt was established at 10% of the net income of the company before the deduction of any bonus or Federal income taxes. This salary is to be retroactive from July 1, 1965. Such salary is not to be paid, but to accrue to his credit until such time as in the judgment of the majority of the directors of the company, the company has sufficient cash reserve in order to pay the salary.”
The compensation formula set out above remained unchanged until January 1, 1970. At a meeting of Putoma’s directors held on December 10, 1969, bonuses for Purselley and Hunt were discontinued as of December 31, 1969, and Purselley’s salary was set at $3,000 per month beginning January 1, 1970.
It is clear from these minutes of the Board that Putoma had no fixed obligation during the years involved to pay Hunt’s salary or Purselley’s bonus. Such obligation was not to come into being until sometime in the future when the directors determined that the corporation had sufficient cash reserve to make the payments.
Pro-Mac had a similar arrangement. Its books showed that Purselley was entitled to a bonus of 25% of the company’s profits and that Hunt was entitled to a bonus of 10% of the profits of the company. The Tax Court found that Pro-Mac’s liability for these salaries and bonuses, like those of Putoma, were contingent on the financial condition of the company.
We conclude that the obligation of Putoma and Pro-Mac to pay the salaries was not a fixed obligation but was contingent and conditioned on future events, namely, the financial condition of the corporations and the determination of the same by their Boards of Directors. In addition to the authorities cited above that prohibit the deduction of contingent and conditional obligations, see this court’s decision in Burlington-Rock Island Railroad Co. v. United States, 321 F.2d 817 (5 Cir. 1963), cert. denied, 377 U.S. 943, 84 S.Ct. 1349, 12 L.Ed.2d 306 (1964). In that case, the taxpayer sought to deduct accrued but unpaid interest on its debt to its shareholder-creditors. Under the terms of an agreement entered into with its creditors, the taxpayer was required to make the interest payments “from time to time, insofar as its cash situation will reasonably permit.” In disallowing the claimed interest deductions, this Court pointed out that the agreement created only a conditional obligation to pay the interest and that the creditors could enforce payment only by showing that taxpayer had sufficient funds for that purpose. The court then went on to conclude:
“Burlington’s [taxpayer’s] duty to pay the statutory interest was thus contingent upon its financial situation, and no legal obligation could arise under the agreement until the occurrence of that contingency.” 321 F.2d 821.
Also, see Pierce Estates v. Commissioner, 195 F.2d 475 (3 Cir. 1952). There, the taxpayer was obligated to pay annual interest at a fixed rate but only from its net income “as ascertained and declared by its board of directors.” The court held that the taxpayer had correctly deducted the interest in the year of payment rather than accruing and deducting the interest each year because its legal duty to pay the interest was contingent on the actions of its directors. In so holding, the court stated:
“Because interest is compensation for the use or forbearance of money it ordinarily accrues as an item of expense from day to day even though its payment may be deferred until a latter date. But this is not true if the payment is not merely deferred but the obligation to pay at all is wholly contingent upon the happening of a later event as, for example, the subsequent earning of profits. In the latter case, the interest may not be regarded as an accrued expense until the year in which, by the earnings of the profits the contingency is satisfied and the obligation to pay becomes fixed and absolute.” 195 F.2d 477.
We hold that the all-events test was not met as to salaries and bonuses of Purselley and Hunt and that the deductions of such items were improperly made by Putoma and Pro-Mac.
II. CANCELLATION BY SHAREHOLDER HUNT OF INDEBTEDNESS FOR ACCRUED INTEREST OWED TO HIM BY THE TWO CORPORATIONS
The facts regarding the appeal of this issue by the Commissioner were found by the Tax Court, as follows:
Putoma Corporation, which was organized in 1963, and Pro-Mac Company, which was formed in 1966, were both Texas corporations. Both corporations have always kept their books and records and filed their corporate income tax returns using the accrual basis of accounting. J. M. Hunt and Lee Roy Purselley each owed 50 percent of the stock of Putoma and Pro-Mac during the years in issue. Purselley served as president of both corporations while Hunt was treasurer of Putoma and secretary-treasurer of Pro-Mac. Putoma’s board of directors consisted of Purselley, Hunt and Harold Wright, Putoma’s accountant. Pro-Mac’s board of directors was comprised of Pursel-ley, Hunt and H. L. Farquhar.
Putoma and Pro-Mac were engaged in the business of making complex structural aircraft parts for the F-lll airplanes then being built by General Dynamics Corporation. On several occasions, Hunt purchased machinery needed by Putoma and Pro-Mac and resold it to the corporations at his cost. Hunt received no cash from the corporations with respect to these sales but instead received interest-bearing notes secured by chattel mortgages. Putoma and Pro-Mac claimed deductions on their returns for the accrued interest on the notes. The interest, however, was not paid to Hunt. Accordingly, Hunt as a cash basis taxpayer, did not include in his taxable income the accrued interest claimed as a deduction by Putoma and Pro-Mac.
On September 15, 1970, Hunt forgave the total amount of the accrued interest owed to him by both corporations ($24,950.44). The Commissioner determined that the cancellation of the previously deducted liability for accrued interest gave rise to taxable income to Putoma and Pro-Mac under the tax-benefit rule. In the alternative, the Commissioner determined that the amount of the cancelled accrued interest was includable in the income of Hunt. The Tax Court rejected the Commissioner’s alternative contention that the amount of cancelled interest was includable in the gross income of Hunt, a cash basis taxpayer. The Government filed a notice of appeal from this part of the Tax Court’s decision (T.C. No. 7471-73), but decided not to prosecute the appeal, and it has requested in its brief that such appeal be dismissed. Accordingly, the appeal of such issue is hereby dismissed.
The Tax Court in a reviewed opinion rejected the Commissioner’s position as to the cancellation of the accrued interest and held that such cancellation constituted a nontaxable contribution to the capital of Putoma and Pro-Mac, notwithstanding the tax benefits secured by the corporations through their prior interest deductions. Judge Simpson filed a dissenting opinion, in which Judges Raum and Sterrett joined, wherein he expressed the view that the majority erred in failing to apply the tax-benefit rule.
The sole question to be resolved in this part of the instant case is whether or not the tax-benefit rule required Putoma and Pro-Mac to restore the deducted interest owed to Hunt to their income in the year Hunt cancelled their interest indebtedness. The tax-benefit rule is generally described as follows:
“The recovery of an item previously deducted — is includible in income in the year of recovery except to the extent the previous deduction did not result in any tax benefit to the taxpayer.” 34 Am. Jur.2d, Federal Taxation, ¶ 5251, p. 217, 1978.
Section 111 of the 1954 Code accorded tax-benefit treatment only to the recovery of bad debts, prior taxes and delinquency accounts, but Treasury Regulations have broadened the rule of exclusion by extending similar treatment to “all other losses, expenditures, and accruals made the basis of deductions from gross income for prior taxable years — See Treasury Regulation, § 1.111-1.
Congress has provided in Sections 102 and 118 of the Code certain exclusions from gross income, namely (as far as this case is concerned), the value of property acquired by gift, or in the case of a corporation, contribution to its capital.
These Sections of the Code are, in effect, exceptions to the tax-benefit rule, when applicable to a particular case under consideration, and in such an instance prevent the universal application of the rule “across the board” in every case. This is especially true where, as in the instant case, the recovery of an item deducted by the taxpayers in a previous year and recovered in a later year is both a gift and a contribution to the capital of a corporation.
Pursuant to Section 118 of the Code, the Treasury Department issued Regulation, Sec. 1.118-1, which provides that contributions to the capital of a corporation, whether by a shareholder or an outsider, are not included in the gross income of the taxpayer corporation.
Prior to 1939, Treasury Regulations 101, Art. 22(a)-14 (1938 Revenue Act) provided, in pertinent part, as follows (without the underlined language):
“In general, if a shareholder in a corporation which is indebted to him gratuitously forgives the debt, the transaction amounts to a contribution to the capital of the corporation to the extent of the principal of the debt.”
In 1938 the Regulations were amended by the insertion of the above underlined language, and they have remained unchanged since 1938 and are currently designated as Treasury Regulations on Income Tax, Section 1.61-12(a). The argument of the Commissioner, with respect to this amended Regulation will be discussed below.
The Commissioner argues, in effect, that the tax-benefit rule should be applied “across the board” in every case, including the one before us, where an expense item (interest here) has been deducted but not paid by a taxpayer (Putoma and Pro-Mac here), and recovered in a later year (when Hunt cancelled the interest) must be restored to taxable income of the taxpayers during the year of recovery, regardless of the circumstances. We do not agree.
In this regard, the Government states in its brief:
“Indeed, it is well established that the tax-benefit rule has general application in all areas of the tax law. Thus, it has been held applicable to the recovery of previously expensed bad debts (Home Savings & Loan Ass’n v. United States, 514 F.2d 1199 (C.A.9, 1975), cert. denied, 423 U.S. 1015 [96 S.Ct. 449, 46 L.Ed.2d 386] (1975); Merchants Nat. Bank v. Commissioner, 199 F.2d 657 (C.A.5, 1952); Citizens Federal S. & L. Ass’n of Cleveland v. United States, 290 F.2d 932 [154 Ct.Cl. 305] (Ct.Cl., 1961)); recovery with respect to securities written off as worthless (Dobson v. Commissioner, 321 U.S. 231 [64 S.Ct. 495, 88 L.Ed. 691] (1944)); recovery of taxes previously deducted (Union Trust Co. v. Commissioner, 111 F.2d 60 (C.A.7, 1940), cert. denied, 311 U.S. 658 [61 S.Ct. 12, 85 L.Ed. 421] (1940)); reimbursements for guaranty and legal payments (Goodman v. Helvering, 115 F.2d 242 (C.A.2, 1940)); recoupment of losses under construction contracts (Burnet v. Sanford & Brooks Co., 282 U.S. 359 [51 S.Ct. 150, 75 L.Ed. 383] (1931)); insurance recoveries in subsequent years (Volspar Corp. v. Commissioner, T.C. Memo Op. Dkt 7621 (1946); Zeeman v. United States, 275 F.Supp. 235 (S.D.N.Y., 1967), aff’d and remanded, 395 F.2d 861 (C.A.2, 1968)). Further, the tax-benefit rule has been held to require that previously expensed items which are sold or disposed of for value in a later taxable period in connection with a corporate liquidation must be included in income. See Commissioner v. Anders, 414 F.2d 1283 (C.A.10, 1969); Anders v. United States, 462 F.2d 1147 [199 Ct.Cl. 1] (Ct.Cl., 1972); Spitalny v. United States, 430 F.2d 195 (C.A.9, 1970).”
Without discussing these cases in detail, suffice it to say that it is obvious that they do not involve the same facts that we have in the instant case, such as a gift and a contribution to a corporation’s capital, and are clearly distinguishable. The tax-benefit rule is one that has been created by the judiciary, except to the extent some parts of it have now been included in the Treasury Regulations cited above. Such a judicially created rule cannot supercede and take precedence over the statutes enacted by Congress, such as 26 U.S.C.A., Sections 102, 111, and 118 quoted above.
We acknowledge that the tax-benefit rule is viable and may be applied in a proper case. In fact, we used it in Mayfair Minerals, Inc. v. C. I. R., 456 F.2d 622 (5 Cir. 1972) where the taxpayer, a utility company, accrued and deducted amounts representing refunds due its customers. The company’s liability to make the refunds was subsequently cancelled and the Commissioner determined that under the tax-benefit rule the previously deducted amounts had to be restored to the taxpayer’s income. This Court agreed, saying:
“When an accrual basis taxpayer accrues an expense and offsets it against taxable income, and subsequently the expense is not paid, the amount of the prior deduction must be restored to income in the year the liability is extinguished. Rothensies v. Electric Storage Battery Co., 1946, 329 U.S. 296, 67 S.Ct. 271, 91 L.Ed. 296 * * *. Taxpayer, having received the prior tax benefits from the accrued deductions, realized income in 1961. Bear Manufacturing Co. v. United States, 7 Cir. 1970, 430 F.2d 152, cert. denied, 400 U.S. 1021, 91 S.Ct. 583, 27 L.Ed.2d 632.” 456 F.2d 623.
The Government relies heavily on the Mayfair Minerals case here and contends that it should control our decision in the instant case. We do not agree. That case is clearly distinguishable as it did not involve a gift within the meaning of the Code nor a contribution to the capital of the corporation.
The Government also relies on Alice Phe-lan Corporation v. United States, 381 F.2d 399, 401-2, 180 Ct.Cl. 659, 663 (1967), decided by the Court of Claims, in which the court held:
“Yet the principle is well engrained in our tax law that the return or recovery of property that was once the subject of an income tax deduction must be treated as income in the year of its recovery. Rothensies v. Electric Storage Battery Co., 329 U.S. 296, 67 S.Ct. 271, 91 L.Ed. 296 (1946); Estate of Block v. Commissioner, 39 B.T.A. 338 (1939), aff’d sub nom. Union Trust Co. v. Commissioner, 111 F.2d 60 (7th Cir.), cert. denied, 311 U.S. 658, 61 S.Ct. 12, 85 L.Ed. 421 (1940).”
In that case the Alice Phelan Corporation conveyed certain real estate to a donee for religious or educational purposes and claimed a charitable deduction from its income tax. Years later the donee decided not to use the gifts and returned the property. The Commissioner and the Court of Claims required the Alice Phelan Corporation to include the value of the property in its income in the year it was returned. Here again, the case is distinguishable from our case. There, when the donee returned the property, it was not done with the intention, purpose or motive to make a gift to the donor within the meaning of the Code. The donee returned the property for the simple reason that it had decided not to use it and did not need it. Being a religious and educational entity, the donee no doubt concluded that it would be right and proper to return the property to the donor from whence it came. Furthermore, the donee had no intention, motive or purpose to contribute to the capital of the Alice Phelan Corporation. As far as the record shows in that case, the donee had no knowledge of the capital structure of the corporation and never considered nor intended to contribute to its capital. It simply returned property it did not need. Under these circumstances, the Commissioner and the Court of Claims were correct in requiring the corporation to restore the value of the property to its income in the year of its recovery.
The leading case in this area of the law is Helvering v. American Dental Co., 318 U.S. 322, 63 S.Ct. 577, 87 L.Ed. 785 (1943). That case and its progeny are dispositive of the instant case and will be discussed below.
Prior to the American Dental Company case, the Second Circuit Court of Appeals had occasion to consider some of the problems involved here in the case of C. I. R. v. Auto Strop Safety Razor Co., Inc., 74 F.2d 226 (2 Cir. 1934), and in Carroll-McCreary Co., Inc. v. C. I. R., 124 F.2d 303 (2 Cir. 1941). In the Auto Strop Safety Razor Co. case a shareholder and creditor of a corporation cancelled the debt of the corporation, which kept its books on an accrual basis, and the amount of the cancelled debt was credited to the surplus account of the corporation. The Commissioner added this amount to the income of the corporation. The Tax Court (then the Board of Tax Appeals) reversed the Commissioner, which reversal was affirmed by the court. The court said:
“Article 49 of Regulations 69 which went into effect under the Revenue Act of 1918 substantially as it is quoted below and has so been continued reads:
‘Art. 49. Forgiveness of Indebtedness — The cancellation and forgiveness-of indebtedness may amount to a payment of income, to a gift, or to a capital transaction, dependent upon the circumstances. If, for example, an individual performs services for a creditor, who in consideration thereof cancels the debt, income to that amount is realized by the debtor as compensation for his services. If, however, a creditor merely desires to benefit a debtor and without consideration therefor cancels the debt, the amount of the debt is a gift from the creditor to the debtor and need not be included in the latter’s gross income. If a shareholder in a corporation which is indebted to him gratuitously forgives the debt, the transaction amounts to a contribution to the capital of the corporation.’
“The Board found that the sole stockholder of the Auto Strop Safety Razor Company acted gratuitously in forgiving the debt, and, as there was evidence to support the finding, we accept it. It held correctly in accordance with the above regulation that by the transaction, being a contribution to its capital, the Auto Strop Safety Razor Company did not receive taxable income.” 74 F.2d 226 (Emphasis supplied).
In Carroll-McCreary v. C. I. R., supra, the Second Circuit Court held that the cancellation by officer-shareholders of salaries owed to them by an accrual basis corporation and deducted by it in prior years was a contribution to its capital by the officer-shareholders and was not income to the corporation in a subsequent year when the debt was cancelled. In so holding, the court stated:
“Article 24(a)-14 of Regulation 86, promulgated under the Revenue Act of 1934, is set out in the margin. The petitioner relies upon that provision of the article which says that ‘If a shareholder in a corporation which is indebted to him gratuitously forgives the debt, the transaction amounts to a contribution to the capital of the corporation.’ Contributions to capital are, of course, not taxable as corporate income. But the Board held that income was realized by the petitioner since the case at bar fails outside the scope of the Regulation. This conclusion was reached on the ground that forgiveness of the debt for the unpaid salaries was not gratuitous because the officer shareholders obtained advantages ‘in furthering the life of the company as accomplished by the agreement providing for the cancellation.’ Such a construction of the Regulation deprives it of any function whatever; for an indirect benefit of this character always results to the shareholder from a gift to his corporation. At least, this is true if the corporation is a going concern or if the gift enables it to continue in business even though insolvent. In our opinion the phrase ‘gratuitously forgives the debt’ means simply that no consideration is paid by the corporation for release of the debt. We find nothing in Helvering v. Jane Holding Corp., 8 Cir., 109 F.2d 933, conflicting with this interpretation. The Board’s order cannot be supported on the ground that release of the debts was not ‘
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.
FLETCHER, Circuit Judge:
This copyright infringement suit arises out of defendants’ use of five songs from plaintiffs’ dramatico-musical play Kismet in a musical revue staged at defendant MGM Grand Hotel in 1974-76. After a bench trial, the district court found infringement and awarded the plaintiffs $22,-000 as a share of defendants’ profits. Plaintiffs appeal and defendants cross-appeal. We affirm in part, reverse in part, and remand.
I. FACTS
The original version of Kismet was a dramatic play, written by Edward Knob-lock in 1911. Knoblock copyrighted the play as an unpublished work in that year and again as a published work in 1912. Knoblock’s copyright expired in 1967, and the dramatic play Kismet entered the public domain.
In 1952, plaintiff Edwin Lester acquired the right to produce a musical stage production of the dramatic play Kismet. Lester hired plaintiffs Luther Davis and Charles Lederer to write the libretto and plaintiffs Robert Wright and George Forrest to write the music and lyrics for the musical adaptation. In 1953 and 1954, Led-erer and Davis copyrighted their dramatico-musical play Kismet, and in 1953, Wright and Forrest assigned to plaintiff Frank Music Corporation the right to copyright all portions of the musical score written for Kismet. Frank Music subsequently obtained copyrights for the entire musical score and for each of the songs in the score.
In 1954, Lederer, Wright, and Forrest entered into a license agreement with Loew’s, Inc., a predecessor of Metro-Goldwyn-Mayer, Inc., (“MGM, Inc.”) granting to it the right to produce a musical motion picture based on plaintiffs’ play. MGM released its motion picture version of Kismet, starring Howard Keel and Ann Blyth, in 1955.
The story presented in the MGM film and in plaintiffs’ dramatico-musical play is essentially the same as that told in Knob-lock’s dramatic play. It is the tale of a day in the life of a poetic beggar named Hajj and his daughter, Marsinah. The story is set in ancient Baghdad, with major scenes in the streets of Baghdad, the Wazir’s palace, an enchanted garden, and the Wazir’s harem.
On April 26, 1974, defendant MGM Grand Hotel premiered a musical revue entitled Hallelujah Hollywood in the hotel’s Ziegfield Theatre. The show was staged, produced, and directed by defendant Donn Arden. It featured ten acts of singing, dancing, and variety performances. Of the ten acts, four were labeled as “tributes” to MGM motion pictures of the past, and one was a tribute to the “Ziegfield Follies.” The remaining acts were variety numbers, which included performances by a live tiger, a juggler, and the magicians, Siegfried and Roy.
The Ziegfield Theatre, where Hallelujah Hollywood was performed, is a lavish showplace. Its special features, including huge elevators used to raise or lower portions of the stage and ceiling lifts capable of lowering performers down into the audience during the shows, reportedly provide impressive special effects.
Act IV of Hallelujah Hollywood, the subject of this lawsuit, was entitled “Kismet,” and was billed as a tribute to the MGM movie of that name. Comprised of four scenes, it was approximately eleven and one-half minutes in length. It was set in ancient Baghdad, as was plaintiffs’ play, and the characters were called by the same or similar names to those used in plaintiffs’ play. Five songs were taken in whole or in part from plaintiffs’ play. No dialogue was spoken during the act, and, in all, it contained approximately six minutes of music taken directly from plaintiffs’ play.
The total running time of Hallelujah Hollywood was approximately 100 minutes, except on Saturday nights when two acts were deleted, shortening the show to 75 minutes. The show was performed three times on Saturday evenings, twice on the other evenings of the week.
On November 1,1974, plaintiffs informed MGM Grand that they considered Hallelujah Hollywood to infringe their rights in Kismet. MGM Grand responded that it believed its use of plaintiffs’ music was covered by its blanket license agreement with the American Society of Composers, Authors and Publishers (“ASCAP”). In 1965, plaintiffs had granted to ASCAP the right to license certain rights in the musical score of their play Kismet.
Plaintiffs filed this action, alleging copyright infringement, unfair competition, and breach of contract. MGM Grand continued to present Hallelujah Hollywood, including Act IV “Kismet,” until July 16, 1976, when the hotel substituted new music in Act IV. In all, the “Kismet” sequence was used in approximately 1700 performances of the show.
II. DISCUSSION
A. Scope of the ASCAP License
Paragraph one of the ASCAP license gives MGM Grand the right to perform publicly “non-dramatic renditions of the separate musical compositions” in the ASCAP repertory. Paragraph three excludes from the license “dramatico-musical works, or songs [accompanied by] visual representation of the work from which the music is taken____” The district court addressed both of these clauses and concluded that Act IV of Hallelujah Hollywood was nondramatic but contained visual representations of plaintiffs’ play. The court therefore held that Act IV exceeded the scope of the ASCAP license. We review de novo the district court’s interpretation of the agreement because the court interpreted the agreement from the face of the document and as a matter of law. In re Financial Securities Litigation, 729 F.2d 628, 631-32 (9th Cir.1984). We apply the clearly erroneous standard to its findings as to the sufficiency of the visual representations.
We agree with the result reached by the district court, but not with its approach. We agree that Act IV “Kismet” was accompanied by “visual representation” of plaintiffs’ play. Accordingly, defendants’ use was excluded from the ASCAP license by the express terms of paragraph three. We conclude, however, that there is no reason to consider, as the district court did, whether Act IV was “non-dramatic.”
The district court found the following “visual representations”: plaintiffs’ songs were performed in Hallelujah Hollywood by singers identified as characters from plaintiffs’ Kismet, dressed in costumes designed to recreate Kismet, and the performance made use of locale, settings, scenery, props, and dance style music of the type used in plaintiffs’ work.
The defendants do not challenge the finding that their production contained these visual representations. They argue, instead, that the district court failed to give sufficient consideration to whether the visual representations in Act IV were “of the work from which the music is taken,” i.e., plaintiffs’ Kismet. Defendants suggest that this distinction is important because plaintiffs’ Kismet is a derivative work. They argue that many of the visual representations, (e.g., street scenes in ancient Baghdad, swarming bazaars, and an oriental palace), could be said to be derived from Edward Knoblock’s 1911 dramatic version of Kismet rather than from plaintiffs’ Kismet. Since Knobloek’s play is in the public domain, defendants contend these visual representations are not protectable by plaintiffs’ copyright. Defendants further argue that other elements of the “visual representations,” such as choreography style and character names, also are not protectable by copyright.
We find defendants’ arguments unpersuasive for two reasons. First, their suggestion that they might have derived portions of Act IV from Knoblock’s 1911 play is directly contradicted in the record. Arden created Act IV as a tribute to the MGM musical Kismet, which was derived from plaintiffs’ play. While preparing Act IV, he obtained the Broadway score of plaintiffs’ play and screened the MGM motion picture. The record does not show that any of Act IV was based on Knob-lock’s 1911 dramatic version of Kismet.
More important, defendants’ argument is unpersuasive because it is simply irrelevant. The question we face is not whether the “visual representations” are copyrightable, but whether the use of a copyrighted work exceeds the scope of an ASCAP license because visual representations accompanied the songs. The license agreement does not refer to “copyrightable” visual representations. The district court was not clearly erroneous in finding that Act IV “Kismet” was accompanied by sufficient visual representations derived from plaintiffs’ play to place the songs’ use beyond the scope of the ASCAP license.
The district court properly concluded that defendants infringed plaintiffs’ copyrights in Kismet.
B. Recovery for Infringement
The Copyright Act of 1909 provided three forms of recovery to a plaintiff whose copyright had been infringed: actual damages, infringer’s profits, or statutory “in lieu” damages. The Act provided for recovery of “such damages as the copyright proprietor may have suffered due to the infringement, as well as all the profits which the infringer shall have made from such an infringement____” 17 U.S.C. § 101(b) (1970). The Act further provided that a court could award “in lieu of actual damages and profits, such damages as to the court shall appear to be just” within certain prescribed minima and maxima. Id.
A court making an award for copyright infringement must, if possible, determine both the plaintiff’s actual damages and the defendant’s profits derived from the infringement. Sid & Marty Krofft Television Productions, Inc. v. McDonald’s Corp., 562 F.2d 1157, 1172 (9th Cir.1977) (Krofft I). In this circuit, we have construed section 101(b) of the 1909 Act as allowing recovery of the greater of the plaintiff’s damage or the defendant’s profits. Krofft I, 562 F.2d at 1176; Universal Pictures Co. v. Harold Lloyd Corp., 162 F.2d 354, 376 (9th Cir.1947).
1. Actual Damages
“Actual damages” are the extent to which the market value of a copyrighted work has been injured or destroyed by an infringement. 3 M. Nimmer, Nimmer on Coyyright § 14.02, at 14-6 (1985). In this circuit, we have stated the test of market value as “what a willing buyer would have been reasonably required to pay to a willing seller for plaintiffs’ work.” Krofft I, 562 F.2d at 1174.
The district court declined to award actual damages. The court stated that it was “unconvinced that the market value of-plaintiffs’ work was in any way diminished as a result of defendant’s infringement.” We are obliged to sustain this finding unless we conclude it is clearly erroneous. Fed.R.Civ.P. 52(a); see County of Ventura v. Blackburn, 362 F.2d 515, 521 (9th Cir.1966); Shapiro, Bernstein & Co. v. 4636 S. Vermont Ave., Inc., 367 F.2d 236, 241 (9th Cir.1966).
Plaintiffs contend the district court’s finding is clearly erroneous in light of the evidence they presented concerning the royalties Kismet could have earned in a full Las Vegas production. Plaintiffs did offer evidence of the royalties Kismet had earned in productions around the country. They also introduced opinion testimony, elicited from plaintiff Lester and from Kismet’s leasing agent, that a full production of Kismet could have been licensed in Las Vegas for $7,500 per week. And they introduced other opinion testimony to the effect that Hallelujah Hollywood had destroyed the Las Vegas market for a production of plaintiffs’ Kismet.
In a copyright action, a trial court is entitled to reject a proffered measure of damages if it is too speculative. See Peter Pan Fabrics, Inc. v. Jobella Fabrics, Inc., 329 F.2d 194, 196-97 (2d Cir.1964). Although uncertainty as to the amount of damages will not preclude recovery, uncertainty as to the fact of damages may. Unviersal Pictures Co. v. Harold Lloyd Corp., 162 F.2d at 369; see also 3 M. Nimmer, supra, § 14.02, at 14-8 to -9. It was the fact of damages that concerned the district court. The court found that plaintiffs “failed to establish any damages attributable to the infringement.” (emphasis in original). This finding is not clearly erroneous.
Plaintiffs offered no disinterested testimony showing that Hallelujah Hollywood precluded plaintiffs from presenting Kismet at some other hotel in Las Vegas. It is not implausible to conclude, as the court below apparently did, that a production presenting six minutes of music from Kismet, without telling any of the story of the play, would not significantly impair the prospects for presenting a full production of that play. Based on the record presented, the district court was not clearly erroneous in finding that plaintiffs’ theory of damages was uncertain and speculative.
2. Infringer’s Profits
As an alternative to actual damages, a prevailing plaintiff in an infringement action is entitled to recover the infringer’s profits to the extent they are attributable to the infringement. 17 U.S.C. § 101(b); Krofft, 562 F.2d at 1172. In establishing the infringer’s profits, the plaintiff is required to prove only the defendant’s sales; the burden then shifts to the defendant to prove the elements of costs to be deducted from sales in arriving at profit. 17 U.S.C. § 101(b). Any doubt as to the computation of costs or profits is to be resolved in favor of the plaintiff. Shapiro, Bernstein & Co. v. Remington Records, Inc., 265 F.2d 263 (2d Cir.1959). If the infringing defendant does not meet its burden of proving costs, the gross figure stands as the defendant’s profits. Russell v. Price, 612 F.2d 1123, 1130-31 (9th Cir.1979), cert. denied, 446 U.S. 952, 100 S.Ct. 2919, 64 L.Ed.2d 809 (1980).
The district court, following this approach, found that the gross revenue MGM Grand earned from the presentation of Hallelujah Hollywood during the relevant time period was $24,191,690. From that figure, the court deducted direct costs of $18,060,084 and indirect costs (overhead) of $3,641,960, thus arriving at a net profit of $2,489,646.
Plaintiffs’ challenge these computations on a number of grounds. Several of the objections plaintiffs raise require only brief discussion; we dispose of these in the margin. But three of their objections are more serious, and deserve closer scrutiny. Plaintiffs claim the district court erred in allowing deductions for overhead expenses for two reasons: because the infringement was “conscious and deliberate,” and because defendants failed to show that each item of claimed overhead assisted in the production of the infringement. Plaintiffs also contend the court erred in not including in gross profits some portion of MGM’s earnings on its hotel and gaming operations.
A portion of an infringer’s overhead properly may be deducted from gross revenues to arrive at profits, at least where the infringement was not willful, conscious, or deliberate. Kamar International, Inc. v. Russ Berrie & Co., 752 F.2d 1326, 1331 (9th Cir.1984); Sammons v. Colonial Press, Inc., 126 F.2d 341, 351 (1st Cir.1942); 3 M. Nimmer, supra, § 14.03[B], at 14-16.1. Plaintiffs argue that the infringement here was conscious and deliberate, but the district court found to the contrary. The court’s finding is not clearly erroneous. Defendants believed their use of Kismet was protected under MGM Grand’s ASCAP license. Although their contention ultimately proved to be wrong, it was not implausible. Defendants reasonably could have believed that their production was not infringing plaintiffs’ copyrights, and, therefore, the district court was not clearly erroneous in finding that their conduct was not willful. See Kamar International, Inc. v. Russ Berrie & Co., 752 F.2d at 1331.
We find more merit in plaintiffs’ second challenge to the deduction of overhead costs. They argue that defendants failed to show that each item of claimed overhead assisted in the production of the infringement. The evidence defendants introduced at trial segregated overhead expenses into general categories, such as general and administrative costs, sales and advertising, and engineering and maintenance. Defendants then allocated a portion of these costs to the production of Hallelujah Hollywood based on a ratio of the revenues from that production as compared to MGM Grand’s total revenues. The district court adopted this approach.
We do not disagree with the district court’s acceptance of the defendants’ method of allocation, based on gross revenues. Because a theoretically perfect allocation is impossible, we require only a “reasonably acceptable formula.” Sammons v. Colonial Press, Inc., 126 F.2d at 349; see Kamar International, Inc. v. Russ Berrie & Co., 752 F.2d at 1333. We find, as did the district court, that defendants’ method of allocation is reasonably acceptable.
We disagree with the district court, however, to the extent it concluded the defendants adequately showed that the claimed overhead expenses actually contributed to the production of Hallelujah Hollywood. Recently, in Kamar International, we stated that a deduction for overhead should be allowed “only when the infringer can demonstrate that [the overhead expense] was of actual assistance in the production, distribution or sale of the infringing product.” 752 F.2d at 1332 (citation omitted); accord Sheldon v. Metro-Goldwyn-Mayer Pictures, Co., 106 F.2d 45, 54 (2d Cir.1939) (Sheldon I), aff'd, 309 U.S. 390, 60 S.Ct. 681, 84 L.Ed. 825 (1940). We do not take this to mean that an infringer must prove his overhead expenses and their relationship to the infringing produc tion in minute detail. See Sheldon I, 106 F.2d at 52; Sterns-Roger Manufacturing Co. v. Ruth, 87 F.2d 35, 41-42 (10th Cir.1936). Nonetheless, the defendant bears the burden of explaining, at least in general terms, how claimed overhead actually contributed to the production of the infringing work. See Kamar International, Inc. v. Russ Berrie & Co., 752 F.2d at 1333; Taylor v. Meirick, 712 F.2d 1112, 1121-22 (7th Cir.1983) (“It is too much to ask a plaintiff who has proved infringement also to do the defendant’s cost accounting.”).
We do not doubt that some of defendants’ claimed overhead contributed to the production of Hallelujah Hollywood. The difficulty we have, however, is that defendants offered no evidence of what costs were included in general categories such as “general and administrative expenses,” nor did they offer any evidence concerning how these costs contributed to the production of Hallelujah Hollywood. The defendants contend their burden was met when they introduced evidence of their total overhead costs allocated on a reasonable basis. The district court apparently agreed with this approach. That is not the law of this circuit. Under Kamar International, a defendant additionally must show that the categories of overhead actually contributed to sales of the infringing work. 752 F.2d at 1332. We can find no such showing in the record before us. Therefore, we conclude the district court’s finding that “defendants have established that these items of general expense [the general categories of claimed overhead] contributed to the production of ‘Hallelujah Hollywood’ ” was clearly erroneous.
Plaintiffs next challenge the district court’s failure to consider MGM Grand’s earnings on hotel and gaming operations in arriving at the amount of profits attributable to the infringement. The district court received evidence concerning MGM Grand’s total net profit during the relevant time period, totaling approximately $395,000,-000, but its memorandum decision does not mention these indirect profits and computes recovery based solely on the revenues and profits earned on the production of Hallelujah Hollywood (approximately $24,000,000 and $2,500,000 respectively). We surmise from this that the district court determined plaintiffs were not entitled to recover indirect profits, but we have no hint as to the district court’s reasons.
Whether a copyright proprietor may recover “indirect profits” is one of first impression in this circuit. We conclude that under the 1909 Act indirect profits may be recovered.
The 1909 Act provided that a copyright proprietor is entitled to “all the profits which the infringer shall have made from such infringement____” 17 U.S.C. § 101(b). The language of the statute is broad enough to permit recovery of indirect as well as direct profits. See 3 M. Nimmer, supra, § 14.03[A], at 14-15; cf. Nucor Corp. v. Tennessee Forging Steel Service, Inc., 513 F.2d 151, 153 (8th Cir.1975) (common law copyright infringement action; issue of whether infringing use of copyrighted architectural plans resulted in lower manufacturing costs to defendants was properly put to jury). At the same time, a court may deny recovery of a defendant’s profits if they are only remotely or speculatively attributable to the infringement. See 3 M. Nimmer, supra, § 14.03[A]; see, e.g., Roy Export Co. v. Columbia Broadcasting System, Inc., 503 F.Supp. 1137, 1156-57 (S.D.N.Y.1980) (profits from an infringing unsponsored television broadcast could not be ascertained since benefit received by CBS “consists of unmeasurable good-will with affiliates and increased stature and prestige vis-a-vis competitors.”), aff'd, 672 F.2d 1095 (2d Cir.), cert. denied, 459 U.S. 826, 103 S.Ct. 60, 74 L.Ed.2d 63 (1982).
The allowance of indirect profits was considered in Sid & Marty Krofft Television Productions, Inc. v. McDonald’s Corp., 1983 Copyright L.Rep. (CCH) 1125,-572 at 18,381 (C.D.Cal.1983) (Krofft II), on remand from 562 F.2d 1157 (9th Cir.1977), a case involving facts analogous to those presented here. The plaintiffs, creators of the “H.R. Pufnstuf” children’s television program, alleged that they were entitled to a portion of the profits McDonald’s earned on its food sales as damages for the “Mc-Donaldland” television commercials that infringed plaintiffs’ copyright. The district court rejected as speculative the plaintiffs’ formula for computing profits attributable to the infringement. However, the court’s analysis and award of in lieu damages indicate that it considered indirect profits recoverable. The court stated, in awarding $1,044,000 in statutory damages, that “because a significant portion of defendants’ profits made from the infringement are not ascertainable, a higher award of [statutory] in lieu damages is warranted.” Id. at 18,-384; see also Cream Records Inc. v. Jos. Schlitz Brewing Co., 754 F.2d 826, 828-29 (9th Cir.1985) (discussed supra note 7) (awarding profits from the sale of malt liquor for Schlitz’s infringing use of plaintiff’s song in television commercial).
Like the television commercials in Krofft II, Hallelujah Hollywood had promotional value. Defendants maintain that they endeavor to earn profits on all their operations and that Hallelujah Hollywood was a profit center. However, that fact does not detract from the promotional purposes of the show — to draw people to the hotel and the gaming tables. MGM’s 1976 annual report states that “[t]he hotel and gaming operations of the MGM Grand — Las Vegas continue to be materially enhanced by the popularity of the hotel’s entertainment[, including] ‘Hallelujah Hollywood’, the spectacularly successful production revue____” Given the promotional nature of Hallelujah Hollywood, we conclude indirect profits from the hotel and gaming operations, as well as direct profits from the show itself, are recoverable if ascertainable.
3. Apportionment of Profits
How to apportion profits between the infringers and the plaintiffs is a complex issue in this case. Apportionment of direct profits from the production as well as indirect profits from the hotel and casino operations are involved here, although the district court addressed only the former at the first trial.
When an infringer’s profits are attributable to factors in addition to use of plaintiff’s work, an apportionment of profits is proper. Sheldon v. Metro-Goldwyn Pictures, Inc., 309 U.S. 390, 405-06, 60 S.Ct. 681, 686-87, 84 L.Ed. 825 (1939) (Sheldon II); Universal Pictures Co. v. Harold Lloyd Corp., 162 F.2d at 377. The burden of proving apportionment, (i.e., the contribution to profits of elements other than the infringed property), is the defendant’s. Lottie Joplin Thomas Trust v. Crown Publishers, Inc., 592 F.2d 651, 657 (2d Cir.1978). We will not reverse a district court’s findings regardmg_^porti.QQment unless they are clearly erroneous. See Shapiro, Bernstein & Co. v. 4636 S. Vermont Ave., Inc., 367 F.2d at 241-42.
After finding that the net profit earned by Hallelujah Hollywood-jazz approximately $2,500,000, the-distr-ie-t-eourt-offered the following explanation_of apportionment:
While no precise mathematical formula can be applied, the court concludes in light of the evidence presented at trial approximation of £ho profits-o£-Act IV attributable to the infringement is $22,-000.
The disfcw«t-conrt was correct that mathematical exactnesses not required. However, a reasonable and just apportionment of profits is required. Sheldon II, 309 U.S. at 408, 60 S.Ct. at 688; Universal Pictures Co. v. Harold Lloyd Corp., 162 F.2d at 377.
Arriving at a proper method of apportionment and determining a specific amount to award is largely a factual exercise. Defendants understandably argue that the facts support~tEeUfísWtet-eourt’s award. They claim that the infringing material, six minutes of music in Act IV, was an unimportant part of the whole show, that the unique features of the Ziegfield Theater contributed_mo_K§_jx> the show’s success than any other factor. This is proved, they argue, bifTEe" fact that when the music from Kismet was removed from Hallelujah Hollywood in 1976, the show suffered no decline in attendance and the hotel received no complaints.
Other evidence contradicts defendants’ position. For instance, defendant Donn Arden testified that Kismet was “a very_im-portant part of the show” and “[he] hated to see it go.” Moreover, while other acts were deleted from the shortenecLSaturday night versions of the show, Act IV “Kismet” never was.
We reject defendants’ contention that the relative unimportance of the Kismet music was proved by its omission and the show’s continued success thereafter. Hallelujah Hollywood was a revue, comprised of many different entertainment elements. Each element contributed significantly to the show’s success, but no one element was the sole or overriding reason for that success. Just because efie element could be omitted and the show goes oñctoes not prove that the elemeni was noTimportant in the first instance ami did~not contribute to establishing the show’s initial popularity.
The difficulty in this case is that the district court has not provided_us with any reasoned explanation of. or formularor its apportionment. We know only the district court’s bottom line: that the plaintiffs are entitled to $22,000. Given the nature of the infringement, the character of the infringed property, the success of defendants’ show, and the magnitude of the defendants’ profits, the amount seems to be grossly inadequate. It amounts to less than one percent of MGM Grand’s profits from the show, or roughly $13 for each of the 1700 infringing performances.
On remand, the district court should reconsider its apportionment of profits, and should fully explain on the record its reasons and the resulting method of apportionment it uses. Apportionment of indirect profits may be a part of the calculus. If the court finds that a reasonable, nonspecu-lative formula cannot be derived, or that the amount of profits a reasonable formula yields is insufficient to serve the purposes underlying the statute, then the court should award statutory damages. See infra Part II.B.5.
4. Liability of Joint Infringers
The district court granted judgment of $22,000 “against defendants” in the plural. Yet if the district court intended that each of the defendants be jointly and severally liable for the $22,000 award, this was error.
When a copyright is infringed, all infringers are jointly and severally liable for plaintiffs’ actual damages, but each defendant is severally liable, for his or its own illegal profit', one defendant is not liable for the profit — made—by—another. MCA, Inc. v. Wilson, 677 F.2d 180 186 (2d Cir.1981); 3 M. Nimmer, supra, § 12.-04[C][3], at 12-50; see Cream Records, Inc. v. Jos. Schlitz Brewing Co., 754 F.2d at 829.
The rule of several liability for profits applies, at least, where defendants do not act as partners, or_((pradically — partners.’ Compare Belford, Clarke & Co. v. Scribner, 144 U.S. 488, 507-508, 12 S.Ct. 734, 740, 36 L.Ed. 514 (1892) (printerjield-joint-ly liable for publisher’s pref-its--©n — infringing book since they were “practically partners.”), with Sammons v. Colonial Press, Inc., 126 F.2d at 346-47 (court refused to hold printer jointly liable for publisher’s profits since printer was paid a fixed price for work, payable whether or not infringing books made profit). Defendants assert that Arden and MGM Grand are jointly liable since they “worked closely together” in producing the infringing work. This is a fact question for the district court to consider on remand. The court should consider whether Arden was an employee or an independent contractor rather than a partner. Relevant to this determination, among others, are such factors as whether Arden received a fixed salary or a percentage of profits and whether he bore any of the risk of loss on the production.
Arden mav be liable for profits he earned in connection.wifh the pmdiTFF.Thri of Haltelujah Hollywood, but amounts paid to hini. as- salar-y-am not_taZph considered as profits. See MCA, Inc. v. Wilson, 677 F.2d at 186. But if Arden did earn profits from the productioñT~§uch as royalties, lie j¡sJiableYdr~a proportionate^ amount of these,- -Goncomita]itLy,-defendant MGM Grand-would-be-entitled-ta.,deduct any such royalties as costs in arriving at its own profits. See Smith v. Little, Brown & Co. 396 F.2d 150, 151-52 (2d Cir.1968; see Cream Records, Inc. v. Jos Schlitz Brewing Co., 754 F.2d at 829 (interpreting the 1976 Act).
The court must also determine whether MGM, Inc., MGM Grand’s parent corporation, should be held liable for the infringement. A parent corporation cannot be held liable for the infringing actions of its subsidiary unless there is a substantial and continuing connection between the two with respect to the infringing acts. 3 M. Nimmer, supra, § 12.04[A], at 12-44 to -45.
If the district court finds a “substantial and continuing connection” between MGM Grand and MGM, Inc., then MGM, Inc., may also be liable for its profits. But to the extent any such profits are merely passed on from its subsidiary, MGM Grand, the plaintiffs should be given only one recovery, to be satisfied by either MGM, Inc. or MGM Grand.
5. Statutory “In Lieu” Damages
Statutory damages are intended as a substitute for profits or actual damage. When injury is proved but neither the infringer’s profits nor the copyright holder’s actual damages can be ascertained, an award of statutory “in lieu” damages is mandatory. Russell v. Price, 612 F.2d at 1131-32; Pye v. Mitchell, 574 F.2d 476, 481 (9th Cir.1978); Sid & Marty Krofft Television Productions, Inc. v. McDonald’s Corp., 562 F.2d 1157, 1178-79 (9th Cir.1977) (Krofft I). But if either profits or actual damages or both can be ascertained, the trial court has discretion to award statutory damages. Krofft I, 562 F.2d at 1178. Such an award must be in excess of the amount that would have been awarded as profits or actual damages. Id. We review a district court’s award or refusal to award statutory damages for abuse of discretion. Russell v. Price, 612 F.2d at 1132.
A determination as to whether to award statutory damages must abide the district court’s reconsideration of whether to award damages based on profits. On remand, the district court should keep in mind the purposes underlying the remedy provisions of the Copyright Act, i.e., to provide adequate compensation to the copyright holder and to discourage wrongful conduct and deter infringements. See F.W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 233, 73 S.Ct. 222, 225, 97 L.Ed. 276 (1952); Kamar International, Inc. v. Russ Berrie & Co., 752 F.2d at 1332; Russell v. Price, 612 F.2d at 1131. Thus, in determining whether to exercise its discretion to award statutory damages, the district court must consider whether the amount of profits that have been proved accomplish the purposes of the statute. If not, it should exercise its discretion to award statutory “in lieu” damages that do effectuate the statutory purposes.
The $22,000 awarded by the district court obviously is too little to discourage wrongful conduct or to deter infringement.
6. Attorneys’Fees
The plaintiffs requested that the district court award attorneys’ fees under 17 U.S.C. § 116 (1970). The court omitted mention of plaintiffs’ request in its memorandum decision, although during the course of the proceedings, it had noted that the issue was before it. On remand, the district court can address this issue.
C. Plaintiffs’ Other Claims
In addition to claims for copyright infringement, plaintiffs pleaded claims for unfair competition and breach of contract. The district court rejected both of these ancillary claims. We affirm.
1. Unfair Competition
To prevail on a claim of unfair competition, a plaintiff must demonstrate a likelihood of confusion. Walt Disney Productions v. The Air Pirates, 581 F.2d 751, 760 (9th Cir.1978), cert. denied, 439 U.S. 1132, 99 S.Ct. 1054, 59 L.Ed.2d 94 (1979); Alpha Industries, Inc. v. Alpha Steel Tube & Shapes, Inc., 616 F.2d 440, 443 (9th Cir.1980). Any findings of fact underlying a determination as to likelihood of confusion are subject to the clearly erroneous test, but determination of whether, based on those facts, a likelihood of confusion exists is a legal conclusion. Alpha Industries, 616 F.2d at 443-44; J.B. Williams Co., Inc. v. Le Conte Cosmetics, Inc., 523 F.2d 187, 190 (9th Cir.1975), cert. denied, 424 U.S. 913, 96 S.Ct. 1110, 47 L.Ed.2d 317 (1976).
Plaintiffs attempted to prove unfair competition by showing that the title “Kismet” had acquired secondary meaning referring to their play. The only evidence offered by plaintiffs on this issue was the testimony of plaintiff Edwin Lester who claimed that the original 1911 Kismet was a “dead issue.” Defendants introduced evidence that the 1911 Kismet and a silent movie produced from that play in 1912 had been very popular and widely acclaimed. The trial court’s finding that the title “Kismet” had not acquired secondary meaning referring to plaintiff’s play, is not clearly erroneous. Moreover, since Act IV “Kismet” was only an 11-minute segment of a 100-minute revue, we agree that audiences were not likely to confuse the two versions.
2. Breach of Contract
Finally, plaintiffs urge that the district court denied them due process in dismissing their breach of contract claim against MGM, Inc. The court indicated at the outset of trial that it would not exercise pendent jurisdiction and would not receive evidence on the contract claim or the unfair competition claim. But at the end of the trial, the court permitted post-trial briefs, specifying that they should include
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.
The decision of this Court, rendered on-March 10, 1941, was to the effect that the award of damages by the District Court for property condemned by the United States should be modified by eliminating certain items from the award of damages and that, as so modified, the judgment appealed from should be affirmed. United States v. Powelson, 4 Cir., 118 F.2d 79. This decision was reversed by the Supreme Court because that Court was of the view that in arriving at the award of damages certain elements had been included in the valuation of the property which should not have been considered. United States v. Powelson, U.S., 63 S.Ct. 1047, 1057, 87 L.Ed. 1390. We have given careful consideration to what should be the future procedure in the case, and are of opinion that it should be remanded to the District Court for further proceedings in accordance with the principles laid down by the Supreme Court, and with leave to the parties to produce additional testimony, if they so desire.
In reversing the decision of this Court, the Supreme Court held that the respondent’s privilege to use the power of eminent domain might not be considered in determining whether there was a reasonable probability of the lands in question being combined with other tracts into a power project in the reasonably near future, and that respondent had not established the basis for proof of the “water power value” which was asserted, except upon the assumption that it possessed the power of eminent domain. The limited nature of the decision was shown by the opening sentence of the next to the last paragraph of the opinion wherein the Court said: “We hold only that profits, attributable to the enterprise which respondent hoped to-launch, are inadmissible as evidence of the value of the lands which were taken.”
The Court went on to say: “Respondent is, of course, entitled to the market value of the property fairly determined. And that value should be found in accordance with the established rules (United States v. Miller, supra [317 U.S. 369, 63 S.Ct. 276, 87 L.Ed. -]) — uninfluenced, so far as. practicable, by the circumstance that he whose lands are condemned has the power of eminent domain.”
The Miller case [317 U.S. 369, 63 S.Ct. 280, 87 L.Ed.-] cited in the excerpt from the opinion goes fully into the principles, to be applied in determining valuation and states that “the market value of the property is to be fixed with due consideration of all its available uses”, citing Boom Co. v. Patterson, 98 U.S. 403, 407, 408, 25 L.Ed. 206. The rule is thus, stated in the case last cited:
“In determining the value of land appropriated for public purposes, the same considerations are to be regarded as in a sale of property between private parties. The inquiry in such cases must be what is the property worth in the market, viewed not merely with reference to the uses to which it is at the time applied, but with reference to the uses to which it is plainly adapted; that is to say, what is it worth from its availability for valuable uses. Property is not to be deemed worthless because the owner allows it to go to waste, or to be regarded as valueless because he is unable to put it to any use. Others may be able to use it, and make it subserve the necessities or conveniences of life. Its capability of being made thus available gives it a market value which can be readily estimated.
“So many and varied are the circumstances to be taken into account in determining the value of property condemned for public purposes, that it is perhaps impossible to formulate a rule to govern its appraisement in all cases. Exceptional circumstances will modify the most carefully guarded rule; but, as a general thing, we should say that the compensation to the owner is to be estimated by reference to the uses for which the property is suitable, having regard to the existing business or wants of the community, or such as may be reasonably expected in the immediate future.”
Nothing said by the Supreme Court changes in any way the rule as to damages laid down in Olson v. United States, 292 U.S. 246, 256, 54 S.Ct. 704, 708, 78 L.Ed. 1236, from which we quoted in our opinion as follows: “The highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future is to be considered, not necessarily as the measure of value, but to the full extent that the prospect of demand for such use affects the market value while the property is privately held. Mississippi & R. River Boom Co. v. Patterson, 98 U.S. 403, 408, 25 L.Ed. 206; Clark’s Ferry Bridge Co. v. Public Service Comm., 291 U.S. 227, 54 S.Ct. 427, 78 L.Ed. 767; 2 Lewis, Eminent Domain (3d Ed.) § 707, p. 1233; 1 Nichols, Eminent Domain (2d Ed.) § 220, p. 671. The fact that the most profitable use of a parcel can be made only in combination with other lands does not necessarily exclude that use from consideration if the possibility of combination is reasonably sufficient to affect market value. Nor does the fact that it may be or is being acquired by eminent domain negative consideration of availability for use in the public service. [City of] New York v. Sage, 239 U.S. 57, 61, 36 S.Ct. 25, 60 L.Ed. 143. It is common knowledge that public service corporations and others having that power frequently are actual or potential competitors not only for tracts held in single ownership but also for rights of way, locations, sites, and other areas requiring the union of numerous parcels held by different owners. And, to the extent that probable demand by prospective purchasers or condemnors affects market value, it is to be taken into account. [Mississippi & R. River] Boom Co. v. Patterson, ubi supra.”
The difficulty presented by the record in this case is that the evidence of value produced by the owner was based almost entirely on profits of the enterprise which he hoped to launch, whereas the evidence on the other side consisted almost entirely of the opinions of those who valued the land merely as wild mountain land without reference to any value it might have because of its availability as a power site. Opinions of persons knowing nothing of the value of land for water power purposes are not a fair criterion of its value, where there is evidence that it is available for such purposes. Persons in the immediate neighborhood may not be in position to testify as to such value, but there may be others who are qualified to testify. Certainly one who has embarked upon the enterprise of a great water power development, has purchased and brought together thousands of acres of land for the purpose and spent hundreds of thousands of dollars in the enterprise, is entitled to have his holdings valued on some other basis than that of numerous small separated tracts of wild mountain land, if it be found, irrespective of the possession of the power of eminent domain by the landowner, that “there is a reasonable probability of the lands in question being combined with other tracts into a power project in the reasonably near future”. Market value is nothing but a hypothetical concept based upon what, in the opinion of those who know, a willing buyer would have to pay a willing seller of property in order to purchase it. The question here is, not what wild mountain land was selling for in the community, but what would the portion of land owned by Powelson and available for this water power development have been reasonably worth on the market when sold by one who was willing but not compelled to sell and bought by one who was willing but not compelled to buy. In arriving at this valuation, it is proper that those who make it take into consideration the fact that a large body of land has been brought together under one ownership and any special value that it may have acquired because of this fact.
If the parties desire to adduce additional evidence on this question in the light of the Supreme Court’s decision, they should be allowed to do so. If they do not so desire, the valuation should at all events be made in the first instance by the court below, because of the opportunity which the judges and commissioners of that court have had to view the land and hear the witnesses as to valuation testify. The judgment below will accordingly be reversed and the case will be remanded to the District Court for further proceedings not inconsistent herewith.
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.
PARKER, Circuit Judge.
This is the second appeal in a suit instituted to enjoin the collection of taxes and penalties in the sum of $135,761.51 assessed by the Tax Commissioner of West Virginia against the Dravo Contracting Company. The case was first heard before a statutory court of three judges, and the taxes were held void on the ground that they burdened operations of the United States Government. Dravo Contracting Co. v. Fox, D.C., 16 F.Supp. 527. On appeal this decision was reversed by the Supreme Court and the case was remanded for further proceedings. James v. Dravo Contracting Co., 302 U.S. 134, 58 S.Ct. 208, 82 L.Ed. 155, 114 A.L.R. 318. The Supreme Court, in addition to passing upon the question as to burden upon the federal government, considered the question of the territorial jurisdiction of the State of West Virginia to impose the tax and held that the jurisdiction existed except as to certain work done in Pennsylvania and that an apportionment would be necessary as to this. The case was then heard before the District Judge, the special court of three judges no longer being necessary; and, from a decree apportioning gross income for purposes of taxation under the statute in accordance with the cost of work performed in the respective states, both parties have appealed. The commissioner contends that the tax should be assessed upon the entire amount of the payments received by the taxpayer on the government contracts, less the amounts paid upon delivery or fabrication of materials at Pittsburgh, title to which passed to the government upon such payments. Taxpayer contends that the entire tax is void because no method of apportionment has been provided by statute.
The statute involved is ch. 11, art. 13, West Virginia Code of 1931, as amended May 26, 1933, Acts W.Va.1933, 1st Ex. Sess., c. 33. The applicable provisions thereof are as follows:
“Sec. 2. There is hereby levied and shall be collected annual privilege taxes against the persons, on account of the business and other activities, and in the amounts to be determined by the application of rates against values or gross income, as follows:
* * *
“(e) Upon every person engaging or continuing within this state in the business of contracting, the tax shall be equal to two per cent of the gross income of the business.”
Gross income is thus defined in the statute : “ ‘Gross income’ means the gross receipts of the taxpayer received as compensation for personal services and the gross receipts of the taxpayer derived from trade, business, commerce or sales and the value proceeding or accruing from the sale of tangible property (real or personal), or service, or both, and all receipts by reason of the investment of the capital of the business engaged in, including interest, discount, rentals, royalties, fees or other emoluments however designated and without any deductions on account of the cost of property sold, the cost of materials used, labor costs, taxes, royalties, interest or discount paid or any other expense whatsoever.” Section 1.
Taxpayer is an engineering and contracting corporation existing under the laws of Pennsylvania and having its office and principal place of business as well as its extensive plant at Neville Island near Pittsburgh. During 1933 and 1934, the tax years here in question, it held four contracts with the United States Government for the construction of locks and dams in the Ohio and Kanawha rivers in the state of West Virginia. These contracts provided for the payment of unit prices for the work to be done in the construction of the locks and dams; and, with the exception hereafter noted, progress payments were made upon delivery of materials at the dam sites or upon incorporation of these materials in the locks or dams. The exception, as pointed out by the Supreme Court (302 U.S. at page 139, 58 S.Ct. 208, 211, 82 L.Ed. 155, 114 A.L.R. 318) was that partial payments were made upon the fabrication of roller gates and certain other equipment at the Pittsburgh plant, the title to which thereupon vested in the government. In the same category, of course, are payments made upon delivery, at the Pittsburgh plant. All other payments were made either upon delivery of materials at the dam sites or upon incorporation in structure or erection. It is the contention of the. commissioner that the entire income received from the contracts, with the exception of the partial payments made on account of the delivery or fabrication of material at the Pittsburgh plant, was income received as the result of activities taking place in the state of West Virginia, and that this is properly taxable by the state of West Virginia and is taxed by the provision of the statute in question. And in support of the position that no portion of the income should be excluded except that which was received upon delivery or fabrication of materials at the Pittsburgh plant, the commissioner relies upon the following language of the Supreme Court in the former appeal:
“A large part of respondent’s work was performed at its plant at Pittsburgh. The stipulation of facts shows that respondent purchased outside the state of West Virginia materials used in the manufacture of the roller gates, lock gates, cranes, substructure racks and spur rims, structural steel, patterns, hoisting mechanism and equipment, under each of its contracts, and fabricated the same at its Pittsburgh plant. The roller gates and the appurtenant equipment were .preassembled at respondent’s shops at' Pittsburgh, and were there inspected and tested by officers of the United States government. The materials and equipment fabricated at Pittsburgh were there stored until time for delivery, and the appropriate units as prepared for shipment were then transported by respondent to' the designated sites in West Virginia and there installed. The United States knew at the time the contracts were made that the above-described work was to be performed at the plaintiff’s main plant. The contracts provided for partial payments as the work progressed, and that all the material and work covered by the partial payments should thereupon become ‘the sole property of the government.’ Payments by the government were made from time to time accordingly.
“It is clear that West Virginia had no jurisdiction to lay a tax upon respondent with respect to this work done in Pennsylvania. As to the material and equipment there fabricated, the business and activities of respondent in West Virginia consisted of the installation at the respective sites within that state, and an apportionment would in any event be necessary to limit the tax accordingly. Hans Rees’ Sons v. North Carolina [283 U.S. 123, 51 S.Ct. 385, 75 L.Ed. 879], supra.”
The contention of the taxpayer is that the State of West Virginia may not tax activities under the contract not taking place in West Virginia; and that, in addition to the fabrication of parts at the Pittsburgh plant upon which partial payments were made, it did much work there in preparing structural steel and other materials for incorporation in the locks and dams. A stipulation as to the costs incurred at the plant and at the work sites was entered into; and the judge below made an apportionment of income based upon this stipulation. Taxpayer contends, however, that the court is without power to apportion income for the purpose of taxation on the basis of relative costs, as no such apportionment is provided for in the statute, and that, in the absence of such provision, the effect of the fact that taxpayer earns the income from the contracts by activities occurring without the state as well as within it, is to invalidate the tax as applied to such income.
We agree with taxpayer that the court was without power to apportion its income on the basis of the cost of the activities involved in earning the income within and without the state. No such basis of apportionment is prescribed by statute ; and, in the absence of statute, the court is without power to adopt it, as this is a legislative function involved in the imposition of the tax, and, therefore, not one which courts may exercise. 61 C.J. 1583. Commonwealth v. P. Lorillard Co., 129 Va. 74, 105 S.E. 683. Porto Rico Mercantile Co. v. Gallardo, 1 Cir., 6 F.2d 526. Mackin v. Taylor County Court, 38 W.Va. 338, 18 S.E. 632. In cases where the tax imposed is not in its nature divisible and some part thereof is beyond the taxing power of the state and no provision is made for apportionment, the whole tax is void. Gwin, White & Prince, Inc., v. Henneford, 305 U.S. 434, 59 S.Ct. 325, 83 L.Ed. 272. Adams Mfg. Co. v. Storen, 304 U.S. 307, 58 S.Ct. 913, 82 L.Ed. 1365, 117 A.L.R. 429. Bowman v. Continental Oil Co., 256 U.S. 642, 41 S.Ct. 606, 65 L.Ed. 1139. As said by Mr. Justice Holmes in Meyer, Auditor of the State of Oklahoma v. Wells, Fargo & Co., 223 U.S. 298, 302, 32 S.Ct. 218, 220, 56 L.Ed. 445, “Neither the court below nor this court can reshape the statute simply because it embraces elements that it might have reached if it had been drawn with a different measure and intent.” If, therefore, any such apportionment as was made by the court below were necessary to separate the portion of the income which the state has jurisdiction to tax from the remainder, the tax would unquestionably be void in its entirety. The fact that the Supreme Court sustained the tax, although the point was expressly raised in the record that it was invalid because imposed on income derived partly from out-of-state activities with no provision for apportionment, is conclusive, we think, not only as to its validity, but also as to the fact that no such method of apportionment was contemplated.
Since'no method of apportionment is provided by the statute, it is clear that the apportionment directed by the Supreme Court means a separation, for purposes of taxation under the statute, of the portion of the income subject to the taxing power of the state. And that this is all that the statute was intended to tax, appears from the fact that the tax is imposed upon “engaging or continuing within the state in the business of contracting.” (Italics supplied.) The business here involved was contracting for the erection of locks and dams within the state. With the exception of the deliveries and the fabrication at the Pittsburgh plant, for which partial payments were made with passage of title to the government, all of the activities upon which payments were made occurred within the state, and the income derived therefrom was subject to the state’s power to tax. Certainly property brought within the state was rendered subject to that power; and no distinction can be drawn between the state’s power to tax the property and its power to tax income received upon delivery of the property within the state by the contractor or its incorporation by him in the dams and locks. As said by the Supreme Court in this case (302 U.S. at page 153, 58 S.Ct. at page 218, 82 L.Ed. 155, 114 A.L.R. 318), “The question of the taxability of a contractor upon the fruits of his services is closely analogous to that of the taxability of the property of the contractor which is used in performing the services.” It is well settled that, where income subject to the state’s taxing power is separable from that which is not, a tax will be upheld as to the portion which is so subject. Bowman v. Continental Oil Co., 256 U.S. 642, 646, 41 S.Ct. 606, 65 L.Ed. 1139; Ratterman v. Western Union Telegraph Co., 127 U.S. 411, 8 S.Ct. 1127, 32 L.Ed. 229.
Not only is it clear from the language of the Supreme Court first quoted, that its intention was that only those portions of taxpayer’s income derived from payments made upon delivery or fabrication at the Pittsburgh plant should be excluded from income in computing the tax, but this is the interpretation -placed upon its decision by the Supreme Court itself in the later case of Ford Motor Co. v. Beauchamp, 308 U. S. 331, 60 S.Ct. 273, 276, 84 L.Ed. 304. In that case, which upheld a corporate franchise tax, the court distinguished its prior decision in this case, saying: “James v. Dravo Contracting Company contains nothing contrary to this view. The statute under consideration there levied a privilege tax ‘equal to two per cent of the gross income of the business.’ In so far as it was upon receipts in other states for work done in other states, it was conceded to be outside of the taxing power of'the statute.” (Italics supplied).
It is argued that the tax is invalid under the decision of the Supreme Court in the case of Hans Rees’ Sons v. North Carolina, 283 U.S. 123, 51 S.Ct. 385, 75 L.Ed. 879, and that particular importance must be ascribed to that case because cited by the Supreme Court in its opinion in this. The Hans Rees’ Sons case was cited, however, merely, as supporting the propositions that, unless the activities which are the subject of tax are carried on within the limits of the state, the state is without power to impose the tax, and that, as to the work done in Pennsylvania upon which partial payments had been made, an apportionment, would be necessary. It constitutes no authority for the proposi-. tion that the state may not impose a: tax on the basis of income received from payments made upon deliveries or construction within the state because work may have been done in other states upon the materials prior to their delivery. The holding of the Hans Rees’ Sons case is that a state income tax upon a unitary enterprise conducted in several states is void if it allocates an unreasonable portion of the income to the taxing state. The tax here is not upon'a unitary enterprise conducted in several states, but upon the business of contracting conducted in West Virginia, and income derived from that business is properly subject to taxation by. that state. Only “upon receipts in other states for work done in other states” is the tax not assessable. The fact that the contractor may have prepared materials in other states for use under the contract is immaterial, if they were used in the performance of the contract in West Virginia and payments made the contractor were dependent upon such use.
Pertinent is the language used by the Supreme Court in Ford Motor Co. v. Beauchamp, supra, 308 U.S. at page 334-335, 60 S.Ct. at page 275, 84 L.Ed. 304, where the Court said: “The statute calls the excise a franchise tax. It is obviously payment for the privilege of carrying on business in Texas. There is no question but that the State has the power to make a charge against 'domestic or foreign corporations for the opportunity to transact this intrastate business. The exploitation by foreign corporations of intrastate opportunities under the protection and encouragement of local government offers a basis for taxation as unrestricted as that for domestic corporations. In laying a local privilege tax, the state sovereignty maj place a charge upon that privilege for the protection afforded.”
In the very recent case of McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 33, 60 S.Ct. 388, 398, 84 L.Ed. 565, a state tax on sales of goods from without the state for' consumption within the state was sustained on the ground that deliveries occurred within the state. On the same principle, the state unquestionably may tax the income of a contractor arising upon, construction within the state or delivery, within the state at the site of the construction; and-.the fact that the materials may have been fabricated in other states, either by the contractor or by others, cannot af-. feet the state’s power. In the case just cited, the court said: “Here the tax is conditioned upon a local activity delivery of.! goods within the state upon their purchase for consumption. It is an activity which apart from its effect on the commerce, is subject to the state taxing power. The effect of the tax, even though measured by the sales price, as has been shown, neither discriminates against nor obstructs interstate commerce more than numerous other state taxes which have repeatedly been sustained as involving no prohibited regulation of interstate commerce.”
With respect to the power of the state to tax on the basis of transactions occurring within its borders, this case, in its implications, is not unlike South Carolina Power Co. v. South Carolina Tax Commission, D.C., 52 F.2d 515; Id., D.C., 60 F.2d 528, affirmed 288 U.S. 178, 53 S.Ct. 326, 77 L.Ed. 685. In that case a state production tax on electricity was upheld, notwithstanding that the electricity immediately upon its production was carried into other states upon an interstate system of wires, and a sales tax on electricity was upheld, although the electricity was brought into the state upon an interstate system of wires. Just as it was there held that the state may tax what is carried on within its borders, although this may be dependent upon transactions extending beyond them, so also the power to tax income derived from contracting within the state is not affected by the fact that materials for use under the contract may be brought from without the state, or that they may have been prepared by the contractor without the state for use under the contract. Only where income arising from a contract performed within the state accrues upon a separable out-of-state transaction should it be excluded, as not being income arising from contracting within the state.
Another question presented by the appeal is whether penalties or interest should be allowed upon the amount of taxes found to be due. We think, however, that the court below was unquestionably right in denying penalties. The assessment was made upon a basis held by the Supreme Court to be erroneous in that it included in the gross income of the taxpayer partial payments made on account of the materials delivered or fabricated at the Pittsburgh plant. No assessment of the correct amount of the tax has even yet been made. Moreover, the tax as assessed was not severable so that taxpayer was given an opportunity of paying the amount properly due; and no opportunity was given to pay the entire amount and sue for the recovery of the portion illegally assessed. Taxpayer was justified in contesting liability for the taxes as assessed; and until the income to serve as the basis for taxation shall be ascertained and the taxes thereon determined, it would be inequitable to allow penalties for non payment to be collected. United States Trust Co. v. New Mexico, 183 U.S. 535, 544, 22 S.Ct. 172, 46 L.Ed. 315; San Barnadino County v. Southern Pac. R. Co., 118 U.S. 417, 6 S.Ct. 1144, 30 L.Ed. 125; Ritterbusch v. Atchison T. & S. F. R. Co., 8 Cir., 198 F. 46, 53.
The question as to the allowance of interest is a more difficult one. It is true that the statutes of West Virginia make no provision for the collection of interest upon delinquent taxes; and it is well settled that in suits for the recovery of such taxes interest is not recoverable unless authorized by statute. Board of Education v. Old Dominion Iron, Min. & Mfg. Co., 18 W.Va. 441; Crabtree v. Madden, 8 Cir., 54 F. 426; Sargent v. Tuttle, 67 Conn. 162, 34 A. 1028, 32 L.R.A. 822; note 16 Ann.Cas. 471. Courts of equity, however, in restraining the collection of the illegal portion of a tax may, in the exercise of their discretion, require the payment of interest on the legal portion, even where there is no statutory provision for payment of interest. Ritterbusch v. Atchison, T. & S. F. R. Co., supra; Ketchum v. Pacific R. Co., Fed.Cas. No. 7,738, 14 Fed.Cas. 418, 423, 424. But in this case it must be remembered that the legality of the entire tax was a matter of grave doubt until the decision of the Supreme Court, wherein its legality was upheld by a divided court. Under that decision the tax as assessed was held invalid and it was pointed out that an apportionment of income would be necessary to determine the correct amount of the tax. The hearing below was an attempt to make the apportionment; and as heretofore indicated an incorrect basis of apportionment was used. In the meantime no action has been taken by the state officials toward assessing the tax on the correct basis, and the amount of the liability of the taxpayer has not been determined. Until the amount of the tax is fixed, so that the taxpayer may know with certainty what amount he is required to pay, we think it would be inequitable to charge him with interest. Particularly is this true in view of the fact that taxpayer has been furnished no opportunity under the law of paying the tax under protest and suing for the recovery of the illegal portion. See United States Trust Co. v. New Mexico, supra.
-For the reasons stated, the decree appealed from will be reversed, and the cause will be remanded for further proceedings not inconsistent herewith. Upon such remand, decree should be entered enjoining the collection of only so much of the taxes as were assessed upon the portion of the income of taxpayer derived from payments made upon deliveries or fabrication at its Pittsburgh plant, but enjoining the collection of all penalties or interest assessed prior to the entry of the decree. The costs in this • Court on both appeals will be equally divided between the parties.
Reversed.
SOPER, Circuit Judge, concurs in the result.
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.
REAYLEY, Circuit Judge:
The United States brought this action against Coastal Refining and Marketing, Inc. (“Coastal”), alleging violations of the Environmental Protection Agency’s Clean Air Act regulations with respect to five cargos of imported petroleum product. On cross-motions for summary judgment, the trial court held that Coastal had, in fact, violated the regulations as to four of the five cargos. The trial court, however, refused to impose the $9 million in mandatory penalties sought by the government because the court found that § 211(d) of the Clean Air Act, which establishes the mandatory penalty, is unconstitutional. The government appeals, arguing that § 211(d) is constitutional and that Coastal violated the regulations with respect to the fifth cargo. Coastal cross-appeals, contending that the trial court erred in concluding that it had violated the regulations with respect to four of the cargos. We vacate the judgment and dismiss the suit of the United States.
I.
Section 211(c) of the Clean Air Act authorizes the Administrator of the Environmental Protection Agency (“EPA”) to promulgate regulations to
control or prohibit the manufacture, introduction into commerce, offering for sale, or sale of any fuel or fuel additive for use in a motor vehicle or motor vehicle engine ... if in the judgment of the Administrator any emission product of such fuel or fuel additive causes, or contributes, to air pollution which may reasonably be anticipated to endanger the public health or welfare....
42 U.S.C. § 7545(c)(1).
For several years the EPA has recognized that lead, which historically was used as an additive to enhance the octane level of gasoline, poses a threat to human health. See Small Refiner Lead Phase-Down Task Force v. United States EPA, 705 F.2d 506, 511, 527-31 (D.C.Cir.1983). Accordingly, the EPA has regulated the use of lead as an additive since 1973. See id. at 512. In 1985, the Administrator issued regulations under § 211(c) to reduce substantially the lead content in gasoline. See Union Oil Co. v. U.S. EPA, 821 F.2d 678, 679 (D.C.Cir.1987). The regulations called for a gradual reduction in lead content over a period of time. To provide producers and importers with flexibility during the “lead phasedown” period, the EPA regulations permitted those who voluntarily used less lead per gallon than specified in the regulations to “bank” the difference as a “lead usage right.” See 40 C.F.R. § 80.20(e)(1). These “rights,” also referred to as “credits,” could then be withdrawn through the end of 1987 to comply with the new, more stringent, standards as they became effective. Id. § 80.20(e)(2). These “credits” could also be transferred through the end of 1987, at which time the program ended. Id.; see also Union Oil Co., 821 F.2d at 680.
In order for a producer or importer to generate any “lead usage rights” under the regulatory program, the product produced or imported had to be “gasoline.” See 40 C.F.R. § 80.20(c)(1)®, (e)(l)(i)-(ii), (e)(3). “Gasoline” is defined as
any fuel sold in any State for use in motor vehicles and motor vehicle engines, and commonly or commercially known or sold as gasoline.
Id. § 80.2(c) (footnote omitted). Those who participated in the lead banking program were required to make quarterly reports to the EPA in which the product being produced or imported was identified. See id. § 80.20(a)(3), (c)(3), (e)(2)(iii), (e)(3)(iv). These reports enabled the EPA to ensure that the total amount of “banked” credits used by the industry did not exceed the maximum allowed under the lead content standard. See Union Oil Co., 821 F.2d at 680.
To give the § 211(c) regulations force, § 211(d) of the Clean Air Act provides that
[a]ny person who violates ... the regulations prescribed under subsection (c) ... shall forfeit and pay to the United States a civil penalty of $10,000 for each and every day of the continuance of such violation....
42 U.S.C. § 7545(d). Section 211(d) further provides that the Administrator of the EPA may remit or mitigate the $10,000 per day penalty. Id.
II.
During the first half of 1985, Coastal imported five cargos of petroleum product from Mexico. In its quarterly reports to the EPA, Coastal classified the cargos as “gasoline” and reported the creation of approximately 30 million grams of “lead usage rights” based on this classification.
The United States brought this action against Coastal, contending that the imported product was not “gasoline” and that the “lead usage rights” were, therefore, invalidly created. The government sought $9 million in penalties under § 211(d) ($10,-000 per day for 900 days — from the time Coastal classified the product as “gasoline” in the quarterly report on July 15, 1985, until December 31, 1987, the date the banking program ended).
Coastal moved for summary judgment and the United States filed a cross-motion for summary judgment. The trial court granted partial summary judgment on the issue of liability in favor of the United States. With regard to four of the five cargos, the court concluded that Coastal had not imported “gasoline” and, therefore, that the lead credits were not validly created. The court determined that § 211(d) of the Clean Air Act, which imposes the mandatory $10,000 per day penalty for a violation of the regulations issued under § 211(c), was unconstitutional. Consequently, the trial court did not impose any penalty on Coastal. The court also granted partial summary judgment for Coastal, holding that one cargo was “gasoline.”
The government appeals the lower court’s determination that § 211(d) is unconstitutional and that one of the five car-gos was “gasoline” as defined by the regulations. Coastal cross-appeals, claiming that the trial court erred in holding that four of its cargos were not “gasoline.”
III.
A. “Gasoline ”
In order to create “lead credits” under the EPA’s “banking” program, an importer must import “gasoline” as defined in the regulations. Two requirements must be met for a petroleum product to be considered “gasoline”: (1) it must be fuel of a type “sold in any State for use in motor vehicles and motor vehicle engines,” and (2) it must be “commonly or commercially known or sold as gasoline.” 40 C.F.R. § 80.2(c). The EPA’s regulatory definition is non-technical and provides no objective test against which product can be measured. As the trial court noted, in determining whether a product is “gasoline,” the courts are resigned to using “other objective standards available as a way of postulating some formula or standard which encompasses this legal definition.” A number of standards were presented to the trial court, including specifications of the American Society for Testing and Materials (“ASTM”).
The ASTM has established a standard specification for automotive gasoline. This specification, “established on the basis of the broad experience and close cooperation of producers of gasoline, manufacturers of automotive equipment, and users of both,” provides guidance “in establishing the requirements of gasoline for ground vehicles equipped with spark-ignition engines.” As the specification itself admits, “[i]t neither necessarily includes all types of gasolines that are satisfactory for automotive vehicles, nor necessarily excludes gasolines that may perform unsatisfactorily....” Although the specification does not provide an objective, comprehensive definition of gasoline, it is useful to the court as an aid in determining whether a particular product is “commonly or commercially known or sold as gasoline”; the standard was developed in conjunction with gasoline producers, automotive equipment manufacturers, and users of both. In addition, it has been incorporated into certain federal procurement standards. Because of the broad-based participation of key groups in developing the standard and its use in federal procurement practices, we accept that standard as our guide in determining whether a product is “commonly or commercially known” as “gasoline.”
The ASTM standard identifies several characteristics of gasoline. These characteristics include, but are not limited to, sulphur content, gum content, vapor pressure, oxidation stability, and octane content. The specification establishes objective standards for each of these several characteristics. For example, the specification establishes 87 as a minimum octane level for leaded gasoline. Similar objective standards are established for each of the other characteristics identified in the specification.
In its order, the trial court recognized that a number of characteristics are considered in determining whether product is “gasoline” and that octane plays a critical role in that determination. The court also acknowledged that to be “gasoline” a product must be both (1) fuel of a type “sold in any State for use in motor vehicles and motor vehicle engines” and (2) “commonly or commercially known or sold as gasoline.” Id. However, the lower court focused its analysis on the second portion of the definition and based its ruling exclusively on the octane level of the cargos.
(1) “Commonly or commercially known or sold as gasoline”
The record reveals that the trial court had before it the results of tests that inspectors had performed on each of the five cargos imported by Coastal. Coastal’s expert witness testified that each cargo satisfied all ASTM standards for gasoline. The government did not dispute that the test results satisfied the ASTM standards with regard to any characteristic of gasoline other than octane content. As to octane content, the government contended that the cargos fell below a level found in product that was “commonly or commercially known or sold as gasoline.”
In determining whether any of the car-gos imported by Coastal were “commonly or commercially known or sold as gasoline,” the trial court specifically stated that “[t]he parties agree that Coastal’s fuel met all [ASTM D 439] requirements, except [for octane content].” As to octane content the court stated that “[a] thorough review of all the specifications reveals that the minimum octane level for leaded gasoline is 87(R + M)/2. Allowable deductions ... reduce this minimum to 81.8(R + M)/2. Therefore, the only cargo ... imported by Coastal that qualifies as gasoline is the Pacific Hunter” (I) shipment with an octane level of 82.6, all other octane levels of the Coastal cargos being below 81.8. The trial court’s holding, at least as to the second part of the two-part definition of “gasoline,” rests solely on a determination that product with an octane level above 81.8 is “gasoline” and product with an octane level below 81.8 is not “gasoline.”
In its cross-appeal, Coastal argues that in arriving at 81.8 as a minimum octane level the trial court committed a mathematical error and that if the math is performed properly, the minimum acceptable octane rating as specified by the ASTM is 80.8. Because all of the Coastal cargos had octane levels exceeding 80.8, Coastal contends that it has satisfied the second part of the two-part definition of “gasoline.”
The United States does not defend the mathematical calculation of the trial court. In fact, the government concedes that Coastal has raised a genuine issue of material fact as to whether the cargos are “commercially known” as “gasoline.” We believe that Coastal has done more than that. Coastal correctly points out that the trial court erred in applying the ASTM specifications for octane levels. As noted earlier, the ASTM establishes 87 as the minimum octane level for leaded gasoline. The ASTM further provides that this octane level can be reduced by up to 4.5 for variations in altitude and by as much as 1 for climatic conditions. This results in a minimum octane level of 81.5.
In addition, the ASTM recognizes that octane measurements may be imprecise. As a consequence, the ASTM specification suggests that an octane measurement of a particular cargo may differ from another measurement of that same cargo by as much as .7 before the test results are considered suspect. We do not necessarily agree with Coastal that this .7 “precision variance” is automatically made a part of the ASTM specification for all purposes. However, the ASTM’s recognition of measurement variances informs this court’s judgment and for purposes of determining whether a particular product is “commonly or commercially known or sold as gasoline,” a .7 reduction in the minimum octane level is appropriate. Taking into account this “precision variance,” the minimum octane rating for gasoline under the ASTM standard is 80.8. The octane level of all of Coastal’s cargos exceeded the 80.8 octane level. Because all five of Coastal’s cargos meet all of the ASTM requirements for gasoline, including octane content, we believe there can be no question that those five cargos are “commonly or commercially known” as “gasoline.”
(2) “Sold in any state”
For a product to be “gasoline” within the meaning of the EPA regulations it must not only be “commonly or commercially known or sold as gasoline,” it must also be “sold in any State for use in motor vehicles and motor vehicle engines.” Id. On appeal the government focuses its attack on this part of the “gasoline” definition and argues that Coastal has failed to demonstrate that fuel with an octane level of 82.6 (the highest octane level of any of Coastal’s cargos) or below was “sold in any State for use in motor vehicles.” The government presented the trial court with a variety of studies showing that the majority of gasoline sold throughout the country has an octane level above 82.6. However, the trial court apparently did not find the evidence on this point in favor of the government and neither do we.
As we read the regulation, all that an importer must do to satisfy this part of the definition is to show evidence of a single sale in one state of gasoline of the same type as that being imported. This Coastal did by evidence of “postings.” The Federal Trade Commission requires that the octane content of gasoline be posted at the pump. See 16 C.F.R. pt. 306. The actual octane content must equal or exceed the posted octane content. See id. § 306.9(c). Coastal presented evidence to the trial court that at four service stations in the United States the posted octane level was below 82.6. One station (in Oregon) had a posted octane level of 80, which is lower than all of Coastal’s imported cargos. We find, as the trial court implicitly must have, that this is sufficient evidence to satisfy the first part of the definition.
The government argues that this is insufficient evidence to support the conclusion that gasoline with octane levels as low as that of the Coastal cargos was sold in any state. The government insists that these postings, admittedly a tiny fraction of the full number of postings, are the result of transcribing errors. The government also suggests that, based upon its surveys, the actual octane content exceeds the posted octane level and that postings are not evidence of actual sales. Other explanations are offered by the government. However, the government fails to offer any evidence that the posted octane content of 80 at the one station was, in fact, the result of a scriveners error. Nor did the government prove that the actual octane content of the gasoline in the pump exceeded the posted octane level of 80 or that there was no sale of such low octane gasoline from that station. We agree with Coastal that this posting presents a prima facie case as to the actual octane level of the gasoline at that station and that postings are evidence of sales. On this record, this posting establishes a material fact in favor of Coastal over which there is no genuine issue. Because Coastal has satisfied both parts of the two-part “gasoline” definition, it is entitled to summary judgment as to all five cargos. We affirm the trial court’s judgment as to the Pacific Hunter (I) cargo and reverse as to the other four cargos.
Because Coastal is not liable for any regulatory violation, we are not compelled to say more. However, we think it will be useful to state our views on the constitutionality of § 211(d) and to express our disagreement with the lower court’s holding in this regard.
B. Constitutionality of § 211(d)
Section 211(d) of the Clean Air Act provides that
[a]ny person who violates ... the regulations prescribed under subsection (c) of this section ... shall forfeit and pay to the United States a civil penalty of $10,-000 for each and every day of the continuance of such violation_ The Admin-
istrator may, upon application therefor, remit or mitigate any forfeiture provided for in this subsection and he shall have authority to determine the facts upon all such applications.
42 U.S.C. § 7545(d). After finding Coastal liable for violating the regulations of subsection (c), the trial court refused to impose the required penalty because the court determined that § 211(d) was unconstitutional. The court stated that
[sjection 211(d) violates the Separation of Powers Doctrine because it subjects the judgment of an Article III Court to review by the Executive Branch. The Article III judge is, in essence, performing an administrative task by determining only the number of days of violation and imposing a mandated penalty. No discretion remains....
Furthermore, the obligatory penalty provision is pre-determined. By denying a defendant the right to present an equitable defense and the Court the right to use its discretion in imposing a penalty, the provision violates the established procedures and guaranteed rights of due process, and therefore violates the Fifth Amendment.
Likewise, the imposition of a $10,000 fine may be reasonable and justifiable in many circumstances; in others it may not be. Not allowing the Court jurisdiction to hear equitable defenses when assessing a penalty deprives the Court of inherent discretion and may result in a penalty with no rational relationship between the violation and the penalty imposed.
We disagree with the district court’s assessment that § 211(d) violates the principles of separation of powers and due process.
(1) Separation of Powers
The trial court determined that § 211(d) violates the principle of separation of powers because it establishes a mandatory penalty and allows the Administrator of the EPA to remit or mitigate the penalty after it is imposed by the court.
The Constitution separates governmental powers into three coordinate branches. Morrison v. Olson, 487 U.S. 654, 108 S.Ct. 2597, 2620, 101 L.Ed.2d 569 (1988). It is this separation of powers that serves as a “ ‘safeguard against the encroachment or aggrandizement of one branch at the expense of the other.’ ” Id. (quoting Buckley v. Valeo, 424 U.S. 1, 96 S.Ct. 612, 684, 46 L.Ed.2d 659 (1976)). The principle of separation of powers is violated when an “Act ‘impermissibly undermine[s]’ the powers of [one] Branch, or ‘disrupts the proper balance between the coordinate branches [by] preventpng] th[at] Branch from accomplishing its constitutionally assigned functions.’ ” Id. 108 S.Ct. at 2621 (citations omitted). We see no evidence that § 211(d) of the Clean Air Act violates the principle of separation of powers. The constitutionality of congressionally established mandatory penalties such as that found in § 211(d) seems beyond doubt. See Tull v. United States, 481 U.S. 412, 107 S.Ct. 1831, 1840, 95 L.Ed.2d 365 (1987) (In denying the defendant’s claim of a Seventh Amendment right to have a jury determine the amount of damages under the Clean Water Act, the Supreme Court reasoned that “the action to recover civil penalties usually seeks the amount fixed by the Congress.... Since Congress itself may fix the civil penalties, it may delegate that determination to trial judges.”); see also United States v. Regan, 232 U.S. 37, 43, 34 S.Ct. 213, 215, 58 L.Ed. 494 (1914); Hepner v. United States, 213 U.S. 103, 108, 29 S.Ct. 474, 476-77, 53 L.Ed. 720 (1909). Similarly, statutes giving the executive branch the power to remit or mitigate a congressionally established and judicially imposed penalty have long been recognized and approved by the Supreme Court. See Confiscation Cases, 74 U.S. (7 Wall.) 454, 461-62, 19 L.Ed. 196 (1869) (Secretary of Treasury can “remit a forfeiture or penalty, accruing under [statutes], subsequent to the final decree or judgment”); Johnson v. United States, 74 U.S. (7 Wall.) 166, 174-75, 19 L.Ed. 187 (1869) (power of Secretary of Treasury to mitigate is not judicial exercise; rather it is one of mercy from which no appeal can be taken); see also Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 690 n. 27, 94 S.Ct. 2080, 2095 n. 27, 40 L.Ed.2d 452 (1974); The Laura, 114 U.S. 411, 5 S.Ct. 881, 29 L.Ed. 147 (1885); United States v. Morns, 23 U.S. (10 Wheat. 246) 246, 292-96, 6 L.Ed. 314 (1825). The mandatory penalty and the mitigation authority provided the Administrator of the EPA in § 211(d) presents neither an aggrandizement of power by one branch at the expense of the other nor an encroachment of one branch on the other. Section 211(d) simply does not impermissibly undermine the powers of the judicial branch.
(2) Due Process
As to the district court’s holding that the mandatory penalty provision of § 211(d) violates due process by denying a defendant the right to present — and the court the right to consider — equitable defenses, we agree with the government that there is no inherent power for the judiciary to mitigate congressionally-mandated penalties. See Clark v. Barnard, 108 U.S. 436, 457, 2 S.Ct. 878, 890, 27 L.Ed. 780 (1883) (“where any penalty or forfeiture is imposed by statute ... courts of equity will not interfere to mitigate the penalty or forfeiture, ... for it would be in contravention of the direct expression of [Congress]”). A court in equity may not do that which the law forbids. See Immigration & Naturalization Serv. v. Pangilinan, 486 U.S. 875, 108 S.Ct. 2210, 2216, 100 L.Ed.2d 882 (1988).
The trial court also determined that § 211(d) is unconstitutional because the mandatory penalty may bear no rational relationship to the violation involved in a particular case. In so doing, the court erred. A court may not declare a statute facially invalid based upon a hypothetical possibility that the law may be unreasonable in certain circumstances. See United States v. Raines, 362 U.S. 17, 20-22, 80 S.Ct. 519, 522-23, 4 L.Ed.2d 524 (1960) (“one to whom application of a statute is constitutional will not be heard to attack the statute on the ground that impliedly it might also be taken as applying to other persons or other situations in which its application might be unconstitutional”); accord Brockett v. Spokane Arcades, Inc., 472 U.S. 491, 501-02, 105 S.Ct. 2794, 2800-01, 86 L.Ed.2d 394 (1985). The trial court failed to do that which it must — determine whether a statute is constitutional as applied to the facts in the case before it. See Raines, 362 U.S. at 21-22, 80 S.Ct. at 522-23.
It is unnecessary for this panel to consider the other arguments raised by the parties given our resolution of the determinative issue — Coastal properly classified its imported product as “gasoline.”
The judgment of the district court is VACATED and the suit of the United States is DISMISSED.
. The lead content of gasoline produced or imported after July 1, 1985, was to be reduced from 1.10 grams of lead per gallon of leaded gasoline to no more than an average level of 0.50 grams of lead per gallon of leaded gasoline. After December 31, 1985, the lead content could be no more than 0.10 grams of lead per gallon of leaded gasoline on average during any quarter of the calendar year. See 40 C.F.R. § 80.20(c)(1) (standards for importers).
. To be "gasoline,” the imported product does not actually have to be sold as such. Coastal’s imported product was not sold directly on the market as gasoline.
. The relevant standard is designated as D 439 and is entitled “Standard Specification for AUTOMOTIVE GASOLINE." The standard indicates that it is a living document subject to change; it represents a description of gasolines at a given point in time.
. "Gasoline” is broadly defined in ASTM D 439 as "a volatile mixture of liquid hydrocarbons, generally containing small amounts of additives, suitable for use as a fuel in spark-ignition internal combustion engines.”
. In its Memorandum in Support of its Cross-Motion for Partial Summary Judgment on Liability, even the government admits that EPA employees have indicated that in determining whether a fuel was “gasoline” under the EPA’s regulations, "a relevant inquiry is whether the product meets the specifications known to be commonly used in industry, such as ... American Society for Testing and Materials specifications .... ”
. All references to octane used in this opinion are (R + M)/2. This formula refers to the research octane number plus the motor octane number divided by two. See 40 C.F.R. § 80.2(d).
. The ASTM standard provides for various adjustments to this octane level. Once these adjustments are applied, the minimum octane level falls to 80.8. These adjustments and their significance in this case are discussed later in this opinion.
. The cargos, and their respective octane contents as reported by Coastal and as relied upon by the trial court, were as follows.
Cargo Octane Content
Pacific Hunter (I) 82.6
Pacific Hunter (II) 80.9
Potomac Trader 81.45
St. Michaelis 81.7
Scottish Lion 81.55
In addition to these octane levels, the record also indicates that the octane content as reported by Coastal to United States Customs for the Pacific Hunter (I) cargo was 81.2 and for the Scottish Lion cargo was 80.3. The government contends that we must rely on the lower octane levels reported to Customs in determining Coastal's cross-appeal. Although the different octane levels on these two cargos arguably present a factual dispute that would render summary judgment inappropriate, we do not consider these different readings to raise a "genuine issue of material fact” in light of other undisputed facts in this case.
As to the Pacific Hunter (I) cargo, the 81.2 octane reading reported to Customs is still above a properly calculated minimum octane level specified by the ASTM after adjustments are applied. See supra note 7. The different reading on this cargo is, therefore, immaterial.
As to the Scottish Lion cargo, we note that the record indicates that the 81.55 reading is the reading upon discharge, and the 80.3 reading appears to be a reading taken upon loading. The difference in the two readings was not explained by the parties. It may merely reflect the imprecision in measuring octane levels. We also note that on appeal the government has not directly challenged the trial court’s reliance on the octane levels reported in the chart above.
Standing alone, however, the 80.3 octane level is not dispositive of the status of the product as "gasoline.” Although octane content is critical in determining whether a product is "gasoline,” octane content is not the only criteria. Assuming 80.3 is the octane level of the Scottish Lion cargo, in a situation such as this, where a product indisputably meets all ASTM criteria (except octane content) and where there is evidence of gasoline with octane levels as low as 80 being sold, see infra, we believe that there can be no doubt that such product is "commonly or commercially known” as "gasoline" where its octane content falls a mere fraction of a point below the ASTM minimum adjusted octane level of 80.8. The process of classifying product as "gasoline” does not rely on a "bright-line” test and is not as precise as the trial court order might suggest. The ASTM standard admits as much. Presumably, if the EPA wished to inject more certainty into the task, it could do so through a regulatory revision.
. Our reading of the trial court order suggests that the court relied on a federal procurement specification modified by the ASTM. standard specification in arriving at its minimum octane level. As we stated earlier, for purposes of determining whether a product is "commonly or commercially known” as “gasoline” we accept the ASTM as our guide. See supra note 5 and accompanying text.
. In its order, the trial court noted that the ASTM standard provides for a .7 "precision variance,” and the court, in fact, applied a .7 reduction in its analysis. Although the applicability of this "precision variance” was disputed by the parties below, on appeal the government has not addressed the issue. Testimony before the trial court revealed that the “precision variance” could be used. In addition, the government’s own witness stated that the State of Maryland routinely applies a .7 variation in determining compliance with State octane specifications.
. See supra note 8.
. The trial court’s order acknowledges that this part of the two-part definition must be satisfied for product to be properly classified as "gasoline.” Beyond this acknowledgment, the court did not discuss how this part of the definition was met in this case. However, the trial court implicitly found that this portion of the definition was satisfied with respect to the Pacific Hunter (I) cargo because it found that cargo to be properly classified as "gasoline."
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.
VAN GRAAFEILAND, Circuit Judge:
Jay N. Tabatchnick and S. Wolfe Emmer appeal from a $73,750 judgment recovered against them by Jerry B. Klein, trustee for the liquidation of the business of JNT Investors, Inc., under the Securities Investor Protection Act of 1970, 15 U.S.C. §§ 78aaa-78111. Klein cross appeals from that portion of the judgment dismissing other claims for relief. The parties’ differences have been much too extensively briefed and argued, both in this Court and in the court below. There are, however, several issues of substance that require discussion.
I
The Grant of Summary Judgment
JNT, a small securities broker and dealer with its office in New York City, was organized by defendant Tabatchnick in 1970. Tabatchnick was president of the company and owned 43 percent of its stock. Defendant Emmer owned 42 percent of the stock and maintained a trading account with the company. In October 1970 Tabatchnick obtained from the First National City Bank a personal loan of $50,000 payable on demand and secured by collateral owned by one Joseph Taub. Tabatchnick then loaned the $50,000 to JNT under a subordinated loan agreement maturing November 1, 1971.
When Tabatchnick decided to extend the subordinated loan for another year, Emmer supplied collateral for the bank loan to replace that of Mr. Taub. With Emmer’s authorization, Tabatchnick used 7,000 shares of common stock of Commonwealth Silver Industries, Ltd., from Emmer’s account at JNT for this purpose. To give Emmer some protection against loss, Ta-batchnick delivered to him certain portfolio securities of JNT. The receipt signed by Emmer stated that the securities were “assigned to [Emmer] as additional collateral until which time your 7,000 shares of Commonwealth Silver Ind. common stock will no longer be needed as collateral for Mr. Tabatchnick’s personal loan of $50,000 [from] First National City which was subordinated to JNT Investors, Inc.”
On February 15, 1972, the United States District Court for the Southern District of New York determined that JNT’s customers were in need of protection under 15 U.S.C. § 78eee and appointed plaintiff trustee for the liquidation of the company’s business. This liquidation was to be conducted generally “in accordance with, and as though it were being conducted under,” Chapter X of the Bankruptcy Act, 15 U.S.C. § 78fff(c)(1). Following his appointment, plaintiff contended that the transfer of JNT’s portfolio securities to Emmer was a fraudulent conveyance under section 67(d) of the Bankruptcy Act, 11 U.S.C. § 107(d), and demanded their return, which was refused. In the suit that ensued, the district court granted plaintiff’s motion for summary judgment on the cause of action alleging a section 67(d) violation, reserving only the question of damages for jury determination. See Klein v. Tabatchnick, 418 F.Supp. 1368 (S.D.N.Y.1976). Damages subsequently were fixed by a jury at $73,750. For the following reasons, we believe that summary judgment should not have been granted.
In granting plaintiff’s motion, the district court made several factual findings. He found (1) that the transfer of JNT securities to Emmer occurred on December 13, 1971, (2) that the transfer was without fair consideration to JNT, and (3) that JNT was insolvent at the time of transfer. We believe that the making of these findings should have awaited trial.
(1)
Fixing the date of transfer was important in this case because of the extreme fluctuations in the value of the volatile securities involved and because it was the date as of which insolvency had to be determined. Although the receipt for the transferred securities was dated December 13, 1971, there was strong indication in the motion papers that the transfer actually occurred in February 1972 and the receipt was either delivered before transfer or was back-dated by some unidentified person. JNT’s inventory records show that the securities were in its vault as late as the end of January 1972, and there is deposition testimony that they were removed by Tabatch-nick in early February. We have examined the voluminous affidavits submitted to the district court and are unable to determine when the transfer occurred. We conclude that the district judge erred in making that determination on plaintiff’s application for summary judgment.
(2)
Fairness of consideration is generally a question of fact. McNellis v. Raymond, 287 F.Supp. 232, 238 (N.D.N.Y.1968), rev’d on other grounds, 420 F.2d 51 (2d Cir. 1970); see Roth v. Fabrikant Bros., Inc., 175 F.2d 665, 668 (2d Cir. 1949); Seligson v. New York Produce Exchange, 394 F.Supp. 125, 132-34 (S.D.N.Y.1975). The district court determined it as a question of law. See 418 F.Supp. at 1372. We do not believe the facts were so clearly established in plaintiff’s favor that they warranted disposition in this manner.
The district judge focused on the fact that Emmer’s written authorization for the use of his securities as replacement collateral was not executed until December 11, 1971, while the extension of Tabatchnick’s subordinated loan agreement was executed on November 1st. From this, he concluded that the December 11 authorization was of no value to JNT. In so doing, the district judge overlooked Tabatchnick’s sworn statement that he would not have extended the subordination agreement on November 1 if he had not obtained a prior commitment from Emmer that he would furnish replacement collateral.
Although the district judge was clearly correct in holding that transfers solely for the benefit of third parties do not furnish fair consideration under section 67(d)(2)(a), that statement may not be applicable to the transaction at issue. Benefit to a debtor need not be direct; it may come indirectly through benefit to a third person. See Williams v. Twin City Co., 251 F.2d 678, 681 (9th Cir. 1958); Mandel v. Scanlon, 426 F.Supp. 519, 523-24 (W.D.Pa.1977); McNellis v. Raymond, supra, 287 F.Supp. at 239; Hoflar v. Marion Lumber Co., 233 F.Supp. 540, 543 (E.D.S.C.1964). Tabatchnick was the majority shareholder of JNT, and everything he owned was in the firm. It appears from the motion papers that he operated the company as if it were his private domain. Emmer, the other substantial shareholder, denied that he participated in any way in company management. As he put it, “This whole company, JNT, was in fact Mr. Tabatchnick as far as I was concerned.” The $50,000 that Tabatchnick borrowed from the bank was loaned to the company, and that loan, Tabatchnick says, would not have been renewed without the use of Emmer’s collateral.
Construing the motion papers most favorably to the defendants, as we are required to do, Adickes v. S. H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970), we cannot say that JNT received no benefit from Tabatchnick’s use of Emmer’s collateral. Whether this furnished fair consideration for the transfer of JNT’s own securities to Emmer depended among other things on JNT’s need for the $50,000, its availability from some source other than Tabatchnick, and the value of the securities transferred to Emmer. JNT was a new underwriting firm which started in business with little or no capital and no financial track record. The motion papers show that withdrawal of Tabatchnick’s $50,000 would have created a severe cash and capital problem in the company and that Emmer “provided a substantial benefit to JNT when he furnished the replacement collateral for the loan.” Moreover, there was substantial dispute as to the value of the securities transferred to Emmer; Tabatchnick in particular placed a very low value upon them. Whether this value was fairly equivalent to the benefits received by JNT should not have been decided on motion papers.
(3)
Insolvency is also a factual question. Britt v. Damson, 334 F.2d 896, 902 (9th Cir. 1964), cert. denied, 379 U.S. 966, 85 S.Ct. 661, 13 L.Ed.2d 560 (1965); 1 Collier on Bankruptcy § 1.19 at 130.12 (14th ed. 1974); 4 Collier on Bankruptcy § 67.05 (14th ed. 1978). Moreover, a finding on the issue of insolvency often depends upon the factual inferences and conclusions of expert witnesses which, when controverted, do not lend themselves readily to summary judgment resolution. See United States v. Diebold, Inc., 369 U.S. 654, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962); Seligson v. New York Produce Exchange, supra, 394 F.Supp. at 128-32.
In this case, the district court made a finding of insolvency on the basis of expert testimony by the trustee, whose accounting procedures and qualifications as an expert were challenged by defendants and who admittedly “made numerous subjective judgments concerning values of various assets.” The district court erroneously assumed that defendants had deposed the trustee prior to the summary judgment application and emphasized that they had not sought out a certified public accountant to verify the accuracy of the trustee’s conclusions. However, when Emmer moved for reconsideration of the district court’s summary judgment order and produced the affidavit of a certified public accountant stating that JNT was solvent on both November 30, 1971, and December 31, 1971, the district court found that Emmer had presented no new evidence which would justify modification of its prior opinion. We conclude that this was error. Where, as here, intelligent adjudication requires more than the use of lay knowledge and the resolution of a disputed issue hinges in large measure upon conflicting opinions and judgments of expert witnesses, summary judgment is not appropriate. See Rains v. Cascade Industries, Inc., 402 F.2d 241, 247 (3d Cir. 1968); Cf. Vermont Structural Slate Co. v. Tatko Brothers Slate Co., 233 F.2d 9, 10 (2d Cir. 1956).
Because the grant of summary judgment was error, judgment for plaintiff on the se.cond and fourth causes of action must be reversed. The second cause of action is remanded for trial as against the defendant Tabatchnick, the fourth cause of action as against the defendant Emmer.
II
Dismissal of Plaintiff’s Ninth Cause of Action
In February 1972, during discussions with the National Association of Securities Dealers (NASD), Tabatchnick agreed to cease conducting business with the public until such time as JNT was able to comply with the Net Capital Rule. 17 C.F.R. § 240.15c3-1. Tabatchnick was instructed that he would have to raise $138,000 in order to bring JNT into capital compliance. Once again, he went to Emmer for help. Emmer instructed another brokerage firm, in which he maintained a substantial account, to give Tabatchnick a check of $100,000 payable to JNT, with the understanding that he would have his money back in 24 to 48 hours or else he would cancel the check.
Although Tabatchnick secured the check to placate the NASD, he apparently decided that his efforts to salvage JNT would be futile. He did not show the check to NASD officials, nor did he place it in the firm account. Tabatchnick informed the NASD staff supervisor that he had a cheek “which could be contributed to JNT but that the check was not going to be put into JNT.” Instead, Tabatchnick tore the signature off the check and returned it to the brokerage firm which had issued it.
Plaintiff’s ninth cause of action alleges that Tabatchnick’s return of the check constituted a voidable preference under section 60 of the Bankruptcy Act, 11 U.S.C. § 96, which defines a preference as a transfer of the debtor’s property “to or for the benefit of a creditor for or on account of an antecedent debt”. Id. § 96(a)(1). The district court held in the first instance that it was for the jury to determine whether Tabatch-nick’s return of the check constituted such a voidable preference. When the jury concluded that it did, the district judge reconsidered his earlier decision and directed that judgment notwithstanding the verdict be entered in favor of the defendants on the ninth cause of action. We believe that this latter determination was the correct one.
In order for the trustee to establish a preferential transfer, he had to show that the transferee was a creditor of the bankrupt, i. e., the owner of a demand or claim provable in bankruptcy. Richardson v. Shaw, 209 U.S. 365, 381, 28 S.Ct. 512, 52 L.Ed. 835 (1908); 11 U.S.C. § 1(11); 3 Collier on Bankruptcy § 60, at 834 (14th ed. 1977). For a debt to exist, something must be owed to the creditor. Zwick v. Freeman, 373 F.2d 110, 116 (2d Cir.), cert. denied, 389 U.S. 835, 88 S.Ct. 43, 19 L.Ed.2d 96 (1967). Moreover, the transferee must have become a creditor prior to the transfer, or it would not have been made “for or on account of an antecedent debt.” 4 Remington on Bankruptcy § 1660, at 203 (5th ed. 1957). “Preference implies paying or securing a pre-existing debt of the person preferred.” Dean v. Davis, 242 U.S. 438, 443, 37 S.Ct. 130, 131, 61 L.Ed. 419 (1917).
We agree with the district judge that JNT owed no antecedent debt to Emmer which he, as a creditor, could have proven in JNT’s bankruptcy proceedings. The check itself was merely a request to the drawee bank to pay JNT $100,000; it did not operate as an assignment of these funds to JNT. Garden Check Cashing Service, Inc. v. First National City Bank, 25 A.D.2d 137, 141-42, 267 N.Y.S.2d 698, aff’d, 18 N.Y.2d 941, 277 N.Y.S.2d 141, 223 N.E.2d 566 (1966). Prior to the cashing of the check, there was simply no obligation owing to Emmer for which he could have had a recovery.
The judgment dismissing plaintiff’s ninth cause of action is affirmed.
III
Damages and Setoff
Both defendants challenge the right of the district court to award damages against them. Emmer contends that plaintiff’s sole remedy against him was the return of the JNT securities. Tabatchnick asserts that section 720 of the New York Business Corporation Law does not authorize the recovery of money damages.
Emmer also contends that he was entitled to recover damages from plaintiff for plaintiff’s refusal to return securities owned by Emmer but in plaintiff's possession. Ta-batchnick argues that he was entitled to a setoff against plaintiff’s recovery of $50,-000, the amount of his unrepaid loan to JNT.
(D
Under the circumstances of this case, if the trustee is entitled to recover for a fraudulent transfer of JNT securities to Emmer, that recovery is not limited to a return of the securities. The remedial provisions of sections 67 and 70 of the Bankruptcy Act are somewhat ambiguous. Section 67(d)(6), 11 U.S.C. § 107(d)(6), provides that a fraudulent transfer “shall be null and void against the trustee.” Section 70(e)(2), 11 U.S.C. § 110(e)(2), on the other hand, provides that the trustee “shall reclaim and recover such property or collect its value.” We need not decide whether these sections, read together, give the trustee the option in every case to seek either recovery of the property or its value. But see Schainman v. Dean, 24 F.2d 475, 476 (9th Cir. 1928). Where, as here, the transferee has refused to return the securities upon the trustee’s request and they have subsequently severely depreciated in value, if such refusal was wrongful, the district court could permit monetary recovery.
(2)
Section 720 of the New York Business Corporation Law provides that an action may be brought against a director to compel him to account for the violation of his duties in the management and disposition of corporate assets. Relying upon Ali Baba Creations, Inc. v. Congress Textile Printers, Inc., 41 A.D.2d 924, 343 N.Y.S.2d 712 (1973), Tabatchnick now contends, apparently for the first time, that section 720 may not be used, as here, to obtain a money judgment in an action at law for damages.
Because we are remanding for a new trial, this issue becomes largely academic. Plaintiff is not seeking to recover any ill-gotten gains in the hands of Tabatchnick but only the damages which JNT sustained as a result of Tabatchnick’s allegedly wrongful conduct. The New York Court of Appeals has held that section 720 “is broad and covers every form of waste of assets and violation of duty whether as a result of intention, negligence, or predatory acquisition.” Rapoport v. Schneider, 29 N.Y.2d 396, 400, 328 N.Y.S.2d 431, 435, 278 N.E.2d 642, 645 (1972). Whether pursuit of relief in the instant case is labeled as an action for an accounting or a suit for damages is of. little consequence. Amending the ad damnum clause in plaintiff’s second cause of action to make it a demand that Tabatchnick account for JNT’s damages will cause no change of substance, nor will it prejudice Tabatchnick in any manner. See Bush v. Masiello, 55 F.R.D. 72, 78, 79 (S.D.N.Y.1972). Such amendment may be had.
(3)
The question whether Emmer should be entitled to a monetary recovery for the trustee’s allegedly wrongful withholding of stock owned by Emmer is an important one because of the securities’ sharp decline in value. In his counterclaim, Emmer alleged that he owned certain securities which were held for his account by JNT and that the trustee had taken possession of them. These allegations were admitted by the trustee, who contended that section 57(g) of the Bankruptcy Act, 11 U.S.C. § 93(g), authorized him to retain possession.
Section 57(g) provides that the claim of a creditor who has received a voidable preference should not be allowed unless he surrenders the preference. Relying upon this provision, the district court held that the trustee could retain Emmer’s stock until any judgment against Emmer was satisfied, at which time it would be returned. Although the facts were not fully developed on the trial, this holding may have been error.
Section 6(c)(2)(A)(iii) of the Securities Investors Protection Act, 15 U.S.C. 78fff(c)(2) (A)(iii), as it existed prior to the 1978 amendments, defined “cash customer” in much the same language as did its predecessor, section 60(e)(1) of the Bankruptcy Act, 11 U.S.C. § 96(e)(1), i. e., a customer entitled to immediate possession of his securities without the payment of any sum to the broker. Further tracking the language of section 60(e), the Securities Investors Protection Act provided that all property held by a stockbroker for the account of customers, except cash customers who were able to specifically identify their property, should constitute a separate fund for the benefit of the customers as a separate class of creditors. Section 6(c)(2)(B). The trustee was directed to return specifically identifiable property to the customers entitled thereto, section 6(c)(2)(C), and no provision was made for an offset based upon a general indebtedness. The statute provided instead that one might be a cash customer as to certain securities and not to as to others. Section 6(c)(2)(A)(iii).
Our examination of section 60(e) and the Securities Investors Protection Act as originally enacted satisfies us that Congress did not intend in either statute for cash customers with specifically identifiable securities to be treated as creditors with regard to those securities. See Tepper v. Chichester, 285 F.2d 309, 312 (9th Cir. 1961); Cf. 15 U.S.C.A. § 78fff—2(c)(2) (Supp.1979). To the extent, if any, that Emmer was such a cash customer of JNT, he should not have been treated as a creditor subject to the provisions of section 57(g). Upon retrial, the district court should determine Emmer’s rights and remedies on that basis. Other than as expressed herein, we have no present opinion on those issues.
(4)
If, on retrial, Tabatchnick is found to have breached his fiduciary duties to JNT through the transfer of its securities to Emmer, he will not be entitled to set off the $50,000 owed to him by the corporation. See Bayliss v. Rood, 424 F.2d 142, 147 (4th Cir. 1970); Ritter v. Mountain Camp Holding Corp., 252 A.D. 602, 604-5, 299 N.Y.S. 876 (1937); 4 Collier on Bankruptcy § 68.04[2.1], at 872-77 (14th ed. 1978).
IV
Other Contentions of the Parties
The only other claim of the parties meriting comment is Emmer’s claim that the trial court was without jurisdiction. The complaint alleged violations of the Securities Exchange Act and tortious conduct in New York State under the pendent state claims. The district court did not err in holding that jurisdiction existed. See 15 U.S.C. § 78aa; N.Y.Civ.Prac.Law and Rules § 302(a); Mariash v. Morrill, 496 F.2d 1138, 1142-43 (2d Cir. 1974); Neilson v. Sal Martorano, Inc., 36 A.D.2d 625, 626, 319 N.Y. S.2d 480 (1971); Francis I. DuPont & Co. v. Chelednik, 69 Misc.2d 362, 363, 330 N.Y.S.2d 149 (1971).
The judgment appealed from is affirmed in part and reversed and remanded in part in accordance with the foregoing provisions of this opinion. Tabatchnick and Emmer will be allowed fifty percent of their costs and disbursements on this appeal. This amount will adequately compensate them for the cost of presenting their nonfrivolous and nonrepetitive arguments to this Court.
. Section 67(d)(2)(a) provides that a transfer by a debtor within one year of filing for bankruptcy is fraudulent as to existing creditors if made without fair consideration and the debtor is or will thereby be rendered insolvent.
. Although the complaint contained nine causes of action, plaintiff waived six of them prior to trial and proceeded to trial only on the second, fourth, and ninth claims for relief.
. The second cause of action alleges a claim under section 720 of the New York Business Corporation Law which authorizes actions against corporate directors for breach of their fiduciary duties. Because Emmer was not a director, plaintiff agreed at trial to limit this claim for relief to Tabatchnick. Although the judgment against Tabatchnick on the second cause of action resulted from a directed verdict at the close of trial, the directed verdict was based upon the prior grant of summary judgment on the fourth cause of action alleging a violation of section 67(d). Reversal of plaintiffs recovery under the fourth cause of action therefore requires reversal of his recovery under the second.
. The district court correctly held that Tabatch-nick did not hold or receive JNT’s transferred portfolio securities within the meaning of the bankruptcy law. 11 U.S.C. § 110(e)(2). See Jackson v. Star Sprinkler Corp., 575 F.2d 1223, 1234 (8th Cir. 1978); Elliott v. Glushon, 390 F.2d 514 (9th Cir. 1967). It did not err, therefore, in concluding that only Emmer might be held liable under the fourth cause of action alleging a violation of section 67(d).
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.
GARDNER, Circuit Judge.
This is a patent suit in which Robert L. Bobbitt, as plaintiff below, sought to enjoin the Midland Flour Milling Company, defendant, charging infringement of claims 3 and 4 of Letters Patent No. 1,354,878, dated May 5,1920, for an improvement in dust collectors. The application for patent was filed November 27, 1914.
The patent relates to a type of dust collector in which dust-laden air is tangentially introduced into the upper cylindrical portion of a chamber, the lower part of which is in the form of a cone, the dust being discharged through an opening near the apex of the cone and the purified air being discharged upwardly through an opening in the center of the top of the collector. Patent-ability is bottomed on the claim that plaintiff introduced into the art as it then existed the feature of having the total height of the dust collector about three and a half times its greatest diameter. It is recited in the patent that:
“This type of dust collector is well known and in very general use. Such dust collectors are in all cases, so far as I am aware, of relatively short height compared with their width, their total height ranging from one-fourth to one-half greater than the greatest diameter, which, of course, is at the top.”
Claims 3 and 4, which are the only ones involved in this suit, read as follows:
“3. A separating chamber having a tangential inlet for dust-laden air and adapted to confine a whirling body of air and dust, an opening at one end thereof for purified air, and a relatively small centrally disposed opening at the other end for dust, said chamber having a tapering portion of the shape of a cone whose altitude is substantially three times the diameter of its base, said dust outlet opening being adjacent to the apex of said cone.
“4. A separating chamber having a cylindrical portion, a tangential inlet for dust-laden air in said cylindrical portion, an outlet for purified air, an outlet for dust, and a tapering portion of the shape of a cone having an altitude equal to substantially three times the diameter of its base and having a smooth uninterrupted inner surface, said dust outlet opening being located adjacent to the apex of said cone.”
The bill of complaint is in conventional form, and the answer in effect pleads invalidity and noninfringement, and also pleads pri- or publication and prior public use. The lower court sustained the validity of the patent and found infringement as to certain of the devices used by the defendant, holding that dust collectors in use by the defendant having a cone proportion of between 2.50 and 3.50 to 1, infringed plaintiff’s claims 3 and 4, but that defendant’s devices in which the cone ratio was more than 3.50 to 1 did not infringe. Both parties have appealed, the defendant claiming that the court erred in holding the patent valid, and the plaintiff claiming that the court erred in limiting his patent to those devices having a cone in which the ratio of the altitude of the cone to the diameter at the base was between 2.50 and 3.50 to 1.
In support of its contention that plaintiff’s patent is invalid, defendant urges: (1) His invention or discovery was described in a printed publication prior to plaintiff’s discovery thereof; (2) that the invention was in public use and sale for more than two years prior to his application for patent; (3) that it was anticipated by the prior art and lacking in invention over the prior art; (4) that plaintiff has been guilty of laches.
Section 31, title 35, U. S. C. (35 HSCA § 31) provides as follows:
“Any person who has invented or discovered any new and useful art, machine, manufacture, or composition of matter, or any new and useful improvements thereof, not known or used by others in this country, before his invention or discovery thereof, and not patented or described in any printed publication in this or any foreign country, before his invention or discovery thereof, or more than two years prior to his application, and not in public use or on sale in this country for more than two years prior to his application, unless the same is proved to have been abandoned, may, upon payment of the fees required by law, and other due proceeding had, obtain a patent therefor.”
Prior publications rest upon the same ground as prior patents so far as anticipation is concerned, and no valid patent under the above-quoted statute can be obtained if the invention or device was disclosed in a printed publication, either in this or any foreign country, before the invention or discovery was made. Bone v. Commissioners of Marion County, 251 U. S. 134, 40 S. Ct. 96, 64 L. Ed. 188; Thacher v. Falmouth (D. C.) 235 F. 151, affirmed (C. C. A. 1) 241 F. 869.
To be effective as an anticipation, tbe printed or public disclosure of tbe subject of patent must be in such terms as to enable a person skilled in, the art of the science to which it pertains to make, construct, and practice the invention without assistance from the patent which it is said to have anticipated.
There was received in evidence a printed publication entitled “Roller Mill and Silo Manual,” published in Liverpool, England, in 1901. On page 154 of this publication appears the fallowing description:
“One form of dust collector of the Vortex type, very suitable for coarse dust material, now much in use, is that known under a variety of titles as the ‘Cyclone,’ ‘Climax,’ ‘Tornado,’ ‘Whirlwind,’ etc. These are generally constructed in the shape of an inverted cone of sheet steel, zinc, teme plate, or wood, with a shallow cylindrical part on the top, in the center of which is an opening for the treated air to escape, and another opening in the side into which the dust-laden air is blown. The dust, impelled by centrifugal action, is supposed to remain close to the inside surface of the cone, and to gradually gravitate towards the bottom outlet at the apex of the cone. Some of these collectors have a second cone or perforated cylinder, etc. inside. Although simple in construction these appliances require attention in order to get good work, and for this purpose should. be placed where they may be easily inspected. A series of these cones may be grouped either vertically or horizontally until the required capacity for proper purification of the air has been obtained. This compounding has been carried out successfully in many eases. To suit various special positions the machines are made right and left hand as regards the inlet openings.
“Another method adopted is to place the machine in a dust room, so that the finer dust may be collected there, or to pass it through a textile collector from which the air may flow into the atmosphere.
“A Vortex machine of this class about 4 feet diameter by 10 feet high has a capacity for treating 1,500' cubic feet of air per minute, and one of 6 feet by 14 feet high about 2,000 cubic feet per minute.”
Defendant produced at the trial a diagram or drawing based upon this publication. It is quite unnecessary to refer to the testimony showing that this diagram, appearing as defendant’s Exhibit 17, was properly de-dueible by one skilled in the art from the above-quoted article, because the court specifically finds that:
“There was undisputed testimony on behalf of defendant, that the drawing, Defendant’s Exhibit No. 17, correctly represents a centrifugal or Vortex type dust collector described on page 154 of ‘The Roller Mill and Silo Manual’, Defendant’s Exhibit 29.”
We here insert for purpose of convenient comparison an outline drawing of Figure 1 of plaintiff’s patent, and an outline of Exhibit 17, based on the above-quoted publication of 1901.
Chart 3.
Plaintiff, testifying on his own behalf, on being shown copy of the diagram produced from the “Roller Mill and Silo Manual,” testified:
“I would consider defendant’s Exhibit 17 an infringement. I consider this a long cone collector. This probably would come under my invention.”
If the device as disclosed by this publication would, if produced after plaintiff received his patent, be an infringement, then it would seem that its earlier disclosure would be an anticipation. Knapp v. Morss, 150 U. S. 221, 14 S. Ct. 81, 37 L. Ed. 1059; Peters v. Active Manufacturing Co., 129 U. S. 530, 9 S. Ct. 389, 32 L. Ed. 738.
The publication describes a Vortex type of dust collector, which is the type of collector described in the patent. It appears from the evidence without dispute that it required only mechanical skill of one skilled in the art to construct the device from the disclosure in the publication, and taking plaintiff’s own testimony, it seems clearly established that his invention was described in this publication some thirteen years before he applied for patent.
The above-quoted statute limits the inventions for which a patent may be obtained to those “not in public use or on sale in this ‘country for more than two years prior to his application.” Twyman v. Radiant Glass Co. (C. C. A. 8) 56 F.(2d) 119; Brush v. Condit, 132 U. S. 39, 10 S. Ct. 1, 33 L. Ed. 251; Smith & Griggs Mfg. Co. v. Sprague, 123 U. S. 249, 8 S. Ct. 122, 31 L. Ed. 141.
Plaintiff applied for patent on November 27, 1914. Prior to that time there had confessedly been installed certain of these devices. The first was installed by plaintiff in an alfalfa mill operated by himself and his brother at Valley Center, Kan., in 1908, and it is admitted by plaintiff that the dust collector there installed embodied his invention. It was in regular operation in this mill for a period of two months and until the mill failed and was shut down. But it is claimed, and the court found, that it was at that time in an experimental stage. It appears from plaintiff’s testimony that this dust collector was built for him by a tinsmith in Wichita, Kan., from drawings submitted by plaintiff, and was transported from Wichita to Valley . Center by a man named Whitelock. So that both the tinsmith and the man who transported it knew about the collector, and there is nothing in the record warranting the conclusion that there was any secreey either about the making, transporting, installing, or maintenance and operation of this device. While it was in use in the mill, it was seen by at least three individuals besides the plaintiff, the tinsmith, and Mr. Whitelock, and none of these observers were pledged to secrecy.
In Corona Cord Tire Co. v. Dovan Chemical Corporation, 276 U. S. 358, 48 S. Ct. 380, 387, 72 L. Ed. 610, it is said by Chief Justice Taft that:
“A process is reduced to practice when it is successfully performed. A machine is reduced to practice when it is assembled, adjusted and used. A manufacture is reduced to practice when it is completely manufactured. A composition of matter is reduced to practice when it is completely composed. * * *
“It is a mistake to assume that reduction to use must necessarily he a commercial use.”
See, also, Consolidated Fruit Jar Co. v. Wright, 94 U. S. 92, 24 L. Ed. 68; Pitts v. Hall, Fed. Cas. No. 11, 192, 2 Blatchf. 235; Hall v. Macneale, 107 U. S. 90, 2 S. Ct. 73, 27 L. Ed. 367; Egbert v. Lippmann, 104 U. S. 333, 26 L. Ed. 755; Allinson Mfg. Co. v. Ideal Filter Co. (C. C. A. 8) 21 F.(2d) 22.
The plaintiff testified that the use was experimental, but there is nothing in the evidence to show that after the collector was installed any experiments were made as to the cone ratio. It was operated until the mill shut down. The only part of the mechanism about which there was any experiment whatever was the size of the fan, but that was a part of the mechanism not claimed to be covered by plaintiff’s invention. The mere circumstance that he connected this Vortex contrivance with a fan either too large or too small is quite immaterial. He conducted no experiments whatever with reference to the sole matter covered by the patent, to wit, the proportion of the. height to the diameter of the dust collector; and it appears that plaintiff in constructing the later machine took the measurements from this machine constructed and installed by him in 1908, and adopted them without change or alteration. We are of the view that the experiments were, therefore, immaterial. Swain v. Holyoke Machine Co. (C. C. A. 1) 109 F. 154, 157; Smith & Griggs Mfg. Co. v. Sprague, 123 U. S. 249, 8 S. Ct. 122, 126, 31 L. Ed. 141; Lettelier v. Mann (C. C.) 91 F. 917; Wendell v. American Laundry Machinery Co. (D. C.) 239 F. 555, affirmed (C. C. A.) 248 F. 698, 701.
In the last-cited ease, the court said:
“The alterations that were made had relation to the adjustment of aprons and the substitution of spring pressure for pneumatic pressure on the rolls, and to other details, whieh did not change or affect the principle of the organization and operation of the machine as subsequently patented.”
It is true that invention is not anticipated by experimental efforts which are abandoned before accomplishing the event achieved by the invention. In the instant ease the experiment was successful, and the dust collector as installed in plaintiff’s alfalfa mills successfully accomplished what he claims to have accomplished by his patent. Successful use of an art or instrument is not an experimental use, and an invention or discovery is not to be considered as an aban-cloned experiment merely because it was not applied to commercial use. Thomson Spot Welder Co. v. Ford Motor Co. (D. C.) 268 F. 836, affirmed (C. C. A. 6) 281 F. 680, affirmed 265 U. S. 445, 44 S. Ct. 533, 68 L. Ed. 1098; Freydberg Bros. v. Hamburger (D. C.) 17 F.(2d) 300; Ficklen v. Harding (C. C. A. 2) 273 F. 179; Buser v. Novelty Tufting Machine Co. (C. C. A. 6) 151 F. 478; Brush v. Condit, 132 U. S. 39, 10 S. Ct. 1, 33 L. Ed. 251.
Confessedly the Chiekasha Milling Company installed a number of these dust collectors in its mills at Chiekasha, Okl. The evidence as to the date of installation was practically all oral, and the lower court expressed the view that it was not sufficient to convince beyond a reasonable doubt that the installation was prior to November 27, 1912. We shall not review the evidence as we think the character of the evidence was such as to warrant the court’s finding on this question.
It also appears that plaintiff sold the Otto Weiss Alfalfa Stock Food Company, of Wichita, Kan., certain of these collectors, but the court was of the view that while the collectors were installed and used more than two years prior to the date of plaintiff’s application for patent, the sale was not consummated until early in 1913, and any money paid was for the purpose of aiding Bobbitt in experiments on such collectors. This can hardly be said to be a finding that there was a sale, or that there was not a sale more than two years prior to the date of the application for patent, but is a finding that sale was not consummated until early in the year 1913. This finding or conclusion is vigorously assailed by appellant. The evidence as to the sale and use by this company was taken by deposition, so that the findings of fact of the lower court are not entitled to the same weight which they would have had if the witnesses had testified in open court. Anderson v. Baldwin Law Publishing Co. (C. C. A. 6) 27 F.(2d) 82.
It is admitted that a dust collector of the design covered by plaintiff’s patent was installed by plaintiff in the plant of the Otto Weiss Alfalfa Stock Food Company at Wichita, Kan., prior to November 27, 1912. Plaintiff was paid for this and another collector, and there was offered and received in evidence certain check stubs of the Otto Weiss Company, and photostatie copies of these stubs are preserved in the record. Check No. 14647, dated October 22, 1912, for $150, payable to the order of the plaintiff, bears the endorsement: “Part payment on dust collector.” Check No. 14787, dated November 9, 1912, for $100, was made payable to the order of plaintiff, and cheek No. 15316, dated December 6, 1912, for $50, was made payable to the plaintiff. Mr. Weiss testified that plaintiff called on him to sell the collectors; that the cheek stubs are the stubs of the cheeks delivered to plaintiff in payment for the dust collectors. The last payment was made December 6, 1912, making a total of $300. It seems clear that the transaction was a purchase, and the first cheek given bore an indorsement indicating that it was for part of the purchase price. The purchase was under guarantee, and clearly, plaintiff received at least $250 of the purchase price before November 27, 1912. Weiss testified:
“I am pretty sure they were installed before November 1, 1912.”
Plaintiff testified that two collectors were installed in the Weiss Company plant, but says they were not in practical “commercial operation” until after January, 1913. He admitted that on November 7, 1912, he received a letter of recommendation from the Weiss Company. Plaintiff, however, testified in patent proceedings as follows:
“Q. When was the first machine for the Otto Weiss Company finally installed in practical working operation? A. The last of October or the first of November, 1912.”
Similarly he testified in that proceeding:
“Q. I also hand you another letter and ask you to state what it is. A. It is a letter to me from Otto Weiss Alfalfa Stock Food Company, dated November 7, 1912. This w,as given to me as a recommendation in case I might want to use it.
“Q. You may state if this letter helps you to fix the date of the installation in the plant of the Weiss Mill. A. Yes, sir, just about a month before this letter I installed the dust collectors.”
It also appears that on November 25, 1912, plaintiff filed patent application for a device involving the same principle described in his present patent, and in the instant case he testified:
“On November 25, 1912, I considered I had made an invention and had perfected it. I aimed for it to cover the long, slim cone and a short cone with a jacket around it.”
We think the clear preponderance of the oral testimony, which is made practically conclusive by the check stubs, shows that two of these dust collectors were sold by the plaintiff to the Weiss Company prior to November 27, 1912, and he had collected at least $250 of the purchase price before that time. It is, however, here again claimed that the installation or operation of these collectors was in the nature of an experiment, but the evidence shows that they were made upon the same plan, with the same relative dimensions, as the collector installed by plaintiff in his own plant in 1908, and that the only part of the device concerning which there was any experiment was the fan connection. This is indicated by plaintiff’s testimony as follows:
“In the mills where I installed my dust collector I couldn’t measure the fans and then fit the collector to the fan. At that time I had to learn that myself. It is a fact that I vary the size of the collector, although I did not vary the proportions of the cone to fit the fan, I mean a bigger collector on a bigger fan. The small collector will not work on a big fan. A large collector will work on a small fan if you don't get it too large. In every case we have to fit the collector to the fan. I found out that you have to have so much air. I vary the size of the collector to the air.”
It is observed that the experimental work was merely adjusting the fan to the proper size collector. There was no change whatever in the proportions of the cone, but the experiment was entirely foreign to the alleged invention. The sale of these collectors to the Weiss Company was more than two years prior to the date of the application for patent. They were sold under guarantee, and there was no experimenting with the particular part of the contrivance whieh is the subject matter of plaintiff’s patent. In fact, on November 25, 1912, when he filed his application for patent, whieh he subsequently abandoned, he testified that at that time he considered he had perfected an invention and that, “I aimed for it to cover the long, slim cone and a short cone with a jacket around it.” If at that time he had perfected the long cone invention, there was no occasion for him to experiment with the one in the Weiss plant. We cannot escape the conclusion that the evidence requires the finding that plaintiff sold to the Weiss Company these collectors, and received practically all the purchase price thereof more than two years prior to filing his application for patent, and, as said by the Supreme Court in Smith & Griggs Manufacturing Co. v. Sprague, supra:
“A use by the inventor, for the purpose of testing the machine, in order by experiment to devise additional means for perfecting the success of its operation, is admis-i-ble; and where, as incident to such use, the product of its operation is disposed of by sale, such profit from its use does not change its character; but where the use is mainly for the purposes of trade and profit, and the experiment is merely incidental to that, the principal and not the incident, must give character to the use.”
What is said by the court in Swain v. Holyoke Machine Co., supra, is here apposite.
“As there is found in the Moodus machine the full and perfected invention of Swain, the circumstance that he connected, the machine with a feeder and draft pipe of insufficient size is immaterial. If the machine, under the circumstances presented in this case, contained the invention in its finished form, the inventor cannot relieve himself from the consequences whieh follow by showing that it was installed by him with imperfect connections. This is not the case of an invention which had not reached a state of perfection or completion at the time the sale was made, but it is a case where the inventor- intended to sell, and did, with a full knowledge and understanding of his invention, sell, a machine which embodied his whole invention, and then proceeded to set it up in such a way that it would not operate to the best advantage.”
This seems to describe the case presented by the evidence in this case, and this conclusion invalidates plaintiff’s patent.
It is also urged that plaintiff’s patent lacks invention over the prior art. In describing his device in his application for patent, plaintiff said:
“This type of dust collector is well known and in very general use.”
• But he says that so far as he was aware, such dust collectors were relatively short compared with their width, and he says that he has discovered that the diameter of this type of’dust collector may be very greatly reduced, provided the total length of the device is likewise greatly increased. He says:
“I have been unable to ascertain in a scientific way the precise relation which the length should bear to the greater diameter and to obtain the highest efficiency in use; but I have by experiment approximated the solution of this problem and find that the proportion named should be not less than 3 to 1; that is to say, the total height should be at least three times that of the greatest diameter. * • ’* I have constructed dust collectors with, a greater height relative to the diameter than that stated without observing any material difference in operation.”
The lower court, in sustaining claims 3 and 4 of plaintiff’s patent, held that such of defendant’s collectors as had cones in which the ratio of the altitude of the cone projected to its apex, to the diameter at the base of the cone, was between 2.5 and 3.5 to 1, infringed plaintiff’s patent.
For greater clarity and by way of illustration, we here insert diagrams of two of defendant’s dust collectors. Under the decision of the court, number 3 does not infringe plaintiff’s patent, but number 4 does infringe.
In plaintiff’s cross-appeal it is claimed that the principle of a “dead air space,” consisting of the formation of a rising current of air within the vortex formed in a dust collector, was discovered by plaintiff as a new principle of operation. This contention, we think, is not sustained by the claims in the patent, and certainly, the principle of the dead air space was old in the art when plaintiff entered the field. It was recognized in the Morse Patent 370,020, in the Harden-burgh Patent • 385,263, in the Wardhaugh Patent 470,608, in the Steiner Patent 967,- ' 849, and in the British Patent 2117. In fact, the very recitals in plaintiff’s patent concede that this type of dust collector was well known and in very general use before plaintiff applied for his patent. What plaintiff claims to have discovered and to have embodied in his patent had to do with the relative height and diameter of the cone, and nothing else. We have already observed that the long cone was disclosed in the publication “Roller Mill and Silo Manual.” It was also disclosed by patents in the prior art, at least by the accompanying diagrams if not by the specific claims. The prior art patents may not have limited nor definitely fixed the relative dimensions of the contrivances, and plaintiff now claims to have. superimposed upon such devices the limitations contained in his patent. For instance, it appears from the evidence that defendant had in use certain dust collectors having longer cones than those claimed in plaintiff’s patent and others having shorter cones than those claimed, and it is conceded that these do not infringe plaintiff’s patent.
The metal dust collector with a tangential inlet for the dust-laden air, a central outlet at the top for the purified air, and a tapering portion in the shape of a cone, with the dust outlet near its apex, has confessedly been in use for many years, and plaintiff so recognized in his application for patent. The change in the dimensions of the cone effects no functional difference in the operation of the device. Both short and long cone collectors operate upon exactly the same principle. One witness testified that, “My experience has been that the longer they are the better. 4 to 1 is better than 2% to 1. The 4 to 1 is more efficient than the 3 to 1.” Confessedly, no dust collector perfectly separates the dust from the air, and satisfactory results are under certain conditions secured by one size of collector, while under different conditions an entirely different size may secure better results. It appears in the record that plaintiff himself constructed certain collectors for a Mr. Howard, yet these did not embody his ratio of 3 to 1, but they are said to have brought satisfactory results.
There is nothing to indicate that there is any magic or definite scientific principle involved in plaintiff’s alleged discovery. Much reliance is placed upon the decision of the Supreme Court in Eibel Process Co. v. Minnesota & Ontario Paper Co., 261 U. S. 45, 43 S. Ct. 322, 329, 67 L. Ed. 523, but it is noted that in that case a wholly different object was attained from that disclosed by the prior art. It is there said:
“Eibel’s high or substantial pitch was directed toward a wholly different object from that of the prior art. He was seeking thereby to remove the disturbance and ripples in the formation of the stock about 10 feet from the discharge, while the slight pitches of the prior art were planned to overcome the dryness in the formed web of the stock at double the distance from the discharge.”
In the instant ease, however, there is no difference in the principle involved in any of these dust collectors under consideration. The principle is the same in all of them, but it is claimed that some of them get better results than others. A mere change in an existing device which involves only a difference in form, proportions, or degree, and resulting in doing substantially the same thing in the same way by substantially the same means, even though with better results, is not invention. City of St. Louis v. Prendergast (C. C. A. 8) 29 F.(2d) 188, 193; Hinrichs v. Henderson (C. C. A. 8) 32 F.(2d) 655, 657; Edison v. Alsen’s American Portland Cement Works (C. C. A. 2) 219 F. 895, 896; Hayes Pump, etc., Co. v. Friend Mfg. Co. (C. C. A. 2) 8 F.(2d) 33; Smith v. Nichols, 21 Wall. 112, 22 L. Ed. 566; Railroad Supply Co. v. Elyria Iron & Steel Co., 244 U. S. 285, 37 S. Ct. 502, 505, 61 L. Ed. 1136; B. F. Goodrich Co. v. Gates Rubber Co. (C. C. A. 10) 54 F.(2d) 580; In re Richter (Cust. & Pat. App.) 53 F.(2d) 525; Keszthelyi v. Doheny Stone Drill Co. (C. C. A. 9) 59 F.(2d) 3.
In City of St. Louis v. Prendergast, supra, this court in an opinion by Judge Booth, reviews many of the authorities on this question. It is there said: :
“Viewed in the light of the rules and principles announced in the foregoing eases, we think that the step taken by the patentee as set forth in claim 2 of the patent in suit, in making use of the plates with positioned shoulders, was a mere carrying forward of the thought embodied in the prior art structures of having the plates support each other by some form of jointure along the line of contact between their respective side edges; the step was a mere substitution of one form of jointure for another, both being old and well known in the art. No new device was produced.”
•In the later ease, Hinrichs v. Henderson, supra, the opinion in which was also written by Judge Booth, it is said:
“It must be remembered, however, that it is not every change, even though it constitutes an improvement, that is necessarily patentable. There must be a product or a method which amounts to invention or discovery. The mere carrying forward of an old thought, the mere change in form, proportion, or degree is not sufficient as a general rule to constitute invention.”
The rule is stated by the Supreme Court in Railroad Supply Co. v. Elyria Iron & Steel Co., supra, as follows:'
“This brings the patents within the principle so often declared that the ‘mere carrying forward of the original thought, a change only in form, proportions, or degree, doing the same thing in the same way, by substantially the same means, with better results, is not such an invention as will sustain a patent.’ ”
In Edison v. Alsen’s American Portland Cement Works, supra, there was some change in the dimensions of the device or structure. In the course of the opinion it is said:
“The specification contains seven pages of description, but it is thought that the only important improvement suggested' or claimed is the lengthening of the kiln without proportionately increasing its diameter.”
In the instant ease, plaintiff has lengthened the cone without proportionately increasing its diameter at its base. He has, therefore, slightly changed the form of the device or its proportions. It operates, however, on the same principle as the devices of the prior art. It performs the same thing in the same way with possibly some better results. We conclude'that the patent is void for want of invention.
The decree appealed from is, therefore, reversed and the cause remanded with directions to dismiss plaintiff’s bill of complaint for want of equity.
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.
RIPPLE, Circuit Judge.
The plaintiffs, who are brokers of municipal solid waste, arrange for trucks to haul waste from temporary storage sites in New York, New Jersey, and Pennsylvania to landfills in Indiana. Seeking a declaratory judgment and injunctive relief, they brought suit in the United States District Court for the Southern District of Indiana to challenge the constitutionality, under the Commerce Clause, of Indiana statutes regulating the trucking of municipal waste. The district court upheld all but one of the provisions at issue, and the plaintiffs appeal. The defendants cross-appeal, challenging both the district court’s determination that the plaintiffs had presented a controversy ripe for review and its determination as to the one provision struck down. For the reasons set forth in this opinion, we reverse in part and affirm in part.
I
BACKGROUND
A. The Challenged Provisions
The plaintiffs challenge a set of statutory provisions regulating the transport and disposal of municipal waste in Indiana. According to the plaintiffs, the challenged provisions, which were enacted as a package in 1991, are aimed at reducing or eliminating, and will in fact reduce or eliminate, the disposal of out-of-state waste in Indiana.
1. The backhaul ban
Under Indiana Code § 13-7-31-13.1, trucks that are used to haul municipal waste to Indiana landfills or disposal facilities may be used to haul only a limited number of other items. The statute provides that “municipal waste collection and transportation vehicles” may only be used to collect and transport the following:
(1)Municipal waste.
(2) Special waste (as defined in 329 IC 2-2-1 as in effect January 1, 1990).
(3) Hazardous waste regulated under:
(A) IC 13-7-8.5; or
(B) the federal Solid Waste Disposal Act (42 U.S.C. 6901 et seq. as in effect January 1, 1990).
(4) Waste described under IC 13-1-12-9'that results from the combustion of coal.
(5) Material that is being transported to a facility, except an incinerator or a landfill, for reprocessing or reuse.
(6) Wood, concrete, brick, and other construction and demolition materials.
(7) Dirt, sand, gravel, asphalt, salt, and other highway maintenance material.
(8) Coal, gypsum, slag, scrap metal, and other bulk industrial commodities.
(9) Infectious waste (as defined under IC 16-1-9.7-3).
Ind.Code § 13-7-31-13.1. The practical impact of this law is to require the use of semi-dedicated fleets of trucks to haul garbage to Indiana. As the district court stated, if this provision is enforced, “a significant number of the remaining truckers now willing to haul trash to Indiana will become unwilling because they cannot afford to dedicate their trucks to so limited a range of payloads.” No. 91 C 899, Order at 16 (R. 132) (Feb. 5, 1992).
2. Vehicle registration and stickering
Indiana enforces its backhaul ban by requiring that municipal waste collection and transportation vehicles be registered with the Indiana Department of Environmental Management, Ind.Code § 13-7-31-8, and bear identification stickers. Ind. Code § 13-7-31-8.2(d). The Department must issue the registration and identification stickers within thirty days after receipt of the application. Ind.Code § 13-7-31-8(d). The registration must be renewed every two years, Ind.Code § 13-7-31-8.1(a), and the fee for registration or renewal is $100. Ind.Code § 13-7-31-16.-1(a)(1). A person who owns, leases, or operates more than one municipal waste collection and transportation vehicle need obtain only one registration listing all such vehicles. Ind.Code § 13-7-31-8.2(a). A copy of the current registration must be carried by each vehicle at all times. Ind. Code § 13-7-31-8.2(c). All vehicles must bear stickers:
Vehicle identification stickers provided by the department, indicating that the vehicle carries municipal waste, must be affixed adhesively at all times in a prominent location on each side of each registered municipal waste collection and transportation vehicle’s cargo compartment or, at the option of the person to whom the registration is issued, on each side of a truck cab of a vehicle.
Ind.Code § 13-7-31-8.2(d)..Landfills are not permitted to accept a shipment of municipal waste if the vehicle carrying it does not have a vehicle identification sticker properly affixed. Ind.Code § 13 — 7—31— 14(1).
3. Surety bond and disposal fees
Indiana law also provides that “nonresident operators,” that is, brokers like the appellants, managers of transfer stations, or transporters of municipal waste, who are not residents of Indiana, must post a surety bond with the Indiana Department of Environmental Management. Ind.Code § 13-7-10.5-15. This provision is intended to “ensure the collection and payment of any civil penalties that the operator may be required to pay in Indiana because of the solid waste transfer activities of the operator.” Ind.Code § 13-7-10.5-15(l)(B). The amount of the surety bond and the time for payment are to be determined under rules adopted by the Solid Waste Management Board. Ind.Code § 13-7-10.5-15(l)(A). Such rules have not yet been adopted. In addition, the nonresident operator is “considered to appoint the Secretary of State as the operator’s agent for purposes of service of process in connection with any matter involving solid waste transfer activities.” Ind.Code § 13-7-10.5-15(2).
Lastly, the appellants challenge Indiana’s disposal fees. Indiana Code § 13-9.5-5-1 provides not only for fees that apply uniformly to all waste, regardless of origin, but also for fees that apply only to waste generated outside Indiana. These latter fees are to be determined by rules to be adopted by the Solid Waste Management Board, and “shall be set at an amount necessary to offset the costs incurred by the state or a county, municipality, or township that can be attributed to the importation of the solid waste into Indiana and the presence of the solid waste in Indiana.” Ind.Code § 13-9.5-5-l(b). Rules have not yet been adopted.
B. Facts
We give the facts as found'by the district court. Indiana is an economically favorable disposal site for municipal waste from other regions of the United States. Indiana’s first attempt to regulate the hauling of waste into Indiana was declared unconstitutional under the Commerce Clause in 1990. See Government Suppliers Consolidating Serv., Inc. v. Bayh, 753 F.Supp. 739 (S.D.Ind.1990). After this ruling, which was not appealed, Indiana enacted new provisions regulating the disposal of municipal waste. Those provisions are the ones at issue in the present case. The primary target of the provisions is a practice known as backhauling or crosshauling.
Truckers who haul municipal waste from the eastern United States to the Midwest normally are engaging in backhauling or crosshauling. The truckers haul goods from the Midwest to New York, New Jersey, or Pennsylvania; these trips (known as fronthauls) are a trucker’s main source of income. Instead of returning to the Midwest with empty trucks, they haul back trash for disposal in midwestern landfills. Trash collected in eastern cities is stored temporarily in transfer and recycling stations. At these stations, the waste is compacted and bound into large bundles. Brokers (like the appellants) identify truckers looking for backhauls of trash and arrange a pick-up for them from a transfer station and also arrange for disposal of the trash in a landfill in Indiana (or another midwest-ern state). Flatbed trailers, box-type semi trailers, and open-top dump trailers are used to carry the trash to Indiana. An individual trucker may haul waste to Indiana only once in several years or may haul waste regularly. The brokers do not have long-term contracts with truckers; arrangements for transport of each load of waste are made on an ad hoc, one-time basis.
Many customers of trucking companies refuse to load their goods onto any vehicle that has hauled municipal waste. As the appellants candidly conceded before the district court, trucking companies would prefer that their other customers remain unaware that their trailers have hauled municipal waste. Order at 32. Evidence at trial showed that even commercial entities that are not involved in food products do not want their products transported in trucks that previously hauled trash. These shippers were concerned about potential adverse effects on product reputation. Order at 27. Shippers, apparently thinking that if a truck is very clean it must have been recently washed after hauling garbage, have rejected trucks because they are too clean. As the district court noted, “this illustrates that shippers are more concerned with reputation' than with the actual health risks.” Order at 27 n. 10. One trucker testified in the district court that he would not voluntarily tell a shipper that a trailer had previously hauled trash because of the stigma attached to crosshaul-ing. Order at 32. However, in spite of pressure from shippers not to haul waste, “it is also clear that many truckers, especially small operators, are still willing to crosshaul trash. If the questioned provisions are enforced, then a significant number of the remaining truckers now willing to haul trash to Indiana will become unwilling because they cannot afford to dedicate their trucks to so limited a range of payloads.” Order at 16.
The district court found that, unlike out-of-state waste, “Indiana-generated municipal waste generally is not cross-hauled— that is, trash is usually shipped intrastate in traditional, dedicated garbage trucks, not dry vans.” Order at 25.
Today a broker must pay a trucker approximately $35 a ton for hauling municipal waste from New York to Indiana. If a dedicated fleet of garbage trucks is used, the cost will double to about $70 a ton. Including a typical Indiana tipping fee of $15 per ton (the disposal fee that must be paid to the landfill), the total disposal cost of crosshauled trash is approximately $50 a ton. If a dedicated fleet is used, the total cost for disposing of New York waste in Indiana will be $85 a ton. At $85 a ton, Indiana will no longer be the most economically reasonable state for the disposal of trash. According to the testimony of the brokers, transfer stations will not pay $85 a ton to dispose of waste; thus the back-hauling ban, if enforced, will eliminate interstate transport of waste to Indiana. Order at 28.
C. District Court Proceedings
The district court first determined that the plaintiffs’ challenges to all of the provisions described above were properly before it. It then examined the constitutionality of the prohibition on backhauling and the registration/stickering provisions as applied. The district court determined that the backhaul ban was facially neutral and applied identically to similarly situated waste haulers, regardless of their residence and the origin of the waste they carried. Therefore, it evaluated its constitutionality under the standard enunciated in Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 847, 25 L.Ed.2d 174 (1970), noting that, under this standard, “a statute will not be held unconstitutional unless the burden imposed on commerce is clearly excessive in relation to the local benefits.” Determining that the putative local benefits (protection of health and of the reputation of Indiana products) justified the burden on interstate commerce (lower profits for waste haulers), the court upheld the statute.
The district court also upheld the registration and stickering provisions. Noting that the statute does not distinguish on its face between local trash haulers and national waste disposal companies, the district court also found that it did not discriminate in practical effect. Moreover, the court noted, “there is no evidence that an Indiana entity will benefit economically from the registration/stickering provision so it does not constitute economic protectionism.” Order at 31. According to the district court, the primary local benefit of the statute was to assist Indiana in enforcing its backhauling prohibitions. Also, registration and stickering would promote private enforcement of the backhauling ban: “All sides agree that if shippers see the stickers, they will probably not use the truck. Thus, crosshauling will be effectively eliminated by private enforcement.” Order at 31. The court rejected the plaintiffs’ arguments that “sticker stigma” was a burden on interstate commerce; rather, it noted, “the dormant Commerce Clause does not give trucking companies a constitutional right to conceal information from their customers.” Order at 32. In addition, the district court stated that, while “there [was] no doubt that enforcement of the vehicle registration greatly w[ould] change how the plaintiffs do business,” Order at 33, the Commerce Clause does not protect a particular method of doing business. Lastly, the court rejected the plaintiffs’ assertions that the registration and stickering requirements were duplicative and ineffective.
The district court reviewed the remaining two provisions at issue here, the disposal fee and surety bond, for facial validity. It upheld the disposal fee provision; however, it struck down the surety bond provision as an unnecessary burden on interstate commerce, noting that other provisions of the Indiana Code require out-of-state operators to register with the Indiana Department of Environmental Management, and that the registration process “should provide the state with all information it requires to adequately effectuate its judgments.” Order at 40.
D. Contentions of the Parties
Government Suppliers and Castenova submit that the district court erred in upholding the backhaul ban, the registration and stickering provisions, and the disposal fees to be imposed on out-of-state waste. They contend that the court should have examined the backhaul ban and the registration and stickering provisions under what they denominate the “per se” test, that is, the elevated scrutiny applied by the Supreme Court where the statute in question is discriminatory on its face or in practical effect. See, e.g., Brown-Forman Distillers v. New York State Liquor Auth., 476 U.S. 573, 106 S.Ct. 2080, 90 L.Ed.2d 552 (1986); Hughes v. Oklahoma, 441 U.S. 322, 336, 99 S.Ct. 1727, 1736, 60 L.Ed.2d 250 (1979).
In a cross-appeal, Indiana submits that the plaintiffs’ challenge to the backhauling ban should be dismissed for lack of a case or controversy and that the plaintiffs’ challenges to the surety bond and the disposal fee are not ripe for judicial resolution, because as yet no implementing rules have been adopted. They also appeal the district court’s determination that the provision requiring out-of-state operators to post a surety bond is invalid under the Commerce Clause.
II
JURISDICTION
“The appropriate test to determine if there is an actual controversy, one ripe for decision, under the Declaratory Judgment Act is the one stated in Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270 [61 S.Ct. 510, 85 L.Ed. 826] (1941).” Oneida Tribe of Indians v. State of Wisconsin, 951 F.2d 757, 760 (7th Cir.1991) (citing Lake Carriers’ Ass'n v. MacMullan, 406 U.S. 498, 506, 92 S.Ct. 1749, 1755, 32 L.Ed.2d 257 (1972)). “Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant issuance of a declaratory judgment.” Maryland Casualty, 312 U.S. at 273, 61 S.Ct. at 512. Indiana submits that the district court erred in finding that it had subject matter jurisdiction over the claims asserted by Government Suppliers and Castenova. It argues that, in challenging the backhaul ban, the plaintiffs have presented “no concrete, justiciable controversy.” Appellees’ Br. at 41. We find little merit in Indiana’s arguments on this point. Jurisdiction is clearly proper as to the backhaul ban and the registration and stickering provisions that accompany it. The plaintiffs do not themselves engage in backhauling; their business consists in arranging for others to do so. It is undisputed that their business would suffer severe adverse effects from enforcement of the backhaul ban. Such economic injury, though indirect, is sufficient to confer standing. Association of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 154, 90 S.Ct. 827, 830, 25 L.Ed.2d 184 (1970). The interest they seek to vindicate is within the zone of interests protected by the Commerce Clause. See Boston Stock Exchange v. State Tax Comm’n, 429 U.S. 318, 320-21 n. 3, 97 S.Ct. 599, 602-03 n. 3, 50 L.Ed.2d 514 (1977); Bacchus Imports Ltd. v. Dias, 468 U.S. 268, 267, 104 S.Ct. 3049, 3055, 82 L.Ed.2d 200 (1984).
Indiana’s contention that the plaintiffs presented only an abstract, and therefore unripe, question appears to rest on the assertion that the plaintiffs did not specify what sorts of goods they claim the “Constitution mandates be allowed to travel in municipal waste vehicles, and under what circumstances.” Appellees’ Br. at 43. “In sum, Plaintiffs have asked the Court for a broad advisory opinion that they (or more precisely, the trucking companies with whom they do business) can haul in trash trucks a broad range of goods, the specifics of which the Court can only guess.” Id. However, as will become clear in our discussion, the legal issue presented “is one the resolution of which would be essentially unaffected by further factual development.” Peick v. Pension Benefit Guar. Corp., 724 F.2d 1247, 1261 (7th Cir.1983), cert. denied, 467 U.S. 1259, 104 S.Ct. 3554, 82 L.Ed.2d 855 (1984). The case presents “a substantial controversy between parties having adverse interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” Lake Carriers’ Ass’n v. MacMullan, 406 U.S. at 506, 92 S.Ct. at 1755.
The ripeness for facial review of the surety bond provision and the disposal fees is a closer question. The implementing regulations have not yet been written or adopted. However, as the Supreme Court stated in Pacific Gas & Electric Co. v. State Energy Resource Conservation & Development Commission, 461 U.S. 190, 201, 103 S.Ct. 1713, 1721, 75 L.Ed.2d 752 (1983), “[o]ne does not have to await the consummation of threatened injury to obtain preventative relief.” In order to protect against a feared future event, “the plaintiff must demonstrate that the probability of that future event occurring is real and substantial, ‘of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.’ ” Salvation Army v. Department of Community Affairs, 919 F.2d 183, 192 (3d Cir.1990) (quoting Steffel v. Thompson, 415 U.S. 452, 460, 94 S.Ct. 1209, 1216, 39 L.Ed.2d 505 (1974)). When “present harms will flow from the threat of future actions,” Armstrong World Industries, Inc. v. Adams, 961 F.2d 405, 412 (3d Cir.1992), those present harms may mean a controversy is ripe for review. See Volvo N. Am. Corp. v. Men’s Int’l Professional Tennis Council, 857 F.2d 55, 63-64 (2d Cir.1988) (“the prospect or fear of future events may have a real impact on present affairs, such that a preemptive challenge is ripe”).
The district court found, based on defendants’ own affidavits, that Indiana intends to enforce the surety bond provision and disposal fee provision once enabling rules are promulgated, and that enforcement would affect the plaintiffs’ businesses. And, according to the plaintiffs, these statutes, though not yet enforced, have an immediate damaging effect on their businesses. As Judge Tinder recognized in the earlier case between the parties, “advance planning required for the interstate shipment of solid waste could well be impaired by the fear of increased future costs.” Government Suppliers Consol. Serv., Inc. v. Bayh, 734 F.Supp. 853, 861 (S.D.Ind.1990). Moreover, faced with future enforcement of provisions which, as the district court recognized, might eliminate disposal of out-of-state waste in Indiana, the appellants “are now incurring increased costs and diminution of revenues and profits based upon the need to secure and use disposal sites outside of the State of Indiana.” Appellants’ Combined Reply Br./Answering Br. at 12. In some cases, the absence of implementing regulations may render the actual effect of the statute too uncertain to make review possible. See MacDonald, Sommer & Frates v. Yolo County, 477 U.S. 340, 348, 106 S.Ct. 2561, 2566, 91 L.Ed.2d 285 (1986) (“A court cannot determine whether a regulation has gone ‘too far’ unless it knows how far the regulation goes.”); Nixon v. Administrator of Gen. Serv., 433 U.S. 425, 438, 97 S.Ct. 2777, 2788, 53 L.Ed.2d 867 (1977) (“For [the Court] to review regulations not yet promulgated, the final form of which has been only hinted at, would be wholly novel.”). In the present case, however, what the statutes authorize is clear; only procedures and amounts are uncertain. There is no need to wait for regulations or specific applications to evaluate and make a conclusive determination as to the legal issue presented. See Pacific Gas & Elec. Co., 461 U.S. at 201, 103 S.Ct. at 1720; Armstrong World Indus., 961 F.2d at 412. The provisions are ripe for review.
Ill
ANALYSIS
The Commerce Clause not only gives the Congress the power to regulate, through the use of its legislative power, commerce among the states, but also limits the power of the states, even in the absence of federal legislation, to burden interstate commerce. See Cooley v. Board of Wardens, 12 How. 299, 13 L.Ed. 996 (1851). In City of Philadelphia v. New Jersey, 437 U.S. 617, 623-24, 98 S.Ct. 2531, 2535-36, 57 L.Ed.2d 475 (1978), Justice Stewart, writing for the Court summarized this latter aspect of the Commerce Power and the need for “delicate adjustment of the conflicting state and federal claims”:
Although the Constitution gives Congress the power to regulate commerce among the States, many subjects of potential federal regulation under that power inevitably escape congressional attention “because of their local character and their number and diversity.” South Carolina State Highway Dept. v. Barnwell Bros., Inc., 303 U.S. 177, 185 [58 S.Ct. 510, 514, 82 L.Ed. 734]. In the absence of federal legislation, these subjects are open to control by the States so long as they act within the restraints imposed by the Commerce Clause itself. See Raymond Motor Transportation, Inc. v. Rice, 434 U.S. 429, 440 [98 S.Ct. 787, 793, 54 L.Ed.2d 664], The bounds of these restraints appear nowhere in the words of the Commerce Clause, but have emerged gradually in the decisions of this Court giving effect to its basic purpose. That broad purpose was well expressed by Mr. Justice Jackson in his opinion for the Court in H.P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 537-538 [69 S.Ct. 657, 664-665, 93 L.Ed. 865]:
“This principle that our economic unit is the Nation, which alone has the gamut of powers necessary to control of the economy, including the vital power of erecting customs barriers against foreign competition, has as its corollary that the states are not separable economic units. As the Court said in Baldwin v. Seelig, 294 U.S. [511], 527 [55 S.Ct. 497, 502, 79 L.Ed. 1032], ‘what is ultimate is the principle that one state in its dealings with another may not place itself in a position of economic isolation.’ ”
The opinions of the Court through the years have reflected an alertness to the evils of “economic isolation” and protectionism, while at the same time recognizing that incidental burdens on interstate commerce may be unavoidable when a State legislates to safeguard the health and safety of its people. Thus, where simple economic protectionism is effected by state legislation, a virtually per se rule of invalidity has been erected.
The jurisprudence of this “dormant” or “negative” Commerce Power described by Justice Stewart is the product of the inevitable tension between the need to preserve the capacity of the country to address national economic concerns and the need of state government to exercise its residual police powers for the betterment and protection of its citizens. It should not be surprising, therefore, that litigation in this area often centers on areas of acute economic and social concern where the interests of preserving the national capacity to act and of allowing state government to solve local problems is particularly urgent. Consequently, in these last decades of the twentieth century, environmental problems have produced heightened concerns about waste management, and garbage has become a frequent focal point of dormant commerce power jurisprudence.
Garbage is, under the prevailing ease law of the Supreme Court, indisputably an article of commerce, and “ ‘States are not free from constitutional scrutiny when they restrict’ ” its interstate movement. Fort Gratiot Sanitary Landfill, Inc. v. Michigan Dept. of Natural Resources, — U.S. -,-n. 3, 112 S.Ct. 2019, 2023 n. 3, 119 L.Ed.2d 139 (1992) (quoting Philadelphia v. New Jersey, 437 U.S. at 622-23, 98 S.Ct. at 2534-35). States faced with increased and rising waste volumes and foreseeable shortages of landfill space have attempted by various statutory means to slow down or halt the inflow of waste from other states where disposal costs are higher. In Philadelphia v. New Jersey, 437 U.S. 617, 98 S.Ct. 2531, the Supreme Court struck down a New Jersey law that, with a few minor exceptions, prohibited the importation of “solid or liquid waste which originated or was collected outside the territorial limits of the state.” More recently, in Fort Gratiot, — U.S.-, 112 S.Ct. 2019, and Chemical Waste Management, Inc. v. Hunt, — U.S. -, 112 S.Ct. 2009, 119 L.Ed.2d 121 (1992), the Court struck down Michigan and Alabama laws that discriminated against interstate commerce in trash. In these cases, the Court reaffirmed the basic principle behind Philadelphia v. New Jersey: one state may not “isolate itself from a problem common to many by erecting a barrier against the movement of interstate trade.” Philadelphia v. New Jersey, 437 U.S. at 628, 98 S.Ct. at 2538; see Chemical Waste, — U.S. at -, 112 S.Ct. at 2012; Fort Gratiot, — U.S. at -, 112 S.Ct. at 2024.
A. The Backhaul Ban, Registration, and Stickering
The heart of the Indiana regulatory scheme under review is the so-called back-haul ban and its attendant registration and stickering provisions. Our evaluation of these provisions requires that we set forth in more detail the principles developed by the Supreme Court to guide dormant Commerce Clause analysis. As the Court explicitly noted in Brown-Forman Distillers Corp. v. New York State Liquor Authority, 476 U.S. 573, 579, 106 S.Ct. 2080, 2084, 90 L.Ed.2d 552 (1986), there are two alternate analytical perspectives for problems under the dormant Commerce Clause. The “critical consideration” in determining the appropriate analysis “is the overall effect of the statute on both local and interstate activity.” Brown-Forman Distillers, 476 U.S. at 579, 106 S.Ct. at 2084.
Under the first test, a statute “which clearly discriminates against interstate commerce is unconstitutional ‘unless the discrimination is demonstrably justified by a valid factor unrelated to economic protectionism.’ ” Fort Gratiot, — U.S. at- -, 112 S.Ct. at 2023-24 (quoting New Energy Co. of Indiana v. Limbach, 486 U.S. 269, 274, 108 S.Ct. 1803, 1808, 100 L.Ed.2d 302 (1988)). By contrast, under the second test (the Pike test), if a statute is neutral on its face, has only indirect or incidental effects on interstate commerce, and regulates evenhandedly, the statute will be upheld “unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.” Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 847, 25 L.Ed.2d 174 (1970). Under the Pike test, if a legitimate local purpose is “credibly advanced,” Chemical Waste, — U.S. at-n. 5, 112 S.Ct. at 2014 n. 5 (quoting Philadelphia v. New Jersey, 437 U.S. at 624, 98 S.Ct. at 2535), “then the question becomes one of degree. And the extent of the burden that will be tolerated will of course depend on the nature of the local interest involved, and on whether it could be promoted as well with a lesser impact on interstate activities.” Pike, 397 U.S. at 142, 90 S.Ct. at 847.
The district court applied the lesser level of scrutiny enunciated in Pike. It reasoned that the statutes under review were “facially neutral,” that they “treat[ ] similarly situated waste haulers alike, regardless of their residence or the origin of the wastes they carry. Neither intrastate nor interstate waste haulers may crosshaul municipal waste and any non-exempt item.” Order at 25. The district court rejected the plaintiffs’ argument that the backhaul ban was discriminatory because it affected primarily interstate haulers of waste (Indiana-generated waste generally is not crosshauled, but usually shipped intrastate in traditional, dedicated garbage trucks). In the district court’s view, the plaintiffs’ argument boiled down to an assertion that the statute would apply most often to out-of-state entities, and that circumstance alone did not render the statute discriminatory. Order at 25 (citing CTS Corp. v. Dynamics Corp. of Am., 481 U.S. 69, 88, 107 S.Ct. 1637, 1649, 95 L.Ed.2d 67 (1987); see Amanda Acquisition Corp. v. Universal Foods Corp., 877 F.2d 496 (7th Cir.), cert. denied, 493 U.S. 955, 110 S.Ct. 367, 107 L.Ed.2d 353 (1989)).
However, a determination that a statute does not discriminate on its face and “purports to regulate evenhandedly” does not end the question of which scrutiny should apply. See Brimmer v. Rebman, 138 U.S. 78, 11 S.Ct. 213, 34 L.Ed. 862 (1891). When a statute discriminates “in practical effect” against interstate commerce, the fact that it purports to apply equally to citizens of all states does not save it. In Brimmer, the Court struck down a Virginia statute requiring that fresh meat brought from more than 100 miles away from the place of sale had to be inspected and imposing a significant inspection fee on the seller of the meat. Recently, in Fort Gratiot, the Supreme Court set forth approvingly the Brimmer Court’s analysis:
This statute [cannot] be brought into harmony with the Constitution by the circumstance that it purports to apply alike to the citizens of all the States, including Virginia; for ‘a burden imposed by a State upon interstate commerce is not to be sustained simply because the statute imposing it applies alike to the people of all the States, including the people of the State enacting such statute.’ Minnesota v. Barber, [136 U.S. 313, 10 S.Ct. 862, 34 L.Ed. 455 (1890)]; Robbins v. Shelby Taxing District, 120 U.S. 489, 497 [7 S.Ct. 592, 596, 30 L.Ed. 694]. If the object of Virginia had been to obstruct the bringing into that State, for use as human food, of all beef, veal and mutton, however wholesome, from animals slaughtered in distant States, that object will be accomplished if the statute before us be enforced.
Brimmer v. Rebman, 138 U.S. 78, [83], 11 S.Ct. 213, 214, 34 L.Ed. 862 (1891) (as quoted by Fort Gratiot, — U.S. at -, 112 S.Ct. at 2025) (emphasis added); see also Dean Milk Co. v. City of Madison, 340 U.S. 349, 354, 71 S.Ct. 295, 298, 95 L.Ed. 329 (1951).
In the case before us, Indiana has not “artlessly disclosed an avowed purpose to discriminate,” Dean Milk, 340 U.S. at 354, 71 S.Ct. at 298, and therefore, to determine what level of scrutiny to apply, we must examine the practical effect of the statutes in question on interstate commerce. Indiana argues that the district court was correct in applying the Pike test — that the backhaul ban and its accompanying registration and stickering provisions are facially non-discriminatory, regulate evenhandedly, and have only incidental effects on interstate commerce.
As the Supreme Court has noted, the “critical consideration is the overall effect of the statute on both local and interstate activity,” Brown-Forman, 476 U.S. at 573, 106 S.Ct. at 2081 (emphasis added), and whether the “effect is to favor in-state economic interests over out-of-state economic interests.” Id. Furthermore, “when considering the purpose of a challenged statute, [the] Court is not bound by ‘[t]he name, description or characterization given it by the legislature or the courts of the State,’ but will determine for itself the practical impact of the law.” Hughes v. Oklahoma, 441 U.S. 322, 336, 99 S.Ct. 1727, 1736, 60 L.Ed.2d 250 (1979).
The appellants characterize the statutes’ effects on interstate commerce as incidental; in fact, the “circumstances of enactment suggest that it was the principal objective” of the statutes to impede importation of trash. Lewis v. BT Investment Managers, Inc., 447 U.S. 27, 39, 100 S.Ct. 2009, 2017, 64 L.Ed.2d 702 (1980). Nonetheless, we need not ascribe a motive of economic protection to the Indiana legislature in order to determine that the statute is discriminatory. The “evils of economic protectionism can reside in legislative means as well as legislative ends.” Philadelphia v. New Jersey, 437 U.S. at 626, 98 S.Ct. at 2537. In this regard, we cannot agree with Indiana’s characterization of the effects of the statutes as merely incidental. The practical impact of the backhaul ban would be to reduce very significantly the inflow of out-of-state waste by raising the cost of disposing of such waste in Indiana: the district court found that the fee paid to a trucker to haul waste doubles if a dedicated fleet is used. Discrimination may take the form of “raising the costs of doing business” for out-of-state entities, “while leaving those of their [in-state] counterparts unaffected.” Hunt v. Washington State Apple Advertising Comm’n, 432 U.S. 333, 351, 97 S.Ct. 2434, 2445, 53 L.Ed.2d 383 (1977) (determining that a facially neutral statute was discriminatory). Because Indiana waste is usually transport: ed in dedicated garbage trucks, intrastate transportation of waste remains unaffected. Like the North Carolina apple producers in Hunt, those engaged in intrastate waste disposal have not been forced to alter their business practices in order to comply with the statute, see id., while those engaged in hauling out-of-state waste will have to change drastically their method of operation or give up hauling waste into Indiana altogether.
It is true, as the defendants point out, that the Commerce Clause does not “protect[] the particular structure or methods of operation in a retail market.”
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.
GARWOOD, Circuit Judge:
These consolidated appeals arise from the trial of a 37-count indictment against two corporations and nineteen individuals for violations of federal environmental laws in the operation of a chemical transfer and storage facility. At the conclusion of the proceedings in the district court, only one defendant, Baytank (Houston), Inc. (Baytank), stood convicted — and only on two counts. Baytank, appellant in No. 89-2129 and an appellee in No. 89-2172, appeals its conviction on two counts of improper storage of hazardous wastes in violation of the Resource Conservation and Recovery Act of 1976 (RCRA), 42 U.S.C. § 6928(d)(2)(A). The government, appellee in No. 89-2129 and appellant in No. 89-2172, appeals the district court’s order granting Baytank and the only three individual defendants whom the jury found guilty, appellees Haavar Nordberg (Nord-berg), Roy Johnsen (Johnsen), and Donald X. Gore (Gore), new trials on various counts charging offenses under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERC-LA), 42 U.S.C. § 9603(b)(3), and the Federal Water Pollution Control Act (Clean Water Act), 33 U.S.C. § 1319(c)(1), and also granting Nordberg and Johnsen post-verdict judgments of acquittal and alternatively new trials on the two RCRA counts. The government also seeks a writ of mandamus directing the district court to impose the mandatory special assessment on the two counts that it left standing with respect to Baytank. We affirm with respect to Bay-tank's appeal in No. 89-2129, and we grant the government’s petition for writ of mandamus; we affirm in part and reverse in part with respect to the government’s appeal in- No. 89-2172.
Facts and Proceedings Below
Baytank is a bulk liquid chemical transfer and storage facility located in Sea-brook, Texas, near Houston. Baytank's principal function is to provide interim storage for customers transporting various chemicals. The three individual defendants before this Court are officers and employees of Baytank. Nordberg was executive vice president of Baytank, Johnsen was Baytank’s safety manager and then its operations manager, and Gore was its technical manager.
This appeal concerns nine counts of the 37-count indictment. At the close of the government’s case, the district court granted all defendants judgments of acquittal on all but eleven counts. The jury, at the conclusion of the four-week trial, returned guilty verdicts on nine of the eleven counts submitted: counts 20-24, 27, 29, and 32 and 33.
Counts 20-24, brought under the Clean Water Act, 33 U.S.C. § 1319(c)(1), allege the willful or negligent discharge of pollutants in wastewater from a Baytank outfall into Galveston Bay’s Bayport Turning Basin, in violation of conditions established in a National Pollutant Discharge Elimination System (NPDES) permit, on “numerous occasions” over various stated time periods. The district court instructed the jury that in order to convict on these charges, it had to find, beyond a reasonable doubt, the following:
(1) on or about the dates charged, the defendant discharged a pollutant willfully or negligently;
(2) the pollutant was discharged from a point source into a navigable waterway of the United States; and
(3) the defendant discharged a pollutant in violation of its permit.
The jury was also instructed that it had unanimously to agree, as to each defendant, on every specific instance on which a discharge occurred and that it had to identify, as to each such instance, whether each defendant committed the violation willfully or negligently. The jury was not given verdict forms with the possible dates identified, but had to come up with its own list of dates from the testimony and the documentary evidence.
Count 27, another Clean Water Act count, alleges that from October 28, 1982 to April 28,1986, Baytank, Nordberg, John-sen, and Gore negligently or willfully failed to file discharge monitoring reports required by Baytank’s NPDES permit with the United States Environmental Protection Agency (EPA). The district court instructed the jury that in order to convict on this count, it had to find the following elements beyond a reasonable doubt:
(1) that the permit included a condition requiring the defendants to file discharge monitoring reports with the EPA; and
(2) that from October 28, 1982 to April 28, 1986, the defendants willfully or negligently failed to file these reports with the EPA.
Again, the jury was instructed to identify, as to each defendant, each specific date of violation and whether the violation was willful or negligent.
Count 29, brought under CERCLA, 42 U.S.C. § 9603(b)(3), alleges that the defendants failed to notify the National Response Center of an April 27, 1985 release of more than one hundred pounds of the hazardous chemical acrylonitrile. Under 42 U.S.C. § 9603(a), the National Response Center must be notified of the release of a hazardous substance in excess of the reportable quantity established by statute or regulation. The reportable quantity of acrylonitrile, established by regulation pursuant to 42 U.S.C. § 9602(a), is one hundred pounds. 40 C.F.R. § 302.4.
Count 32, brought under the RCRA, 42 U.S.C. § 6928(d)(2)(A), alleges that from April 1985 until September 1986, Baytank, Nordberg, and Johnsen knowingly stored hazardous wastes in drums at the Baytank facility in Seabrook without having obtained a permit. Count 33 sets forth the same allegation with respect to storage in tanks from March 1984 to September 1986.
At a motions hearing held following the trial, the district court set aside the jury’s verdict, almost in its entirety. The district court entered judgments of acquittal for Nordberg and Johnsen on counts 32 and 33 (the RCRA counts), granted conditional new trials to them should their judgments of acquittal be reversed, and ordered new trials for all of the defendants on the remaining counts on which the jury had returned a guilty verdict. The court let stand only the jury’s guilty verdict against Baytank on counts 32 and 33. The district court did not give any written statement of reasons or explanation for its action.
At sentencing, the district court fined Baytank $50,000 on count 32. The court suspended the sentence on count 33, subject to Baytank’s providing and executing a community service program. The court refused to impose the mandatory $200 special assessment per count under 18 U.S.C. § 3013(a)(2)(B) on the ground that the law is a revenue-raising measure that originated in the Senate, and is therefore unconstitutional.
Baytank appeals its conviction on counts 32 and 33. The government petitions for a writ of mandamus to compel the district court to impose the special assessment on those counts. The government appeals the judgment of acquittal and conditional new trial with respect to Nordberg and Johnson on counts 32 and 33, and it also appeals the district court’s grant of a new trial to Bay-tank, Nordberg, Johnsen, and Gore on all of the remaining counts (numbers 20-24, 27, and 29) on which the jury returned verdicts of guilty.
Discussion
Part I — Baytank Appeal
Baytank in its appeal presents essentially five claims of error, which we discuss in order.
A. Variance
Baytank argues that, in variance with the indictment, which alleged a violation of 42 U.S.C. § 6928(d)(2)(A) (knowing storage of hazardous waste without a permit), evidence introduced at trial and the court’s instructions to the jury allowed the jury to convict for a violation of § 6928(d)(2)(C) (knowing violation of any material condition or requirement of any applicable interim status regulations or standards).
In general, once an indictment has been returned, its charges may not be broadened through amendment except by the grand jury. Stirone v. United States, 361 U.S. 212, 80 S.Ct. 270, 272, 4 L.Ed.2d 252 (1960); United States v. Mize, 756 F.2d 353, 356 (5th Cir.1985); United States v. Young, 730 F.2d 221, 223 (5th Cir.1984); see Ex Parte Bain, 121 U.S. 1, 7 S.Ct. 781, 30 L.Ed. 849 (1887), overruled in part, United States v. Miller, 471 U.S. 130, 105 S.Ct. 1811, 85 L.Ed.2d 99 (1985). In Stirone, the Supreme Court recognized that a trial court’s amendment of the indictment need not be explicit to constitute reversible error, but that it may be implicit or constructive. Young, 730 F.2d at 223; see Stirone, 80 S.Ct. at 273. As this Court explained in Young:
“Stirone requires that courts distinguish between constructive amendments of the indictment, which are reversible per se, and variances between indictment and proof, which are evaluated under the harmless error doctrine. The accepted test is that a constructive amendment of the indictment occurs when the jury is permitted to convict the defendant upon a factual basis that effectively modifies an essential element of the offense charged. In such cases, reversal is automatic, because the defendant may have been convicted on a ground not charged in the indictment. If, on the other hand, the variation between proof and indictment does not effectively modify an essential element of the offense charged, ‘the trial court’s refusal to restrict the jury charge to the words of the indictment is merely another of the flaws in trial that mar its perfection but do not prejudice the defendant.’ ” 730 F.2d at 223 (citatiohs omitted).
Besides contesting Baytank’s argument on the merits, the government argues that Baytank waived any objection. Where no objection is made, review is normally limited to plain error. Nonetheless, courts have held that it is plain error to give instructions that permit a jury to convict for a crime not charged in the indictment because a court may not substantially amend an indictment through its jury instructions. E.g., Mize, 756 F.2d at 355; Ricalday v. Procunier, 736 F.2d 203, 207 (5th Cir.1984) (interpreting Texas law). We have held that such an error does not require reversal if it is harmless beyond a reasonable doubt. United States v. Slovacek, 867 F.2d 842, 848-49 (5th Cir.1989).
Baytank, however, not only failed to object to the allegedly overbroad portion of the court’s charge, but that portion of the charge is the precise language requested by Baytank. A party generally may not invite error and then complain thereof. E.g., United States v. Lopez-Escobar, 920 F.2d 1241, 1246 (5th Cir.1991); United States v. Raymer, 876 F.2d 383, 388 (5th Cir.), cert. denied, — U.S.-, 110 S.Ct. 198, 107 L.Ed.2d 152 (1989); United States v. Doran, 564 F.2d 1176, 1177 (5th Cir.1977), cert. denied, 435 U.S. 928, 98 S.Ct. 1498, 55 L.Ed.2d 524 (1978); United States v. Taylor, 508 F.2d 761, 763-64 (5th Cir.1975). This Court has made clear that the invited error doctrine applies to jury instructions as well as evidentiary rulings. United States v. Stanley, 765 F.2d 1224, 1238 (5th Cir.1985); United States v. Gray, 626 F.2d 494, 501 (5th Cir.1980), cert. denied sub nom. Wright v. United States and Fennell v. United States, 449 U.S. 1038, 101 S.Ct. 616, 66 L.Ed.2d 500 (1980), and cert. denied sub nom. Gray v. United States, 449 U.S. 1091, 101 S.Ct. 887, 66 L.Ed.2d 820 (1981), and cert. denied sub nom. Barker v. United States, 450 U.S. 919, 101 S.Ct. 1367, 67 L.Ed.2d 346 (1981); United States v. Easterly, 444 F.2d 1236, 1240 (5th Cir.1971). Although in those cases we did not address the precise question of a jury instruction allowing a conviction for a crime not charged in the indictment, we know of no reason why the invited error doctrine might not apply in some such situations, at least where it does not appear that a substantial miscarriage of justice would result from its application. In Ricalday, we noted that under Texas law, where the charge allows conviction on an unindicted offense, the error is “fundamental” and reversal is required even absent an objection from the defendant. 736 F.2d at 207. We further noted, however, that under the doctrine of invited error, a defendant would be precluded under Texas law from challenging such a charge if it had been requested by the defendant and given as requested. Id. at 207 n. 3 (citing Cadd v. State, 587 S.W.2d 736, 741 (Tex.Crim.App.1979) (en banc)).
Even if the doctrine of invited error did not apply, Baytank nonetheless would not prevail on this issue. In order to convict on counts 32 and 33, the government had to demonstrate that Baytank — which was not in “interim status” — both had stored hazardous waste without a permit and had violated the limited conditions under which it could store those wastes without a permit. Baytank argues that a permit is required only for storage over 90 days. This assertion is misleading. EPA regulations do allow a facility to store hazardous waste for up to 90 days without a permit, but only if it complies with certain safe storage conditions. 40 C.F.R. § 262.34(a) (1984). Knowing violation of any of the safe storage conditions set forth in 40 C.F.R. § 262.34(a) is subject to criminal prosecution under § 6928(d)(2)(A), even if that storage is for less than 90 days. Accordingly, the government can prove a violation of § 6928(d)(2)(A) either by showing unpermitted storage for longer than 90 days, see 40 C.F.R. § 262.34(b), or by showing unpermitted storage for any period of time in violation of any of the safe storage conditions of 40 C.F.R. § 262.34(a). Here, the government presented amply sufficient proof of both.
The district court instructed the jury that “[n]o one may store hazardous waste for longer than 90 days unless he has received a permit to do it” (emphasis added), and that “a generator of hazardous waste may accumulate waste on site for 90 days or less without a permit if he meets these conditions” (emphasis added), and then listed the relevant § 262.34(a) conditions. The jury was next instructed that in order to convict it had to find that the defendant either “(1) knowingly stored hazardous waste without a permit for longer than 90 days or (2) knowingly failed to comply with any one of these conditions [those which had just been listed in the charge].” Bay-tank argues that the government’s proof and the district court’s instruction constituted a “constructive amendment of the Indictment in fatal variance with Counts 32 and 33 as charged in the Indictment,” exposing it to conviction for another RCRA crime — 42 U.S.C. 6928(d)(2)(C), violation of interim status (see note 15, supra). But the temporary storage of hazardous waste for less than 90 days under 40 C.F.R. § 262.34 has no necessary relationship to interim status. The temporary storage exception to the permit requirement applies to all generators who store hazardous wastes for less than 90 days, whether or not they have interim status, which Bay-tank did not have.
It is true that some of the elements critical to proving a criminal violation of interim status under § 6928(d)(2)(C) may be identical to some of the elements of the crime charged here under § 6928(d)(2)(A) where the unpermitted storage is for less than 90 days. This overlap exists because the regulations governing short-term storage by all facilities, 40 C.F.R. § 262.34(a)(1), incorporate by reference portions of the safe storage regulations devoted to interim status. This incorporation may well reflect EPA’s judgment that safe storage practices should apply to short-term storage of hazardous waste, whether by facilities with interim status or without it.
Nonetheless, because there was no attempt to prove that Baytank sought or obtained interim status, nor any instruction (or argument) suggesting that a jury could find a violation of interim status, there is no chance that the jury convicted Baytank under § 6928(d)(2)(C). The evidence at trial was tied directly to the charged violation of § 6928(d)(2)(A), so there was no variance or constructive amendment of the indictment.
Baytank’s complaints respecting variance and constructive amendment of the indictment present no reversible error.
B. Duplicity
Baytank argues that both counts 32 and 33 are duplicitous, meaning that each charged more than one offense, contrary to Federal Rule of Criminal Procedure 8(a). Baytank notes that these counts both cover a substantial period of time and that the government’s bill of particulars specified various particular dates and also alleged “continuous and isolated, individual violations on all days” within the periods alleged in each of counts 32 and 33.
An indictment may be duplicitous if it joins in a single count two or more distinct offenses. United States v. Robin, 693 F.2d 376, 378 (5th Cir.1982). If an indictment is duplicitous and prejudice results, the conviction may be subject to reversal. See United States v. Salinas, 654 F.2d 319, 326 (5th Cir. Unit A 1981), overruled on other grounds, United States v. Adamson, 700 F.2d 953 (5th Cir. Unit B) (en banc), cert. denied, 464 U.S. 833, 104 S.Ct. 116, 78 L.Ed.2d 116 (1983).
Even if Baytank’s duplicity argument had merit, Baytank has waived it by failing to object below. “This court has consistently required that objections to the indictment, such as duplicity, must be raised prior to trial.” United States v. Elam, 678 F.2d 1234, 1251 (5th Cir.1982) (citing United States v. Busard, 524 F.2d 72 (5th Cir.1975), cert. denied sub nom. Meyer v. United States, 426 U.S. 948, 96 S.Ct. 3168, 49 L.Ed.2d 1185 (1976); United States v. Williams, 203 F.2d 572 (5th Cir.), cert. denied, 346 U.S. 822, 74 S.Ct. 37, 98 L.Ed. 347 (1953)). This requirement is embodied in Rule 12(b)(2) of the Federal Rules of Criminal Procedure, which has remained virtually unchanged from the time of its adoption in 1944. See also Durland v. United States, 161 U.S. 306, 16 S.Ct. 508, 40 L.Ed. 709 (1896).
Baytank never raised a duplicity objection below with respect to either of counts 32 or 33. Baytank did file a motion to dismiss below which argued that counts 32 and 33 were “multiplicitous as to one another,” in that they covered the same time frame and both involved storing hazardous waste without a permit. Plainly this is asserting multiplicity (charging the same offense in two separate counts) and not duplicity (charging more than one offense in a single count). Indeed, Baytank has not contended otherwise. Rather, Baytank relies on oral objections it made at a pretrial hearing. At this hearing Baytank’s counsel did state that “many of the counts were duplicitous,” but the only counts specifically so identified (out of the total of 37 counts in the indictment) were counts 16-23, 26, and 31; no mention was made of either count 32 or count 33. Accordingly, Baytank has waived its duplicity argument as to these counts.
Nor is there any good cause for granting Baytank relief from waiver under Rule 12(f). Notwithstanding that a defendant’s actions, charged in a single count, could have been charged as separate violations, nevertheless a single count may be
used where those actions “represent a single, continuing scheme,” provided the indictment (1) notifies the defendant adequately of the charges against him; (2) does not subject the defendant to double jeopardy; (3) does not permit prejudicial evidentiary rulings at trial; and (4) does not allow the defendant to be convicted by a nonunanimous jury verdict. Robin, 693 F.2d at 378; United States v. Pavloski, 574 F.2d 933, 936 (7th Cir.1978). This analysis is supported by Federal Rule of Criminal Procedure 7(c)(1), which allows one or more specified means to be included in a single count. See Pavloski, 574 F.2d at 936. Baytank does not suggest that it was prejudiced on any of the first three grounds but does argue that the alleged duplicity deprived it of its right to a unanimous jury verdict.
In any event, we observe that counts 32 and 33 appear to meet the Robin tests for permissible duplicity, with the possible exception of assuring a unanimous jury verdict. Thus, the complaint comes down to whether the jury instructions were sufficient, as it is clear that this aspect of a duplicity problem can be cured by appropriate special instructions which, for example, inform the jury that it must unanimously agree on the specific basis {e.g., a given date or the like) on which it finds the defendant guilty under the count in question. See, e.g., United States v. Gipson, 553 F.2d 453, 457 (5th Cir.1977). Here the court gave only the usual, general unanimity charge. However, Baytank’s requested instructions do not contain any special unanimity charges with respect to either count 32 or 33, and Baytank’s oral objections to the charge do not complain of the absence of any instruction of that nature. Accordingly, any failure to instruct specially in that respect concerning count 32 or 33 is reviewable only under the narrow “plain error” standard of Fed.R.Cr.P. 52(b). Pavloski, 574 F.2d at 936; see also Robin, 693 F.2d at 379 (citing Pavloski with approval). Further, the instructions on counts 32 and 33 were, in all respects that are material to this point, the same as those Baytank itself requested. Thus, any error would be invited, and as we noted in Section B, supra, a party may not invite error and then complain thereof.
No reversible error is presented by Bay-tank's duplicity argument.
C. Mixture Rule — Knowledge Instructions
Baytank asserts that its conviction on count 33, the RCRA tank storage count, depends on the EPA’s mixture rule, 40 C.F.R. § 261.3(a)(2)(iv), which defines a hazardous waste to include any mixture of solid waste and any one or more specifically listed hazardous wastes, without regard to how small an amount of hazardous waste is in the mixture. Although some aspects of Baytank’s rather confusing argument may be viewed as a general challenge to the validity of the mixture rule or any conviction that depends on it, a closer examination of the argument reveals that it is really a challenge to the jury instructions for not requiring the jury to find, in order to convict, that Baytank knew that what was in its tanks was defined as hazardous under the mixture rule. Thus, Baytank asserts that it preserved this challenge by requesting instructions that the jury must find the substances were in fact hazardous and that the defendants knew that the waste was identified by the regulations as hazardous waste. Similarly, Baytank argues in effect that the fairness element of due process — proscribing felony conviction of one pure in heart and mind — requires a jury instruction either that the chemicals must be actually hazardous or that the defendants must know that they are identified as hazardous under the mixture rule. Further, Baytank states that “the central issue presented” by its mixture rule argument is that Baytank was constitutionally entitled to a jury instruction that required the jury to find, in order to convict, that the defendants knew the material was identified as a hazardous waste under the mixture rule, at least in instances where the hazardousness of the material in issue depends on that rule.
As an initial matter, the government contends that 42 U.S.C. § 6976(a) bars any challenge to the mixture rule in this proceeding, contending that under that statute one had either to challenge the mixture rule within 90 days after it was adopted (which was about six months before Bay-tank came into existence), or seek an exemption for the wastes in question under 40 C.F.R. § 260.22, or seek an amendment to the regulation through the procedures for that purpose, 40 C.F.R. § 260.22, and in either event, if unsuccessful before the EPA in those attempts, timely appeal the EPA’s denial of relief to the D.C. Circuit under § 6976(a)(1). We need not decide this question, because assuming, arguen-do, that we can reach such of Baytank’s properly preserved contentions as are grounded on its complaints of the mixture rule, we hold that in any event those contentions present no reversible error. Bay-tank’s arguments respecting the mixture rule do not present any properly preserved contention respecting the EPA’s statutory authority to adopt the mixture rule (for example, that the rule is not supported by substantial evidence or is invalid because it is arbitrary and capricious or the like). Cf. Touby v. United States, — U.S. -, 111 S.Ct. 1752, 114 L.Ed.2d 219 (1991). Therefore, the real issues presented on appeal in this respect are those which concern the court’s charge on count 33.
A careful reading of Baytank’s briefs reveals that it really raises only one complaint of the charge in this respect. However, before discussing that complaint, we do note that Baytank also seems to complain about the failure of the charge to require a finding that the wastes in the tanks were actually hazardous. We find that the court did so instruct the jury, or at least came close enough to doing so that Baytank may not complain of any failure to do so more precisely, as it did not object on this ground below. The court instructed that to convict under counts 32 and 33 the jury had to find that “[t]he defendant knowingly stored... hazardous waste” and that “the defendant knew that the waste stored had the potential to be harmful to others or to the environment,” and again that the defendant “knowingly stored hazardous waste” (emphasis added). We believe these instructions required the jury to find that the waste stored was hazardous. The charge does not make any reference to the mixture rule, either by name or by stating any of its provisions. Nor does the charge — apart from its referenced requirement that the defendants “knew the waste stored had the potential to be harmful to others or to the environment” — otherwise define “hazardous” or “hazardous waste.”
In their supplemental proposed jury instructions, the defendants requested a charge requiring the jury to find that the waste “was in fact hazardous and had the potential to be harmful to others or the environment” and that each defendant knew this. Later, the defendants presented a revised requested jury charge which, with respect to counts 32 and 33, was virtually word for word the same as the charge subsequently given by the court insofar as concerns a requirement that the jury find that the waste be actually hazardous in fact. Moreover, none of the charges requested by the defendants contained a definition of “hazardous” or “hazardous waste.” The oral objections made by the defendants to the court’s charge did not contain any objection on the ground that the charge failed to require the jury to find that the wastes were actually hazardous, or that the charge was not explicit enough in this regard, or improperly failed to contain any definition of, or incorrectly defined, “hazardous” or “hazardous waste.” Further, the statute, 42 U.S.C. § 6903(5)(B), defines hazardous waste as any waste that “may—... pose a substantial present or potential hazard to human health or the environment when improperly... stored... or otherwise managed.” The court’s charge, which required the jury to find that the defendants had stored “hazardous waste” and that the defendants “knew” that the waste stored “had the potential to be harmful to others or to the environment,” seems logically to require that the jury find that the waste was actually hazardous in the sense that § 6903(5)(B), as above quoted, defines it. The only possibly meaningful difference between the court’s instruction and the quoted statutory definition is that the instruction does not contain the word “substantial” as a modifier of “potential.” Nonetheless, neither did the defendants’ requested instructions contain “substantial” or anything like it in this regard, and there was no objection to the charge for the failure to include such or a similar word.
The one objection to the charge in this connection that the defendants have properly preserved relates to the charge’s requirement, as a separate and additional element that the jury must find in order to convict, that the wastes had been identified by the EPA regulations as hazardous wastes under the RCRA. The defendants requested instructions contained a requirement in this respect, not included in the charge as given, that the defendants knew that the waste was identified by the regulations as a hazardous waste under the RCRA. It is the failure to give this requested instruction that the defendants have properly preserved on appeal and urge as a ground for reversal.
We conclude that in the circumstances of this case the court was not required to instruct that the jury must find that the defendants knew the waste had been identified by the EPA regulations as hazardous under the RCRA. Baytank’s argument is that the absence of such an instruction allows felony conviction of an “innocent” person contrary to our en banc decision in United States v. Anderson, 885 F.2d 1248 (5th Cir.1989). Given that the court here also instructed — sufficiently, in light of the absence of objection and the fact that in this respect the charge was as defendants had requested — that the jury must find that what was stored was “hazardous waste” which the defendant “knew” had the potential for harm to others or the environment (i.e., that the stored waste in fact had the requisite potentially harmful physical character and defendant knew that the stored waste was potentially harmful), what Baytank is claiming is in effect the defense of mistake of law (ignorance of the regulations), not mistake of fact. In Anderson the defense was mistake of fact (the defendant thought the gun was in fact a semi-automatic, rather than a fully automatic); we did not hold that mistake of law (ignorance of the law’s requirement to register a fully automatic gun or how the law defined fully automatic) was a defense. In United States v. International Minerals & Chemical Corp., 402 U.S. 558, 91 S.Ct. 1697, 29 L.Ed.2d 178 (1971), a case involving the shipment of sulfuric acid and hydro-fluosilicic acid in violation of an Interstate Commerce Commission regulation, the Supreme Court held that the word “knowingly” in the statute pertained to knowledge of the facts, and where, as here, dangerous products were involved, anyone who was aware that he was in possession of or dealing with them must be presumed to have been aware of the regulation. A majority of the circuits have adopted a similar approach under the RCRA. See, e.g., United States v. Hoflin, 880 F.2d 1033, 1039 (9th Cir.1989), cert. denied, — U.S. -, 110 S.Ct. 1143, 107 L.Ed.2d 1047 (1990) (RCRA) (indicating an instruction that defendant knew the substance “had the potential to be harmful to others or to the environment” was sufficient; no requirement to have knowledge of lack of permit, and, inferentially, none to know the waste was listed by EPA as hazardous under the RCRA); United States v. Greer, 850 F.2d 1447, 1450 (11th Cir.1988) (similar, but instructions as such not in issue); United States v. Dee, 912 F.2d 741, 745 (4th Cir. 1990), cert, denied, — U.S.-, 111 S.Ct. 1307, 113 L.Ed.2d 242 (1991) (defendant does not have to know “that regulations existed listing and identifying the chemical wastes as RCRA hazardous wastes,” but does have to know that chemicals in question are “hazardous,” but apparently approves Hoflin and Greer definitions of “hazardous” as having “potential to harm others or the environment”); United States v. Hayes International Corp., 786 F.2d 1499, 1502-5 (11th Cir.1986) (RCRA) (defendant must know there was no permit and that the waste was a mixture of paint and solvent, but need not know “that the paint waste was a hazardous waste within the meaning of the regulations” or that the regulations required a permit).
There are few authorities to the contrary. Baytank relies on Liparota v. United States, 471 U.S. 419, 105 S.Ct. 2084, 85 L.Ed.2d 434 (1985), which did require knowledge of the regulations in a food stamp misuse case. We find persuasive the Eleventh Circuit’s conclusion in Hayes International that Liparota is not controlling in a prosecution brought under the RCRA. See Hayes International, 786 F.2d at 1502-05. Although Baytank’s proposed interpretation of the statute is plausible, it is not as readily suggested by the statutory language as was the language of the statute at issue in Liparota. Even more important, the Liparota court distinguished its case from those involving public welfare offenses, concluding that the violation of the food stamp regulations did not involve “a type of conduct that a reasonable person should know is subject to stringent public regulation and may seriously threaten the community’s health or safety.” 105 S.Ct. at 2092. As the Hayes International court recognized, the RCRA “is undeniably a public welfare statute, involving a heavily regulated area with great ramifications for the public health and safety.” 786 F.2d at 1503. International Minerals is much closer to the instant case, and it has not been overruled. See also United States v. Yermian, 468 U.S. 63, 104 S.Ct. 2936, 82 L.Ed.2d 53 (1984) (statute forbidding knowingly making a false statement within the jurisdiction of a federal agency does not require actual knowledge of federal jurisdiction). The other case relied on by Baytank is United States v. Johnson & Towers, Inc., 741 F.2d 662, 669 (3d Cir.1984), cert. denied sub nom. Angel v. United States, 469 U.S. 1208, 105 S.Ct. 1171, 84 L.Ed.2d 321 (1985), an RCRA case where in dicta the court said that to convict the defendant employees they had to know not only that their employer “did not have a permit” but also that it “was required to have a permit.” While arguably the latter relates to knowing the facts that required the employer to have a permit, the opinion seems also to imply a requirement of knowledge of the regulations so requiring. To the extent Johnson & Towers would require knowledge of the regulations, we respectfully decline to follow it. Johnson & Towers was rejected in Hoflin and, infers entially, in Dee. Hoflin, 880 F.2d at 1037-38; Dee, 912 F.2d at 745.
Here the statute — § 6928(d)(2)(A) —does use the word “knowingly,” but we conclude, as Dee, Hoflin, and Hayes International all indicate, that “knowingly” means no more than that the defendant knows factually what he is doing — storing, what is being stored, and. that what is being stored factually has the potential for harm to others or the environment, and that he has no permit — and it is not required that he know that there is a regulation which says what he is storing is hazardous under 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.
McGOWAN, Circuit Judge:
Before us for review is a decision by the Federal Communications Commission to deny petitioner’s request for authority to operate its existing daytime AM radio station (WJAZ) in Albany, Georgia, at night as well. This determination was reached after full hearing, and no procedural issues are pressed upon us by petitioner. The controversy turns upon the question of whether the Commission acted arbitrarily and beyond the bounds of its discretion in refusing to waive a conceded conflict between the authority sought and the Commission’s so-called 10 per cent rule. 47 C.F.R. § 73.28(d) (3) (1965). We are not' persuaded that it did.
I
When petitioner’s application was filed, its examination by the Commission resulted in a finding that it qualified for granting in all respects except that of the 10 per cent rule. It was, therefore, set for hearing on that issue. Petitioner’s own evidence confirmed and established the violation to be a substantial one. Thus, the precise question was whether the Commission should waive its rule in this instance. The Examiner recommended waiver, giving three principal reasons therefor:
1. The proposed service would reach a “white area” (i. e., one with no standard broadcast service at all) in Albany’s business and factory area, involving 6,231 persons.
2. A “gray area” (i. e., one with only one primary service) of 41,182 persons would be reached.
3. Petitioner’s past and proposed programming, because of its allotments of time to the colored community, commendably furthered local self-expression.
The Broadcast Bureau excepted to the Examiner’s report. It flatly challenged the accuracy of the Examiner’s first point, asserting that the so-called “white area” was not so at all since it was already receiving a primary service within the meaning of the Commission’s Rules. It argued that the evidence relied upon by the Examiner for his third point was not such as to show programming circumstances sufficiently unusual as to justify a waiver.
The Review Board concluded to withhold the waiver. It held that there was no “white area”; and that, accordingly, the 6,231 persons in question should be added to the 41,182 in the “gray area,” resulting in a total of 47,413 for whom the waiver would mean a second service. It thought this circumstance to be petitioner’s strongest reason for waiver, but it concluded that it did not overcome the policy considerations giving rise to the 10 per cent rule. Neither did it think that the evidence as to programming was such as to warrant a departure in this case from those considerations. Accordingly, it refused the waiver and denied the application. As noted above, the Commission denied the application to it for review of the Board’s action.
II
The dispute over the existence of a “white area” represents clashing interpretations of the Commission’s technical rules. We cannot say that the Commission’s view of the operation of those rules in this case is clearly in error, particularly in view of the “great weight” which we have heretofore said should be given “in this highly technical field [to] the Commission’s construction and application of its own Rules and Standards of Engineering Practice * * Interstate Broadcasting Co. v. FCC, 105 U.S.App.D.C. 224, 231, 265 F.2d 598, 605 (1959). Here the situation seems to be that, although the proposed service might provide a stronger signal than presently reaches the business and factory area in question, it would not be a first or primary service and, therefore the geographical area involved would not be “white” within the contemplation of the Commission’s definitions. There appears, then, to have been no misapprehension of fact in this respect distorting the Commission’s deliberations on the matter of waiver.
The so-called “white area” thus became part of the “gray,” and this was recognized as presenting a serious and substantial argument in favor of waiver. But the concept of administrative discretion does not mean that the failure to accept a good argument is invariably an abuse of that discretion. Here it was concluded that that argument, good as it was, when arrayed against the objectives sought to be secured by the 10 per cent rule, was not good enough. Opinions might vary about the correctness of this conclusion, but it is a determination which Congress has primarily committed to an expert agency of its own creation, with a reviewing function in ourselves which is purposefully limited. We observe those limitations when, as here, we leave undisturbed the Commission’s resolution of the very kind of problem it was summoned into being to handle.
We turn to the important issue of program content. We are not, we should first make clear, confronted by the Commission with a threshold issue as to the relevance of this matter to the waiver question. That relevance is not here denied. The Commission argues, rather, that the showing made on this point was not such as to vitiate the purposes of the 10 per cent rule and to dictate the granting of a waiver of it. We look to the evidence of record in our assessment of petitioner’s contention that, on this score at least, the Commission was moved by caprice.
The matter is, as we have said, an important one because the community involved is 40 per cent colored. At the time of the hearing, it was served by four AM stations, two of which operated full time; a TV station; and one FM station. This last became two when petitioner, during the pendency of this proceeding, was awarded authority for a full-time FM station. Although this represents a substantial amount of service for an area of this size, that fact alone would not be very meaningful for 40 per cent of the population if their interests and activities were not appropriately reflected in the programs offered. That the Commission is not oblivious of these considerations and of its capacity to deal directly and effectively with them is attested by its recent action after investigation of explicit charges of discrimination in the programming services offered by eight stations coming up for license renewal.
In proffering evidence of petitioner’s assertedly superior performance in this respect, petitioner’s counsel expressly disclaimed any “intention to show that there was any discrimination” by the other stations. Although this statement is to be weighed in the light of the local pressures which undoubtedly exist in a situation of this kind, it remains true that the depositions of local citizens put in the record were read by the Commission, and we think rightly, as fully consistent with this disclaimer. Two colored ministers stated that petitioner had volunteered the use of its facilities for their programs; and that no such specific invitation had been forthcoming from the other stations. But they also said that they had never approached the other stations because, as one put it, “We have not sought time on other stations because we were very well satisfied with the service of WJAZ and we didn’t think it necessary.” Neither of these witnesses nor any other was critical of the services and programming of the other stations, and no charge of discrimination was made. Although a representative of Albany State College, a colored institution, praised petitioner’s cooperativeness with it, he referred to WJAZ as “one of the outlets that we used.” Although there was unquestionably a basis in the testimony for an inference that WJAZ’s programming made more of an effort to reflect the interests and activities of the colored community, there was no evidence placed in the record as to the programs of the other stations.
Thus it seems fair to say that what the evidence did was to establish not that petitioner was the only station serving the colored community but that its record in this regard compared quite favorably with that of the other stations. It does not appear to us that the Commission either regarded this circumstance as irrelevant or ignored it in weighing the matter of waiver. Rather, it seems to have concluded that the objectives of the 10 per cent rule were not overbalanced, and that the pursuit of those objectives should not be relaxed in this instance, there being neither claim nor showing that such relaxation was necessary to assure the Negro groups of at least one outlet for self-expression. We think the record adequately supported this conclusion, and we do not disturb it.
Affirmed.
. Two orders are brought to us for review: one is that of the Commission’s Review Board, denying petitioner’s application for licensing authority, and the other is that of the Commission, denying petitioner’s application for review of the Board’s decision by the Commission itself. Under the statute, 47 U.S.C. § 155(d) (3), the Board’s decision in this posture has the force and effect of a Commission decision, and is so referred to on occasion throughout this opinion.
. 19.1% of the population within the normally protected contour of the proposed service would, because of interference, have failed to receive it. This is, of course, nearly double the tolerance provided in the 10% rule. The 10% rule is directed against the inefficient utilization of frequencies, and reflects a judgment by the Commission that the inability of a proposed service to reach as many as 10% or more of the population involved reflects an unacceptable inefficiency in the use of a scarce resource. There are specific exceptions in the rule wbicb reflect other interests, but petitioner admittedly does not fall within them. The Commission, at the time of its issuance, aptly characterized its 10% rule as “the determination of the point at which on an overall basis the resulting interference may become so severe as to outweigh the advantages to be gained by assigning additional stations to the available frequencies.” 10 P. & F. Radio Reg. 1595, 1597 (1954). After some years of experience in its administration, the Commission noted the eroding effect of the exceptions and waivers in these terms: “The result has been a developing system of assignments that may be justified in terms of each individual case, but which, on the whole, bears little relation to the rational assignment system represented by the protected contour concept in undiluted form.” This last was said in conjunction with the promulgation in 1962 of a partial freeze upon new applications for standard broadcast authority. 23 P. & F. Radio Reg. 1545, 1547. That freeze has no application in this case.
. Sunshine State Broadcasting Co. v. FCC, 114 U.S.App.D.C. 271, 314 F.2d 276 (1963). Petitioner complains generally that the Commission has granted waivers in cases comparable to this one. In the first place, comparability in this area is an inexact concept at best; and, secondly, the Commission is to be accorded substantial latitude in the continuing administration of a rule such as is here involved, where trial and error is to some extent inevitable. The Supreme Court has said that the Commission is not obliged “to deal with all cases at all times as it has dealt with some that seem comparable.” FCC v. WOKO, Inc., 329 U.S. 223, 228, 67 S.Ct. 213, 216, 91 L.Ed. 204 (1946). And this court has referred to the necessarily “pragmatic” nature of the Commission’s approach to each requested waiver, see Guinan v. FCC, 111 U.S.App.D.C. 371, 375, 297 F.2d 782, 786 (1961), as well as to the inescapable fact that “the Commission’s view of what is best in the public interest may change from time to time.” Pinellas Broadcasting Co. v. FCC, 97 U.S.App.D.C. 236, 238, 230 F.2d 204, 206, cert. denied, 350 U.S. 1007, 76 S.Ct. 650, 100 L.Ed. 869 (1956).
. On May 20 last, the Commission announced that, as a result of its inquiry into racial discrimination in the programming of eight Mississippi licensees, it was renewing the licenses of three for only one year and with conditions attached; and that the renewals for the other five were on the basis of warnings, corrective action, and the making of representations as to future conduct. In the case of the one-year renewals, the conditions relate to strict observance of the fairness doctrine, the cessation of discriminatory programming patterns, and the affirmative obligation to seek out the community leaders, including those active in the civil rights movement, and to explore with them the adequacies of the programming in terms of the needs of the whole community. Lamar Life Broadcasting Co., 5 P. & F. Radio Reg. 2d 205 (1965).
. As an appendix to its brief in this court, petitioner submitted certain documents relating to a complaint made to the Commission, several months after the filing of the petition for review, that WALG, one of the other stations in Albany, had violated the Commission’s fairness doctrine. The charge was that WALG had broadcast an editorial critical of the award of the Nobel Prize to the Reverend Martin Luther King, Jr., and had not accorded equal time for reply. The Commission acted to bring this to the attention of WALG and asked for an explanation. WALG replied that it had offered the time, but that it had not understood that it was required to allow the answering matter to be read by someone outside its own staff. The Commission advised that this was not, under its fairness doctrine, a permissible limitation. WALG replied forthwith that it had complied in full and that, since it now understood that its interpretation of the Commission’s fairness doctrine was not correct, it would be “guided accordingly in the future.” It was urged to us that this incident demonstrates the need for the waiver of the 10% rule as to petitioner. We are not persuaded, any more than is the Commission, that it must be accorded that significance.
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 appeal was perfected from the Memorandum Decision and order handed down by the United States District Court for the Western District of Tennessee on May 3, 1973, ordering the implementation of a plan intended to complete the desegregation process in Memphis. Appellants assert that the plan approved by the District Court does not achieve the degree of desegregation demanded by the Constitution and recent Supreme Court cases.
The history of this case is long and involved and need not be recounted here. For its history see the opinions of this Court in Northcross v. Board of Education of Memphis City Schools, 302 F.2d 818 (6th Cir. 1962); 333 F.2d 661 (6th Cir. 1964); 444 F.2d 1179 (6th Cir. 1971); 466 F.2d 890 (6th Cir. 1972). In the latter opinion we ordered the implementation of an interim desegregation plan and directed the District Court to ‘^prepare a definite timetable providing for the establishment of a fully unitary school system . . . . ” Northcross, supra, 466 F.2d at 895. On remand, the District Court ordered that the interim plan, Plan A, be put into effect for the Spring semester of 1973. Appellee carried out this order, necessitating extensive student and faculty reassignments and equipment transfers. In addition, the_Disirict Court directed, the Board of Education to prepare a 'further plan for desegregation designed to establish a fully unitary system.
The appellee created a bi-racial “Team” consisting of staff members to handle the task of drawing a new plan. Instead of proposing a single solution, the Team submitted a series of alternative plans to the District Court. The trial court conducted hearings on the various proposals, selected one of the Team’s plans, and ordered its implementation for the Fall semester of 1973. Expressing his desire for an end to this litigation, the District Judge designated the effort “Plan Z.” It is from the decision to adopt Plan Z that appellants bring this appeal.
The appellee’s desegregation Team submitted two sets of alternative plans. Plan I and Plan III constitute one total plan, and will hereinafter be referred to as Plan I — III. Plan II (elementary) and Plan II (secondary) taken together make up one plan, and will hereinafter be simply Pian II. In addition, appellants submitted a modified version of Plan III, and the Team suggested a possible variation of Plan II (elementary).
At the elementary level Plan I — III would provide for complete desegregation of every attendance unit. Plan II integrates all but nineteen all-black or predominantly black units, but includes no all-white units. Plan I — III would require substantially greater times and distances of transportation than Plan II. The District Court chose Plan II, re-designating it “Plan Z,” as hereinabove mentioned.
Plan I — III would desegregate all junior and senior high school units. Plan II leaves two all-black high schools _and 'four all-black junior high schools... Once again, Plan I — III would involve the greater degree of transportation. The District Court opted for Plan II- at this level.
It is estimated, based on projected figures, that Plan II will enable eighty-three percent of the Memphis public school students to attend school in a desegregated situation. To achieve this result, over 38,000 children will be bused to school. (23,000 of the 38,000 bused students are in the elementary schools.) Forty-four percent of the bused students will spend between 31-45 minutes in transit each way, but no ride will be over 45 minutes in length.
Appellants point out that Plan II leaves a number of black students in all-black or predominantly black schools, and complain that some of the very schools that were all-black at the inception of this litigation in 1960 will remain so under Plan II. The solution urged both here and below by appellants is the adoption of Plan I — III. Under this proposal ninety-seven percent of the students would be placed in desegregated units. This would require the busing of 48,000 children, the great majority of whom would ride for 31-45 minutes each way, although 9,700 would have to travel 46-60 minutes. The greater number of those involved in the 46-60 minute trips would be elementary students.
The District Court, sitting as trier of fact, reviewed the merits of the alternative plans submitted by appellee before reaching its decision. That decisión cannot be set aside unless clearly erroneous. Rule 52(a) Fed.R.Civ.P. In Goss v. Board of Education of Knoxville, 482 F.2d 1044, 1047 (6th Cir. 1973), this Court, faced with a similar question, stated that “An appellate court simply cannot violate this settled principle of our jurisprudence, no matter how desirable a particular result may appear to be.” We conclude that the District Court’s choice of Plan II was not clearly erroneous and must, therefore, be upheld.
The evidence consisted mainly of projected attendance, transportation and cost figures for the various plans, and the testimony of Team members and other experts. The basic figures for the different plans have been discussed heretofore. A review of the testimony reveals that for a variety of reasons a majority of the Team favored the adoption of Plan II. The lone psychological expert was of the opinion that a shortening of the times and distances of transportation would inure to the benefit of many school children, especially the younger ones. Plan II was also recommended by the school staff and the Board of Education.
The District Court relied heavily on a phrase from Davis v. Board of School Commissioners of Mobile, 402 U.S. 33, 37, 91 S.Ct. 1289, 1292, 28 L.Ed.2d 577 (1971). That phrase directs that district courts “make every effort to achieve the greatest possible degree of actual desegregation, taking into account the practicalities of the situation.” (Emphasis added.) To discover what constituted a “practicality,” the District Court referred to Swann v. Charlotte-Mecklenburg Board of Education, 402 U.S. 1, 91 S.Ct. 1267, 28 L.Ed.2d 554 (1971).
The practical considerations set forth in Swann which influenced the District Court’s decision in this case are as follows: First, the limited usefulness of racial quota ratios; secondly, the necessity of tolerating some one-race schools because minority groups concentrate in urban areas; thirdly, the logistical problems inherent in remedial alteration of attendance zones; and lastly, the limitations on travel that must be considered when transportation remedies are employed.
The clearest insight into the weight that the District Court gave to the practical considerations recommended by Swann and Davis is found in the following passage from the Memorandum Decision:
“The lesser degree of desegregation in combined Plan II is based primarily upon four factors pertaining to effectiveness, feasibility and pedigogical soundness. Those factors are time and distance traveled on buses, cost of transportation, preservation of desegregation already accomplished, and adaptability.”
The District Court’s analysis of the proposed alternatives was both thoughtful and thorough, and we do not find the conclusions reached to be clearly erroneous. As we stated in Goss, supra, 482 F.2d at 1047, “The experienced District Judge who has lived with this case from its inception analyzed the evidence in great detail. His findings are supported by substantial evidence and are not clearly erroneous.” The above statement has equal validity here. The May 3, 1973 Memorandum Decision of the District Court ordering the implementation of Plan II and designated Plan Z is hereby . affirmed.
No costs are taxed, and each party will bear their own costs on appeal.
. Projections were based on the attendance figures for the Spring semester of 1973 when the system was operating under interim Plan A. At that time there were 131,268 students in the system.
. The Team also worked out an alternative bus route system for both plans relying primarily on the use of expressways. The expressways result in a decrease in the transportation time for some students, although it has less effect on Plan II than on Plan I-III.
. Using the expressways only 5,347 students would ride for 46-60 minutes. See footnote 2, 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.
GOLDBERG, Circuit Judge:
This clash between the Boeing Company (Boeing) and the International Association of Machinists and Aerospace Workers (IAMAW) over Boeing’s obligations to some 1100 installation support services employees at John F. Kennedy Space Center, Florida, has spread far beyond the launch pad and into the executive bureaucracy, the halls of Congress, and several federal courtrooms. In other forums, the great issues of national labor policy and government contracting policy have been debated and determined in their ways. Ours is the more mundane, but nonetheless complex, task of defining the obligations of a successor employer to arbitrate claims submitted by a union on behalf of incumbent employees of a predecessor employer.
I
FACTS
From March, 1964, until April 1, 1971, Ti’ans Woi’ld Airlines, Inc. (TWA) performed “installation support services” at Kennedy Space Center under contract with the National Aeronautics and Space Administration (NASA). The approximately 1100 nonsupervisory personnel employed by TWA were represented in collective bargaining by IA-MAW. A collective bargaining agreement between TWA and IAMAW, entered into on January 28, 1970, was in force at the time TWA’s contract with NASA expired, and was to “remain in full force and effect to and including December 31, 1971.” Two subordinate IAMAW units, District Lodge 142 and Local Lodge 773, helped administer the TWA-IAMAW agreement.
In June, 1970, NASA invited bids for performance of the Kennedy Space Center installation support services duties for a one-year period commencing February 1, 1971 (performance to begin April 1, 1971), with option for NASA to extend the contract for four successive one-year periods. TWA, Boeing, and five other companies submitted proposals. Four of the offerors, including TWA, based their computations of labor costs on the wage rates and fringe benefits established by the existing TWA-IAMAW collective bargaining contract. Boeing based its computation of labor costs on the wage rates and fringe benefits provided under its own existing collective bargaining agreement with IAMAW, which covered some 287 Kennedy Space Center employees performing mission support services known as “hardware contracts” on the Saturn V launch vehicle. The wages and benefits fixed by the Boeing-IAMAW agreement were substantially below those specified in the TWA-IAMAW agreement, and the Boeing-IAMAW agreement was administered through different local subordinates, District Lodge 166 and Local Lodge 2061.
In November, 1970, NASA announced that Boeing had been selected to perform the installation support services at Kennedy Space Center. Although both TWA and IAMAW vigorously protested NASA’s decision, Boeing began performance of the contract on April 1, 1971, with a work force of 981, of whom 380 were TWA incumbents. On this appeal the parties have debated at length the reasons why a greater percentage of incumbents were not hired by Boeing. The district court’s opinion provides a partial summary:
When Boeing first learned that it would get the contract for support services commencing April 1, 1971, it delivered over 1,000 job application forms to TWA’s Industrial Relations office for dissemination to TWA employees. Boeing offered evidence that I AM [AW] officials — International and local — had discouraged TWA support service employees from seeking employment with Boeing and for that reason by April, 1971, of the approximately 1,000 Boeing employees hired to perform under the support.services contract less than 400 were formerly TWA employees. At first in the course of this suit the defendants contested that position... and contended there was discrimination by Boeing in its hiring. However, in its brief filed July 3, 1972, IAM[AW] withdrew for the purposes of this case that contention.
Boeing Co. v. International Association of Machinists & Aerospace Workers, M.D.Fla.1972, 351 F.Supp. 813, 815. IA-MAW emphasizes here, however, that the TWA employees were dissatisfied with the wages and benefits offered under the Boeing contract and that the environment surrounding Boeing’s takeover was highly unsettled. In particular the union argues that Boeing and NASA had not yet entered into a contract, and a TWA protest to the contract award was still pending, as of early February, 1971, so that it would have been premature for the incumbent work force to commit itself to a contractor whose selection was still in doubt. In any case, by February 19, 1971, when an IAMAW spokesman told Boeing representatives that the union would cooperate in distributing Boeing employment applications to TWA incumbents and in transmitting completed applications to Boeing, Boeing had extended offers to and received acceptances from 521 non-incumbents, more than half its workforce.
When Boeing took over performance of the installation support services work on April 1, 1971, the TWA incumbents hired by Boeing reported for work as new employees with no seniority and at reduced wages. Boeing gave each of the IAMAW-represented employees a copy of the Boeing-IAMAW agreement and a notice stating that IAMAW was its employees’ representative and that terms of employment were governed by the Boeing-IAMAW agreement.
On April 26, 1971, IAMAW advised Boeing that
[i]n accordance with Article XI (b)(5) of the [TWA-IAMAW] collective bargaining agreement [it was] submitting the following grievance relating to matters general in character:
1. The Boeing action failed to retain in employment as of April 1, 1971, at least 602 members of the incumbent work force performing installation support services work at Kennedy Space Center, Florida, and this failure constitutes a reduction in force out of seniority order, and/or a dismissal without just cause and without compliance with the procedures requisite to that action, in violation of the IAMAW/TWA agreement.
2. The Boeing Company failed and fails to accord to the members of the incumbent work force whom it did retain in employment on April 1, 1971, the seniority that each employee had as of April 1, 1971, but instead treats them as new hires with zero seniority.
3. The Boeing Company failed as of April 1, 1971 and fails, to observe the wages, other benefits, and other employment terms of the TWA/IAMAW agreement as it applies to the performance of installation support service work at Kennedy Space Center, Florida, and which governs for its duration the wages, hours and other employment terms at the Kennedy Space Center.
Boeing declined to consider the merits of the grievances, stating in part:
As of April 1, 1971, the date on which Boeing assumed its responsibilities under the Installation Support Services contract, a substantial majority of the bargaining unit employees were from sources other than Trans World Airlines. Therefore, Boeing is of the opinion that it is not a successor to the TWA/IAM[AW] agreement. Furthermore, even if the majority of the Boeing work force was made up of former TWA employees, it is the position of the Boeing Company that a finding of successorship would be precluded because of the substantial change in the employing industry.
Consistent with our position that the contract on which,the purported grievances are based has no application to the Boeing Company or any of its operations or activities, we cannot and do not recognize your letter of April 26, 1971, as a grievance and decline to respond to it as such.
During the pendency of this dispute IAMAW informed Boeing that, while it would continue to press for adoption of the TWA-IAMAW agreement, it would utilize the dues deduction authorization cards of Local Lodge 2061 (the IAMAW local affiliated with Boeing) until the issue was resolved. Boeing deducted union dues in accordance with the individual authorizations; instead of transmitting the checked-off dues to Local 2061 pursuant to the authorization, however, Boeing deposited the collected dues in an escrow fund on the ground that IAMAW had refused to-recognize the Boeing-IA-MAW collective bargaining agreement.'
On May 10, 1971, Boeing filed this suit under § 301 of the Labor Management Relations Act, 29 U.S.C. § 185, against IAMAW in the United States District Court for the Middle District of Florida, seeking a declaratory judgment that Boeing “is not a successor to and is not bound by the collective bargaining agreement executed by the defendant and Trans World Airlines.” IAMAW filed a counter-claim seeking a declaration that Boeing is bound by the terms of the TWA-IAMAW agreement and an order compelling Boeing to arbitrate the grievances submitted by IAMAW, and an order requiring Boeing to remit the dues which the employees had authorized the company to check-off from their wages.
Upon cross-motions for summary judgment, the District Court declared that “Boeing is not a successor and is not bound” by the TWA-IAMAW collective bargaining agreement, and declined to order Boeing to arbitrate the grievances submitted under that agreement. The District Court did, however, require Boeing to remit the dues previously withheld and escrowed. IAMAW appeals the declaration that Boeing is not a successor; Boeing cross-appeals the order that it turn over the checked-off dues. We affirm.
II
SUCCESSORSHIP
Had 41 U.S.C. § 353(c) been in effect at the time when the events giving rise to this controversy occurred, this matter would have been much simpler of resolution. That section provides in effect that a government service contractor, such as Boeing, which succeeds to a contract under which it furnishes substantially the same services as its predecessor, shall not pay its employees less than its predecessor paid under its collective bargaining agreement, unless such terms are found by the Secretary of Labor to be substantially at variance with the going rate in the locality. Section 353(c) was not in effect at the time of the events which gave rise to this controversy, however; it was added to the Service Contract Act of 1965, 41 U.S.C. § 351 et seq., by amendment in 1972, 86 Stat. 789. Nor does § 353(c) apply retroactively. We are thus left to the guidance and direction of the developing case law regarding successorship controversies.
Before approaching these cases we note that we cannot rest upon the formal concepts of merger, successorship, or alter egoism developed in fields alien to labor law. In the sprawling workaday world of employer-employee relationships we go to the plant to find human continuity and pragmatic identity of enterprise; we are not pinned by the precisions and precedents fixed and formulated in the law of taxation, securities, or real property.
A
GENERAL PRINCIPLES
The district court reasoned in this case, 351 F.Supp. 813, 816, that NLRB v. Burns Int’l Security Servs. Inc., 1972, 406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61, had established that an employer will not be bound as a successor to arbitrate under its predecessor’s labor contract unless it has employed a majority of its predecessor’s personnel; since Boeing did not meet that standard, the district court determined that Boeing was not bound to arbitrate. While we ultimately conclude as well that IAMAW had made out an insufficient case on the law here, we are concerned that the district court has misapprehended Burns. Thus, with the. additional benefit of the Supreme Court’s opinion in Howard Johnson Co. v. Detroit Local Joint Exec. Bd., 1974, 417 U.S. 249, 94 S.Ct. 2236, 41 L.Ed.2d 46, which was undecided at the time of the district court’s opinion, we proceed at some length to elaborate our understanding of the relevant case law.
The course through the cases on which the parties dispatch us leads over ground both dense and largely uncharted. This case requires the resolution of difficult issues regarding the contractual freedom and expectations of employers and the expectations and reliance of employees. We determine our conclusions by reference to landmarks set by the Supreme Court; but its positions have been too few to survey the entire landscape, and we explore here a largely shadowed spot.
The reference points which the Supreme Court has established lie chiefly in three cases: John Wiley & Sons, Inc. v. Livingston, 1964, 376 U.S. 543, 84 S.Ct. 909, 11 L.Ed.2d 898; Burns, supra; and Howard Johnson, supra. These three cases not only offer three different perspectives on the successorship problem, but at times they seem to illuminate a different background. Thus, it is necessary to consider them individually and chronologically in order to determine the coordinates of established principles. Indeed, as the Supreme Court has coun-selled, “In our development of the federal common law [in this area] we must necessarily proceed cautiously, in the traditional ease-by-ease approach of the common law.” Howard Johnson, 417 U.S. at 256, 94 S.Ct. at 2240, 41 L.Ed. 2d at 53.
The primary case on which IAMAW relies, and which Boeing seeks to distinguish, is Wiley, supra, in which the Supreme Court held that “the disappearance by merger of a corporate employer which has entered into a collective bargaining agreement with a union does not automatically terminate all rights of the employees covered by the agreement, and that, in appropriate circumstances,. the successor employer may be required to arbitrate with the union under the agreement.” 376 U.S. at 548, 84 S.Ct. at 914, 11 L.Ed.2d at 904.
In Wiley a small publishing house, In-terscience, with 80 employees, 40 of whom were union-represented, merged into Wiley, a firm with larger assets and commitments and a premerger total of about 300 employees. Interscience ceased to exist in its own right after the merger, and almost all the 40 union-represented employees of Interscience stayed on with Wiley and were mingled with the existing work force at Wiley’s plant, where they pursued the same kind of work as before. The employees’ union and Wiley were unable to agree on the effect of the merger on the existing collective bargaining agreement between Interscience and the union. The union asserted grievances concerning “conditions of employment typically covered by collective bargaining agreements and submitted to arbitration if other grievance procedures fail. Specific provision for each of them [was] made in the In-terscience agreement.” 376 U.S. at 554, 84 S.Ct. at 916, 11 L.Ed.2d at 907. Wiley refused to arbitrate, however, protesting its freedom from a contract which it had not joined. Ultimately the union sued under § 301 to compel arbitration.
The Supreme Court recognized that ordinary contract law would not bind Wiley to the Interscience agreement. Under § 301, however, the controlling principles were held to be a matter of federal law, to be developed from the policies embedded in the “national labor laws.” See Textile Workers Union v. Lincoln Mills, 1957, 353 U.S. 448, 77 S. Ct. 912, 1 L.Ed.2d 972. The Court rested its conclusions regarding the requirement of arbitration on two such policies. First:
[e]mployees, and the union which represents them, ordinarily do not take part in negotiations leading to a change in corporate ownership. The negotiations will ordinarily not concern the well-being of the employees, whose advantage or disadvantage, potentially great, will inevitably be incidental to the main considerations. The objectives of national labor policy, reflected in established principles of federal law, require that the rightful prerogátive of owners independently to rearrange their business and even eliminate themselves as employers be balanced by some protection to the employees from a sudden change in the employment relationship.
376 U.S. at 549, 84 S.Ct. at 914, 11 L.Ed.2d at 904. Second:
The transition from one corporate organization to another will in most cases be eased and industrial strife avoided if employees’ claims continue to be resolved by arbitration rather than by “the relative strength of the contending forces,” [United Steelworkers v.] Warrior & Gulf [Navigation Co., 1960], 363 U.S. [574,] at 580, 80 S.Ct. 1347, at 1352, 4 L.Ed.2d [1409,] 1416.
The preference of national labor policy for arbitration as a substitute for tests of strength between contending forces could be overcome only if other considerations compellingly so demanded.
Furthermore, the Court considered that
a collective bargaining agreement is not an ordinary contract. “. [I]t is a generalized code to govern a myriad of cases which the draftsmen cannot wholly anticipate The collective agreement covers the whole employment relationship. It calls into being a new common law— the common law of a particular industry or of a particular plant.” Warrior & Gulf, supra, 363 U.S. at 578-579, 80 S.Ct. at 1351, 4 L.Ed.2d [at 1415]. Central to the peculiar status and function of a collective bargaining agreement is the fact, dictated both by circumstance and by the requirements of the National Labor Relations Act, that it is not in any real sense the simple product of a consensual relationship.
376 U.S. at 550, 84 S.Ct. at 914, 11 L.Ed.2d at 905. “Therefore,” the Court concluded,
although the duty to arbitrate. must be founded on a contract, the impressive policy considerations favoring arbitration are not wholly overborne by the fact that Wiley did not sign the contract being construed. This case cannot readily be assimilated to the category of those in which there is no contract whatever, or none which is reasonably related to the party sought to be obligated. There was a contract, and Interscience, Wiley’s predecessor, was party to it. We thus find Wiley’s obligation to arbitrate this dispute in the Inter-science contract construed in the context of a national labor policy.
376 U.S. at 550-551, 84 S.Ct. at 915, 11 L.Ed.2d at 905 (footnote omitted).
Consonant with its reasoning, the Court limited application of its holding to cases in which there was “substantial continuity of identity in the business enterprise before and after a change,” so that the duty to arbitrate was not “something imposed from without, not reasonably to be found in the particular bargaining agreement and the acts of the parties involved.” 376 U.S. at 551, 84 S.Ct. at 915, 11 L.Ed.2d at 905.
The broad principle of employee protection against sudden changes in the employment relationship which the Court first sketched in Wiley is not, however, the complete picture. Most significantly, the Supreme Court has somewhat shifted its view of the policy framework on which the Wiley result hung, as evidenced by its opinion in NLRB v. Burns Int’l Security Servs., Inc., supra, on which Boeing relies here.
Burns involved an NLRB action to enforce an order requiring a successor employer (1) to recognize and bargain with the union representing its predecessor employer’s employees, and (2) to adhere to the collective bargaining agreement which had bound the predecessor employer. The predecessor-successor relationship was of the service contract type involved in the case at bar: on submitting the best bid in an annual rebidding, Burns was chosen to replace its predecessor, Wackenhut, as the supplier of plant protection services for the Lockheed Aircraft Service Co. at a California airport. When Burns took over the security operation, employing 42 workers, 27 of whom had been with Wackenhut in identical jobs, Burns refused to recognize the United Plant Guard Workers of America (UPG), which had been certified four months earlier as the exclusive bargaining representative of Wacken-hut’s employees.
The Court’s opinion, which turned “to a great extent on the precise facts involved here,” 406 U.S. at 274, 92 S.Ct. at 1575, 32 L.Ed.2d at 65 was in two parts.
First, the Court held, 5 to 4, that, assuming the appropriateness of the bargaining unit,
it was not unreasonable for the Board to conclude that the union certified to represent all employees in the unit still represented a majority of the employees and that Burns could not reasonably have entertained a good-faith doubt about that fact.
406 U.S. at 278, 92 S.Ct. at 1577, 32 L. Ed.2d at 68. Four Justices dissented to this holding on the grounds that a continuing union majority had not been shown with mathematical certainty and that notions of suceessorship such as underlay Wiley ought not apply even to require the union recognition here, given the nature of the predecessor-successor relationship.
Second, the Court held unanimously that Burns was not bound to observe the substantive terms of the Wackenhut-UPG agreement. Stressing the fundamentally of the freedom of contract principle in the national labor laws, see generally Howard K. Porter Co. v. NLRB, 1970, 397 U.S. 99, 90 S.Ct. 821, 25 L.Ed.2d 146, the Court emphasized that the existence of a duty to bargain did not enable the Board to bind either side to agree to any particular term of contract. The Board argued that the interests in the “peaceful settlement of industrial conflicts and ‘protection [of] the employees [against] a sudden change in the employment relationship’ ” 406 U.S. at 285, 92 S.Ct. at 1581, 32 L.Ed.2d at 72, recognized in Wiley “require that Burns be treated under the collective-bargaining contract exactly as Wackenhut would have been if it had continued protecting the Lockheed plant.” Id. The Court found the Wiley case distinguishable, however, on two grounds.
First, Wiley held only that the agreement to arbitrate survived the merger there, and left for the arbitrator to decide, subject to judicial review, the extent to which the successor employer was bound by the remaining provisions of the predecessor’s collective bargaining agreement. In Burns, however, arbitration was not in issue, and the interest in labor stability was insufficiently substantial to outweigh the policy against governmental imposition of specific contract terms. Second, the Burns Court distinguished the predecessor-successor relationship in the Burns annual rebidding situation from that in Wiley, which involved
a merger occurring against a background of state law that embodied the general rule that in merger situations the surviving corporation is liable for the obligations of the disappearing corporation.... Here there was no merger or sale of assets, and there were no dealings whatsoever between Wackenhut and Burns. On the contrary, they were competitors for the same work, each bidding for the service contract at Lockheed. Burns purchased nothing from Wackenhut and became liable for none of its financial obligations. Burns merely hired enough of Wackenhut’s employees to require it to bargain with the union.... But this consideration is a wholly insufficient basis for implying either in fact or in law that Burns had agreed or must be held to have agreed to honor Wacken-hut’s collective-bargaining contract.
406 U.S. at 286-287, 92 S.Ct. at 1581, 32 L.Ed.2d at 72.
Whatever the possibility of distinguishing the precise holdings of the two cases, however, there remains a fundamental difficulty in reconciling their approaches, as we have remarked elsewhere, United Steelworkers v. United States Gypsum Co., 5 Cir. 1974, 492 F.2d 713, 725 n. 20, and as the Supreme Court has itself subsequently observed, Howard Johnson, 417 U.S. at 253-259, 94 S.Ct. at 2239-2241, 41 L.Ed.2d at 52-53. Wiley’s expansive approach to the reach of a collective bargaining agreement remains in stark contrast to the Burns Court’s emphasis on traditional principles of consent to be bound by contract, which emphasis culminated in the statement that “[s]trife is bound to occur if the concessions that must be honored do not correspond to the relative economic strength of the parties.” 406 U.S. at 288, 92 S.Ct. at 1582, 32 L.Ed.2d at 73.
The Supreme Court has not yet found it necessary to resolve these differences in approach. We are confident, however, that even at the most Burns has not overruled the principles of Wiley. See e. g., Golden State Bottling Co. v. NLRB, 1973, 414 U.S. 168, 94 S.Ct. 414, 38 L.Ed.2d 388 (a post-Burns case applying principles of Wiley in enforcing an NLRB unfair labor practice remedy against successor employer, where it had notice of predecessor’s unfair labor practice litigation); see United Steelworkers v. United States Gypsum Co., 5 Cir. 1974, 492 F.2d at 725-726.
The matter at bar resembles both Wiley (in that the remedy sought is an arbitration order under § 301) and Burns (in that the link between the predecessor and successor is the tenuous one of replacement under a periodic rebidding service contract arrangement). While we need not determine the precise remaining vitality of Wiley’s reach, we are required to measure its application to the matter at hand, in light of the approach more recently adopted by the Supreme Court. In this effort we extract some guidance from the Court’s most recent discussion of these issues in Howard Johnson, supra. There Howard Johnson leased the real property and purchased the remaining assets of a restaurant and motor lodge of one of its franchisees, and proceeded to operate the unit itself. Determining to establish its own work force, Howard Johnson hired 45 employees, only 9 of whom had been its former franchisee’s personnel. The union which had represented the former franchisee’s work force and entered into a collective bargaining agreement with the former franchisee brought a § 301 action to compel arbitration under the predecessor’s bargaining agreement; its principal grievance was that Howard Johnson was obligated under that contract to continue the employment of all of the franchisee’s employees because they had not been discharged in accordance with the terms of the union-franchisee contract.
While the Howard Johnson Court explicitly declined to resolve the differences between Wiley and Burns, it did make three points significant here. First, it established that Wiley should be read restrictively, as a “guarded, almost tentative statement,” 417 U.S. at 256, 94 S.Ct. at 2240, 41 L.Ed.2d at 53. Second, it held that even under Wiley the arbitration.sought could not be ordered because of the lack of “substantial continuity of identity in the business enterprise,” which requirement it read to include a showing of a “substantial continuity in the identity of the work force across the change in ownership.” 417 U.S. at 259, 94 S.Ct. at 2241, 41 L.Ed.2d at 57. Third, the Court articulated the balance which must be struck in determining whether an employer is obliged to fulfill any given obligation of “sue-cessorship”;
The answer to this inquiry requires analysis of the interests of the new employer and the employees and of the policies of the labor laws in light of the facts of each case and the particular legal obligation which is at issue, whether it be the duty to recognize and bargain with the union, the duty to remedy unfair labor practices, the duty to arbitrate, etc. There is, and can be, no single definition of “successor” which is applicable in every legal context. A new employer, in other words, may be a successor for some purposes and not for others.
417 U.S. at 262 n. 9, 94 S.Ct. at 2243, 41 L.Ed.2d at 56-57.
B
SUBSTANTIAL CONTINUITY IN THE IDENTITY OF THE BUSINESS ENTERPRISE
The Supreme Court opinions are consistent on the one proposition that there is no simple checklist for decision; none could exhaust the factors relevant to determining whether a successor employer is bound to arbitrate under its predecessor’s contract. We are in essence called upon to pragmatize the corporate and labor relationships to determine whether the past is part of the present, or the present the beginning of tomorrow. In a given case it may be clear that some one indicator of continuity is so weak as to allow a simple conclusion of no duty to arbitrate; but in more closely balanced cases, ownership, contracts terminated and germinated, purity and impurity of motives, and an encyclopedia of other variables must be equiponderated. We conclude here that despite the fact that there is no doubt on this record that Boeing has pursued its business in a manner substantially congruent to TWA’s patterns, Boeing cannot be ordered in this § 301 action to arbitrate IAMAW’s grievances under the TWA-IAMAW contract, given (1) the extent of the continuity in the identity of the work force across the change in employers, and (2) the relation between Boeing and TWA themselves.
Continuity in the Identity of the Work Force
Howard Johnson establishes that “continuity of identity in the business enterprise necessarily includes. a substantial continuity of identity of the work force across the change in ownership.” 417 U.S. at 263, 94 S.Ct. at 2244, 41 L.Ed.2d at 46. We do not think that any precise definition of “substantiality” in work force continuity can be distilled from the particular language of Howard Johnson, however. The Court found support for its “substantial” standard in the “wholesale transfer” of employees from predecessor to successor in Wiley and from “the emphasis most of the lower courts have placed on whether the successor employer hires a majority of the predecessor’s employees in determining the legal obligations of the successor in § 301 suits under Wiley” 417 U.S. at 263, 94 S.Ct. at 2244, 41 L.Ed.2d at 46. We believe that these statements in Howard Johnson are descriptive rather than prescriptive and do not, in themselves, establish any “majority” criterion, such as Boeing argues in favor of here. IAMAW argues in the other direction that the Supreme Court’s enunciation of a “substantiality” test when it might have adopted a “majority” standard establishes that a “majority” employee continuity cannot be prerequisite to a duty to arbitrate. We find this argument as unimpressive as its rejected converse. Rather, we regard the Supreme Court’s emphasis in Howard Johnson of the necessity for pursuing a “traditional case-by-case approach” in this area, 417 U.S. at 256, 94 S.Ct. at 2240, 41 L.Ed.2d at 53, as an assurance that it intended to establish no precise benchmark at this stage in the law’s development, even assuming that a strict standard would ever be appropriate.
Computation of Continuity in the Identity of the Work Force
Boeing argues, and IAMAW denies, that even if the Supreme Court has not committed itself to any precise definition of “substantiality,” case law from the lower courts establishes “majority status” as the test of substantial continuity in the identity of the work force. Before addressing the appropriateness of a “majority” standard, we consider what group it is that this “majority” is to be computed from: that is, whether the more significant factor in determining the continuity in the identity of the work force for the purpose of determining whether a successor employer must arbitrate under its predecessor’s contract is the percentage of the predecessor’s employees who have continued to work for the successor, or whether it is the percentage of the successor’s employees who had earlier worked for the predecessor.
The parties here have debated the substantiality of the continuity in the identity of the work force largely in terms of the 39% of Boeing’s employees who had worked for TWA. We conclude, however, that the percentage of TWA employees who became Boeing employees, which we determine to be about 35%, is the more significant figure in considering whether Boeing is obliged to arbitrate under the TWA-IAMAW contract.
To begin with, the showing of employee continuity is relevant in establishing “the continuity of identity in the business enterprise.” As a matter of principle, since the duty to arbitrate arises from an application of the contract between the predecessor employer and his organized employees, the entity whose identity is to be the reference point for judging continuity ought to be the predecessor enterprise. Accordingly, in judging the continuity in the identity of the work force, the incumbent component of the successor’s work force ought to be compared against the predecessor’s staff, not the successor’s.
This method of computation is consistent with the Supreme Court’s opinions. In Wiley the Court required arbitration where the predecessor’s employees comprised a much smaller percentage of the successor’s employees after the merger (40 of 340 = 12%) than the corresponding ratio in Howard Johnson (9 of 45 = 20%), in which no arbitration was required. Rather, the Howard Johnson Court found it most significant that “in Wiley the surviving corporation hired all of the employees of the disappearing corporation,” 417 U.S. at 258, 94 S.Ct. at 2241, 41 L.Ed.2d at 54 (emphasis altered). Moreover, it found support for its conclusion in what it perceived to be “the emphasis most of the lower courts have placed in determining the legal obligations of the successor in § 301 suits under Wiley” on the percentage of the predecessor’s employees hired by the successor employer, 417 U.S. at 263, 94 S.Ct. at 2244, 41 L.Ed.2d at 57.
Thus, while the figure most significant in determining the successor’s duty under Burns to bargain with the union representing the predecessor’s organized employees may be the percentage of the successor’s employees who are incumbents from the predecessor, see e. g., Burns, 406 U.S. at 279, 92 S.Ct. at 1577, 32 L.Ed.2d at 68; Emerald Maintenance, Inc., 5 Cir. 1972, 464 F.2d 698, 701; Goldberg, The Labor Law Obligations of a Successor Employer, 63 Nw.U.L.Rev. 735, 793-794 (1969), we find those cases — where the basic question to be resolved by examination of employee continuity is simply whether the union represents a majority of the successor’s employees, see Burns, 406 U.S. at 278-281, 92 S.Ct. at 1577-1579, 32 L.Ed.2d at 68-69; NLRB v. Auto Ventshade, Inc., 5 Cir. 1960, 276 F.2d 303, 307 — unpersuasive examples in this context.
Regarding “Majority” Work Force Continuity
Having established the reference point from which to compute the ratio of substantial continuity in identity of the work force, we turn to the substance of the question: whether the fact that Boeing hired only about 35% of the incumbent TWA work force determines that Boeing is not obligated to arbitrate under its predecessor’s contract.
We are not prepared at this point in the development of the law of successor employers’ obligations to arbitrate either to accept or to reject Boeing’s argument that “majority status” is prerequisite to the obligation to bargain. In the first place, as we have already expressed, we do not find that the Supreme Court has established any benchmark. Furthermore, we are convinced that reliance on bargaining cases, such as Burns, is misplaced. There is much, though not unanimous, authority for the proposition that a successor employer will be required to bargain with the union representing his predecessor’s employees only when predecessor’s personnel comprise a majority of the successor’s work force. But the federal labor law policies underlying such conclusions are analytically distinct from those involved in succes-
sorship arbitration suits under § 301. The majority requirement in duty to bargain cases is premised upon notions of majority selection of organized employees’ collective bargaining agents. In the duty to arbitrate cases under § 301, however, the incumbent employees fulfill no such representative function in the filing of their grievances. Thus, in Wiley the Supreme Court noted that its finding of Wiley’s duty to arbitrate did “not suggest any view on the questions surrounding a certified union’s claim to continued representative status. This union... seeks to arbitrate claims based on [its contract with the predecessor employer], not to negotiate a new agreement,” and stated that “[t]he fact that the Union does not represent a majority of an appropriate bargaining unit in Wiley does not prevent it from representing those employees who are covered by the agreement which is in dispute and out of which Wiley’s duty to arbitrate arises.” 376 U.S. at 551 and n. 5, 84 S.Ct. at 915, 11 L.Ed.2d at 905. To the same effect, we have upheld a successor employer’s duty to arbitrate with a union which had once represented the predecessor’s employees, but lost its certification. United States Gypsum Co. v. United Steelworkers, 5 Cir. 1967, 384 F.2d 38, 47.
For the purpose of resolving this case, however, we need not decide whether the principles underlying the Howard Johnson requirement of a substantial continuity in the identity of the work force is to be read as a generally applied “majority” standard. We conclude only that the continuity in the identity of the work force must be considered together with other indicia of enterprise continuity, and turn to a consideration of those factors.
Nature of the TWA — Boeing Relationship
It is well established that the principle of Wiley applies to corporate succes-sorships accomplished through purchase and sale rather than merger. We consider here the extent to which the Wiley test of continuity in the identity of the business enterprise can be satisfied in a periodic rebidding service contract context — “hardly... a typical suc-cessorship situation.”
We begin by distinguishing the cases finding sufficient continuity in the “employing industry” to support a duty to recognize and bargain with the predecessor employees’ union in such a context. The focus in these duty to bargain cases being
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.
JOHN R. BROWN, Circuit Judge:
This case involves the extent of Prudential’s monetary liability on a group life insurance policy issued to Eastern Airlines covering its pilots, among whom was Appellee’s husband. Not a single identifiable significant question of law is present. And the facts are neither complex nor conflicting.
In 1961 Prudential issued a group policy to Eastern covering the lives of its pilots, with “basic” benefits of $50,000 and “additional” benefits depending on the employee’s annual earnings. It is the amount of these “additional” benefits which is here in dispute. During the calendar year 1962, the Assured’s earnings were of an amount which entitled him to $17,500 “additional” insurance during 1963. His earnings for 1963 were of an amount which would entitle him to $40,-000 “additional” insurance, but it was only upon the completion of his last flight on December 26, 1963, that his earnings reached this amount. He died a few days after on January 2,1964. The question here is whether his death on January 2,1964, entitles his beneficiary to additional benefits of $40,000.
The answer would be clear were it not for Eastern’s system of payroll accounting and “classification” of employees under the group policy, all being done, however, with Prudential’s knowledge and apparent acceptance. Eastern pays its pilots at the end of bach month for services performed during the preceding month. But it deducts from each check the employee’s contribution, due in advance for the succeeding month, for “basic” and “additional” benefits under the group life plan. Since the amount of “additional” insurance depends on the pilot’s calendar year annual earnings and since on January 31 the payroll check for the last month (December) of the preceding calendar year is issued, Eastern adopted the practice of “reclassifying” its pilots on February 1 of each year for the purpose of determining the amount of “additional” insurance available to them for that year. Prudential contends that since the Assured died on January 2, 1964, prior to the February 1 reclassification date, he is entitled to only the “additional” insurance ($17,500) applicable to his February 1, 1963, classification based on his 1962 annual earnings, though had he survived February 1,1964, he would be entitled to reclassification and “additional” insurance ($40,000) based on his 1963 annual earnings including his January 31 paycheck for work performed during December 1963.
In light of the terms of the policy and the applicable state law, we affirm the District Court’s summary judgment for the latter, greater amount. Although the group policy issued to Eastern provides that “the classification of each individual Employee shall be determined by the Policyholder from time to time. without discrimination among persons in like circumstances, and such determination shall be final and conclusive,” the certificate, issued to the Assured and controlling on the extent of his individual coverage, clearly provides that the amount of insurance “shall be adjusted automatically to conform” to the annual earnings of the insured-employee, and, indeed, Florida law provides that “[t]he amounts of insurance under the [group] policy must be based upon some plan precluding individual selection * * * by the employer.” This all points away from a construction which makes an employee’s coverage dependent upon a “reclassification” date (not referred to in the certificate or policy) selected by Eastern, and acquiesced in by Prudential, for bookkeeping and administrative convenience. This is espeically true in light of the system envisaged by the insurance contract and the conceded fact that Eastern and Prudential, which had access under the policy to all of Eastern’s records, were immediately aware of the Assured’s daily earnings as reflected in detailed flight sheets and employee pay statements prepared monthly. As of December 31, 1963, it was neither impossible nor impracticable for either Eastern or Prudential to determine that the Assured had earned enough during 1963 to entitle him to $40,000 “additional” insurance.
Prudential’s primary argument for a lesser amount is that the Assured had never paid the premium by means of deduction from his monthly pay check for the $40,000 coverage. But the policy construed in the light of general insurance principles lends no support to this argument. Although this insurance was a non-contributory plan in which the employer did not ultimately bear any portion of the premium cost and all premiums were ultimately to be borne by covered employees, the structure reflects positively that it rested on Eastern’s credit. Prudential required, of course, that the full premium for all of the assureds be paid for the policy year. But Eastern had the sole obligation to pay the proper premiums to Prudential, and there is no contention that it has failed to do so. The manner in which Eastern chose to collect contributions from each employee was left to its discretion as a matter of administrative and bookkeeping convenience, and as long as Eastern properly paid the premiums on the master policy, Prudential could not deny coverage on the ground that Eastern had failed to deduct the proper contribution from its employees’ paychecks the moment a change in the earnings bracket or status of an assured employee triggered an increase in the premium. Indeed, the argument revealed that there was no machinery or procedure either established or required under the contract terms prescribing the time or manner in which these shifting events and increased premium costs are to be reported and paid.
Affirmed.
. The group policy provides that “the company will issue * * * to each Employee * * * an individual certificate setting forth the insurance protection to which such Employee is entitled.” This is in accordance with the general rule, 1 Appleman, Insurance Law and Practice § 46, at 68-70, and Fla.Stat.Ann. § 627.-0414. Without discussing in any depth the question of which State’s laws should be applied in this case, both parties rely on Florida law and concede, in any case, that the insurance laws of other states which might apply are similar to those of Florida.
. The certificate on page one indicates that the Assured had basic and additional insurance (under Columns A and B), and that the amount of insurance that he was entitled to was “To be determined by the Table of Amounts on the last page of the Certificate.”
The last page of the certificate in turn reproduces from the master policy the following schedule:
“Classification
“All Employees according Column Column
to annual earnings as follows: A B
“22,500 or more but less than 25,000 50,000 17,500
“25,000 or more but less than 30,000 50,000 25,000
“30,000 or more but less than 35,000 50,000 40,000”
Immediately below this classification of all employees according to annual earnings is the following highly significant provision:
“If the Employee’s classification changes to one for which a larger amount of insurance is provided, the Employee’s amount of insurance under Column A (and under Column B, if Column B is applicable to the Employee) shall be adjusted automatically to conform to the new classification on the first day on which he is actively at worlc on full time.” (emphasis supplied).
There is then immediately thereafter a provision that if the employee’s classification changes to one for which a lesser amount of insurance is provided, there is no automatic decrease of coverage, but the employee must make written request therefor of the employer.
. Ela.Stat.Ann. § 627.0401(4). As to the applicability of Florida law, see note 1, supra.
. Under the policy Eastern was obligated to pay monthly premiums. Each monthly premium was determined by multiplying the average monthly premium rate per $1000 in effect for the policy year (June 1 to June 1) by the total amount of insurance in force under the policy on the due date of each monthly premium. The average monthly premium rate per $1000 for any policy year was to be calculated upon the basis of attained ages, nearest birthday, of the employees insured under the policy on the first day of the policy year (June 1) and the individual amounts of insurance at that time. Thus, nothing in this formula, and the essential machinery for its effectuation, for determining the premiums payable to Prudential gives crucial significance to the February 1 “reclassification” date chosen by Eastern.
Prudential relies heavily on the following policy provision:
“5. If the classification of an Employee insured for additional insurance changes to one for which a larger amount of additional insurance is provided, the Employee’s additional insurance shall be adjusted automatically to conform to the new classification on the first day on which he is both actively at work on full timo and malees a contribution applicable to the new classification.” (Emphasis added.)
The italicized phrase supports Prudential’s position because the Assured admittedly never made a contribution applicable to the $40,000 “additional” insurance classification. There are at least two reasons why this is not decisive. First, this phrase does not appear in the certificate (note 2, supra) which is controlling on the extent of the Assured’s coverage (note 1, supra). Second, and more important, under this structure which recognized that the employee would never — simply never — make the premium payment himself and that it would be made on his behalf by the employer under the administrative procedure for periodic, but subsequent, reports, the “day” for the added premium payment is not the day on which it is paid, but the date specified or otherwise indicated by the employer in the subsequent report.
. “So far as premium payments are concerned, since the employer * * * assumes full liability for the collection of premiums and forwarding them to the insurer, the employee has no personal liability therefor. * * * [T]he burden rests upon the insurer at all times to prove nonpayment to it in order to defeat a claim for loss under the policy.”
1 Appleman, Insurance Law and Practice § 47, at 72-73.
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 and cross-appellee A-Leet Leasing Corporation (“A-Leet”), defendant-appellant Citibank, N.A. (“Citibank”), and plaintiff-appellee, cross-appellant Marion Bell (“Bell”) appeal from a judgment entered upon a jury verdict in the United States District Court for the Southern District of New York, Gerard L. Goet-tel, Judge, for Bell against A-Leet and Citibank in the amount of $17,229, as remitted, plus interest and costs. On appeal, A-Leet and Citibank seek reversal of the judgment, or in the alternative a new trial. Bell seeks additer to the judgment and remand for trial on additional liability against A-Leet and Mercedes-Benz Manhattan, Inc. (“Mercedes-Benz”). We affirm the judgment of the district court.
In the spring of 1981, the late Dr. Thomas L. Bell desired to purchase a Mercedes-Benz automobile from Mercedes-Benz, a dealership in New York City. Because of a poor credit rating and a number of outstanding judgments against him, Dr. Bell could only lease the car. The financial transaction was as follows: Mercedes-Benz sold the car to A-Leet for $42,900. A-Leet paid Mercedes-Benz with a $15,000 down payment received from Dr. Bell and a $27,900 loan borrowed from Citibank. Dr. Bell’s obligation, in addition to the $15,000 down payment, was to make an initial monthly payment of $3,027.15 to A-Leet and forty-five monthly payments of $1,009.05 to Citibank until Citibank’s loan to A-Leet was retired, after which A-Leet was to receive the monthly payments.
After a number of monthly payments were received late and some were paid with checks that were later returned, A-Leet repossessed the car on January 3, 1983. Dr. Bell promptly commenced this action for damages. As finally amended, the complaint named as defendants A-Leet, Citibank, Mercedes-Benz and Avery Agency, Inc. (“Avery”) (a defendant below, the re-possessor of the vehicle). In October, 1983, Dr. Bell died and his wife Marion Bell was substituted as plaintiff (both as admin-istratrix and individually, since she was a cosigner of the lease). Bell alleged inadequate credit disclosure in violation of 15 U.S.C. § 1601 et seq. (1982), wrongful repossession in violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (1982), overcharge for the car, usurious interest in violation of state law, failure to account for cash payments, and violation of N.Y.Gen.Oblig.Law § 5-702 (McKinney 1978 & Supp.1988) by failure to use plain language in the lease documents.
At the close of plaintiff’s case, the district court dismissed all claims against Mercedes-Benz except a claim that Mercedes-Benz received, but did not account for, a $2,000 cash payment from Dr. Bell. This claim was decided in favor of Mercedes-Benz by the jury. Thereafter, the district court dismissed all claims against Avery and directed judgment in favor of Mercedes-Benz on all claims. The district court refused to dismiss plaintiff’s claims against A-Leet or Citibank at the conclusion of plaintiff’s direct case, and also denied these defendants’ motion for a directed verdict at the close of trial. The jury found A-Leet and Citibank liable for breach of contract, and rendered a verdict of $25,000 in damages.
Defendants A-Leet and Citibank moved for a new trial on the breach of contract claim, or alternatively, solely on the issue of damages. The district court denied the motion for a new trial, subject to plaintiffs’ acceptance of a remittitur reducing the verdict to $17,229. The district court reasoned that measuring plaintiffs damages as the fair market value of the car at the time of repossession, as the jury was instructed to do, damages could only amount to $16,229. This figure was computed by subtracting the present value of Bell’s future obligations for payments on the car (including the purchase option price), $26,671, from its retail value, $42,900, and adding to the resulting figure, $16,229, $1,000 representing the Bells’ loss of use of the car. The jury’s verdict of $25,000 in damages was almost fifty percent greater than the proper measure of damages, and was thus deemed excessive.
The only significant issue on appeal, out of the myriad raised by the parties, is whether the jury’s finding is supported by the evidence presented at trial. Early in the litigation, the attorney for A-Leet and Citibank submitted answers to interrogatories that erroneously stated the number of monthly lease payments paid by Dr. Bell. The interrogatory answers mistakenly reflected checks sent by Dr. Bell that were dishonored by the bank on which they were drawn. Although successor counsel for A-Leet and Citibank detected the errors prior to trial, no steps were taken to correct them. The district court disagreed with the jury verdict, but concluded that the verdict was not “so contrary to the weight of the evidence as to require a new trial.”
We conclude that the district court did not err in denying A-Leet and Citibank’s motions for a new trial. It is clear that answers to interrogatories may be utilized as admissions. Gadaleta v. Nederlandsch-Amerekaansche Stoomvart, 291 F.2d 212, 213 (2d Cir.1961). “ ‘When there is conflict between answers in response to interrogatories and answers obtained through other questioning, either in deposition or trial, the finder of fact must weigh all of the answers and resolve the conflict.’ ” Freed v. Erie Lackawanna Ry. Co., 445 F.2d 619, 621 (6th Cir.1971) (quoting Victory Carriers, Inc. v. Stockton Stevedoring Co., 388 F.2d 955, 959 (9th Cir.1968)). This, we may infer, the jury did.
Our main purpose in publishing this opinion is to remind the counsel in this case, as well as all counsel appearing before this court, of the importance we place upon resolving appeals whenever possible through this circuit’s Civil Appeals Management Plan (“CAMP”). CAMP was instituted by this circuit, pursuant to Fed. R.App.P. 33:
(1) to encourage the resolution of appeals without participation by judges, thus preserving their scarcest and most precious asset, time; (2) to expedite the consideration of appeals that will be briefed and argued; (3) to have Staff Counsel help the parties clarify the issues on appeal; and (4) to dispose of minor procedural motions without expenditure of judicial resources.
Kaufman, Must Every Appeal Run the Gamut? — The Civil Appeals Management Plan, 95 Yale L.J. 755, 756 (1986); see also Kaufman, The Pre-Argument Conference: An Appellate Procedural Reform, 74 Colum.L.Rev. 1094, 1094 (1974).
CAMP does not deprive the parties of their right to appeal — this court fully recognizes that every party has a right to appeal a district court ruling. Moreover, the purpose of CAMP is not to pressure parties to settle or withdraw an appeal. Further, we recognize that, in the words of the hallowed jurisprudential maxim, “it takes two (in this case more) to tango,” and one obdurate party or counsel can thus frustrate an otherwise available settlement without any blame legitimately attaching to the remaining dramatis personae.
Having said all this, we question whether a more meaningful effort at settlement, or at least at limiting the issues, might not have been made in this case, and remind the bar of its obligation to participate in the CAMP process, where applicable, seriously and in good faith.
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:
|
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.
EBEL, Circuit Judge.
This case requires us to consider whether the guidelines promulgated by the United States Sentencing Commission apply to violations of the Assimilative Crimes Act. We conclude that the sentencing guidelines apply to assimilative crimes, but that the sentence imposed may not exceed any maximum sentence and may not fall below any mandatory minimum sentence that is required under the law of the state in which the crimes occur. We further hold that the commentary to § 2X5.1 of the sentencing guidelines, which “requirefs]” courts to apply guidelines applicable to analogous federal crimes in determining sentences for assimilative crimes, has no legal effect to the extent that it exceeds the less-restrictive mandate of the Sentencing Reform Act of 1984 to give only “due regard” to analogous federal sentencing guidelines. Finally, we conclude that the district court’s guidelines sentence in this case is permissible because it is within the range permitted under New Mexico law.
Facts
On December 7, 1987, defendant Gerard Gary Garcia, an American Indian, struck and killed an American Indian pedestrian while driving a pickup truck on the Acoma Pueblo Reservation. The accident was caused, at least in part, by defendant’s use of alcohol. R. Vol. II at 9. Defendant pled guilty to the assimilative New Mexico crime of involuntary manslaughter, in violation of 18 U.S.C. § 13 (1982). Prior to the entry of his guilty plea, defendant filed a motion asking the court to declare unconstitutional the Sentencing Reform Act of 1984, as amended, 18 U.S.C. §§ 3551-3586 (Supp. IV 1987) (current version at 18 U.S.C. §§ 3551-3586 (1988)) & 28 U.S.C. §§ 991-998 (Supp. IV 1987). R. Doc. 7. The district court granted the motion, concluding that the Sentencing Reform Act violated the constitutional principle of separation of powers and expressing an additional concern that the guidelines violated the Due Process Clause. R. Doc. 40. The district court then sentenced defendant to an 18-month prison term pursuant to the sentencing law in effect prior to the Sentencing Reform Act of 1984. However, the district court also imposed an alternative sentence pursuant to the Sentencing Reform Act, to take effect if the Act was found to be constitutional. The alternative sentence was a prison term of 18 months, plus one year of supervised release, during which defendant would be required to undergo rehabilitation for alcohol abuse. R. Doc. 41. Because the guidelines have been held to be constitutional, the alternative guidelines sentence is the sentence that must be applied against defendant.
Discussion
I. The Purposes of the Assimilative Crimes Act and the Sentencing Reform Act of 1984
The Assimilative Crimes Act applies to offenses committed on Indian reservations. United States v. Pinto, 755 F.2d 150, 154 (10th Cir.1985). “The purpose of the Assi-milative Crimes Act is to provide a method of punishing a crime committed on government reservations in the way and to the extent that it would have been punishable if committed within the surrounding jurisdiction. The Act fills in gaps in federal criminal law by providing a set of criminal laws for federal enclaves.” United States v. Sain, 795 F.2d 888, 890 (10th Cir.1986) (citation omitted). See also United States v. Sharpnack, 355 U.S. 286, 293, 78 S.Ct. 291, 295, 2 L.Ed.2d 282 (1958); James Stewart & Co. v. Sadrakula, 309 U.S. 94, 101, 60 S.Ct. 431, 434, 84 L.Ed. 596 (1940); United States v. Press Publishing Co., 219 U.S. 1, 10, 31 S.Ct. 212, 214, 55 L.Ed. 65 (1911).
The Sentencing Reform Act of 1984 was enacted to achieve greater uniformity in the sentencing of federal crimes. Its provisions “are designed to structure judicial sentencing discretion, eliminate indeterminate sentencing, phase out parole release, and make criminal sentencing fairer and more certain.” S.Rep. No. 225, 98th Cong., 2d Sess. 65, reprinted in 1984 U.S. Code Cong. & Admin.News 3182, 3248. The Sentencing Reform Act provides that “[ejxcept as otherwise specifically provided, a defendant who has been found guilty of an offense described in any Federal statute ... shall be sentenced in accordance with the provisions of this chapter.” 18 U.S.C. § 3551(a) (Supp. V 1987) (current version at 18 U.S.C. § 3551(a) (1988)). In the case of assimilative crimes, it is difficult to achieve fully the Sentencing Reform Act’s goal of federal sentencing uniformity because the punishments for particular state offenses often vary significantly among the states. Therefore, it is not always possible to achieve uniformity in federal sentences for similar assimilative crimes that are committed in different states, and, at the same time, promote the Assimilative Crime Act’s goal of intrastate sentencing uniformity.
The guidelines adopted pursuant to the Sentencing Reform Act do not adequately take into account the tension between the two policies of federal sentencing uniformity and intrastate sentencing uniformity. The guidelines focus primarily on the goal of federal sentencing uniformity. The commentary to § 2X5.1 of the guidelines provides that in the case of assimilative crimes, the court imposing the sentence “is required to determine if there is a sufficiently analogous offense guideline, and, if so, to apply the guideline that is most analogous.” Although applying analogous federal guidelines in determining sentences for assimilative crimes promotes federal sentencing uniformity, it ignores entirely the objective of intrastate sentencing uniformity underlying the Assimilative Crimes Act.
Where two statutes are “ ‘ “capable of co-existence, it is the duty of the courts, absent a clearly expressed congressional intention to the contrary, to regard each as effective.” ’ ” Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1018, 104 S.Ct. 2862, 2881, 81 L.Ed.2d 815 (1985) (quoting Regional Rail Reorganization Act Cases, 419 U.S. 102, 133-34, 95 S.Ct. 335, 353-54, 42 L.Ed.2d 320 (1974) (quoting Morton v. Mancan, 417 U.S. 535, 551, 94 S.Ct. 2474, 2483, 41 L.Ed.2d 290 (1974))). See also 2A J. Sutherland, Statutes and Statutory Construction § 51.02 (C. Sands 4th ed. rev. 1984). Here, the Sentencing Reform Act expressly authorizes courts to interpret it so as to achieve harmony, to the extent possible, with other statutes. The Sentencing Reform Act states that its provisions apply “[ejxcept as otherwise specifically provided.” 18 U.S.C. § 3551(a). We conclude that the Assimilative Crimes Act “specifically provide[sj,” within the meaning of 18 U.S.C. § 3551(a), that the sentencing for assimilative crimes is to be determined in accordance with state law so that the defendant is “subject to a like punishment.” 18 U.S.C. § 13.
However, state law generally specifies only the outer maximum and minimum sentences that a judge may impose and vests with the judge considerable discretion to determine an appropriate sentence within those limits. Within the permitted range, it is impossible to determine with certainty the sentence that a state judge would impose. As a result, the Assimilative Crimes Act’s goal of intrastate sentencing uniformity is inherently limited by the lack of specificity of state sentencing law. It is within this permitted range that the Sentencing Reform Act of 1984 and the sentencing guidelines may act to promote federal uniformity.
Federal judges, like their state counterparts, can only be required to impose sentences for assimilative crimes that fall within the maximum and minimum terms permitted under state law. Efforts to duplicate every last nuance of the sentence that would be imposed in state court has never been required. For example, federal courts need not follow state parole policies, including provisions for good time credits. See, e.g., United States v. Binder, 769 F.2d 595, 600 (9th Cir.1985); Pinto, 755 F.2d at 154; United States v. Vaughan, 682 F.2d 290, 294-95 (2d Cir.), cert. denied, 459 U.S. 946, 103 S.Ct. 261, 74 L.Ed.2d 203 (1982); United States v. Smith, 574 F.2d 988, 992-93 (9th Cir.), cert. denied, 439 U.S. 852, 99 S.Ct. 158, 58 L.Ed.2d 156 (1978). In addition, Congress has expressly made applicable to assimilative crimes the federal provision requiring that a special monetary assessment be imposed on convicted persons. 18 U.S.C. § 3013(d) (Supp. V 1987) (current version at 18 U.S.C. § 3013(d) (1988)). Therefore, we hold that the Assimilative Crimes Act requires courts to impose sentences for assimilative crimes that fall within the maximum and minimum terms established by state law. However, within the range of discretion permitted to a state judge, a federal judge should apply the federal sentencing guidelines to the extent possible.
In addition to the exception clause of § 3551(a), discussed above, the Sentencing Reform Act also provides that where there is no applicable sentencing guideline, the court is to have “due regard” for sentences prescribed by the guidelines for similar offenses and offenders. 18 U.S.C. § 3553(b) (Supp. V 1987) (current version at 18 U.S.C. § 3553(b) (1988)). The use of the phrase “due regard” suggests that Congress recognized that, in the absence of an applicable guideline for a particular crime, courts should not automatically apply the guidelines for similar offenses. In contrast, the commentary to § 2X5.1 of the guidelines requires courts to apply “sufficiently analogous” guidelines. The commentary is too restrictive and is not authorized by the statute. Therefore, we hold that to the extent the commentary to § 2X5.1 exceeds the statutory mandate to have “due regard” for analogous sentencing guidelines, the commentary is of no legal effect.
Our views expressed herein are in agreement with the few cases that have considered similar issues. Two cases have agreed that the Sentencing Reform Act does not manifest a clear intent to repeal the “like punishment” clause of the Assimi-lative Crimes Act. United States v. Richards, No. 88-9005M-01 (D.Kan. Oct. 21, 1988) (magistrate’s memorandum and order) (available on Westlaw at 1988 WL 123140; available on Lexis at 1988 U.S. Dist.LEXIS 15101); United States v. Policastro, No. 89-244M-3 (E.D.N.C. July 11, 1989) (magistrate’s memorandum and order). A third case has noted that “while the reforms enacted by the Sentencing Reform Act are broad, there are circumstances in which a defendant convicted in a federal district court is not properly sentenced under the guidelines.” United States v. Norquay, 708 F.Supp. 1064, 1066 (D.Minn.1989) (concluding that the Sentencing Reform Act does not clearly express an intent for defendants convicted of crimes under the Indian Major Crimes Act to be sentenced under the federal sentencing guidelines instead of the provisions of the Major Crimes Act).
This court considered a similar situation in United States v. Dunn, 545 F.2d 1281 (10th Cir.1976). In Dunn, the court considered whether state sentencing law or the Youth Corrections Act, 18 U.S.C. § 5010 (repealed 1984), governed the sentencing of an assimilative crime committed by a youth offender. The court concluded that a federal court may apply the Youth Correction Act in determining the sentence for an assimilative crime, but, in order to ensure that the purposes underlying the Assimilative Crimes Act are honored, the sentence may not exceed the maximum period allowed under relevant state law. Dunn, 545 F.2d at 1283. By following that approach, the court was able to “give[] maximum comfort to the basic intent of Congress as contained in” the Youth Corrections Act and the Assimilative Crimes Act. Id.
II. The District Court’s Guidelines Sentence
In light of our earlier holding that the sentences for assimilative crimes must fall within the maximum and minimum terms provided for under state law, we now proceed to consider whether the district court’s guidelines sentence in this case is within the range permitted under New Mexico law. New Mexico law provides for a “basic sentence” of 18 months for involuntary manslaughter. N.M.Stat.Ann. § 31-18-15(A). However, New Mexico judges are authorized to alter the basic sentence based on “any mitigating or aggravating circumstances surrounding the offense or concerning the offender.” N.M. Stat.Ann. § 31-18-15.1(A). The amount of that alteration cannot exceed one-third of the basic sentence. N.M.Stat.Ann. § 31-18-15.1(0). The guideline for the federal crime of involuntary manslaughter, which was apparently applied by the district court in determining its alternative guidelines sentence, provides for a base offense level of 14 for involuntary manslaughter resulting from conduct that was reckless. The sentences for crimes with a base offense level of 14 range from 15 months to 46 months, depending on various aggravating and mitigating factors.
Although New Mexico does preclude the consideration of certain aggravating circumstances in imposing sentence, appellant has made no showing here that the district court improperly considered any of those circumstances in computing his sentence under the guidelines. The district court in this case applied the mitigating and aggravating factors provided in the Sentencing Reform Act and the guidelines in determining the guidelines sentence and arrived at a sentence of 18 months, plus one year of supervised release. Because the 18-month sentence is clearly within the range permitted under New Mexico law, it is consistent with the policy of intrastate sentencing uniformity underlying the Assimilative Crimes Act. Because the sentence is based on an application of the sentencing guidelines, it also furthers the objectives of federal uniformity underlying the Sentencing Reform Act. Further, New Mexico law provides for a mandatory one-year parole term for persons convicted of involuntary manslaughter. See N.M.Stat.Ann. § 30-2-3(B) (defining involuntary manslaughter as a fourth-degree felony); N.M. Stat.Ann. 31-21-10(C) (requiring one-year parole term for persons convicted of a fourth-degree felony). Therefore, the guidelines sentence imposed by the district court was lawful.
In sum, we hold that the Assimilative Crimes Act falls within the exception clause of 18 U.S.C. § 3551(a). Therefore, a sentence for an assimilative crime must satisfy the “like punishment” clause of the Assimilative Crimes Act, which requires that the sentence fall within the maximum and minimum terms provided under state law. We further hold that the commentary to § 2X5.1 of the guidelines, which “require[s]” courts to apply analogous guidelines in sentencing assimilative crimes, has no legal effect to the extent that it exceeds the less-restrictive mandate of the Sentencing Reform Act to have “due regard” for analogous sentencing guidelines. Finally, we conclude that the district court’s guidelines sentence in this case was permissible because it is within the range permitted under New Mexico law and because it is apparently based on analogous guidelines and falls within the range of discretion permitted by state law. Therefore, the September 23, 1988 judgment of the district court is AFFIRMED.
. The Assimilative Crimes Act provides:
Whoever within or upon any of the places now existing or hereafter reserved or acquired as provided in section 7 of this title, is guilty of any act or omission which, although not made punishable by any enactment of Congress, would be punished if committed or omitted within the jurisdiction of the State, Territory, Possession, or District in which such place is situated, by the laws thereof in force at the time of such act or omission, shall be guilty of a like offense and subject to a like punishment.
18 U.S.C. § 13 (1982) (current version at 18 U.S.C. § 13(a) (1988)).
. N.M.Stat.Ann. § 30-2-3(B).
. Defendant’s guilty plea and the July 15, 1988 information upon which his guilty plea is based state that defendant's conduct also amounted to a violation of the Indian Major Crimes Act, 18 U.S.C. § 1153. Section 1153 provides, in relevant part:
(a) Any Indian who commits against the person or property of another Indian or other person any of the following offenses, namely, murder, manslaughter, ..., and a felony under section 661 of this title within the Indian country, shall be subject to the same law and penalties as all other persons committing any of the above offenses, within the exclusive jurisdiction of the United States.
(b) Any offense referred to in subsection (a) of this section that is not defined and punished by Federal law in force within the exclusive jurisdiction of the United States shall be defined and punished in accordance with the laws of the State in which such offense was committed as are in force at the time of such offense.
18 U.S.C. § 1153 (Supp. V 1987) (current version at 18 U.S.C. § 1153 (1988)).
We are unable to determine whether the district court based its sentence on the Indian Major Crimes Act or on the Assimilative Crimes Act, since the sentence refers to both. However, both parties treat the sentence as having been based on the Assimilative Crimes Act. We accept that characterization for purposes of this opinion because of our conclusion that the sentencing guideline for the federal crime of involuntary manslaughter would be appropriately applied to determine the sentence for the assimila-tive New Mexico crime of involuntary manslaughter. Thus, the sentence would be the same under either 18 U.S.C. § 13 or 18 U.S.C. § 1153.
. The Government argues that this case may be moot because the Bureau of Prisons had issued an Operations Memorandum dated February 2, 1989, which suggested that the Bureau would, on an interim basis, apply the non-guidelines sentence in a situation where a court had imposed both a non-guidelines sentence and an alternative guidelines sentence. Appellee’s Br. at 4. However, the district court's judgment in this case explicitly provided that the alternative guidelines sentence would apply "in the event the Sentencing Reform Act of 1984 is found to be constitutional." R.Doc. 41. In light of the Supreme Court’s decision that the Sentencing Reform Act does not violate the separation-of-powers principle, Mistretta v. United States, - U.S. -, 109 S.Ct. 647, 102 L.Ed.2d 714 (1989), and this court's holding that the Act does not violate the Due Process Clause, United States v. Thomas, 884 F.2d 540 (10th Cir.1989), the alternative guidelines sentence is the one that must be applied under the express terms of the district court’s judgment. Therefore, the case is not moot. Moreover, a memorandum dated February 1, 1989, from Assistant Attorney General Edward S.G. Dennis, Jr., the head of the Criminal Division of the United States Department of Justice, indicated that a consensus had been reached within the Department of Justice, including the Bureau of Prisons, to the effect that if a court imposed an alternative sentence based on the guidelines, the Bureau of Prisons would apply that alternative guidelines sentence.
. The commentary to § 2A1.4 provides that “[a] homicide resulting from driving ... while under the influence of alcohol or drugs ordinarily should be treated as reckless.”
. N.M.Stat.Ann. § 31-18-15.1(B) provides that the sentencing judge “shall not consider the use of a firearm or prior felony convictions as aggravating circumstances for the purpose of altering the basic sentence." Presumably, the purpose of § 31-18-15.1(B) is to take into account the fact that other New Mexico statutory provisions provide for specific sentence enhancements based on the use of a firearm and prior felony convictions. See N.M.Stat.Ann. §§ 31-18-16, 31-18-16.1, 31-18-17. Appellant was not charged here with any assimilative crime based on those specific enhancement provisions.
. We note that defendant raised the issue of whether the sentencing guidelines apply to assi-milative crimes for the first time on appeal. Therefore, if we had concluded that the district court erred in sentencing defendant, we would have had to address whether the district court committed a “plain error[ ]” that would warrant reversal under Fed.R.Crim.P. 52(b). However, in light of our conclusion that the district court did not err in sentencing defendant, there is no plain-error issue to decide.
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, Chief Judge.
This appeal concerns a struggle for control of one large company by another through a tender offer. Both the target company and the bidder are real estate investment trusts (REITs), organized pursuant to 26 U.S.C. § 856 and subject to certain constraints and possessing the advantage of avoiding a separate income tax on the corporate entity, a single tax being paid by shareholders on their receipt of distributions.
Plaintiff-appellant, San Francisco Real Estate Investors (SFREI), on October 28, 1982, made a tender offer of $40 a share (about $9 above the then current market price) for 34 percent of the shares (558,000) of defendant Real Estate Investment Trust of America (REITA). Acquisition of this amount of shares would give SFREI control of REITA. A brief account of SFREI’s corporate “family” relationships and its present and potential holding of REITA’s shares explaining how this result would be achieved is set forth in the margin. REI-TA, a venerable Massachusetts business trust, tracing its origins from 1886, with a record of 340 consecutive dividends, invests in commercial and light industrial real estate, the value of such investments being estimated at $63 a share or approximately twice the market price per share.
Long before the tender offer, REITA had kept a watching brief on Mann and his corporate entities. REITA had several meetings with Mann in 1979 and 1980, and observed Mann’s (or UCC’s) acquisition of UAC, which thereafter gave up its status as a REIT, his unsuccessful but profitable effort to acquire another REIT, First Union, and the acquisition of a majority position in SFREI. REITA’s trustees concluded that they were on a “collision course” with Mann, and that not only was control of REITA his object, but that Mann’s investment philosophy was not that of the steady and full distribution of income of a REIT but rather one of accumulating income and engaging in “high leverage” borrowing for reinvestment. In the spring of 1982, the trustees discussed, had counsel draft, and on May 24, three days after they learned of SFREI’s stock purchases, adopted a by-law that precluded the possibility that over 50 percent of REITA’s stock could be owned by five or fewer persons — a circumstance that, see n. 1, supra, could result in losing REIT status.
Realizing that the by-law constituted a roadblock in its path, SFREI brought suit in the district court against REITA and its seven Trustees to enjoin enforcement of the by-law at the same time as it made its tender offer on October 28, 1982. Indeed, the completion of stock purchases under the tender offer was made conditional on obtaining a preliminary injunction against enforcement of the by-law. Five days later REITA counterclaimed, charging SFREI, Mann, UCC, and UAC with nondisclosure of their intent and fraudulent market manipulation, and seeking injunction of the tender offer.
Within a two week period voluminous affidavits, depositions, exhibits, and memo-randa were assembled and on November 16, 1982 the district court heard argument and received brief testimony from one of REI-TA’s officers at a hearing. On November 17 it denied SFREI’s request to enjoin the by-law and granted REITA’s motion for an injunction against the tender offer. We refused to stay the injunction but agreed to hear the appeal on an expedited basis.
Denial of SFREI’s Request to Enjoin Enforcement of the By-Law
We first consider the court’s refusal to enjoin enforcement of the by-law. Even though the injunction against the tender offer did not rest on the by-law, consummation of the offer expressly depends upon obtaining a ruling of its invalidity. Only if we could say that under no circumstances could we foresee the lifting of the injunction against the tender offer, which we cannot, could we reasonably avoid deciding this issue. As did the district court, we shall deal independently with both requests for injunctive relief.
The district court properly noted the familiar four part inquiry into (1) plaintiff’s likelihood of success on the merits, (2) the irreparability of harm to plaintiff if relief is not granted, (3) the. excess of such harm over harm to defendant if relief is granted, and (4) the adverse effect on the public interest if relief is granted. Agency Rent-A-Car, Inc. v. Connolly, 686 F.2d 1029 (1st Cir.1982). We note in addition the constraint laid on us to defer to the district court’s action unless we find an abuse of discretion or error of law. Burgess v. Affleck, 683 F.2d 596 (1st Cir.1982); Crowley v. Local No. 82, 679 F.2d 978, 994 (1st Cir.1982). We agree with appellees that deference to factual determinations does not in this circuit diminish because most or all of the evidence is documentary. Custom Paper Products Co. v. Atlantic Paper Box Co., 469 F.2d 178, 179 (1st Cir.1972).
The court did not explicitly address the question, in the context of SFREI’s request for an injunction, of REITA’s irreparable harm should the operation of the by-law be enjoined. It seems clear to us, however, that it clearly felt that if the by-law were inoperative, Mann and companies might mount a successful and wholly legal tender offer effort, which would result in the change of control of REITA and loss of its REIT status, to the irreparable harm of REITA and its shareholders.
The court did address the harm that SFREI would suffer from denial of relief. Because SFREI conditioned its tender offer on the granting of preliminary injunctive relief, the court reasoned that it had lost nothing except time and money and, but for self imposed limitations of “economic rationality” and time, could still purchase shares at a premium. In so reasoning, we think the court erred as a matter of law. There can be no doubt that enforcement of the by-law would substantially chill, if not freeze in its tracks, any continued takeover effort. While time and money are lost, so also is diminished if not destroyed any chance of success. Whether one questions the wisdom of such efforts or not, the fact is that “loss of [a] best opportunity to seize control of a major corporation... could be crucial.” Dan River, Inc. v. Carl C. Icahn, 701 F.2d 278 at 284 (4th Cir.1983); National City Lines, Inc. v. LLC Corp., 524 F.Supp. 906, 912 (W.D.Mo.1981), aff’d, 687 F.2d 1122 (8th Cir.1982). Congress has endeavored, in enacting the Williams Act governing takeovers, to assure a “policy of neutrality in contests for control”, Piper v. Chris-Craft Industries, Inc., 430 U.S. 1, 29, 97 S.Ct. 926, 943, 51 L.Ed.2d 124 (1977), which is frustrated by unjustifiably delaying tender offers, Edgar v. MITE Corp., — U.S. —, —, 102 S.Ct. 2629, 2637, 73 L.Ed.2d 269 (1982); Kennecott Corp. v. Smith, 637 F.2d 181, 190 (3d Cir.1980).
Not only did the district court’s error, as we see it, in finding no risk of irreparable harm to SFREI disable it from balancing such risk against that faced by REITA, but it also prevented it from explicitly addressing the impact on the public interest should the by-law be enjoined. This part of the analysis, it seems to us, merges with our consideration of the merits. If the by-law was a perfectly proper one for REITA’s trustees to enact and not in violation of the Williams Act, the public interest could not be said to be served by enjoining its enforcement; the public interest in stimulating a competitive assault would be at least balanced by seeing a defense in place. If, however, the by-law was not a proper expedient, the public interest would be ill served by allowing it to determine the outcome of the fight. We therefore consider the remaining factor, which we deem crucial in the weighing process — SFREI’s likelihood of success in ultimately demonstrating the by-law to be illegal.
The district court first considered SFREI’s charge that the by-law constituted a manipulative device used in connection with a tender offer, in violation of Section 14(e) of the Securities Exchange Act of 1934, 15 U.S.C. § 78n(e). It held that it was not persuaded that the by-law was enacted solely to prevent a tender offer, and that the Trustees, perceiving Mann’s intention (through SFREI) as that of controlling REITA, were justified in enacting the by-law as “a reasonable and good-faith exercise of their business judgment.” The court had earlier stated that “the by-law was a proper means to protect REITA’s status.” Addressing the contention that the by-law was unauthorized, the court began by noting that the plaintiff had not demonstrated that the enactment of the by-law was unauthorized, then observed that the trustees possessed “practically unlimited powers”, and concluded that the enactment of the by-law “was a proper business judgment and entitled to some deference.” This conclusion stemmed from the facts that no one had challenged the trustees’ authority, SFREI had not called for a meeting of shareholders, similar provisions had been included in other REITs, and legal advice had been sought. The court specifically stated that it did not reach the question of the validity of the by-law, whether by fiduciary duty or the Declaration of Trust; even were breaches committed, such a fact would not change its conclusion that the trustees acted “in good faith and in the proper exercise of their business judgment.”
REITA explicitly recognizes that more than a “good faith” defense is needed to prevail against both SFREI’s Williams Act “manipulative device” claim and its breach of Declaration of Trust claim. It contends that, notwithstanding the court’s disclaimer of any judgment on validity, there was “a reasoned succession of findings which together show that the By-Law was enacted lawfully in furtherance of an imperative duty vested in the Trustees.” We acknowledge that this interpretation is not without support in the court’s reference to the bylaw as “a proper means” and to the powers of the Trustees as “practically unlimited”. We therefore take the court’s ruling on this basis.
We first deal with what we consider the dispositive issue at this juncture, the validity of the by-law as measured by the Decía-ration of Trust. REITA urges that we not underestimate the flexibility and even the authoritarian, oligarchical, and self perpetuating nature that can legally characterize a business trust. The Declaration obviously vests large powers in the seven Trustees. They serve for life (Section 8.2). Vacancies are filled only by the remaining Trustees (Section 8.4). They have “full and absolute power and control... to the same extent as if [they] were the sole owners... subject only to the limitations herein expressly stated” (Section 2.1). In addition to some sixteen itemized powers, they have power “to do all such other matters and things as in their judgment will promote or advance the business” (Section 2.19). In logical contrast the shareholders “shall have no interest... other than the beneficial interest conferred by their shares” (Section 6.1). The Trustees also may adopt “by-laws for the conduct of their business, and in such by-laws may define duties of their officers, agents, servants, and representatives” (Section 8.8).
The Declaration of Trust does not, however, entirely overlook shareholders. A shareholder is entitled to a certificate which “shall be treated as negotiable and title thereto... shall be transferred by delivery thereof to the same extent... as a stock certificate” (Section 4.2). Although shares acquired by the Trustees shall not “either receive dividends... or be voted” (Section 6.3), “shareholders of record of... shares [entitled to vote] shall be entitled to vote and each full share shall be entitled to one vote” (Section 7.5). Trustees shall “distribute ratably among the shareholders” profits, surplus, or capital (Section 9.1).
In addition to the above powers vested in the Trustees and the rights vested in the shareholders is Section 6.5, which is specifically addressed to the danger posed to a REIT by excessive concentration of ownership. It reads in relevant part:
“If the Trustees shall at any time and in good faith be of the opinion that direct or indirect ownership of the shares of the Trust has or may become concentrated [so as to cause a loss of REIT status], the Trustees shall have the power to call for redemption a sufficient number of such shares [to maintain or bring ownership into conformity with REIT requirements] and/or to prevent the transfer of shares to persons whose acquisition thereof would result in a violation of such requirements.”
The newly enacted by-law recites that “Acting pursuant to the provisions of Section 6.5... the Trustees are of the opinion that ownership by any person of more than 9.8% of the outstanding Shares of the Trust is hereby deemed to constitute ownership which may become concentrated [so as to cause loss of REIT status].” It then sets forth the provisions we have earlier described, barring ownership of more than 9.8 percent of the shares, and classifying “Excess Shares” as not carrying voting rights, nor rights to dividends or other distributions. It also applies to individuals, corporations, and partnerships and incorporates all of the attribution rules of the Internal Revenue Code.
The parties agree that the determination of the power of Trustees in a Massachusetts business trust is a question of contract law, State Street Trust Co. v. Hall, 311 Mass. 299, 306, 41 N.E.2d 30 (1942). Agreement proceeds no farther. SFREI claims that the by-law is contradictory to and inconsistent with Section 6.5. REITA argues that while Section 6.5 is directed to a particular problem of actual or potential concentration posed by a known stock transfer, the by-law is a general prophylactic measure that “could be applied equitably to all REITA shareholders”. REITA adds, appealingly, that “If the Trustees are empowered to block transfer of shares, or to redeem shares, to preserve REIT qualification, it must follow that the Trustees are empowered to take less drastic steps to deter...."
Our problem is that we see no room for both Section 6.5 and the by-law to coexist, or more accurately, what function is realistically left to be served by Section 6.5. Because of the by-law’s coverage of individuals and all other kinds of legal entities and all the elastic attribution rules, we can conceive of no situation in which Section 6.5 would be needed to forestall loss of REIT status. As our colleague Judge Aldrich has said in a vastly different context: “If there is a big hole in the fence for the big cat, need there be a small hole for the small one?” Jarecki v. G.D. Searle & Co., 367 U.S. 303, 307, 81 S.Ct. 1579, 1582, 6 L.Ed.2d 859 (1961) (quoted by Warren, Ch. J.)
In sum, what has happened with the enactment of the by-law is the effective repeal of Section 6.5 and the substitution of the by-law for it. Should this be attempted explicitly and directly through a by-law substituting a new Section 6.5, we suspect that the effort would run afoul of Section 10.1 of the Declaration of Trust requiring amendments to be effectuated by an affirmative vote of “three-fourths in interest of the shares then outstanding... and entitled to vote”.
Although REITA portrays the by-law as a less drastic step than the absolute proscription of transfer or redemption allowed by Section 6.5, its very preemptive and preventive approach adopts, in effect, an irre-buttable presumption of a circumstance giving rise to a good faith opinion of risk of impermissible concentration. This means that, for example, where no other shareholder owns over 3 percent or even 1 percent of the shares and where there is absolutely no foreseeable risk of undue concentration, a corporation or an individual would be barred from purchasing over 9.8 percent of the shares.
In addition to such overbreadth, very serious questions of conflict with both the Declaration of Trust and Massachusetts Law are raised by the restrictions the bylaw imposes on “Excess Shares” as to transferability, receipt of dividends, and voting rights. REITA’s assertions that in some instances Massachusetts law permits restrictions on transfer and that “a discouragement to some few hypothetical buyers” poses no conflict with Section 4.2 ring hollow to us, as does its attempt to distinguish Joseph E. Seagram & Sons v. Conoco, Inc., 519 F.Supp. 506 (D.Del.1981).
As for receipt of dividends, Section 9.1, of the Declaration of Trust prescribing ratable distributions, together with Section 6.3, excepting Treasury shares, appear to conflict with the by-law, which requires that any distribution based on Excess Shares be put in a savings account and paid only to the holder when the shares are no longer Excess, i.e., to the purchaser from the holder of Excess Shares. REITA seeks to distinguish Twenty-Seven Trust v. Realty Growth Investors, 533 F.Supp. 1028 (D.Md.1982) on the ground that in that case the requirement of ratable distributions was violated by the different forms of distribution, cash to small shareholders and secured notes to large ones, while here the amount and form of distribution per share are identical. Whether or not this is a salient distinction or whether, as SFREI argues, the distribution in the case at bar would, under Twenty-Seven Trust, be a fortiori a violation need not detain us, for we find it even more difficult to reconcile the accumulate- and-place-in-a-savings account provision of the by-law with the clear requirement of Section 9.1 to “distribute ratably among the shareholders ” (emphasis supplied).
Finally, the voting rights guaranteed by Section 7.5 are obviously affected, at least during the period in which shares are deemed Excess. No real answer to this apparent inconsistency is attempted by REITA except to say that Treasury shares, shares jointly held by owners in disagreement, or shares subject to redemption have no vote by express provisions of the Declaration of Trust, and to distinguish several cases cited by SFREI. It is perhaps an understatement to say that the defense is not impressive.
The one judicial precedent closest on point is Pacific Realty Trust v. APC Investments, Inc., 651 P.2d 163 (Or.App.1982). In that case a target REIT, whose declaration of trust contained a Section 6.17 with trustee powers to redeem and prevent transfer very similar to Section 6.5, after being confronted with a tender offer, enacted a bylaw absolutely prohibiting anyone from owning more than 9.8 percent of the shares. The Trustees relied on their broad powers to conduct the business of the trust, a presumption (in the declaration) that their action lay within their general powers, and their good faith in preserving REIT status — the essential purpose of the trust. The court posed the issue as whether the Trustees could lawfully adopt a by-law restricting the transferability of shares in a different and more stringent way than in the declaration of trust. It concluded that the by-law was “not authorized by, nor an implementation of, section 6.17”. Id. at 166.
The district court distinguished Pacific Realty Trust on the grounds that the bylaw there was “more far reaching” (i.e., that it completely barred ownership of excess shares) and was enacted after a tender offer had been launched. We are not sure that the analysis in Pacific is so easily disposed of. In any event we have relied on our own analysis. We do not pronounce final judgment on the validity of the bylaw, but we do say that SFREI has demonstrated a likelihood of success on the merits of its claim that the by-law was not authorized by the declaration of trust.
At this junction, in light of the serious prospect of irreparable harm to SFREI, the intertwining of the impact on the public interest and the validity or not of the bylaw, and our tentative view of its likely invalidity, we conclude that the district court committed legal error in refusing SFREI’s motion for a preliminary injunction. We therefore have no occasion to pass upon the correctness of the court’s holding that “plaintiff has not persuaded me on this record that the enactment of the offending by-law was a manipulative device”.
Granting of REITA’s Request to Enjoin the Tender Offer
Belatedly, UCC challenges REITA’s standing to assert claims under Section 13(d) of the Exchange Act, 15 U.S.C. § 78m(dXl)(C); it did not do so in the district court. The SEC in an amicus brief urges that we recognize a private right of action. We need not face the question. We do not view this issue as jurisdictional in an Article III sense and just as we proceeded to the merits of the suit in General Aircraft Corp. v. Lampert, 556 F.2d 90, 94 n. 5 (1st Cir.1977), no challenge having been made to standing, so do we consider the issue not before us, the point having not been urged in the district court. Dobb v. Baker, 505 F.2d 1041, 1044 (1st Cir.1974).
As was the case with its consideration of SFREI’s request to enjoin enforcement of the by-law, the district court did not identify the harm that SFREI would suffer from an injunction against its tender offer, or balance that harm against the harm to REI-TA if the tender offer were allowed, or probe the impact on the public interest. It did determine, with ample support in the record, that REITA’s loss of REIT tax status would constitute irrevocable harm. And, from what we have said earlier, we deem the loss of momentum and opportunity on the part of a tender offeror also to constitute irreparable harm. Once again we deem the issue on the merits to be the critical one, determining the public interest analysis, and outweighing whatever balance of hardship could be struck on this record. That is, if REITA’s case for a preliminary injunction is likely to succeed on the merits, the fact that SFREI would lose a valuable opportunity to acquire control of REITA could not bar the injunction. Of course if REITA’s case on the„ merits is not likely to succeed, we do not even reach the balancing of harms.
The district court held simply that REI-TA had shown that the counterclaim defendants had not complied “with the disclosure requirements of the federal securities laws” and thus should be enjoined. It then rehearsed what it viewed as a record showing that Mann and his companies had consistently masked their intent to obtain control of various REITs including REITA and had filed 13D forms describing the purpose of various stock acquisitions as “investment”. Specifically with reference to SFREI’s purpose in relation to its acquisitions of REITA’s shares in May 1982, the court noted discussions concerning a takeover of REITA between Mann and New York counsel, the filing by SFREI of a 13D schedule on June 1, 1982, in which investment was the sole stated purpose, and a SFREI proposal on June 17 that REITA merge with SFREI coupled with the suggestion that if REITA resisted merger there might be a tender offer. The court concluded in the light of “[t]his scenario” that REITA’s shareholders had not been apprised of SFREI’s future plans, its intent to gain control, the effect on REIT tax qualification, and the value of the underlying.real estate.
UCC, UAC, and Mann make a spirited, point-for-point attack on the court’s findings, alleging that all materials referred to were “true and complete in all material respects” and complaining that the court rejected without explanation the sworn statements of UAC and UCC officials. We are far from persuaded that the district court abused its discretion or that there was insufficient evidence to support its findings — particularly those relating to SFREI’s disclosure relating to its intent in purchasing the shares of REITA. But all of this controversy over pre-tender offer conduct has been substantially reduced in importance by two subsequent developments.
The first is the tender offer itself. It is clear to us that the only “scenario” that was the subject of the court’s scrutiny was the intent and 13D disclosures preceding the October 28,1982 tender offer. In the Offer of Purchase of that date, several of the defects noted by the court were remedied: at least by this time there was a full discussion of the interrelations of Mann, UAC, UCC, and SFREI and the purpose of the offer was described as to enable SFREI to wind up with 51 percent of the shares, “all as a first step toward eventually acquiring the entire equity interest in REITA”; the offer stated that it was possible that a merger might be attempted; and the offer disclosed that SFREI’s own “limited valuation analysis” in early 1982 produced an estimate of the value of REITA’s assets on a liquidation basis as “approximately $103,-350,000, or slightly more than $63.00 per Share.”
As for the effect of successful completion of the tender offer on REITA’s tax status, the Offer of Purchase discussed the Five Person Rule and stated that to SFREI’s “best knowledge”, Mann would be deemed to own only about 13 percent of the shares, and there are three other stockholders who would be deemed to own 3, 1, and 1 percent of the shares respectively. Since SFREI was not aware of any other “individual or entity that owns or would be deemed to own” at least 32 percent, SFREI “does not believe that the consummation of the Offer would result in a violation of the Five Person Rule. The offer added that there could be no absolute assurance and cautioned that REITA and its shareholders (including SFREI) “could suffer substantial adverse tax and economic consequences” if REITA lost its REIT status.
Had the Offer of Purchase made sufficiently full disclosure of the defects noted by the district court we would face the question whether such “corrective disclosure” is sufficient to accomplish the purpose of giving REITA’s shareholders an adequate basis for making an informed decision concerning the tender offer. Cf. Gen eral Aircraft Corp. v. Lampert, 556 F.2d 90, 97 (1st Cir.1977) (affirmed district court order enjoining further acquisitions until Schedule 13D was amended to reflect intentions accurately). On the other hand, the SEC in its amicus brief suggests that there are occasions when “[a]bsent a remedy beyond ordering corrective disclosure, a person will have little incentive to comply with the statute.” It argues that in determining whether more than corrective disclosure is called for, we should, while taking care not to tip the balance between offeror and target sought to be achieved by the Williams Act, consider (1) whether a substantial number of shares were purchased after the misleading disclosures and before corrective disclosure, (2) whether the curative disclosure occurred simultaneously with or on the eve of a tender offer, and (3) whether the violation was egregious.
These seem like sensible tests. Measured by them, SFREI would probably pass the first test, since none of its shares were purchased after its June 1982 disclosure and half of UCC’s shares were purchased before any disclosure, the remainder being acquired shortly after the two year old disclosure of December 1980. It would arguably not pass the second test since the curative disclosures were made in the Offer to Purchase itself, although the subsequent delay and publicity of litigation may well have repaired this shortcoming. Finally, while having held that the district court’s findings as to pre-offer non-disclosure could be sustained, we recognize the ambiguities of motivation revealed by the record and would not be disposed to call the violation “egregious”.
But we do not feel that the district court was required to find that full corrective disclosure had been made. In its opinion it referred to uncontroverted affidavits indicating a substantial and imminent danger of REITA’s losing its REIT status if the tender offer were not enjoined. These concerned the post-complaint discovery of the fact that SFREI was a 50 percent partner in a general partnership with one John Starkey. Two affidavits were submitted to the court on th'e day of its hearing, November 15, 1982, from tax specialists, one with extensive background in Regulated Investment Companies (subject to the same stock ownership and attribution rules as are REITs) and the other with extensive governmental and private law background in REITs. Each was of the opinion that if SFREI were to own 51 percent of REITA’s stock and were a partner in a partnership with an individual, under the attribution rules of Section 544(a)(2) of the Code, that individual would be considered to own SFREI’s 51 percent and REITA would no longer satisfy the Five Person Rule of Section 856(a)(l, 6).
In opposition to these opinions in the district court, SFREI relied on Estate of Netti S. Miller v. Commissioner, 43 T.C. 760 (1965), nonacquiesced, 1966-1 C.B. 4. In that case the Tax Court refused to apply an analogous attribution rule to the brother of a shareholder in a corporation where the brother had no interest in the corporation and could not bring pressure to influence its actions. Whether or not this case, involving application of the “Family Attribution Rule” to a foreign personal holding company, is apposite we do not know. What does seem relevant is that the I.R.S. has for the past 16 years maintained its nonacquies-cence.
The essential point is that, whatever the final “right” decision on this esoteric point of law might be, the district court could well find that even the disclosure in the Offer to Purchase, which made no mention of the Starkey partnership, did not sufficiently inform shareholders of the full range of REIT qualification problems.
SFREI has attempted to cure this deficiency in two steps. First, in a December 7, 1982 “Amendment No. 5” to its Schedule 14D, filed in connection with its tender offer, SFREI argues its belief of counsel that Estate of Miller controls and says that it has proposed that Starkey transfer his partnership interest to a general partnership in which he and at least one other person would be the partners. Just how this would avoid the attribution problem is not made clear. Mr. Starkey was said, subject to advice of his counsel, to have indicated that he would cooperate.
A second step was taken on January 4, 1983, when SFREI filed “Amendment No. 6” to its Schedule 14D, stating that Mr. Starkey had now formed, not a general partnership as described in Amendment No. 5, but a limited partnership in which he is the general partner and three members of his family are limited partners. This limited partnership has been substituted as SFREI’s partner in the general partnership. In counsel’s view the fact that no individual is a direct partner of SFREI is sufficient insulation to block the attribution rule.
Amendment No. 6 then refers to a revelation in REITA’s brief that SFREI is also the general partner in a Texas limited partnership with a number of individual limited partners. All SFREI says about this development is that it has undertaken “a comprehensive review” to identify “possible alternatives for restructuring the relationship”.
These two “amendments”, one attached to SFREI’s main brief on appeal, the other to its reply brief, were of course not part of the record on which the district court acted. Nor do they constitute such full disclosure of facts and risks that we could confidently pronounce that all is now in order and that the tender offer may proceed. Because we are uncertain whether disclosure is, as yet, complete, we will not now set aside the district court’s preliminary injunction. Rather, we remand to allow the district court to focus on whether, assuming a REIT status problem still exists, sufficient disclosure has been made to equip REITA’s shareholders to make a decision. It may, of course, transpire that SFREI will feel that any REIT problems should be solved, to avoid application of Section 6.5 of REITA’s Declaration of Trust.
We leave the preliminary injunction in effect temporarily for purposes related to the expeditious handling of this particular case. We do so, while recognizing that an injunction forbidding an acquisition is not, except in the most egregious case, the preferred or even proper remedy. In many situations failure to disclose can be cured by an order requiring appropriate disclosure. And, where that order is insufficient, in-junctive relief should be designed to help the victims of the inadequate disclosure, not to hurt them. Typically, the victims are persons who tendered their shares prior to disclosure that would have made them realize the shares were worth more. With these persons in mind, Judge Friendly wrote in Electronic Specialty Co. v. International Controls Corp., 409 F.2d 937, 947 (2d Cir.1969);
“If the court believes that the offeror has improperly depressed the price of the stock before making the offer, it can require rescission and enjoin further solicitation for a period, or allow the offeror the alternative of raising the price of both past and future deposits.”
In addition, where, for example, a putative acquirer has obtained a “blocking” position, an injunction might have the result of preventing shareholders who wish to sell from being able to do so on any terms. As we already have noted, see p. 1009 n. 15 supra, we think it unlikely that SFREI’s tactics have given it any “unfair advantage” that complete disclosure could not cure, or that it has acquired a “blocking” interest that will ultimately frustrate higher bids by rival offerors and harm REITA shareholders. Our point is simply that even under circumstances more extreme than appear to be present here, injunctive relief should be tailored to advance the interests of those whom the Williams Act seeks to protect, not employed to punish an offeror at the expense of the persons the injunction purports to help.
Nonetheless, we are at present reluctant to order that the preliminary injunction be modified or dissolved, despite these concerns, for several reasons. First, we do not believe that an absolute ban on a tender offer is never appropriate under any circumstances. Second, the district court has not focused on the adequacy of disclosures both in and subsequent to the Offer of Purchase in order to determine whether sufficiently corrective disclosure has been made. Finally, and perhaps most pertinently, we have noted the unresolved specific issue of the adequacy of disclosures in SFREI’s Amendments No. 5 and 6.
We therefore allow the preliminary injunction to remain in effect temporarily, and direct a full hearing on the merits of REITA’s counterclaim forthwith. The district court is free to modify the preliminary injunction in the meantime if it feels such action is warranted. But, in light of the neutrality policy underlying the Williams Act and the desirability of avoiding delay as a factor tilting in favor of target management, the court should expeditiously reach a final decision on the counterclaim, in any event within two months from the time this opinion is issued.
The court’s refusal to grant a preliminary injunction against enforcement of the bylaw is reversed with directions to enter such a preliminary injunction; the court’s refusal to grant defendants’ motion to dismiss is affirmed.
The court’s judgment granting a preliminary injunction against the tender offer is affirmed and the matter is remanded for further proceedings consistent with this opinion.
No costs.
. Qualifying preconditions include annual distribution of 95% of taxable income, 75% of assets held in the form of real estate, 75% of income realized from real estate, at least 100 shareholders, and compliance with the “Five Person Rule”: during the last half of a tax year, five or fewer individuals may not directly or indirectly (by attribution) hold more than 50% of the shares.
. Head of the “group” is a Canadian citizen, George S. Mann, who owns 60% of the shares of Unicorp Canada Corporation (UCC), a Canadian company. UCC owns 84.5% of the shares of Unicorp American Corporation (UAC), a Delaware corporation. UAC and UCC own 50.02% of SFREI. UCC, through purchases in 1979 and 1980, owns 10.6% of REITA’s shares (173,200). In the spring of 1982 SFREI acquired 6.3% of REITA’s shares (102,400), all purchased at a price of $30.50 a share. Because SFREI has an option to buy UCC’s 10.6% and already owns 6.3%, successful prosecution of the 34% tender offer would make SFREI the holder of 51% of REITA’s shares.
. Under a December 24, 1980 “standstill agreement” with SFREI, Mann, UCC, and UAC are limited to three of ten SFREI directorships and to their existing shareholdings until March 31, 1983.
. The by-law stated that “no person shall at any time be or become the owner of more than 9.8 percent of the outstanding shares of the trust”. Despite the absolutist proscription of this sentence, the by-law goes on to provide that shares held in excess of this limit shall be “Excess Shares”,
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.
FAIRCHILD, Circuit Judge.
Cause of action for defamation asserted by counterclaim by David Dorin against his former employer, The Equitable Life Assurance Society of the United States (Equitable). The jury found for Dorin, assessing compensatory damages at $57,500 and punitive damages at $125,-000. The district court, however, ruled that unless Dorin filed a remittitur agreeing to reduce the awards to $17,500 and $7,500, respectively, Equitable’s motion for a new trial would be granted. Dorin filed the remittitur.
On appeal, Equitable contends that (1) its motion for a directed verdict should have been granted because the communication was qualif iedly privileged and there was no evidence of malice, (2) its motion for a new trial should have been granted because the district court found “that the jury was inflamed by passion and prejudice in awarding the amount of damages,” and (3) that Dorin’s cross-appeal should be dismissed because by filing the remittitur he waived objection to the judgment.
On cross-appeal, Dorin contends that the district court abused its discretion in requiring a remittitur as a condition of the denial of Equitable’s motion for a new trial.
1. Equitable’s motion for a directed verdict. This case is related to Jacobson v. Equitable Life Assurance Soc’y of the United States, 7 Cir., 381 F.2d 955, which was an action by named beneficiaries to recover on a life insurance policy issued by Equitable, Dorin having been the soliciting agent. Equitable denied liability on several grounds, one of which was that the insured concealed material facts relating to a change of health during the period between the time he answered questions in the medical portion of the application and the payment of the first premium, the date the insurance went into effect.
During Equitable’s investigation of the Jacobson claim, it obtained information that when Dorin accepted the first premium, he had some degree of knowledge regarding the insured’s change of health and his plans to enter the hospital for corrective surgery and that when Dorin delivered the policies by mail to the insured, he had knowledge that the insured had just had a “long and complicated operation.”
Dorin’s employment was terminated and he was joined as a third party defendant in the Jacobson Case, Equitable contending that if it was liable to the beneficiaries, Dorin was liable to it by reason of breaches of contractual and fiduciary duty. Dorin then filed the counterclaim for defamation that is involved here. The issues on the counterclaim were tried separately.
After Dorin was terminated by Equitable, he sought employment, or applied for an agency, with Massachusetts Mutual Insurance Company. Massachusetts Mutual granted Dorin an agency contract. The Retail Credit Company was asked to make a routine investigation of Dorin. On May 25, or 26, 1963, the Retail Credit investigator interviewed Dorin’s former supervisor, Ernest C. Wentcher, a general agent for Equitable. The report emanating from that interview, and upon which this action is based, contained the following statements:
“He was' employed by the Ernest C. Wentcher Agency of the Equitable Life Ins. Co., for 13 years, and was with the Equitable Life Ins. Co., with various ageancies [sic] since 1-18-37, and terminated on 4-12-63. He was an insurance agent selling life and casualty insurance. He was forced into retiring by the company and not eligible for rehire under andy [sic] circumstances. Applicant wrote a $100,-000.00 policy on a man whom he knew was going into hospital for a very serious operation. The man died on the operating table and survivors contended that the Equitable pay the indemnity. Subject denied at first knowing that the man was sick and going into hospital. One year later he changed his story and admitted that he knew man was sick and going to the hospital and wrote the policy anyway. Subject is now a party in a counter suit between Equitable and the survivors of the deceased. Source stated that they had trouble with him in the past in the fact that he would fail to mention important items in the application that would be important to the underwriter such as health, finances, etc. He it seems deliberately witheld [sic] this information from the company just so he could write the policy with no regard for the applicant and most of all with the employer. Stated to be a person who just wanted to sell insurance, no matter what it took to get the applications through. He was a big producer in the end and it was indicated that he made policy holders cash in older policies in order to pay for new policy, with the greater amounts which he was always trying to sell. Actually subject was fired, however record shows that he was forcefully retired. No salary information would be supplied.”
When Massachusetts Mutual received the report, Dor in’s agency contract was cancelled.
Both of the parties agree that the communication was qualifiedly privileged and the only question is whether there was sufficient evidence of malice to present the question to the jury.
It is apparent that in several respects, Wentcher’s statements in the report were substantially exaggerated beyond the truth. In part they went beyond what Wentcher admitted was his information at the time, and in part went beyond what the jury could well have found was information he had when he made the statements. Wentcher said that Dorin wrote a $100,000 policy on a man he knew was going into the hospital for a “very serious” operation. But the evidence showed that when he accepted the first premium Dorin only knew that the insured had a pain in his leg caused by nerve pressure and that he was going into the hospital to have the pressure relieved.
Wentcher stated in the report that the insured “died on the operating table.” In fact, the insured recovered completely from the operation, which was on June 30, 1961, and died several months later, on September 20, 1961, of a coronary occlusion and generalized arteriosclerosis.
Wentcher’s report also stated that Dorin would fail to mention important items to the underwriters, such as the insured’s health and finances and that Dorin deliberately withheld information from the company. However, at the trial, Wentcher admitted that in making the statement, he only had in mind one incident where Dorin had attempted to sell a policy which the company would not issue after certain adverse facts came to light. Dorin introduced evidence that he hadn’t been aware of these adverse facts and that after another company issued a policy on the applicant’s life, Equitable issued one after all.
The report stated that Dorin was a big producer in the end and that he made policyholders cash in older policies in order to pay for new policies. This would indicate to anyone acquainted with the insurance industry that Dorin was a “twister.” “Twisting” is a particularly opprobrious term in the industry and refers to inducing people to substitute a new policy for an existing one where the change does not serve the best interests of the insured. But Dorin testified that although he did recommend the cashing in of old policies, he only did so because Equitable recently came out with a particularly good policy, the executive policy, and that he only did so after he took “everything into consideration.”
In Flannery v. Allyn the court said:
“ ‘ * * * But it is not necessary to prove it [malice] by extrinsic evidence. It may be inferred from the relation of the parties, the circumstances attending the publication, and even from the terms of the publication itself.’
“ * * * to find that a communication is qualifiedly privileged means no more than that the occasion of making it rebuts the prima facie inference of malice arising from the publication, and places on the plaintiff the onus of proving malice in fact; but not proving it by extrinsic evidence only; he has still the right to require that the alleged libel itself be submitted to the jury to judge whether there is evidence of malice on the face of it.”
The Restatement of Torts does not use the term “malice":
§ 599. General Principle.
“One who publishes false and defamatory matter of another upon a conditionally privileged occasion is liable to the other if he abuses the occasion.”
§ 603. Purpose of Particular Privilege.
“One who upon a conditionally privileged occasion publishes false and defamatory matter of another abuses the occasion if he does not act for the purpose of protecting the particular interest for the protection of which the privilege is given.”
The trial court’s order denying Equitable’s motion for directed verdict must be sustained, if, viewing the evidence in the light most favorable to the plaintiff Dorin, there is any evidence which, if believed by the jury, would warrant a verdict against Equitable.
The information Wentcher had, much of which has been substantiated on trial, would have justified a report somewhat unfavorable to Dorin, but the jury could find, indeed there is very persuasive evidence, that Wentcher so greatly colored and exaggerated the facts as he understood them that he must have intended to hurt Dorin more than he deserved.
2. Equitable’s motion for a new trial. In his order on Equitable’s motion for a new trial, the judge said:
“ * * * The record is clear that Dorin’s annual earnings equaled, if they did not exceed, his earnings prior to the publication. The Court observed the counter-plaintiff on the witness stand and arrived at the conclusion that it would be difficult, if not impossible, to injure the feelings or sensitivity of a person so calloused in nature. His total ignorance, or disregard, of the fiduciary relationship that existed with his employer, The Equitable, is beyond comprehension. To me, it is quite obvious that the jury was inflamed by passion and prejudice in awarding the amount of damages above mentioned. Nevertheless, I have previously ruled, and I still feel, that the record contains sufficient evidence of malice to carry the case to the jury. On this state of the record an alternative should be offered to Dorin.”
The judge then ruled that if Dorin filed a remittitur, agreeing to reduce the compensatory damages from $57,500 to $17,500 and the punitive damages from $125,000 to $7,500, Equitable’s motion for a new trial would be denied. Dorin filed the remittitur.
If a verdict is the result of appeals to passion and prejudice, the trial court must unconditionally order a new trial and cannot give the plaintiff an option to accept a lesser amount. Equitable contends the rule is automatically applicable in this case because of the language used by the trial judge in his ruling on the motion for new trial.
It is within the trial judge’s discretion to conditionally grant a motion for new trial on grounds of exeessiveness, and in the absence of a showing of abuse, his ruling must be affirmed. The trial court was of the opinion that even though the verdict was excessive, the record contained “sufficient evidence” of malice. We are of the opinion, after a careful examination of the record, that the evidence of malice was strong, and that whatever the cause of the jury’s making an excessive award of damages, the judge could properly conclude that such cause did not infect the jury’s finding on the existence of malice to the prejudice of Equitable. There was nothing in the record, other than the size of the award, to impeach the objectivity of the jury or the fairness of the proceedings, and we do not regard the judge’s use of the term “passion and prejudice” as carrying the broad meaning which Equitable would attribute to it.
3. Dorin’s cross appeal. In Casko v. Elgin, Joliet and Eastern Ry. Co. this court held that by consenting to the remittitur, the plaintiff “waived objection to the judgment entered.” While the writer of this opinion, speaking individually, would prefer a rule more liberal to the plaintiff, the Casko decision states the federal rule, followed in this and most circuits.
Dorin, however, argues that the law of Illinois is applicable here under Erie R. Co. v. Tompkins. In the Illinois courts, Dorin would not be precluded from asserting that the amount of the verdict was proper because Equitable has appealed. Dorin cites Mooney v. Henderson Portion Pack Co. where, in virtually identical circumstances, the sixth circuit held that the state statute controlled.
In Allstate Ins. Co. v. Charneski this court said:
“The history of the Erie doctrine has been a continual retreat from conclusionary labels or mechanical solutions and an increasing emphasis has been placed on the consideration and accommodation of the basic state and federal policy goals involved. By this standard we must determine this case.”
In Hanna v. Plumer the Supreme Court again considered the choice of law doctrine in diversity cases and stated, with reference to Guaranty Trust Co. v. York, the case enunciating the “outcome determination” test, at page 468:
“The ‘outcome determination’ test therefore cannot be read without reference to the twin aims of the Erie rule: discouragement of forum shopping and avoidance of inequitable administration of the laws.”
The two rules govern a problem of procedure in the determination of just damages for a wrong, which problem may not arise at all, and will arise, if it does, after completion of trial. Under the federal rule a plaintiff in Dorin’s situation has the choice of taking judgment at the figure set by the judge, or attempting the recovery of a greater amount by a new trial. In theory, if he is entitled to a favorable verdict in a greater amount he will get it from the second jury. Acceptance of the judge’s figure, however, does not protect him from reversal on the appeal of his opponent. Under the Illinois statute such plaintiff is given a “shot” at reinstating his damage verdict on appeal if the defendant appeals, and defendant’s appeal is unsuccessful. With all respect to the sixth circuit which, incidentally, decided Mooney before Hanna v. Plumer, we do not believe that under any “Erie” test this procedural stage in the federal process of adjudication should be governed by the state rule.
Dorin’s cross appeal is dismissed, and on Equitable’s appeal the judgment is
Affirmed.
. Jurisdiction is based on diversity.
. Lescher Bldg. Service, Inc. v. Local Union No. 133 of the Sheet Metal Workers Intern. Ass’n (7th Cir. 1962), 310 F.2d 331, 333.
. Minneapolis, St. Paul & Sault Ste. Marie Ry. Co. v. Moquin (1931), 283 U.S. 520, 51 S.Ct. 501, 75 L.Ed. 1243.
. Bucher v. Krause (7th Cir. 1952), 200 F.2d 576, 586, cert. den. 345 U.S. 997, 73 S.Ct. 1141, 97 L.Ed. 1404.
. (7th Cir. 1966), 361 F.2d 748, 751.
. Kennon v. Gilmer (1889), 131 U.S. 22, 9 S.Ct. 696, 33 L.Ed. 110; Lewis v. Wilson (1894), 151 U.S. 551, 555, 14 S.Ct. 419, 38 L.Ed. 267; Koenigsberger v. Richmond Silver Mining Co. (1895), 158 U.S. 41, 52, 15 S.Ct. 751, 39 L.Ed. 889; Woodworth v. Chesbrough (1917), 244 U. S. 79, 82, 37 S.Ct. 583, 61 L.Ed. 1005; Movible Offshore Co. v. Ousley (5th Cir. 1965), 346 F.2d 870, 875, and S. Birch & Sons v. Martin (9th Cir. 1957), 244 F.2d 556, 562, 17 Alaska 230. It appears that the fifth circuit does allow the plaintiff to appeal the judgment after he has accepted a remittitur. Compare Delta Engineering Corp. v. Scott (5th Cir. 1963), 322 F.2d 11, 15-16, cert. den. 377 U.S. 905, 84 S.Ct. 1164, 12 L.Ed.2d 176, and Steinberg v. Indemnity Ins. Co. of North America (5th Cir. 1966), 364 F. 2d 266, 268, with Movible Offshore Co. v. Ousley, supra.
. (1938), 304 U.S. 64, 58 S.Ct. 817, 82 L. Ed. 1188.
. 1965 Ill.Rev.Stat. Ch. 110, § 68.1(7).
. (6th Cir. 1964), 334 F.2d 7.
. (7th Cir. 1960), 286 F.2d 238, 243.
. (1965), 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8.
. (1945), 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079.
. Supra, footnote 12.
. (1966), 75 Ill.App.2d 365, 221 N.E.2d 89, 97.
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 is an appeal from an order in bankruptcy in the usual “turn ‘ over” proceeding. The respondents were the three officers and directors of the bankrupt company and its only shareholders; they had full charge of its affairs. The case against them was made from the corporate books and for its validity presupposed that between January 1, 1939, and October 28th, 1939, the bankrupt had not sold below cost; if this was true, the respondents had not accounted for more than $10,000 of mcr-cliandise. For that reason sales below cost were the only issue litigated; and the respondents now argue, as they did in the District Court and before the referee, that they proved that their sales had been enough below cost to account for the deficiency. The trustee conceded that he could not from the books prove that issue, because they did not show the yardage which had gone into the garments made and sold. For that reason he relied (1) upon the presumption of § 21 (Z), 11 U.S.C.A. § 44(1) of the Bankruptcy Act; (2) an admission of Nathan Tanzer, the president of the bankrupt upon his examination under § 21, sub. a, that he had never sold below cost; (3) a document obtained by the trustee’s accountant from Tanzer of the bankrupt’s operations which showed that it had sold at a profit of about 20%. The only one of the respondents to take the stand was Nathan Tanzer who swore that he had sold at a loss, and who called in confirmation three supposedly disinterested merchants in the same goods — men’s and boys’ clothing — to swear to the yardage necessary to make up the number of garments sold. Their estimates were not in accord with each other and did not satisfy the referee. A fourth merchant called by the trustee was discredited as he told a different story from what he had told to the trustee in preparation for trial. The referee in a careful report found that the bankrupt had not sold below cost and charged the respondents with the deficiency.
It would be absurd to say that on any theory the respondents have shown that the referee’s findings were “clearly erroneous”; indeed they are clearly right if the respondents had the burden of proof. The case is of the common sort; bankrupts making away with their assets on the verge of bankruptcy; we should hardly have thought that it deserved an opinion except for the fact that § 21, sub. I, is involved. That section declares that when in a proceeding like this the bankrupt’s books do not disclose the “cost to him of * * * property sold by him during any period under consideration, it shall be presumed, until the contrary shall appear, that such property was sold at a price not less than the cost thereof to him.” First, we hold that the word, “bankrupt,” as here used, includes individuals who, like the respondents, have complete control of a corporate bankrupt’s business. Second, we hold that the phrase “presumed until the contrary shall appear” is more than the usual presumption whose office is over as soon as the other party has put in substantial evidence; that it imposed upon the bankrupt the burden of proving that its sales were below cost. Even so, the respondents deny that it imposed that burden here because they say that their books contained the cost of all the raw materials which went into the garments which they sold, and all amounts paid for labor. We think that this was not enough; when the section speaks of the books as not disclosing “the cost to him of such property sold by him,” it means that from them it shall be possible to learn the cost of the property actually sold. The bankrupt at bar did not sell the materials which it bought or the labor it paid for; it sold garments made out of those materials by that labor. The section means that the books must contain enough to show what the garments themselves cost and it was necessary for that that they should show how much material and how much labor went into each garment. There is indeed no penalty for not keeping such books, but if a bankrupt fails to keep them he must prove that he sold, below cost and how much below cost.
Since the respondents denied possession at any time of the property in question, they do not have the benefit of the doctrine of Danish v. Sofranski, 2 Cir., 93 F.2d 424.
Order 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.
TIMBERS, Circuit Judge:
This declaratory judgment action arises out of a dispute between four liability insurance companies as to which of them provided coverage in a wrongful death and survival action commenced by the estate of an automobile driver who was killed in a collision with a truck driver who was under a lease agreement with a common carrier.
The district court, David O. Belew, Jr., District Judge, in an amended judgment entered March 26, 1987 in the Northern District of Texas, held that Shelter General Insurance Company (“Shelter”), as the primary insurer of the common carrier, and Carolina Casualty Insurance Company (“Carolina”), as the primary insurer of the leased truck driver in the accident, were jointly and equally liable. The court held that the other two insurance companies, Northland Insurance Company (“North-land”) and Empire Indemnity Insurance Company (“Empire”), were not liable, although Empire had a duty to defend one of the parties sued.
On appeal, Shelter claims that it is entitled to indemnification from Carolina. Both Shelter and Carolina claim that the other two insurance companies also are liable. Empire claims that it is entitled to attorney’s fees for defending one of the parties sued since the court held only Carolina and Shelter were liable for coverage.
We hold that the district court’s findings as to liability were not clearly erroneous and that the court correctly applied controlling law in determining Shelter’s liability. Based on Empire’s duty to defend in the underlying action, we also hold that the court did not abuse its discretion in denying attorney’s fees to Empire for complying with this duty.
I.
We shall summarize only those facts and prior proceedings believed necessary to an understanding of the issues raised on ap-péal.
The dispute here arose out of a vehicular accident on April 5, 1983 involving Ira Moore and Jerry Nelson, resulting in the death of Moore. At the time of the accident, Nelson was hauling coal in a tractor-trailer that he owned.
Until 1982, Nelson leased his vehicle and his driving services to Curtis Kelly and drove under Kelly's Interstate Commerce Commission (“ICC”) authority. The terms of their lease agreement required Nelson to provide his own insurance and to maintain the upkeep of his truck. Kelly is a sole proprietor doing business under various trade names, including C. Kelly Trucking. Kelly employed drivers to drive the trucks he owned and leased additional trucks from owner-operators such as Nelson. The leased drivers owned and maintained their own trucks, supplied their own fuel,, and furnished their own insurance. No taxes were withheld from their payments. They were paid differently from Kelly’s employee drivers.
In 1982, Willis Reasnor and Delbert Ra-ley under the name R & R Trucking obtained authority from the ICC and the Oklahoma Corporation Commission (“OCC”) to haul coal from fixed points. Reasnor and Raley each contributed 50% of the fee and were 50% owners of the authority. In 1982, Reasnor obtained contracts to haul coal from Oklahoma to Texas. When Reasnor realized that he did not have enough vehicles of his own to perform the contract, he contacted Raley and Kelly to find out if their drivers were interested in the job. Reasnor, Raley and Kelly had cooperated in the past, borrowing each other’s drivers, to keep their drivers fully occupied and to permit them to bid on larger jobs.
Reasnor, Raley and Kelly signed an agreement dated December 11, 1982 which provided that Kelly’s leased drivers would receive one-third of the work from Reas-nor’s coal hauling contract. Kelly was not paid for acting as spokesman for the leased drivers. The agreement did not provide for compensation or sharing of revenue between the parties.
Nelson, who was unaware of the December 11 agreement, was one of Kelly’s leased drivers who signed a lease to haul coal for Reasnor. Under the lease agreement, Nelson was required to maintain his own vehicle. The relationship between Nelson and Reasnor was similar to that between Nelson and Kelly. Between January 1983 and May 1983, Nelson hauled for Reasnor under the R & R authority. During this period, Nelson dealt solely with Reasnor. Raley was not involved. Nelson did not haul for Kelly after he began hauling for Reasnor. Some payments made by Reasnor to Nelson were sent to Kelly, but only for the purpose of reimbursing Kelly for prior loans he had made to Nelson. At the time of the April 5, 1983 vehicular accident with Moore, Nelson was hauling coal for Reasnor under the R & R authority.
After the accident, Moore’s estate commenced a wrongful death and survival action, alleging that Nelson was negligent and that Reasnor (individually or d/b/a R & R Trucking), Raley (individually or d/b/a R & R Trucking), and Kelly (individually or d/b/a C. Kelly Trucking) were derivatively liable. Four insurance policies in effect on the day of the accident were involved. Some of those policies contained ICC endorsements. ICC rules and regulations re-. quire that all policies issued to common carriers contain an endorsement stating that within the limits of the provided coverage, “no condition, provision, stipulation, or limitation contained in the policy ... shall relieve the Company from liability”. ICC form B.M.C. 90.
Nelson had a Carolina liability insurance policy with a $500,000 combined single limit. This policy named Nelson as the insured, expressly listed the tractor-trailer Nelson was driving at the time of the accident as a covered vehicle, and contained an ICC endorsement. C. Kelly Trucking had a Northland policy listing the named insured, C. Kelly Trucking, as an individual and containing an ICC endorsement. Empire had issued a policy to “Willis Reasnor and Delbert Raley d/b/a R & R Trucking” as the named insured. The Empire policy contained an ICC endorsement and provided coverage to the named insured or to anyone using an automobile specifically described in the policy or owned by the insured. Raley owned the vehicles described in the policy. Shelter had issued four policies to “Willis Reasnor d/b/a R & R Trucking”. These four policies were essentially the same, providing coverage for the insured, a permissive user, or anyone vicariously liable for the insured if the accident involved a described automobile.
Empire commenced the instant declaratory judgment action in the United States District Court for the Northern District of Texas, grounded on diversity jurisdiction, for a determination of which insurance company provided coverage and had a duty to defend the various defendants in the wrongful death and survival action. Prior to the court’s decision, the underlying Moore action was settled for a total of $500,000, to be apportioned in accordance with the court’s determination in the instant action.
In a memorandum opinion filed March 20, 1987, the court applied Texas choice of law rules and held that Oklahoma law controlled. The court made the following determinations. Carolina was liable for a judgment against Nelson and was liable for a judgment against Reasnor to the extent of Reasnor’s vicarious liability. Shelter was liable for a judgment against Nelson and Reasnor by virtue of its policy’s endorsement. Empire was not liable since Nelson was not an insured under its policy; Nelson was neither a named insured nor driving a covered vehicle. As a result of Nelson’s failure to qualify as an insured under the Empire policy, that policy’s ICC endorsement did not attach. Although Empire had no liability for coverage in relation to the accident, under Oklahoma law it did have a duty to defend since the complaint alleged that Nelson was operating under R & R’s ICC authority. The court determined that Northland was not liable since Nelson was not operating under Kelly’s lease or authority at the time of the accident.
In short, the court entered an amended judgment holding that Carolina afforded primary coverage to Nelson; Carolina and Shelter both provided coverage to Reasnor; Shelter’s ICC endorsement rendered it the primary insurer of Reasnor; Carolina and Shelter were jointly or equally liable on the settlement up to their policy limits; and, although Empire did not provide coverage, it had a duty to defend Reasnor in the Moore action.
On appeal, none of the insurance companies disputes that Oklahoma law controls. The appeal raises a number of alleged errors in apportioning damages. Shelter claims that, since its insured was derivatively liable, it is entitled to indemnification from Carolina as the insurer of the actual tortfeasor. Both Shelter and Carolina claim that Empire is liable for coverage to Reasnor either because Empire’s policy does not differ from Shelter’s or because the policy covers R & R Trucking and Reasnor and Raley are estopped from denying their partnership. Empire disputes these claims and asserts that it is entitled to attorney’s fees for defending Reasnor in the wrongful death and survival action. Empire asserts that it was forced to defend Reasnor when Carolina and Shelter refused to do so, and the court found Carolina and Shelter solely liable for any judgment against Reasnor. Carolina claims that Northland is liable for coverage to Kelly due to Kelly’s alleged failure to terminate his lease with Nelson in compliance with ICC regulations.
Emerging from this morass of contentions and counter-contentions, we believe that the law provides a clear and just solution.
II.
We turn first to whether Carolina is primarily liable. If we find Carolina primarily liable, it would be solely liable since the underlying Moore action was settled for a sum within Carolina’s policy.
In Argonaut Insurance Co. v. National Indemnity Co., 435 F.2d 718, 720 (10th Cir.1971), the Tenth Circuit held that, when two insurance policies were implicated in a vehicular accident involving motor carriers and one policy contained a relevant ICC endorsement, the issuer of that policy was the primary insurer as a matter of law. The insurance company which provided coverage would be the primary insurer notwithstanding any “condition, provision, stipulation, or limitation contained in the policy.” Id. at 720. In Hagans v. Glens Falls Insurance Co., 465 F.2d 1249, 1252 (10th Cir.1972), the Tenth Circuit reaffirmed its Argonaut holding and explained that such a holding “was obviously grounded on public policy.” Relying on the rule established in Argonaut, the court held that an insurance company could not avoid its responsibility as the primary insurer by relying on a collateral lease agreement between the two named insureds in the policies issued by the two competing insurance companies. Id. The court also observed that, although the lease agreement required the lessee to obtain certain insurance, the agreement made no reference to primary coverage. In Ryder Truck Rental v. International Van & Storage, 550 F.Supp. 725, 728 (W.D.Okla.1981), an Oklahoma federal district court, citing both Argonaut and Hagans, held that, unless the lease agreement expressly provided for indemnification, none would be read into the agreement. The court expressly stated that a lease agreement provision requiring a party to furnish liability insurance does not give rise to rights of indemnification. Id.
Shelter’s argument that it is entitled to indemnification fails under the Argonaut line of cases. While as a general rule one who is constructively liable to an injured party is entitled to indemnification under Oklahoma law, none of the cases cited by Shelter involved a common carrier. Argonaut and its progeny enunciate a public policy determination that an insurance policy containing an ICC endorsement provides primary coverage. Although the lease agreement between Nelson and Raley required Nelson to obtain insurance, such a provision did not give Shelter the right to indemnification. The lease agreement did not contain an express written agreement to indemnify.
Shelter attempts to distinguish these cases by asserting that in the instant case two policies contained an ICC endorsement. Although the Argonaut line of cases involved only one policy containing an ICC endorsement, the court in the instant case found that Nelson was driving under Reas-nor’s ICC authority — a finding we hold was not clearly erroneous. Based on this finding, the court concluded that the Shelter policy, which provided Reasnor with an ICC endorsement, made Shelter the primary insurer. It comports with common sense to hold that, when more than one policy contains an ICC endorsement, the insurance company providing coverage to the person or company whose ICC authority was implicated is the primary insurer. Language in the Argonaut cases indicates that this was the courts’ intent.
Accordingly, we affirm as not clearly erroneous the district court’s holding that Carolina as the primary insurer of Nelson, and Shelter as the primary insurer of Reas-nor, are jointly and equally liable.
III.
We turn next to the question whether Empire’s policy also provided coverage to Reasnor. Shelter argues that Empire’s policy is not distinguishable from its own policy — Empire’s policy also names Reas-nor as an insured and contains an ICC endorsement covering Reasnor. Carolina argues that Reasnor and Raley are es-topped from claiming that they did not have a partnership by representing to the ICC that they were partners in order to obtain the certificates and to Empire to obtain insurance. According to Carolina, Nelson relied on the permit allegedly obtained by the “partnership”.
Both Shelter and Carolina apparently ignored the basis of the court’s finding that Empire’s policy did not provide coverage. The Empire policy expressly limited its coverage to the use of covered vehicles as defined in the policy. The court found that the vehicle involved in the accident did not qualify. That finding is not challenged. We hold that it is not clearly erroneous. Since the vehicle was not a covered vehicle, Nelson did not qualify as an insured under the policy. Since the policy did not attach, therefore, neither did the ICC endorsement, thus making the issue of partnership irrelevant.
IV.
We turn next to Carolina’s claim that the court erred in not holding Kelly and consequently his insurer Northland liable for failure to comply with ICC lease termination requirements. Carolina asserts that at the time of the accident Nelson retained Kelly’s lease and continued to post Kelly’s name and ICC certificate numbers on Nelson’s trailer, in violation of ICC regulations.
Where a leased driver is operating under the permit of a licensed carrier, the driver is considered a “statutory employee” of the carrier, who is vicariously liable under ICC regulations. ICC regulations require display of the carrier’s insignia and permit number. Upon termination of a lease, ICC regulations provide that “the authorized carrier shall remove all identification showing it as the operating carrier before giving up possession of the equipment”. 49 C.F.R. 1057.11 (1986).
There is precedent holding that, when a leased driver is making a trip during the term of but outside the scope of his employment and continues to display the required ICC insignia and permit number, that driver continues to be a statutory employee of the carrier during the period he displays the authority, even though he is not actually operating under that authority at the time of the collision. This sometimes is referred to as the “logo liability” rule. E.g., Grinnell Mutual Reinsurance Co. v. Empire Fire & Marine Insurance Co., 722 F.2d 1400, 1404 (8th Cir.1983), cert. denied, 466 U.S. 951 (1984); Rodriguez v. Agers, 705 F.2d 1229, 1230 (10th Cir.1983). But see Wilcox v. Transamerican Freight Lines, Inc., 371 F.2d 403 (6th Cir.) (rejecting logo liability rule), cert. denied, 387 U.S. 931 (1967); Gudgel v. Southern Shippers, Inc., 387 F.2d 723 (7th Cir.1967) (same).
The district court here found that Kelly’s staff had marked the Nelson lease as “terminated” when Nelson began hauling for Reasnor and that Kelly had told Nelson to remove all placards showing Kelly’s authority from the doors of his vehicles and to remove Kelly’s lease from his vehicles.
The tractor which, unlike the trailer, operated under its own power, had R & R’s insignia on it. The court held that Nelson was operating under the R & R insignia, not Kelly’s insignia.
In reviewing this finding, we must keep in mind that, when there are two permissible views of the evidence, the factfinder’s choice between them cannot be clearly erroneous. Anderson v. City of Bessemer City, 470 U.S. 564, 574 (1985). Even if we were to hold that Nelson had not removed Kelly’s insignia from the trailer, we are satisfied that the court was not clearly erroneous in finding that Nelson was driving under the R & R authority. Accordingly, we need not determine whether the logo liability rule applies if the insignia in dispute appeared only on the trailer and not on the tractor.
V.
This brings us to a claim which warrants only brief discussion — Empire’s claim for attorney’s fees. It is well established that a district court has discretion to award attorney’s fees in a declaratory judgment action. Empire does not challenge the court’s finding that it had a duty to defend, nor does it claim that the court abused its discretion in failing to award fees. Rather, Empire asserts that the abuse of discretion standard applies to the determination of whether the fees awarded were reasonable, not whether fees should have been awarded at all.
We find this argument specious. Relevant precedent states that an award of attorney’s fees is within the discretion of the district court. Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 716-17 (5th Cir.1974). Since Empire made no allegation of abuse of discretion and, indeed, the court found that Empire was required to defend Reasnor, the court did not err in denying attorney’s fees.
VI.
To summarize:
We affirm the judgment of the district court holding Shelter and Carolina jointly and equally liable for the settlement of the underlying wrongful death and survival action.
We hold that under controlling Oklahoma law Shelter provided primary coverage to the common carrier pursuant to ICC regulations. When more than one policy with an ICC endorsement is involved, we hold that the issuer of the policy providing coverage to the common carrier whose ICC authority is implicated is the primary insurer.
We also hold that the court was not clearly erroneous in finding that Carolina provided primary coverage to the common carrier’s leased driver who actually was involved in the accident, and that North-land was not liable.
The court was not clearly erroneous in determining that Empire’s ICC endorsement did not attach since the policy itself did not attach. Since Empire had a duty to defend one of the defendants in the underlying action, however, the court did not abuse its discretion in denying attorney’s fees to Empire.
AFFIRMED.
. Empire is incorporated and has its principal place of business in Oklahoma. Carolina is incorporated and has its principal place of business in Florida. Shelter is incorporated and has its principal place of business in Missouri. Northland is incorporated and has its principal place of business in Minnesota.
. The court indicated that perhaps Nelson would have been covered by the endorsement if the Empire policy contained language defining the insured as "any person who would not otherwise be covered under the underlying policy except by provisions of a motor vehicle financial responsibility law.” As the court found, however, the Empire policy contained no such language.
. The court did not reach the partnership issue in determining whether Empire provided coverage because it found that the policy did not cover the vehicle involved. The court specifically found, however, that no partnership existed for the purpose of determining coverage of Ra-ley under the Shelter policies issued in Reas-nor’s name. Moreover, the court found that Nelson did not appear to have relied on the existence of the partnership. Nelson dealt only with Reasnor. He apparently was unaware of the agreement between Reasnor, Raley and Kelly.
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.
VAN GRAAFEILAND, Circuit Judge:
On June 19, 1986, Michael Ewing (“Michael”) brought the instant action against Citytrust alone in the United States District Court for the Southern District of New York, alleging that the Bank breached its fiduciary duty to him in the administration of two estates and three trusts. The estates in question were those of Michael’s grandmother, Myra, and his grandfather, George. Citytrust and Michael’s father, Alexander, were co-executors of both estates. The trusts in question were a testamentary trust created by Myra, of which Citytrust was the sole trustee, a testamentary trust created by George, of which Citytrust was co-trustee with Alexander, and an inter vivos trust created by George, of which Citytrust was the sole trustee.
When Citytrust moved to join Alexander’s Estate as an additional defendant, Alvin Ruml and Lynda Ewing, as Executors of the Estate of Alexander Ewing, were included as defendants pursuant to stipulation. The action thereafter was transferred to the United States District Court for the District of Connecticut. Michael now appeals from Chief Judge Daly’s dismissal of Michael’s claims involving Myra’s estate and trust and George’s inter vivos trust. Citytrust cross-appeals from an $81,769.58 judgment against it on Michael’s claim involving the George Ewing testamentary trust. Although Michael’s notice of appeal is general in scope, the relief he seeks is limited to his claim against Citytrust. Alvin Ruml and Lynda Ewing, as Executors of the Estate of Alexander Ewing, have not appeared in this appeal. The sole issue before us then is the conduct of the Bank.
Myra died on January 22, 1967. George died on June 3, 1967, leaving an only son, Alexander. Myra’s trust named Alexander as the income beneficiary, with the remainder upon his death going to Alexander’s issue [Michael] if he survived. Citytrust, as co-executor with Alexander and as sole trustee, was given the power “[t]o invest and reinvest without restriction or limitation” and to hold and retain stocks, bonds or other securities “whether or not the same shall be an investment of the character deemed to be legal and proper for Trust investments under the laws of the State of Connecticut.” Myra’s estate was made up largely of common stocks. Because they produced only modest income, the Bank sold them and invested the proceeds in tax-exempt bonds which produced substantially higher income. The original trust corpus consisted of approximately $400,000 of these bonds.
George Ewing’s inter vivos trust also consisted largely of common stocks. These stocks, having an approximate value of $1.5 million, were sold, and the proceeds invested mainly in bonds providing a higher rate of return. The income from this trust and so much of the principal “as may in the judgment of the Trustee be desirable to or for the benefit of [Alexander or Michael]” was to be paid to them “in such amounts and proportions as my said corporate Trustee in its sole and absolute discretion shall deem advisable from time to time without regard to equality of distribution.” The Trustee also was empowered “to invest and reinvest in any property or security” and “to make, retain or change any investment without liability on account thereof.”
George Ewing’s will named Citytrust and Alexander as co-executors and as co-trustees of a trust, the corpus of which was approximately $283,497. However, Alexander delegated his responsibilities as co-trustee to Alvin Ruml, a New York City stockbroker, and Ruml thereafter offered his investment counsel and advice to City-trust. The will empowered the corporate Trustee to pay so much of the net income to Alexander and Michael “in such amounts and proportions as my said corporate Trustee in its sole and absolute discretion shall deem advisable from time to time without regard to equality of distribution.” It also authorized the corporate Trustee “to invade the principal for any reason in its discretion for the benefit of [Alexander or Michael]”.
Michael argued in the district court that the defendants breached their fiduciary duties to him by (1) engaging in an investment policy favoring income production over principal appreciation; (2) delegating investment strategy decisions to Alvin Ruml; and (3) distributing $111,000, the balance remaining in George’s testamentary trust, to Alexander without Michael’s knowledge or consent. Both sides moved for summary judgment. The district court granted summary judgment in favor of the defendants on the first two claims and in favor of Michael and against Citytrust on the third.
Before we can address the merits of the two appeals, we must determine whether the case comes to us in proper posture for review. The district court’s disposition of the summary judgment motions is entitled “RULING ON CROSS-MOTIONS FOR SUMMARY JUDGMENT.” The decretal portion of this “RULING” provides that “partial summary judgment shall enter for the plaintiff only on the question of liability with regard to [the invasion of principal in the George Ewing testamentary trust].” With regard to Michael’s remaining claims, the RULING provides that “partial summary judgment shall enter in favor of defendants Citytrust and the Estate of Alexander Ewing.”
Citytrust moved for reconsideration of the portion of the district court’s ruling that was in favor of Michael, and Michael moved for entry of final judgment and damages. On January 25,1989, the district court denied Citytrust’s motion for reconsideration and granted Michael’s “application for damages ... to the extent of $55,-500 plus prejudgment interest....” The order stated in conclusion that “upon the entry of final judgment, this matter is hereby closed of record.” The judgment, entered on February 10,1989, referred simply to the court’s January 25th “Ruling” on plaintiff’s motion for final judgment and then stated, it is “ORDERED and ADJU[D]GED that judgment be and is hereby entered for the plaintiff in the amount of $81,769.58.” This abbreviated judgment was signed and entered by the district court clerk.
Where a separate judgment thus is entered as required by Fed.R.Civ.P. 58, the preferred procedure is to make it self-sufficient and complete. 11 C. Wright and A. Miller, Federal Practice and Procedure § 2785 at 15-16; Reytblatt v. Denton, 812 F.2d 1042, 1043-44 (7th Cir.1987). If this is done, it is readily apparent to all what relief has been granted and what has been denied and the date when this has occurred for purposes of appeal. See Cardillo v. United States, 767 F.2d 33 (2d Cir.1985). However, where, as here, the appeals are timely and the district court’s disposition of the case is undisputed, we may accept the appeal and interpret the judgment in the light of the district court’s opinions, findings and conclusions of law. See Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293, 295, 63 S.Ct. 1070, 1071, 87 L.Ed. 1407 (1943); National Railroad Passenger Corp. v. City of New York, 882 F.2d 710, 713 (2d Cir.1989); Security Mutual Casualty Co. v. Century Casualty Co., 621 F.2d 1062, 1066 (10th Cir.1980). Any other disposition would result in a spinning of wheels for no practical purpose. See Bankers Trust Co. v. Mollis, 435 U.S. 381, 385, 98 S.Ct. 1117, 1120, 55 L.Ed.2d 357 (1978). Upon dismissal by this Court, the district court simply would enter a new judgment incorporating all the dispositive provisions of its summary judgment order, and review would be sought once again. Id. Accordingly, we treat the district court’s disposition of the issues before it as a final dismissal of all claims made by Michael against the defendants, except that Michael was awarded judgment against Citytrust alone in the amount of $81,769.58 because of the distribution of principal to Alexander Ewing from the George Ewing testamentary trust. We affirm the district court’s dismissal of the several claims that it found to be without basis. We vacate the $81,769.58 award against Citytrust and remand for further proceedings with respect to this claim.
THE DISMISSED CLAIMS
In dismissing Michael Ewing’s claims based on alleged improper investment policies, the district court correctly noted that the issue of the defendants’ breach of fiduciary duty was a matter of state law. Erie R.R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Where, as here, the interpretation of state law is made by a district judge sitting in that state, it is entitled to great weight and should not be reversed unless it is clearly wrong. Lomartira v. American Automobile Ins. Co., 371 F.2d 550, 554 (2d Cir.1967). Michael has not convinced this Court that the district court’s reasoning is so flawed as to fail under this standard. Quite to the contrary, the lower court’s decision on this issue is well reasoned and correct.
Both in its capacity as executor and trustee, Citytrust owed Michael a fiduciary obligation. See Satti v. Rago, 186 Conn. 360, 367, 441 A.2d 615 (1982); O’Connor v. Chiascione, 130 Conn. 304, 307-08, 33 A.2d 336 (1943); 45 Conn.Gen.Stat.Ann. § 45-100d(a) (West Supp.1989). Connecticut law generally requires that a fiduciary such as Citytrust act with the care of a prudent investor in managing estate assets. United States Trust Co. v. Bohart, 197 Conn. 34, 48, 495 A.2d 1034 (1985); see also Jackson v. Conland, 178 Conn. 52, 55 & n. 3, 420 A.2d 898 (1979); Conn.Gen.Stat.Ann. § 45-88 (West Supp.1989). Language in a will or trust agreement, however, may excuse such a fiduciary from the strictures of this rule and allow it a broader range of investment discretion than the rule otherwise would permit. United States Trust Co. v. Bohart, supra, 197 Conn. at 48, 495 A.2d 1034; see also Jackson v. Conland, supra, 178 Conn, at 55 & n. 3, 420 A.2d 898 (1979); Reed v. Reed, 80 Conn. 401, 409-10, 68 A. 849 (1908); Conn.Gen.Stat.Ann. § 45-88 (West Supp.1989). In such circumstances, courts may hold the fiduciary liable only where it abuses that discretion. United States Trust Co. v. Bohart, supra, 197 Conn. at 48, 495 A.2d 1034. Courts will not find such abuse unless the fiduciary has acted dishonestly or with improper motive, has failed “to use his judgment,” or has “acted beyond the bounds of a reasonable judgment.” Restatement (Second) of Trusts § 187, comment e (1959); see also Gimbel v. Bernard F. & Alva B. Gimbel Foundation, Inc., 166 Conn. 21, 37, 347 A.2d 81 (1974).
Michael has not shown that Citytrust abused its discretion under any of these criteria. Although Michael argues that Citytrust should have followed a different investment strategy to better serve his interests as the remainderman of various trust assets, the district court correctly held that George’s will did not require it to do so. Moreover, Michael has made no showing that Citytrust acted dishonestly, in bad faith, with improper motives, or in a grossly negligent manner in following a conservative investment policy emphasizing income over capital gains. We accordingly find, as did the court below, that Citytrust did not abuse its discretion in following the investment strategy of which Michael now complains.
The district court correctly rejected Michael’s argument that Citytrust breached its fiduciary duty by delegating to Alvin Ruml its authority to control the investment policy of the Ewing trusts. The court found that, although Ruml and Citytrust had a relationship and a variety of contacts, their interaction did not indicate a delegation of trust responsibilities. Michael does not seriously dispute that finding in this Court, and we see nothing in the record that warrants a contrary conclusion. Citytrust, as trustee, was entitled to consult advisors in making investment decisions. See Restatement (Second) of Trusts § 171 comment f (1959); McClure v. Middletown Trust Co., 95 Conn. 148, 153-54, 110 A. 838 (1920). Its dealings with Ruml were nothing more than such consultation.
THE MONETARY AWARD
As above stated, the George Ewing testamentary trust authorized Citytrust as trustee “to invade the principal for any reason in its discretion for the benefit of [Alexander] or [Michael].” The district court construed this clause to mean that principal could be invaded only for the personal needs of Alexander and Michael:
The primary intent of the settlor in this instance appears to have been to provide the two income beneficiaries with a fund upon which they could draw income and invade principal as the need arose.
Proceeding from this premise, the district court held that payment of principal to Alexander was improper where Alexander’s admitted intent was to use the money to help him provide support for his stepchildren. This interpretation of the trust provisions gave to the word “benefit” a meaning that is contrary to the overwhelming weight of legal authority.
In Ferrigino v. Keasbey, 93 Conn. 445, 106 A. 445 (1919), the Connecticut Supreme Court, contrasting the words “support” and “benefit”, as used in Conn.Gen.Stat. § 5275, now in substance section 46b-37, said, quoting Webster’s New International Dictionary, that “the word ‘benefit’ is defined to be ‘whatever promotes prosperity and personal happiness; advantage; profit; good.’ ” Id. at 451.
This definition accords with that given the word “benefit” in most other states; i.e., that it is more comprehensive than the word “support” and means anything that works to the advantage, gain or happiness of the recipient. See, e.g., In re Emmons Will, 165 Misc. 192, 195, 300 N.Y.S. 580 (1937); In re Rachlin’s Will, 133 N.Y.S.2d 151 (1954); Matter of Estate of Hixon, 715 P.2d 1087, 1090 (Okla.1985); Matter of Conrad, 97 Ill.App.3d 202, 203, 52 Ill.Dec. 675, 422 N.E.2d 884 (1981); Bird v. Newcomb, 170 Va. 208, 216, 196 S.E. 605 (1938); Matter of Estate of Krause, 173 Wash. 1, 7-8, 21 P.2d 268 (1933); Winthrop Co. v. Clinton, 196 Pa. 472, 474, 46 A. 435 (1900). See also Black’s Law Dictionary 200 (4th ed. 1968).
Indeed the word “benefit” is sufficiently broad that a bequest of all the property of a testator to his wife “for her own proper use and benefit, forever” has been construed to convey an estate in fee simple absolute. Dei Cas v. Mayfield, 199 Conn. 569, 573, 508 A.2d 435 (1986). “A gift to a person for his benefit means an absolute gift, and excludes the idea of a qualified or limited estate.” Crain v. Wright, 114 N.Y. 307, 310, 21 N.E. 401 (1889). See also Warren v. Webb, 68 Me. 133, 135 (1878); Stowell v. Hastings, 59 Vt. 494, 497, 8 A. 738 (1887).
The word “benefit” has received a good deal of attention in tax litigation, where the extent of the power to invade principal on behalf of a trust beneficiary may determine who pays an estate tax. A power to invade principal that is limited by an ascertainable or measurable standard, i.e., for support, maintenance, health, etc., is held not to be a general power of appointment for tax purposes. See Henslee v. Union Planters National Bank & Trust Co., 335 U.S. 595, 597-600, 69 S.Ct. 290, 291-93, 93 L.Ed. 259 (1949); 26 U.S.C. § 2041(b)(1)(A). The eases uniformly hold, however, that a power to invade principal for the “benefit” of a trust beneficiary does not limit the beneficiary’s power of invasion. See De Oliveira v. United States, 767 F.2d 1344, 1348 (9th Cir.1985); Old Colony Trust Co. v. United States, 423 F.2d 601, 604 (1st Cir.1970); National Bank of Commerce v. United States, 369 F.Supp. 990, 992 (W.D.Tex.1973), aff'd, 491 F.2d 1271 (5th Cir.1974); Newton Trust Co. v. Comm’r, 160 F.2d 175, 179 (1st Cir.1947); Helvering v. Evans, 126 F.2d 270, 272 (3d Cir.), cert. denied, 317 U.S. 638, 63 S.Ct. 30, 87 L.Ed. 514 (1942). The following language from National Bank, supra, 369 F.Supp. at 992, is illustrative:
Considering plaintiffs contentions in order, the Court begins the search for an ascertainable standard with the trust instrument. It provides only one express standard, i.e. “benefit [of decedent’s wife].” This standard “is so loose that the trustee is in effect uncontrolled.”
(Quoting Old Colony Trust Co., supra, 423 F.2d at 604).
Alexander Ewing was spending about $5,000 per month to support his stepchildren, who were remaindermen under the George Ewing testamentary trust. Alexander requested that the $111,000 be withdrawn for him because it would take care of two years of these “expenses”. The Bank determined that it would be to Alexander’s benefit to take the money for this purpose out of the testamentary trust rather than the inter vivos one, because it would give Alexander about a $51,000 tax loss which he could use on liquidation. We hold that, under the foregoing circumstances, the challenged withdrawal was for Alexander’s benefit. The issue of Alexander’s “need” for the money therefore was irrelevant. Indeed, because Alexander was a multi-millionaire, having inherited more than $2 million from his parents alone, a limitation of trust payments to him based solely on need hardly could have been within the contemplation of his parents when they adopted the trust language permitting withdrawals for his “benefit”.
The $81,769.58 award is vacated, and the issue of liability on this claim is remanded to the district court for further consideration. Since the several “irregularities” that the district court found to support this award were premised upon its erroneous legal finding of unlawfulness, we believe that the district court should go back to square one with regard to these alleged irregularities and reconsider them on a full record interpreted in the light of proper legal principles. In other words, before determining whether Citytrust is liable on this claim, the district court should permit a full development of all the pertinent facts.
CONCLUSION
The district court’s dismissal of all of Michael Ewing’s claims against Citytrust except that of invasion of principal in the George Ewing testamentary trust is affirmed. The award of $81,769.58 against Citytrust in connection with the invasion of principal in the George Ewing testamentary trust is vacated, and this issue is remanded to the district court 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.
GOLDBERG, Circuit Judge:
The Equal Employment Opportunity Commission (“EEOC”) filed this action against General Dynamics in the Northern District of Texas. The EEOC’s complaint alleged that General Dynamics violated the Age Discrimination in Employment Act of 1967 (“ADEA”), 29 U.S.C. § 621 et seq. Specifically, the EEOC claimed that: (1) General Dynamics’ policy of rejecting job applicants for the stated reason that these applicants were “overqualified” had an unlawful disparate impact on older workers, and (2) General Dynamics subjected Mr. William Willis and other similarly situated applicants over the age of 40 to disparate treatment by applying the policy of not hiring “overqualified” applicants more strictly to older workers than to younger workers.
Before the commencement of trial, the district court sanctioned the EEOC for violating a discovery order by excluding the EEOC’s expert witness, Dr. Kearns, who intended to testify with regard to the EEOC’s disparate impact claim. The district court also sanctioned the EEOC for its failure to adequately respond to portions of General Dynamics’ interrogatories by excluding the EEOC’s evidence regarding the alleged disparate treatment of employees similarly situated to Willis. As a result of the trial court’s exclusions, the EEOC could ultimately present only Willis’ individual claim of discrimination to the jury. The jury found that General Dynamics did not discriminate against Willis.
On appeal, the EEOC challenges the trial court’s exclusion of its expert witness and the exclusion of its evidence pertaining to the disparate treatment of persons similarly situated to Willis. The EEOC also appeals the district court’s admission of evidence regarding Willis’ prior employment discrimination lawsuits against other employers. In their cross appeal, General Dynamics requests that we award General Dynamics attorney’s fees.
We reverse the district court’s exclusion of the EEOC’s expert witness and the EEOC’s evidence regarding persons similarly situated to Willis, and remand for further proceedings.
I.
The exclusion of Dr. Kearns’ expert testimony
On November 13, 1991, with trial scheduled to begin on December 16, 1991, General Dynamics moved to exclude the EEOC’s expert witness Dr. Kearns because at the time of General Dynamics’ deposition of Dr. Kearns, on September 30, 1991, Dr. Kearns could not yet provide General Dynamics with any of his conclusions. The district court denied General Dynamics’ motion, but issued an order giving the EEOC five days (until November 18) to file an instrument with the court describing everything done by Dr. Kearns in preparation for the coming trial. The order also required that the EEOC provide General Dynamics with a copy of “each tangible thing” on which Dr. Kearns had relied in forming his opinions.
In an effort to comply with the court’s order, the EEOC produced an eighty-two page document for the court regarding Dr. Kearns’ preparations and expected testimony. The EEOC also provided General Dynamics with computer printouts of the entire data base constructed by Dr. Kearns (except for documents that the EEOC had previously obtained from General Dynamics itself), all the computer programs Dr. Kearns had used, and the analyses he performed on the data.
On November 27, 1991, at a pretrial conference, General Dynamics complained that the EEOC should have supplied Dr. Kearns’ data base and computer programs in the form of a machine-readable computer tape, rather than in the form of a computer printout. General Dynamics maintained that without the computer tapes it could not sort out the information the EEOC provided it. According to General Dynamics, the computer tapes were essential to make the provided information intelligible.
General Dynamics also complained that not all the documents used by Dr. Kearns were supplied to General Dynamics. The EEOC responded that the- only documents not given to General Dynamics were copies of documents the EEOC had received from General Dynamics itself; and that instead of recopying and returning General Dynamics’ records to General Dynamics, Dr. Kearns specified which information he used and described where in General Dynamics’ records that information could be found.
The district judge ruled from the bench that the EEOC failed to comply with the court’s November 13 discovery order, and had not diligently developed its expert testimony. As a sanction for the EEOC’s violation of the court’s order, the district court excluded the EEOC’s expert witness from testifying at trial.
The central question on appeal is whether the district court erred in excluding Dr. Kearns’ expert testimony. We review a district court’s exclusion of expert testimony for abuse of discretion. See 1488, Inc. v. Philsec Inv. Corp., 939 F.2d 1281, 1288 (5th Cir.1991); Geiserman v. MacDonald, 893 F.2d 787, 790 (5th Cir.1990).
In reviewing district courts’ exercise of discretion in' excluding expert testimony, we have previously considered the following four factors: (1) the importance of the excluded testimony, (2) the explanation of the party for its failure to comply with the court’s order, (3) the potential prejudice that would arise from allowing the testimony, and (4) the availability of a continuance to cure such prejudice. See 1488, Inc. v. Philsec Inv. Corp., 939 F.2d at 1288 (applying these four factors in analyzing the exclusion' of an expert witness); Geiserman v. MacDonald, 893 F.2d at 791 (same). In both of the above cases we applied the four-factor analysis in reviewing the exclusion of an expert witness which resulted because of a party’s failure to designate the excluded expert within the time required by the pretrial order or the local rules. While in the instant case the expert witness was excluded as a result of a violation of a discovery order, the same four-factor analysis is appropriate. Applying this analysis to the case at hand, we find that the district court abused its discretion.
(1) The importance of Dr. Kearns’ testimony:
General Dynamics does not dispute the fact that Dr. Kearns’ expert testimony was absolutely indispensable to the EEOC’s disparate impact claim. Without Dr. Kearns’ testimony regarding the statistical evidence of discrimination, the EEOC simply could not make the argument that General Dynamics’ policies resulted in an unlawful disparate impact on older employees. See Watson v. Fort Worth Bank and Trust, 487 U.S. 977, 992, 108 S.Ct. 2777, 2788, 101 L.Ed.2d 827 (1988) (noting that statistics are the inevitable focus of disparate impact cases).
(2) The EEOC’s explanation:
The trial court’s November 13 discovery order, which the district court found the EEOC to have violated, required the EEOC to provide General Dynamics all “tangible” things relied on by Dr. Kearns. The EEOC provided General Dynamics with a computer printout of all things relied on by Dr. Kearns, except for materials already in the possession of General Dynamics. The EEOC did not produce the data in the form of a computer tape because it did not understand the court’s order to require it to do so. The parties quibble over whether the computer tapes ever existed in “tangible” form. We need not engage in a philosophical disquisition about the tangibility of the computer tapes; the arcane language of philosophy has rarely helped the resolution of legal disputes. Regardless of the metaphysical meaning of “tangible” in a world of computers, the EEOC’s explanation, i.e., their common sense understanding that providing the computer printouts to General Dynamics would satisfy the court’s order, was reasonable in light of the order’s generality and vagueness.
In an analogous context, the Supreme Court has held that a party cannot be held in contempt for violating a court order unless the order stated in specific and clear terms what acts were required or prohibited. International Longshoremen’s Ass’n v. Philadelphia Marine Trade Ass’n, 389 U.S. 64, 76, 88 S.Ct. 201, 208, 19 L.Ed.2d 236 (1967); see also In re Hailey, 621 F.2d 169, 172 (5th Cir.1980); Erhardt v. Prudential, Inc., 629 F.2d 843, 846 (2nd Cir.1980). The court order in the instant case did not specifically require the EEOC to produce the computer tapes, and we do not think that the production of the computer tapes was clearly implicit in the order.
(8) Prejudice from allowing Dr. Kearns’ testimony, and (4) the possibility of continuance:
If General Dynamics needed the computer tapes in order to effectively defend against the EEOC’s allegations, the absence of the tapes would have obviously prejudiced General Dynamics. However, any such prejudice could have been easily avoided. Upon the EEOC’s failure to produce the computer tapes the district court could have clarified its discovery order to specifically require the EEOC to produce the computer tapes, and granted the EEOC a short continuance in which to comply with the clarified order. General Dynamics does not argue that it would have suffered prejudice if the district court had granted a continuance allowing both the EEOC and,General Dynamics more time to prepare. In fact, General Dynamics did not oppose two earlier motions for a continuance made by the EEOC.
The above four-factor analysis, outlined by this court in 1488, Inc. v. Philsec Inv. Corp., reveals that Dr. Kearns’ testimony was crucial to the EEOC’s disparate impact claim, the EEOC’s failure to comply with the court’s order arose from a reasonable interpretation of that order, and whatever prejudice would have resulted from permitting Dr. Kearns to testify could have been cured by a continuance.
We have emphasized that continuance, not exclusion, is the preferred means of dealing with a party’s attempt to designate a witness out of order or offer new evidence. Bradley v. United States, 866 F.2d 120, 127 n. 11 (5th Cir.1989). In Bradley, we explained that “coupled with appropriate sanctions, a continuance will serve the court’s truth-seeking function while still allowing it to punish and deter conduct that is in violation of the rules.” Id. (emphasis added). Given the fact that the .district court’s sanction of total exclusion of Dr. Kearns’ expert testimony was tantamount to a dismissal of the EEOC’s disparate impact claim, the district court abused its discretion by failing to consider the possibility of lesser sanctions than the total exclusion of the EEOC’s expert witness. See Hornbuckle v. Arco Oil & Gas Co., 732 F.2d 1233, 1237 (5th Cir.) (a court may dismiss a claim only when lesser sanctions have proved futile), cert. denied 475 U.S. 1016, 106 S.Ct. 1198, 89 L.Ed.2d 312 (1985); Callip v. Harris County Child Welfare Dept., 757 F.2d 1513, 1521 (5th Cir.1985) (“we cannot affirm a dismissal unless the district court expressly considered alternative sanctions and determined that they would not be sufficient ... ”). See also Cox v. Am. Cast Iron Pipe, 784 F.2d 1546, 1556 (11th Cir.) (“On appeal we will find abuse of discretion if lesser sanctions will suffice”) cert. denied 479 U.S. 883, 107 S.Ct. 274, 93 L.Ed.2d 250 (1986). Imposing sanctions less severe than the complete dismissal of a claim is normally the appropriate mechanism for courts to use in disciplining delinquent lawyers.
General Dynamics correctly emphasizes that we should be “loath to interfere with the [district] court’s enforcement of [its] order.” 1488, Inc., 939 F.2d at 1289. However, absent bad faith, the sanction imposed by the district court, which amounted to a dismissal of the EEOC’s disparate impact claim, was unduly harsh. See e.g., McGowan v. Faulkner Concrete Pipe Co., 659 F.2d 554, 557 (5th Cir.1981) (reversing lower court’s dismissal for failure to timely file pretrial order where there was no willful contempt); Batson v. Neal Spelce Assoc., 765 F.2d 511, 514 (5th Cir.1985) (dismissal is “authorized only when the failure to comply with the court’s order results from willfulness or bad faith”). The EEOC’s actions complied with a reasonable interpretation of the court’s order and cannot be considered to be in bad faith.
General Dynamics urges this court to consider what it calls the EEOC’s “dilatory attitude.” The district court’s finding that the EEOC was “not diligent” in preparing its expert witness is not supported by any .specific findings of the court, and a review of the facts leading up to the court’s order and sanction does not reveal any “dilatory attitude” on the part of the EEOC. We hold that the trial court’s sanction of excluding the EEOC’s expert witness was an abuse of discretion.
II.
The exclusion of evidence of disparate treatment
In addition to its disparate impact claim, the EEOC also sought to prove that Willis, and five persons similarly situated to Willis, were subjected to disparate treatment.as a result of their age. On December 12, 1991, the district court granted General Dynamics’ motion to strike the EEOC’s class claim and exclude evidence regarding the persons similarly situated to Willis. The court excluded this evidence as a sanction for the EEOC’s failure to adequately respond to portions of General Dynamics’ interrogatories which asked the EEOC to identify the individual class members.
General Dynamics filed interrogatories on September 19, 1989, which inter alia asked the EEOC to identify by name the similarly situated persons subjected to disparate treatment. The EEOC responded to General Dynamics’ interrogatories by identifying the criteria for membership in the class, which included applicants over the age of forty who were rejected for being “overqualified.” The EEOC’s response also invoked Fed.R.Civ. Proc. 33(c), claiming that General Dynamics itself could identify the specific individuals who met the EEOC’s criteria because such information was in General Dynamics’ possession.
The EEOC’s reliance on Rule 33(c) was misplaced. Rule 33(c) provides:
Option to Produce Business Records. Where the answer to an interrogatory may be derived or ascertained from the business records of the party upon whom the interrogatory has been served or from an examination, audit, or inspection of such business records ... and the burden of deriving or ascertaining the answer is substantially the same for the party serving the interrogatory as for the party served, it is a sufficient answer to such an interrogatory to specify the records from which the answer may be derived or ascertained and to afford the party serving the interrogatory reasonable opportunity to examine, audit, or inspect such records.
A party served with an interrogatory may proceed under Rule 33(c) by providing its own business records for inspection by the serving party; however, Rule 33(c) does not authorize the party being served to tell the serving party that it must find the answer by a search of it own (i.e. the serving party’s) records. Thus, the EEOC erroneously invoked Rule 33(c) in response to General Dynamics’ interrogatory requests.
Regardless of the EEOC’s misplaced reliance on Rule 33(c), the EEOC could not have specifically identified the class members as requested by General Dynamics’ interrogatory until the EEOC obtained the personnel data records from General Dynamics. The EEOC did not receive these records from General Dynamics until July 19¡ 1991, nearly two years after General Dynamics’ interrogatory requesting the EEOC to identify the class members by name. Prior to obtaining these records, all the EEOC could do was inform General Dynamics of the parameters of the class.
Two months after filing the lawsuit, the EEOC informed General Dynamics that the class was composed of all individuals over the age of 40 who were rejected for the stated reason of being overqualified. General Dynamics cannot claim to have been prejudiced by the EEOC’s delay in providing the specific names of the class members because General Dynamics could have determined the members of the class by applying the EEOC’s parameters to its own employee data base. The criteria for inclusion in the class consisted of objective facts that General Dynamics has never denied possessing, and the EEOC never wavered from the original class parameters it announced two months after the filing of the lawsuit.
General Dynamics never filed a motion challenging the EEOC’s reliance on Rule 33(c), and the district court never ruled that the EEOC misapplied Rule 33(c) before imposing its sanction. The district court also refused to grant the EEOC’s unopposed motions for continuance which would have cured any prejudice the court thought General Dynamics suffered from the timing of the EEOC’s identification of the class members. Moreover, the district court did not make any findings of bad faith on the part of the EEOC. In a similar case, the Eleventh Circuit reversed the dismissal of a class claim as a discovery sanction, stating that such a dismissal “ought to be a last resort — ordered only if noneompliance with discovery orders is due to willful or bad faith disregard for those orders.” Cox, 784 F.2d at 1556. Because there was no bad faith on the part of the EEOC, and because the information necessary for the EEOC to identify the individual victims was in the hands of General Dynamics, the district court’s extreme sanction of dismissing the EEOC’s class claim was an abuse of discretion.
Sanctions are a usable weapon for judges to assure that litigants have a fair, legal, and expeditious trial. While we do not wish to disarm district judges, and we pause before treading upon the discretion of trial judges, we emphatically state that sanctions should not be used lightly, and should be used as a lethal weapon only under extreme circumstances. Our judicial wisdom commands us not to review supinely the imposition of sanctions, but to remain alert to the possibility of overkill. In applying this attitudinal concept we find that the conduct of the EEOC lawyers in the case before us does not rise to level of recalcitrance which would justify the imposition of the death penalty on the EEOC’s class action claim.
III.
The admission of evidence regarding Willis’ other employment discrimination lawsuits.
The trial court, over the EEOC’s objection, allowed General Dynamics to introduce evidence of prior discrimination charges filed by Willis against other employers. While these prior lawsuits were arguably not relevant, the district court did not err in permitting General Dynamics to raise Willis’ other lawsuits on cross-examination because the subject of Willis’ other lawsuits was opened by the EEOC’s own questioning. On direct examination, the EEOC’s lawyer elicited from Willis the fact that Willis had prevailed in another discrimination suit in the Texas Supreme Court. After the EEOC raised the issue of others lawsuits on direct examination, it was appropriate for the trial court to permit cross examination on the same subject.
IV.
General Dynamics’ Cross Appeal
On cross appeal, General Dynamics claims that it is entitled to recover attorney’s fees because the EEOC brought this claim in bad faith. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 258-259, 95 S.Ct. 1612, 1622, 44 L.Ed.2d 141 (1975). Trial courts enjoy wide discretion in deciding whether to award attorney’s fees and General Dynamics provided no evidence showing that the EEOC acted in bad faith. The district court’s refusal to grant General Dynamics attorney’s fees is affirmed.
CONCLUSION
For the foregoing reasons, the district court’s exclusion of the EEOC’s expert witness and evidence regarding persons similarly situated to Willis is REVERSED; the district court’s denial of General Dynamics’ claim for attorney’s fees is AFFIRMED, and this case is REMANDED for further proceedings consistent with this opinion.
. The EEOC filed the instant suit against General Dynamics on August 28, 1989. On November 1, 1989, the district court ordered discovery to close on February 11, 1991, and trial to begin in March 1991. On January 25, 1991, the court granted the parties' joint motion for extension of discovery to September 11, 1991, and postponement of the trial date to December 16, 1991. During the discovery period, the EEOC sought copies of General Dynamics' computerized personnel data records which the EEOC needed in order to develop proof of its disparate impact claim. The EEOC was not able to obtain the necessary records from General Dynamics until July 19, 1991. According to the EEOC, Dr. Kearns needed at least three months to analyze the data. General Dynamics does not argue that this was an unreasonable period of time For such a task. On August 6, 1991, two weeks after receiving General Dynamics' data, the EEOC filed an unopposed motion seeking to extend discovery and reschedule the trial. The district court denied the postponement of the trial but extended discovery by a month to October 11th, 1991. On October 7, the EEOC filed another unopposed motion for extension of expert discovery stating that Dr. Kearns would formulate his opinions by November 17, 1991. Despite the fact that General Dynamics did not oppose the motion, the EEOC's motion for continuance was denied by the district court. On November 13, 1991, General Dynamics' made a motion to exclude Dr. Kearns’ testimony which led to the court's discovery .order at issue.
. While we reverse the trial court's exclusion of the EEOC's expert witness, we express no opinion as to the merits of the EEOC's disparate impact claim.
. The same analysis applies to the district court’s exclusion of evidence regarding General Dynamics' rejection of applicants other than Willis which the EEOC sought to introduce for the purpose of proving that General Dynamics’ stated reason for not hiring Willis was a pretext. The court excluded this evidence as a sanction for the EEOC’s failure to identify the specific job openings for which the EEOC claimed older workers’ applications were denied on the stated basis of the workers’ “overqualification.” As with the list of the class members, General Dynamics was not prejudiced because General Dynamics was in possession of the information regarding which positions the company filled during the relevant time period. The district court refused to grant a continuance to remedy any possible prejudice from the EEOC’s failure to include the specific job openings despite the absence of bad faith on the part of the EEOC.
. In Wrenn v. Gould, the Sixth Circuit ruled that despite an employee’s past administrative actions against a total of 152 employers, "this court cannot find this particular appeal frivolous, unreasonable or unfounded simply because Wrenn is overly litigious.” 808 F.2d 493, 505 (6th Cir.1987).
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
PER CURIAM:
The above entitled actions were consolidated for trial in the District Court. The appeal in each case involved the same issues of fact and law. The appellants appeared in propria persona in the District Court and in these appeals and have filed consolidated briefs on appeal.
Demand for refunds of income taxes allegedly overpaid for the year 1971 were made by the appellants, Theep for $124.57 and Steinert for $932.48. The refunds were denied and the Internal Revenue Service (IRS) issued and served on each appellant a summons to produce all bank records, and all other records pertaining to the information used in the preparation of their tax returns and the computation of tax as disclosed in their income tax returns relating to the years 1969, 1970 and 1971. Each appellant presented himself before the appellee, Revenue Agent Ronald H. Eggleston, at the appointed time, December 7, 1972, and place, with his records but refused to disclose them to the Revenue Agent or to testify as to the said records, claiming the information was protected by the unreasonable search and seizure provisions of the Fourth Amendment and their right not to incriminate themselves under the Fifth Amendment to the United States Constitution. The Government then petitioned the District Court for enforcement of the summons whereupon the appellants moved to dismiss the petition for enforcement and petitioned the Court for an injunction prohibiting the appellee Eggleston from issuing any further “abusive” process. As part of their petitions for injunction, Theep asserted his 1971 tax was overpaid by $124.57 and appellant Steinert claimed overpayment of his 1971 tax in the sum of $932.48. It is to be noted that the 1969 deficiency was determined by the IRS from the information at hand before the running of the statute of limitations.
The Government, at the hearing on December 7, 1972, conceded that there might be specific answers or documents which were protected by the Constitution but objected to the blanket refusal by .the taxpayers to disclose their records.
In the circumstances the Government summons enforcement proceedings were not barred by Title 26, U.S.C. § 6213(a), because of the refusal of the IRS to make the 1971 refunds claimed by the taxpayers. The Government was investigating the appellant’s tax returns, not seeking to assess or collect unpaid taxes. No showing of probable cause is required for this investigation or enforcement of summonses. The summonses were properly issued for the purpose of determining whether any deficiency existed for the pertinent years.
Although the appellants could not avoid the summonses by a blanket claim of privilege under the Fourth and Fifth Amendments, neither is the Government entitled to have the records produced by the appellants turned over to it in toto for its examination. As stated by this Court in United States v. Bell, 448 F.2d 40, at 42 (1971), the law recognizes that a taxpayer must appear for questioning, and as to each question asked or document sought by the Government may decide whether to raise the Fifth Amendment privilege.
It does not appear that Agent Eggles-ton made the specific inquiries required to afford the appellants the opportunity to make appropriate objection to the production of separate documents or records sought by the Government for inspection.
The unlawful search and seizure provisions of the Fourth Amendment do not protect the taxpayer from an IRS summons in an investigation proceeding of the nature involved in the instant case once the Fifth Amendment is satisfied. Donaldson v. United States, 400 U.S. 517, at 522, 91 S.Ct. 534, 27 L.Ed. 2d 580 (1971); and United States v. Ahmanson, 415 F.2d 785, 787 (9th Cir. 1969).
The order of enforcement of the District Court is affirmed and the case is remanded for further proceedings to be conducted in accordance 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:
|
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 for the Court filed by Circuit Judge STEPHEN F. WILLIAMS.
STEPHEN F. WILLIAMS, Circuit Judge:
. The continual discovery of new coal mines and exhaustion of old ones leads to a very high turnover of employers in the coal industry. Because of this and the mobility of employees, labor and management in the industry have since 1950 worked out a means for assuring workers retirement' benefits without linking specific workers to specific employers. They have done this through national, multi-employer agreements between the United Mine Workers of America and a multi-employer association of coal producers, the Bituminous Coal Operators’ Association (“the BCOA” or “the Association”). All coal companies that join the agreements pay into the same health and benefit funds at a specified rate per ton of coal produced, and all eligible employees receive benefits from those funds without reference to the employers they happened to be working for at the time of their retirement. The issue here is whether certain coal companies that joined the 1984- Bituminous Coal Wage Agreement were entitled to cut their rate of payment simply by entering into a later agreement with the UMW providing for a lower rate. Because we believe that at an .absolute minimum the 1984 Agreement can be construed as barring this sort of spontaneous burden-shedding, we reverse the summary judgment granted by the district court and remand for further proceedings.
The defendants are the UMW itself and several coal companies that, although not members of the BCOA, joined the 1984 Agreement either by becoming actual signatories or by signing so-called “me-too” agreements. “Me-too” agreements have terms identical to the terms of the national agreement, and thus there is no distinction among them concerning employers’ contractual rights and obligations. See Bituminous Coal Operators’ Ass’n v. Connors, 867 F.2d 625, 627-28 (D.C.Cir.1989). The plaintiffs are the Trustees of one of four multi-employer trust funds, the 1950 Pension Trust Fund, which was created in 1950 and has been extended periodically by successive national agreements.
The 1984 Agreement adopted a rate of contribution to the Fund that had been originally chosen in 1978, namely $1.11 per ton of coal produced. The 1984 Agreement itself remained in effect until February 1988, when the UMW and the BCOA entered into a new national agreement that reduced the contribution level to zero. The Fund is and has long been “closed”: only workers who retired before 1976 are eligible, and its liabilities may be calculated with a, fair degree of actuarial precision.
In January 1987 a group of coal producers who had joined the 1984 Agreement entered into new agreements with the UMW, called Employment and Economic Security Pacts (“the EESPs”). The EESPs were worded so as to take effect once the 1950 Fund was fully funded, i.e., had reserves enough to pay all actuarily expected claims. They provided that, starting then, the employers would contribute to the Pension Fund at a rate of only $0.25/ton. In exchange for agreeing to this reduction, the UMW secured from the coal companies various advantages for the workers covered by the agreements.
In May 1987 the Trustees filed suit against the UMW and the defecting coal companies, seeking to recover the differential between the amount those companies would have paid between the effective date of the EESPs in early 1987, and the cessation of all contributions pursuant to the 1988 agreement, had they continued to contribute at $1.ll/ton rather than $0.25/ ton — roughly $16 million dollars. The Trustees, claiming to be third-party beneficiaries of the 1984 Agreement, argued that the UMW and the defendant employers were bound to continue paying at the $1.ll/ton rate provided for in the 1984 Agreement until that agreement was itself terminated or modified. The district court granted summary judgment for the defendants, evidently on the theory that on the record before it the 1984 Agreement could not possibly be found to lock the defendants into the 1984 Agreement and its $1.ll/ton rate. Summary judgment in this context is properly granted only where the provision in question admits only of the interpretation offered by the moving party. E.g., America First Inv. Corp. v. Goland, 925 F.2d 1518, 1520-22 (D.C.Cir.1991).
In arguing that the defendants were not free to reduce their payments, the Trustees point particularly to a so-called “evergreen clause” that originated in the 1978 agreement and was incorporated in substance into the 1984 Agreement. The clause reads as follows:
Any employer who employed any participant eligible for coverage under, or who received or receives benefits under, the 1950 Pension Plan, or any Employer who was or is required to make, or who has made or makes contributions to the 1950 Pension Plan and Trust, is obligated and required to comply with the terms and conditions of the 1950 Pension Plan and Trust, as amended from time to time, including, but not limited to, making the contributions required under the National Bituminous Coal Wage Agreement of 1978, as amended from time to time, and any successor agreements thereto including, but not limited to, the National Bituminous Coal Wage Agreement of 1984.
Joint Appendix (“J.A.”) at 83, 95 (emphasis added). On its face at least, the clause seems to bind parties to the contribution rate provided in the national agreements, including the 1984 Agreement, and thus the $1.ll/ton rate, until a successor agreement should provide otherwise.
Other clauses incorporated into the 1984 Agreement confirm that reading. First, Article VI, Section B, paragraph (8) of the Amended 1950 Pension Plan provides that “Contributions to the 1950 Pension Trust ... shall be paid solely by the Employers in accordance with ... the National Bituminous Coal Wage Agreement of 1984, as amended from time to time, and any successor agreements to that specific agreement”, J.A. at 79 (emphasis added), language which seems to preclude side agreements enabling particular parties to adopt a lower rate. Other language in documents incorporated in the 1984 Agreement specifies that the “me-too” agreements are to be treated as “Wage Agreements” “solely for the purposes of determining who is required to make contributions to, and receive benefits under, the 1950 Pension Trust.” J.A. 70, 87. This suggests the parties’ anticipation of accession to the agreement solely for purposes of the 1950 Fund, but with the 1984 Agreement (and successors) being the sole source of control of those contributions. Finally, the clauses allowing action to be taken for the coal companies by ones that are parties to the wage agreement and that account for 51% or more of the contributions, and providing for amendment of the agreements, see J.A. 78-79, 83, 94-95, suggest a determination that the agreements should not be undermined by a minority of contributors.
Extrinsic evidence further supports the Trustees’ interpretation. At the time of the 1978 Agreement, the Fund’s liability exceeded its assets. According to a declaration of Mr. Roger Haynes, a labor negotiator and according to the Trustees the Association’s “key spokesman” on issues relating to the Fund, the evergreen clause was added for the precise purpose of making sure that none of the employers accepting the national agreement could reduce their contributions below the rate specified by the national agreement for all. See Declaration of Roger Haynes, reproduced at J.A. at 210-11, 218. Haynes also said that by the time of the negotiations for the 1984 Agreement it was clear that the Fund would reach fully funded status, and yet the UMW at that time refused to include a clause that contributions should cease when it did so. J.A. at 221-22. Even if the text of the evergreen clause permits the defendants’ interpretation, this bargaining history suggests that in fact its meaning is what the Trustees claim. See Local No. 47, Internat’l Bhd. of Electrical Workers, AFL-CIO v. National Labor Relations Bd., 927 F.2d 635, 640 (D.C.Cir.1991); Local Union 1395, International Bhd. of Electrical Workers, AFL-CIO v. National Labor Relations Bd., 797 F.2d 1027, 1036 (D.C.Cir.1986).
Rather than provide their own interpretation of the language of the evergreen clause or offer competing extrinsic evidence, the defendants argue mainly that under the Trustees’ reading the evergreen clause is a waiver of their statutory right to enter into collective bargaining (on the subject of contribution to the Fund) and is thus covered by the labor law doctrine that waivers of statutory rights can be effective only if “clear and unmistakable”. Metropolitan Edison Co. v. NLRB, 460 U.S. 693, 708, 103 S.Ct. 1467, 1477, 75 L.Ed.2d 387 (1983).
The doctrine of “clear and unmistakable” waiver, however, is inapplicable here. Defendants’ invocation of the doctrine is based on the notion that under the Trustees’ reading of the evergreen clause, the defendant companies and union waived the right to bargain on the subject of contributions to the 1950 Fund. But to the extent that a bargain resolves any issue, it removes that issue pro tanto from the range of bargaining. Such issue resolutions are not waivers within the meaning of the doctrine.
Recently, in Department of the Navy, Marine Corps Logistics Base, Albany, Georgia v. FLRA, 962 F.2d 48 (D.C.Cir. 1992), we identified waiver quite carefully, saying that “when a union waives its right to bargain about a particular matter, it surrenders the opportunity to create a set of contractual rules that bind the employer, and instead cedes full discretion to the employer on that matter.” Id. at 57 (emphasis in original). And we distinguished between waiving an issue and resolving it:
A waiver occurs when a union knowingly and voluntarily relinquishes its right to bargain over a matter; but where the matter is covered by a collective bargaining agreement, the union has exercised its bargaining right and the question of waiver is irrelevant.
Id. (emphasis in original). Accord Local Union No. 47, 927 F.2d at 641 (when contract defines rights, “it is incorrect to say the union has ‘waived’ its statutory right to bargain; rather, the contract will control and the ‘clear and unmistakable’ intent standard is irrelevant”).
It is hard to find any waiver in sight. In the 1984 Agreement the UMW and the employers appear simply to have agreed on a criterion for determining the employers’ pension fund contribution, namely the figure embodied in the 1984 Agreement ($1.11), subject to such changes as might be agreed upon by (1) the UMW itself and (2) the BCOA — an organization which on this issue would seem to have interests virtually identical to those of the defendant employers. The defendants do not explain how, by their standards, any contractual resolution of an issue could escape having to satisfy the Metropolitan Edison criteria for waivers. Incidentally, a matter may be “covered by” a collective bargaining agreement even though the agreement does not specifically address the particular subject matter at issue. Department of the Navy, 962 F.2d at 58; see also id. at 59.
Nor is the Trustees’ view of the 1984 Agreement undermined by the fact that the EESPs took effect only after the Fund was fully funded. Nothing in the words of the 1984 Agreement suggests that the parties’ obligations should cease at the moment of full funding. See Bituminous Coal Operators’ Ass’n, Inc. v. Connors, 867 F.2d 625, 629-31 (D.C.Cir.1989). Defendants implicitly acknowledge the fact by pointing elsewhere for support, arguing that the Trustees’ post-agreement conduct — their pursuit of withdrawing employers under provisions of the Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. §§ 1381-1453 — somehow reflects an understanding to that effect. Brief of Appellees Island Creek Corp., et al. at 40-43. Whatever the force of that extrinsic evidence — certainly not enough to justify summary judgment against the Trustees — it leaves intact the obvious reason why the parties may have intended the obligation to survive full funding. Withdrawal at the option of each employer would leave those slowest to withdraw — the most dutiful, perhaps, or the ones using the most cautious calculations to determine full funding (the 1984 Agreement itself supplies no formula) — bearing a disproportionate share of the load. Quite apart from allowing some employers to free ride on the contributions of others, the temptations of early withdrawal might jeopardize the Fund. Thus, the UMW’s interest in the pensioners’ welfare, and the coal companies’ competitive interest in equal treatment, both argued for termination by agreement. See Schneider Moving & Storage Co. v. Robbins, 466 U.S. 364, 373, 104 S.Ct. 1844, 1849, 80 L.Ed.2d 366 (1984); Lewis v. Benedict Coal Corp., 361 U.S. 459, 469, 80 S.Ct. 489, 495, 4 L.Ed.2d 442 (1960).
Thus the parties may well have reasoned that when full funding had clearly been obtained, the parties’ incentives to agree on termination would come into play, leading to an orderly end of contributions; any deviation from hitting “full funding” right on the nose would go to the benefit of the pensioners. Indeed, the 1988 agreement converted the Fund’s surplus into added pension benefits for its eligible retirees. See J.A. at 95; see also Bituminous Coal Operators’ Ass’n, 867 F.2d at 629.
Defendants assert that insofar as plaintiff Trustees assert rights as third-party beneficiaries of the 1984 Agreement they overlook the doctrine that ordinary TPB law may not be used “to interpret collective agreements in a manner contrary to federal labor policy”, Brief of Island Creek Corp., et al. at 24, citing Schneider Moving & Storage and Lewis. But in fact in both cases the Court found that the TPBs in question, there as here trustees of funds for the benefit of employees and their families, should enjoy a status superi- or to that of ordinary TPBs, and should be free of the usual rule that any defense a promisor would have against the promisee can be invoked against the TPB. Schneider Moving & Storage, 466 U.S. at 370-71 & n. 11, 104 S.Ct. at 1848 & n. 11; Lewis, 361 U.S. at 468-69, 80 S.Ct. at 495.
Finally, defendants suggest that ordinary TPB law allows the promisor and promisee to modify their agreement up to the point where the TPB has acted in reliance upon the agreement. But the issue of when the parties may amend over a TPB’s objection, see generally 3 E.A. Farnsworth, Farnsworth on Contracts § 10.8 (1990) (setting forth alternative rules), is not really in question, for in this case it is understood that even an employer who joins by virtue of a “me-too” agreement is a party to the full 1984 Agreement, and such an employer is tied contractually to all other joining employers, including those who did not strike a deal with the UMW to reduce their payments. Without their agreement (or amendment by the terms of the trust), there is no amendment by the original promisors and promisees.
We leave further exploration of these issues to the district court. In light of the above, it is clear that evergreen clause is, at the very least, susceptible to the Trustees’ interpretation. Accordingly, the district court’s grant of summary judgment in favor of the defendants is
Reversed and Remanded.
. To the extent that defendants rely on a notion that bargaining history cannot play a role in satisfying that standard (if applicable), they are plainly wrong. Local Union No. 47, 927 F.2d at 640; see also Local Union 1395, 797 F.2d at 1036 ("The intent of the parties to collective bargaining agreements [even for purposes of “clear and unmistakable waiver”] is not to be discerned by reference to ‘abstract definitions unrelated to the context in which the parties bargained,’ especially where bargaining history is crucial to an understanding of that intent.”) (quoting NLRB v. C & C Plywood Corp., 385 U.S. 421, 430, 87 S.Ct. 559, 565, 17 L.Ed.2d 486 (1967)); id. at 1036 n. 9.
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.
This opinion promises to be the final trek in a long safari of a case. At journey’s end, we reaffirm our earlier judgment, see Kotler v. American Tobacco Co., 926 F.2d 1217 (1st Cir.1990) [Kotler III], and dismiss the vestiges of plaintiff’s two appeals.
I. BACKGROUND
Our prior opinion memorializes much of this case’s convoluted procedural history. See id. at 1219-20. We merely summarize and update here, highlighting the events that bear on the residuum of the litigation.
Plaintiff-appellant Joanne Kotler sued three cigarette manufacturers, American Tobacco Company (ATC), Philip Morris, Inc. (PMI), and Liggett Group Inc. (Lig-gett), in federal district court to recover damages for her husband’s death from lung cancer. Plaintiff’s claims fell into four general categories: negligence, misrepresentation, breach of warranty based on failure to warn, and breach of warranty based on design defects. During pretrial proceedings, the district court put to rest everything except plaintiff’s pre-1966 claims against ATC for breach of warranty (failure to warn) and negligence. See Kotler v. American Tobacco Co., 685 F.Supp. 15, 18-20 (D.Mass.1988) [Kotler I]; Kotler v. American Tobacco Co., 731 F.Supp. 50, 52-57 (D.Mass.1990) [Kotler II]. Those claims went to trial. The lower court directed a verdict for ATC on the former claim and the jury returned a defendant’s verdict on the negligence count. See Kotler III, 926 F.2d at 1220.
On appeal, we considered myriad assignments of error. These included plaintiff’s challenge to the district court’s May, 1988 ruling that the Federal Cigarette Labeling and Advertising Act, codified as amended, 15 U.S.C. §§ 1331-1341 (1988) [the Labeling Act], preempted her post-1965 misrepresentation claims. See Kotler I, 685 F.Supp. at 20. Inasmuch as the preemption question was clearly controlled by our earlier opinion in Palmer v. Liggett Group, Inc., 825 F.2d 620 (1st Cir.1987), we affirmed the district court's dismissal of these claims without deciding whether Kot-ler’s notice of appeal adequately preserved the preemption issue for appellate review. See Kotler III, 926 F.2d at 1221-24. We did, however, express considerable skepticism about the existence of appellate jurisdiction. See id. at 1221.
Plaintiff also argued that the district court erred in failing to submit her breach of warranty (failure to warn) claim to the jury. We agreed with this assertion but determined that, under Massachusetts products liability law as explicated in Anderson v. Owens-Illinois, Inc., 799 F.2d 1 (1st Cir.1986), the error was harmless. See Kotler III, 926 F.2d at 1228-35. Hence, we affirmed the judgment.
Plaintiff petitioned for certiorari in respect to both the preemption and breach of warranty rulings. The Supreme Court withheld action on the petition pending its disposition of Cipollone v. Liggett Group, Inc., — U.S. —, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992), a case that addressed the Labeling Act’s preemptive effect. The Court decided Cipollone on June 24, 1992, and, in the process, narrowed Palmer’s sweep. Five days later, the Court vacated our judgment in the instant case and remanded “for further consideration in light of Cipollone v. Liggett Group, Inc..... ” See Kotler v. American Tobacco Co., — U.S. —, 112 S.Ct. 3019, 120 L.Ed.2d 891 (1992). Three weeks thereafter, the Massachusetts Supreme Judicial Court (SJC) issued an opinion that clarified, albeit in dicta, state breach of warranty law. See Simmons v. Monarch Machine Tool Co., 413 Mass. 205, 207 n. 3, 596 N.E.2d 318 (1992).
II. ISSUES PRESENTED
Following remand, the defendants moved to dismiss the remnants of plaintiff’s appeals on jurisdictional grounds. The plaintiff opposed this motion and simultaneously asked that we go beyond the letter of the High Court’s remand order to reconsider the directed verdict in light of Simmons. In this posture of the case, two threshold questions loom:
1. Did Kotler’s notice of appeal addressed to PMI and Liggett (No. 90-1400) preserve the preemption issue for appellate review? This is, of course, the very issue which we previously left open. See Kotler III, 926 F.2d at 1221-22. Only if this question warrants an affirmative response can we reach the merits of the preemption claim.
2. Do sufficient grounds exist to impel us to revisit our prior affirmance of the directed verdict in ATC’s favor on the breach of warranty claim (notwithstanding that to do so would require us to surpass the scope of the Supreme Court's limited remand)? Only if this question warrants an affirmative response can we rework the decisional calculus in light of the SJC’s statements in Simmons.
III. THE PREEMPTION ISSUE
PMI and Liggett argue that the preemption issue is not properly before us because plaintiff failed to direct her notice of appeal to the district court’s May, 1988 order.
A
This point is governed by Fed. R.App.P. 3(c), which requires, inter alia, .that a notice of appeal “designate the judgment, order or part thereof appealed from.” The rule’s commands are jurisdictional and mandatory. See Smith v. Barry, — U.S. —, —, 112 S.Ct. 678, 682, 116 L.Ed.2d 678 (1992); Torres v. Oakland Scavenger Co., 487 U.S. 312, 315-16, 108 S.Ct. 2405, 2407-08, 101 L.Ed.2d 285 (1988). Its dictates, however, should be construed liberally. See Smith, — U.S. at —, 112 S.Ct. at 682; Foman v. Davis, 371 U.S. 178, 181-82, 83 S.Ct. 227, 228-30, 9 L.Ed.2d 222 (1962). Noncompliance with “mere technicalities” will not defeat appellate jurisdiction. Foman, 371 U.S. at 181, 83 S.Ct. at 230. Rather, an appeal survives so long as the litigant’s filing “is the functional equivalent of what the rule requires.” Torres, 487 U.S. at 317, 108 S.Ct. at 2409.
In deciding whether a notice of appeal confers appellate jurisdiction over a specific issue, we are cognizant that “the notice afforded by a document, not the litigant’s motivation in filing it, determines the document’s sufficiency as a notice of appeal.” Smith, — U.S. at —, 112 S.Ct. at 682. Accordingly, we examine the notice of appeal addressed to PMI and Lig-gett, see supra note 2, in order to ascertain whether plaintiff sufficiently manifested an intention to appeal the May, 1988 preemption order, or stated another way, whether the notice adequately apprised the defendants of such an intention. See id. (stating that “a notice of appeal must specifically indicate the litigant’s intent to seek appellate review”); Mariani-Giron v. Acevedo-Ruiz, 945 F.2d 1, 3 (1st Cir.1991) (similar); see also Foman, 371 U.S. at 181, 83 S.Ct. at 229 (deciding that petitioner’s intention to appeal a particular order “was manifest”). However, we do not examine the notice in a vacuum but in the context of the record as a whole. See FirsTier Mortgage Co. v. Investors Mortgage Ins. Co., 498 U.S. 269, — n. 6, 111 S.Ct. 648, 653 n. 6, 112 L.Ed.2d 743 (1991) (noting that compliance with Rule 3(c)’s judgment-designation requirement is to be scrutinized “ ‘in light of all the circumstances’ ”) (quoting Torres, 487 U.S. at 316, 108 S.Ct. at 2408); Foman, 371 U.S. at 181, 83 S.Ct. at 229 (considering the entire appellate record); Kelly v. United States, 789 F.2d 94, 96 (1st Cir.1986) (similar); see also Kotler III, 926 F.2d at 1221 (observing that the court of appeals is “not limited to the four corners of the notices [of appeal], but may examine them in the context of the record as a whole”).
B
Upon careful perscrutation of the total record, we are persuaded that plaintiff failed to satisfy the requirements of Appellate Rule 3(c). The body of the relevant notice of appeal is reproduced in the appendix. It makes no reference to the district court’s May, 1988 dismissal of plaintiff’s failure to warn and negligent misrepresentation claims on preemption grounds. Instead, it specifically references the district court’s entirely separate order of November 21, 1989, granting summary judgment on certain design defect claims. Omitting the preemption order while, at the same time, designating a completely separate and independent order loudly proclaims plaintiff’s intention not to appeal from the former order. See, e.g., Mariani-Giron, 945 F.2d at 3; Pope v. MCI Telecommunications Corp., 937 F.2d 258, 266-67 (5th Cir.1991), cert. denied, — U.S. —, 112 S.Ct. 1956, 118 L.Ed.2d 558 (1992); Chaka v. Lane, 894 F.2d 923, 925 (7th Cir.1990); Spound v. Mohasco Indus., Inc., 534 F.2d 404, 410 (1st Cir.), cert. denied, 429 U.S. 886, 97 S.Ct. 238, 50 L.Ed.2d 167 (1976). As an ancient maxim teaches, “expressio unius est exclusio alteráis.” PMI and Liggett were entitled to rely on the plain language and apparent purport of the notice appellant prepared and served.
C
Plaintiff bobs and weaves in an artful attempt to overcome this deficiency. She tries three approaches. We consider them seriatim.
Plaintiff’s reliance upon her explicit mention of the May, 1988 order in a previously filed, yet untimely, notice of appeal is misplaced. Her subsequent reiteration of all the other grounds listed in the untimely notice, coupled with her omission of any further allusion to the May, 1988 order, would inevitably lead reasonably prudent appellees to infer that plaintiff had abandoned her quest for review of the ruling on preemption.
Next, plaintiff theorizes that because the first three paragraphs of her notice of appeal run the gamut of the November, 1989 order, the final paragraph could “only logically refer” to the May, 1988 order. This hypothesis smacks of wishful thinking. The most natural reading of the notice is that all four paragraphs parse the particulars of the November, 1989 order. A review of the proceedings below makes this conclusion pellucidly clear.
In November, 1989, the district court granted defendants’ motions for a protective order and for summary judgment on plaintiffs design defect claims. See Kotler II, 731 F.Supp. at 56-57. It held that plaintiffs evidence was insufficient to support her claim that defendants’ cigarettes were defective because they contained adulterated tobacco. See id. at 56. The court also rejected on state-law grounds an alternative claim that, even if the tobacco was pristine, defendants’ cigarettes were still defective. See id. at 55. The memo-randa that the parties submitted to the district court at that time left no doubt but that this alternative theory represented an attempt to balance product risk against product utility — what we subsequently called “the risk/utility interface.” Kotler III, 926 F.2d at 1224 (excess capitalization omitted).
With this background in mind, it is virtually impossible to read plaintiff's notice of appeal as manifesting anything but an intent to appeal from the whole of the November, 1989 order. Paragraphs (1) and (2) target the grant of summary judgment in favor of PMI and Liggett, respectively, on the ground that plaintiff’s evidence was insufficient to prove adulteration; paragraph (3) targets the district court’s issuance of a protective order; and paragraph (4) targets the court’s rejection of other “theories of defective product,” that is, “risk utility and/or consumer expectation.” After all, Judge Skinner rejected, explicitly and by name, the risk utility theory in his January, 1990 decision granting ATC summary judgment on plaintiff’s design defect claims, see Kotler II, 731 F.Supp. at 52-53; and, moreover, reasonable consumer expectations comprised the focal point of plaintiff’s state-law design defect claims. See Kotler I, 685 F.Supp. at 19. On this basis, we think it is perfectly plain that the fourth paragraph of plaintiff’s notice of appeal did not draw attention to the May, 1988 order.
Third, and finally, we find entirely unpersuasive plaintiff’s argument that the trial judge’s passing allusion to the prior preemption decision in the November, 1989 order sufficiently incorporated the earlier order into the later order to the extent that a notice to appeal the 1989 order constituted, at the same time, notification that plaintiff was appealing the preemption decision.
In sum, plaintiff’s notice of appeal does not mention the May, 1988 order, and nothing else within the record’s perimeter adequately manifests an intent to preserve the preemption ruling for appellate review. In the absence of either a properly targeted notice of appeal or the functional equivalent thereof, we lack jurisdiction over plaintiff’s present claim that the district court erred in assessing the Labeling Act’s preemptory effects.
IV. THE BREACH OF WARRANTY ISSUE
We next consider whether this court can and should revisit its prior affirmance of a judgment for ATC on the state-law breach of warranty count. Plaintiff’s position is that we should dredge up the warranty issue despite the narrow language of the Supreme Court’s remand order (remanding “for further consideration in light of Cipol-lone," a case unrelated to any issue of state law). Because the Court’s order had the effect of vacating our earlier mandate, Kotler asseverates, we are now at liberty to reconsider even issues unrelated to those delineated in the remand order.
The general rule is that, when the Supreme Court remands in a civil case, the court of appeals should confine its ensuing inquiry to matters coming within the specified scope of the remand. See Escalera v. Coombe, 852 F.2d 45, 47 (2d Cir.1988) (“Any reconsideration at this juncture of our earlier opinion [granting petitioner’s writ of habeas corpus] must be limited to the scope of the Supreme Court’s remand.”); Hyatt v. Heckler, 807 F.2d 376, 381 (4th Cir.1986) (limiting review to the scope of the remand), cert. denied, 484 U.S. 820, 108 S.Ct. 79, 98 L.Ed.2d 41 (1987); Hermann v. Brownell, 274 F.2d 842, 843 (9th Cir.) (declaring that the appellate court’s jurisdiction “is rigidly limited to those points, and those points only, specifically consigned to our consideration by the Supreme Court”), cert. denied, 364 U.S. 821, 81 S.Ct. 56, 5 L.Ed.2d 50 (1960). This rule is grounded on sound prudential considerations. Repose is important in the law and, consequently, there must be an end to litigation.
To be sure, there are exceptions to the rule. Thus, we agree with Kotler that, when the Supreme Court vacates an entire judgment, an appellate court, on remand, has the naked power to reexamine an issue that lies beyond the circumference of the Supreme Court’s specific order. See Moore v. Zant, 885 F.2d 1497, 1502-03 (11th Cir.1989), cert. denied, 497 U.S. 1010, 110 S.Ct. 3255, 111 L.Ed.2d 765 (1990); Hill v. Black, 920 F.2d 249, 250 (5th Cir.1990), modified on other grounds, 932 F.2d 369 (5th Cir.1991); but cf. Escalera, 852 F.2d at 47 (refusing to relax general rule in favor of habeas petitioner). This power is to be exercised sparingly and only when its invocation is necessary to avoid extreme injustice. Cf. Eubank Heights Apartments, Ltd. v. Lebow, 669 F.2d 20, 23 (1st Cir.1982) (stating, in connection with what was in effect an untimely petition for rehearing under Fed.R.App.P. 40, that “reopening an issued opinion” would require “a showing of injustice of major proportions — not mere arguable error”). Habeas cases like Moore and Hill often present compelling scenarios for invoking the long-odds exception to the general rule and lowering conventional barriers to further review. In the context of traditional civil litigation, however, even those circuits that have exhibited uncommon liberality in habeas cases are careful to operate within the confines of the Supreme Court’s mandate. See, e.g., United States v. M.C.C. of Florida, Inc., 967 F.2d 1559, 1563 (11th Cir.1992) (refusing to interpret Supreme Court order vacating an entire judgment, but for a specific purpose, as entitling the appellant to a new trial on all issues); Aladdin’s Castle, Inc. v. City of Mesquite, 713 F.2d 137, 138-39 (5th Cir.1983) (vacating a prior decision that strayed outside the scope of the Supreme Court’s remand order).
Nothing in this case compels us to depart from the accepted norm. This is a civil case, pure and simple. The plaintiff has had her full day in court. Allowing our previous decision to stand does not appear to work a gross injustice. To the contrary, reopening the breach of warranty issue on the basis of the fortuitously timed Simmons dictum would set an unfortunate precedent — especially when the Supreme Court’s specific directive tells us to review only a preemption issue that in no way affects ATC.
In the absence of truly egregious error or some other extraordinary circumstance, the Supreme Court’s mandate is “our compass and our guide.” Hermann, 274 F.2d at 843. The situation here is unremarkable and counsels strict adherence to the scope of the Court’s remand order. Hence, we decline to revisit the breach of warranty count. In our view, a decision gratuitously to reopen this issue, like any decision belatedly to reopen a judgment that is arguably in error, would deprive the defendants of their rightful sense of repose and frustrate the judicial system’s core principles of finality and efficiency. Accord Robinson v. Ariyoshi, 854 F.2d 1189, 1190 (9th Cir.1988) (rejecting the proposition that a Supreme Court order remanding for consideration in light of a designated case “reopens the whole case for reconsideration of all issues that have arguably been changed by state law in the interim”).
Y. CONCLUSION
We need go no further. We lack appellate jurisdiction to review the district court's May, 1988 order anent preemption. And, because we are constrained by the narrowly circumscribed scope of the Court’s remand order, we will not revisit the previously decided state-law breach of warranty issue.
The judgment of this court is reissued and mandate is to issue forthwith.
APPENDIX
NOTICE OF APPEAL
Notice is hereby given that the Plaintiff, Joanne Kotler, Individually and as Adminis-tratrix of the Estate of George P. Kotler, hereby appeals to the United States Court of Appeals for the First Circuit from the following:
1) decision of Judge Skinner of November 21, 1989 granting the Motion of the Defendant, Philip Morris for Summary Judgment, from which judgment entered on March 26, 1990;
2) decision of Judge Skinner on November 21, 1989 granting the Motion of the Defendant, Liggett Group, Inc. for Summary Judgment, from which judgment entered on March 26, 1990;
3) limitation of discovery as to Philip Morris and Liggett Group, Inc.; and
4) preclusion of the many theories of defective product, risk utility and/or consumer expectation as to Philip Morris and Lig-gett.
. Kotler II comprises the district court’s memorandum and order of January 12, 1990, granting ATC’s motion for summary judgment on the design defect claims, and incorporates, as an appendix, the court's memorandum and order of November 21, 1989, granting the other defendants’ motions for summary judgment on all remaining claims asserted against them.
. It is crystal clear that plaintiff never intended to appeal the preemption ruling vis-a-vis ATC and she has not made any developed argument to the contrary. At this juncture, then, we ignore Kotler’s notice of appeal against ATC (No. 90-1297) and train our sights exclusively on the notice of appeal plaintiff filed in connection with her claims against PMI and Liggett (No. 90-1400).
. We note that, by vacating and remanding for further consideration in light of Cipollone, the Supreme Court neither reached the merits of plaintiff's preemption claim, see Parker v. Randolph, 442 U.S. 62, 75-76 n. 8, 99 S.Ct. 2132, 2140-41 n. 8, 60 L.Ed.2d 713 (1979), nor passed upon the threshold jurisdictional issue which we must now confront. See United States v. Ferri, 686 F.2d 147, 157 (3d Cir.1982), cert. denied, 459 U.S. 1211, 103 S.Ct. 1205, 75 L.Ed.2d 446 (1983).
. We emphasize that the design defect claims are distinct from the failure to warn and negligent misrepresentation claims which were the object of the May, 1988 order. See, e.g., Kotler I, 685 F.Supp. at 19 (recognizing that, under state law, plaintiffs "claims for defective design [are] independent of [her] claims for failure to warn”).
. We take no view of whether the Simmons dictum, had it been available earlier, might (or might not) have made an outcome-determinative difference in regard to our affirmance of the directed verdict on the breach of warranty count.
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.
PECK, Circuit Judge.
Plaintiffs instituted this desegregation action against the School District of the City of Benton Harbor, Michigan, members of the local school board and the district’s chief administrative officer in 1967, alleging unconstitutional segregation and inferior educational opportunities for black students. The case was tried before the late Judge W. Wallace Kent, Western District, Michigan, in February 1970. In the findings of fact and conclusions of law announced in July 1971 the court found that although a racial imbalance existed in the school district, defendants had not created it and had no affirmative legal duty to adopt a system wide remedial plan. The court, however, did find defendants guilty of discrimination in three areas: (1) assignment of teaching positions; (2) use of different systems to establish learning groups at three junior high schools; and (3) budgeting for operational expenses on a per-pupil basis. The court ordered defendants to discontinue discriminatory practices in the above areas. Defendants perfected this appeal from the above findings and from the orders to desist, and plaintiffs perfected a cross-appeal claiming that the court erred in not finding de jure segregation and in not providing adequate remedies for the discrimination it found.
Defendant school district was formed in 1965 by a process of consolidation, annexation and attachment of separate school districts in and around Benton Harbor. It encompasses an area of 57 square miles, and in 1969 it enrolled approximately 12,000 students in 28 regular schools. The professional staff consisted of 470 teachers and 50 administrators. At the time of consolidation the school board adopted the existing attendance area boundary lines of the predecessor districts, the result of which was that by 1970, seven of the 28 schools were more than 80% black and 14 more than 80% white. Only 7 of 28 schools could be termed mixed. The overall student population was approximately 49% black and 51% white. Both before and after consolidation, however, all area students attended Bénton Harbor High School, which during the 1969-1970 school year was 40% black and 60% white.
The district court attributed pupil population in the schools in the consolidated district to “the racial complexion of the area served by the individual schools.” It also pointed out that the number and density of the black population had increased between 1965 and 1970, and that with few exceptions the predominately black neighborhoods contained less than adequate housing. Although defendants were not held responsible for the segregated housing patterns, the court stated that the “containment of blacks [caused] the percentage of students attending schools with a student body of fifty percent or more of the same race [to increase].” The defendants made no effort to alter attendance boundaries to achieve a better racial balance.
In 1970 there were approximately 470 teachers in the district, 83 (17.7%) of whom were black. Black teachers were actively recruited by the school district and the years 1965 through 1970 saw a steady improvement in the percentage of black teachers employed. But the district court found that the method used to assign the teachers was racially motivated and that a disproportionate number of black and generally inexperienced teachers were assigned to predominantly black schools resulting in a denial of equal educational opportunity to black students. Nearly 70% of the black elementary and junior high teachers were assigned to predominantly black schools, while 15 schools had 100% white faculties. The district court ordered defendants to desist from assigning teachers on the basis of race.
The court also found that the physical conditions in a number of the schools turned over to the consolidated district in 1965 were grossly inadequate and that all of the buildings operated by the district were generally crowded. It further noted that the median age for predominantly black schools was 43 years, while the median age for predominantly white schools was 17 years. In spite of a well recognized need for improved facilities, no new construction or substantial remodeling was undertaken in the elementary or junior high schools after consolidation due to lack of funds. The court ascribed the differences among the various schools to different types of land and economic development and wide variances in assessed valuation for taxes in the predecessor districts.
Defendants operated three separate schools for junior high level students; Fairplain Junior High School (predominantly white), Hull School (mixed), and Benton Harbor Junior High School (predominantly black). Two different methods were used to establish learning groups in the three units and this led the district court to the following conclusion :
“The tracking system as used at Benton Harbor Junior High School as differentiated from that used at Fair-plain Junior High School and Hull Junior High School, results in a denial of equal opportunity to the students at Benton Harbor Junior High School to achieve the same level of education in junior high school and high school as is afforded to the students at Fair-plain Junior High School and at Hull Junior High School. This system is improper and denies equal opportunity to the children who are attending Benton Harbor Junior High School.”
The court ordered the tracking system used at Benton Harbor Junior High School discontinued.
The district court received extensive evidence regarding the district’s budgeting procedures. It found that the budgeting of funds for operational expenses was done on a per-pupil basis and that as a result predominantly white schools which were generally in good condition were able to maintain that status while the older and more dilapidated facilities in predominantly black schools were not upgraded due to lack of funds. Defendants were ordered to revise this budgeting procedure.
A thorough review of the record convinces us that the district court’s findings that defendants were guilty of discrimination in the assignment of teachers and in the use of two different methods of establishing learning groups in the junior high schools were supported by the evidence. However, it is clear that the district court erred in finding discrimination in the budgeting procedures.
The district court made the following finding of fact:
“[T]he budgeting of funds is done by the Defendant on a per-student basis, as a result of which many of the schools with majority white students which came into the consolidated district with good facilities are in a position to maintain good facilities, and those schools which came into the consolidated district without good facilities do not have sufficient funds to improve the situation. The budgeting provides for $10.00 per child for operational expense.”
The Superintendent explained that the per-student allocation was used only for “instructional supplies, library and office supplies.” Teachers’ salaries, maintenance and repairs, and capital expenditures all came from different and separate funds.
The conclusion reached by the district court was apparently based upon the erroneous assumption that the allocation of $10.00 per-pupil per year for operational expenses was spent to maintain the school buildings, or could have been spent to upgrade some of the older facilities. The only evidence of record, however, was that new construction, renovation, and regular .maintenance had nothing to do with the operating budget. Thus we must conclude that the district court was clearly erroneous in finding defendants guilty of discrimination in this regard.
It is clear from a recital of the facts of record in this case that a number of important indicia of de jure segregation were present even though a dual school system was neither compelled nor authorized by law. The school system was in fact racially imbalanced, teachers were assigned on the basis of race, the physical condition of the predominantly black schools was generally inferior to the conditions in the predominantly white schools, and the method of assigning students to learning groups in the black junior high school deprived black students of an equal opportunity for an education. The Supreme Court has stated that discrimination in these areas of education constitutes a prima facie case of the existence of a dual school system. Keyes v. School District No. 1, Denver, Colorado, 413 U.S. 189, 201, 93 S.Ct. 2686, 37 L.Ed.2d 548 (1973); Swann v. Charlotte-Mecklenburg Board of Education, 402 U.S. 1, 18, 91 S.Ct. 1267, 28 L.Ed.2d 554 (1971); Green v. County School Board, 391 U.S. 430, 88 S.Ct. 1689, 20 L.Ed.2d 716 (1968). We are satisfied that a prima facie case was made out in this instance.
We recognize the difficulty in determining the quantum of state participation which is a prerequisite to a finding of a constitutional violation. “[T]he necessary degree of state involvement is incapable of precise definition and must be defined on a case-by-case basis.” United States v. Texas Education Agency, 467 F.2d 848, 864 (5th Cir. 1972), cited with approval in Keyes v. School District No. 1, Denver, Colorado, supra, 413 U.S. at 215, 93 S.Ct. 2686 (Douglas, J., concurring). The district courts are not without guidance in this difficult .task, however, as there have been a number of appellate decisions addressed to this problem. Although the relevant standards have not changed since Judge Kent rendered his decision in 1971, the Supreme Court has attempted to clarify the law in this area. For this reason, the issues presented by this case are particularly well suited to fresh consideration by the district court in light of recent case law. The question on remand will be whether defendants can successfully negate the prima facie case of de jure segregation that has been made against them.
Plaintiffs ask that we hold defendants’ 1965 adoption of the previously existing school attendance boundaries an independent act of deliberate segregation sufficient in itself to warrant an order for “all-out” desegregation. We decline to do so.
The instant suit was commenced after consolidation and no court action was pending against the school district prior to that time. There had been no judicial finding that defendants were operating a dual school system and the defendants had made no determination that action ought to be taken. Further, the attendance lines had existed in substantially the same form for a number of years prior to consolidation and before any complaint of segregation. In light of the above, we cannot say as a matter of law that defendants were under a duty to alter the attendance lines in 1965. Defendants’ decision, however, not to adopt new attendance boundaries in the face of a readily discernable pattern of residential segregation may be considered part of the cumulative evidence of a possible constitutional violation.
We note in passing that the district court stated that except for the specific areas in which it found discrimination “there [was] no' evidence that race [had] been the sole consideration in any act, decision, assignment, choice or program of Defendant District or its Board.” (Emphasis supplied.) It is not necessary to prove discriminatory motive, purpose, or intent ás a prerequisite to establishing an equal protection violation when discriminatory effect has been demonstrated. The “sole criterion” test has been rejected by the Supreme Court. Wright v. Council of City of Emporia, 407 U.S. 451, 461-462, 92 S.Ct. 2196, 33 L.Ed.2d 51 (1971); see United States v. Texas Education Agency, supra; Mahaley v. Cuyahoga Metropolitan Housing Authority, 355 F.Supp. 1245 (N.D.Ohio 1973). The question to be considered by the district court is whether defendants’ official acts resulted in a constitutionally impermissible dual school system.
For the reasons set forth hereinabove, the findings of the district court are affirmed in part and reversed in part and the orders entered pursuant thereto are vacated, and the cause is remanded to the district court for further proceedings consistent with this opinion.
. The latest statistics of record are for the 1969-1970 school year.
. The predominantly black schools operated at 103.6% capacity; the predominantly white schools operated at 96% capacity.
. All building programs proposed by the school board were defeated by district voters,
. The six criteria most often listed as indicia are composition of the student bodies, faculty, staff, transportation, extra-curricular activities, and facilities.
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.
The order of the District Court is affirmed on Memorandum of Decision below. 108 F.Supp. 183.
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.
HILL, Circuit Judge:
Ralph Kemp, Warden of the Georgia Diagnostic Center, appeals to this court from an order of the district court granting Freddie Davis’ petition for a writ of habeas corpus, and thus prohibiting his execution unless the state holds a resentencing hearing within 180 days. Davis has filed a cross-appeal from the order of the district court denying relief as to the other grounds set forth in his petition. We affirm the order of the district court denying relief as to the grounds raised by Davis in his cross-appeal and reverse the order granting relief on the grounds addressed by the state’s appeal.
Davis was indicted in Meriwether County, Georgia, on charges of murder and rape; at his trial in March 1977, the jury found him guilty of both crimes. At his sentencing hearing, the jury found an aggravating circumstance, see O.C.G.A. § 17-10-30(b)(2), and the judge sentenced Davis to death for the murder and life imprisonment for the rape. Davis appealed his convictions and sentence to the Georgia Supreme Court. In February 1978, that Court upheld Davis’ convictions but vacated his death sentence. See Davis v. State, 240 Ga. 763, 243 S.E.2d 12 (1978). At Davis’ second sentencing hearing in May 1978, the jury found two statutory aggravating circumstances, see O.C.G.A. § 17-10-30(b)(2) & (b)(7), and the judge sentenced Davis to death. Davis appealed to the Georgia Supreme Court, which affirmed the death sentence. See Davis v. State, 242 Ga. 901, 252 S.E.2d 443 (1979). The United States Supreme Court vacated the second death sentence and remanded the case to the Georgia Court for reconsideration in light of Godfrey v. Georgia, 446 U.S. 420, 100 S.Ct. 1759, 64 L.Ed.2d 398 (1980). See Davis v. Georgia, 446 U.S. 961, 100 S.Ct. 2934, 64 L.Ed.2d 819 (1980). The Georgia Court reinstated the death sentence, see Davis v. State, 246 Ga. 432, 271 S.E.2d 828 (1980), and the Supreme Court denied certiorari. See Davis v. Georgia, 451 U.S. 921,101 S.Ct. 2000, 68 L.Ed.2d 312 (1981). Davis then filed a petition for a writ of habeas corpus in state superior court. The state court denied this petition on February 5, 1982, and the Georgia Supreme Court denied Davis’ application for a certificate of probable cause on March 24, 1982. The United States Supreme Court again denied certiorari. See Davis v. Georgia, 459 U.S. 891, 103 S.Ct. 189, 74 L.Ed.2d 153 (1982).
On December 15,1982, Davis filed a petition for a writ of habeas corpus in federal district court. The court denied this petition on December 20, 1982. Davis, with new counsel, filed various pleadings with the district court, which he characterized as amended petitions, in an effort to raise new claims. Although the district court found the petitions to be successive and an abuse of the writ, on December 23, 1982, the court agreed to reconsider the case. On April 8, 1983, the court granted Davis the above-described partial relief.
This appeal was held in abeyance pending four en banc opinions affecting the outcome of this case. With the Supreme Court’s denial of certiorari on March 2, 1987 in Tucker v. Kemp, 762 F.2d 1480 (11th Cir.1985) (en banc), vacated, 474 U.S. 1001, 106 S.Ct. 517, 88 L.Ed.2d 452 (1985), on remand, 802 F.2d 1293 (llth Cir.1986), cert, denied, — U.S.-, 107 S.Ct. 1359, 94 L.Ed.2d 529 (1987), the appeals in these four cases became final. Accordingly, we proceed to analyze the issues set forth in Davis’ petition.
I
Davis raised three of his claims on appeal for the first time in his second federal habeas petition. The state contends that the district court improperly considered Davis’ second petition after finding it to be a successive petition and an abuse of the writ. We hold that, under the controlling case law, the district judge did not abuse his discretion in considering the issues raised in the successive petition in this case.
As the Supreme Court has stated, the district courts are responsible for
the just and sound administration of the federal collateral remedies, and theirs must be the judgment as to whether a. second or successive application shall be denied without consideration of the merits. Even as to such an application, the federal judge clearly has the power— and, if the ends of justice demand, the duty — to reach the merits.
Sanders v. United States, 373 U.S. 1, 18-19, 83 S.Ct. 1068, 1078-79, 10 L.Ed.2d 148 (1963); see also Kuhlmann v. Wilson, 477 U.S. 436, 106 S.Ct. 2616, 2625, 91 L.Ed.2d 364 (1986) (“the permissive language of § 2244(b) gives federal courts discretion to entertain successive petitions under some circumstances”); Potts v. Zant, 638 F.2d 727, 741 (5th Cir. Unit B 1981). In his order, the district judge specifically cited Sanders and Potts. We thus conclude that, despite his decision that Davis had abused the writ, the district judge relied on the proper grounds in exercising his discretion, concluding that the “ends of justice” justified considering Davis’ amended petition. See Sanders, 373 U.S. at 15, 83 S.Ct. at 1077.
II
The district court granted the writ because it found the closing argument of the prosecutor at Davis’ sentencing hearing unconstitutional under our decision in Hance v. Zant, 696 F.2d 940 (11th Cir.1983). In Hance, the court found unconstitutional arguments made by the prosecutor which were similar to the arguments delivered in this case. The decision in Hance, however, has been largely overruled. Brooks v. Kemp, 762 F.2d 1383, 1399 (11th Cir.1985) (en banc), vacated on other grounds, — U.S.-, 106 S.Ct. 3325, 92 L.Ed.2d 732 (1986); see Drake v. Kemp, 762 F.2d 1449 (11th Cir.1985) (en banc), cert, denied, — U.S.-, 106 S.Ct. 3333, 92 L.Ed.2d 739 (1986); Tucker v. Kemp, 762 F.2d 1480 (11th Cir.1985) (en banc), vacated, 474 U.S. 1001, 106 S.Ct. 517, 88 L.Ed.2d 452 (1985), on remand, 802 F.2d 1293 (11th Cir.1986), cert, denied, — U.S.-, 107 S.Ct. 1359, 94 L.Ed.2d 529 (1987); Tucker v. Kemp, 762 F.2d 1496 (11th Cir.1985) (en banc).
Generally the court engages in a two step process in determining whether a habeas petitioner is entitled to relief based upon a prosecutor’s arguments. First, we consider whether the prosecutor’s arguments were improper. Second, we consider whether any arguments found improper were so prejudicial as to render the trial fundamentally unfair. As we noted in Brooks, 762 F.2d at 1400, “it is not our duty to ask whether a particular remark was unfair; we are concerned with whether it rendered the entire trial unfair.” The Supreme Court has recently reaffirmed the standard to be employed in reviewing a prosecutor’s argument:
The relevant question is whether the prosecutors’ comments “so infected the trial with unfairness as to make the re-suiting conviction a denial of due process.” Donnelly v. De Christoforo, 416 U.S. 637 [94 S.Ct. 1868, 40 L.Ed.2d 431] (1974). Moreover, the appropriate standard of review for such a claim on writ of habeas corpus is “the narrow one of due process, and not the broad exercise of supervisory power.” Id. at 642, 94 S.Ct. at 1871.
Darden v. Wainwright, 477 U.S. 187, 106 S.Ct. 2464, 91 L.Ed.2d 144 (1986). Applying this standard, we conclude that the prosecutor’s closing arguments did not render Davis’ trial fundamentally unfair.
Davis primarily attacks six portions of the prosecutor’s arguments which he considers unconstitutional. During the sentencing phase, the prosecutor analogized the role of the jury and the role of soldiers fighting for their country:
I know it’s difficult and an unpleasant thing. Nobody would like to recommend the death penalty for anybody else, but people, unfortunately, are faced with difficult times, having to do difficult things. Every one who goes into the armed services has a difficult duty. Oftentimes these men have to go into battle and fight and get killed although they might be opposed to the practice of killing. But, in order to protect our country and preserve it, keep it where it is and keep it free, they must occasionally go into battle and kill people. It’s the same principal that applies here, and I submit, Freddie Davis and people like him are just as much as an enemy of this country as soldiers who have fought against this country in war. In fact, even more because these soldiers are fighting for their own country.
Freddie Davis has no such motives. His motives are self-motivations, greed, lust or what have you. Let’s not feel sorry for Freddie Davis. There has been no evidence whatsoever presented by Freddie Davis to repute [sic] or dispute or rebute [sic] any evidence that we have submitted. The evidence that we have submitted must be taken as true because you have no other evidence presented to you. That’s it.
In Brooks, we found improper an argument that was similar in some respects to the argument quoted above but was in other respects more egregious. We noted that “the analogy of the death penalty to killing in a war was appropriate insofar as it implied that imposing death, while difficult, is at times sanctioned, by the state because of compelling reasons (national security or deterring crime).” 762 F.2d at 1412. We found the particular analogy drawn in Brooks to be improper, as it “undermine[d] the crucial discretionary element required by the Eighth Amendment.” Id. at 1413. In that case, however, “[t]he improper aspect of the argument was the suggestion that the jurors should forego an individualized consideration of Brooks’ case and instead choose execution because he was part of the broad ‘criminal element’ terrorizing American society.” Id. at 1414. The excerpt quoted above included no such suggestion. Instead, the prosecutor emphasized the evidence in this particular case and the duty of the jury to impose a sentence of death if they deemed it appropriate under the particular circumstances of the crime Davis committed. The prosecutor thus avoided the argument held improper in Brooks.
Also challenged is the prosecutor’s argument concerning the deterrent value of the death penalty:
We do know this, that in the last 10 or 12 years, since we haven’t had but one death penalty in the whole United States, violent crimes have increase [sic] tremendously. They are running rampant in this country. You cannot pick up the newspaper, listen to the television, or radio, read a magazine or anything about the news without reading about some vile, horrible, unspeakable crime. These crimes are happening in much more frequency now than they did while we were imposing the death penalty on people who committed these crimes. That’s just the facts of life. We do know that this is happening.
This argument was not improper. Arguments by the prosecutor that the death penalty serves as a deterrent are proper. Brooks, 762 F.2d at 1407 (“In deciding whether to impose the death penalty in a particular case, it is appropriate for a jury to consider whether or not the general deterrence purpose of the statute is served thereby.”); Drake, 762 F.2d at 1449; Tucker, 762 F.2d at 1484; Tucker, 762 F.2d at 1505; Collins v. Francis, 728 F.2d 1322, 1339 (11th Cir.1984). One of the stronger arguments relied upon by defense attorneys during the sentencing phase of a death case is that nothing would be served by taking the defendant’s life. The prosecutor is permitted to rebut such an argument. The constitution does not require one-sideness in favor of the defendant.
Davis contends the prosecutor’s arguments are presumably based on studies not in evidence. In Brooks, the prosecutor was permitted to argue that the increasing crime rate had been produced by the state’s failure to have executed anyone in recent years. Reference to the increasing crime rate was permissible without statistical proof, because such information was within the common knowledge of jurors. Implicit within the state legislature’s decision to enact a death penalty statute is the determination that the death penalty serves valid purposes of deterrence and retribution. Thus, the court in Brooks concluded that: “[t]he prosecutor need not adduce evidence... to prove the link between death and deterrence. An argument... urging jurors to consider the deterrent effect of the penalty is not improper.” Brooks, 762 F.2d at 1409.
Retribution is also a permissible factor which the jury may consider in imposing death. Brooks, 762 F.2d at 1407; Tucker, 762 F.2d at 1484; Tucker, 762 F.2d at 1505. The prosecutor’s arguments seeking to justify the execution of Freddie Davis based upon society's legitimate interest of purging itself of this wrong was a permissible argument. The prosecutor made the following argument:
But, by feeling sorry for him, we neglect and overlook another aspect of the case. We completely ignore and neglect and overlook what happened to Miss Coe. What happened to her? For 35 or 40 minutes these people were in her house in which she was undergoing tortures that we can’t imagine. We can’t imagine what happened to her. No one within his wildest dreams can imagine what she went through. This type of sympathy directed toward Freddie Davis, ladies and gentlemen is false sympathy because it only looks at one side of the coin. One side of the story. To ignore Frances Coe and feel only for this defendant, I submit, would be a disgrace and an injustice and an outrage. That people can commit crimes like this in this country and not receive the punishment that they deserve is a disgrace and an outrage. Something this whole country has to be ashamed of, and ladies and gentlemen, I submit one of the main reasons that we have so many crimes like this in this country and we have them because of sympathy on the part of jurors toward people who commit the crime.
This argument was merely an effective means of emphasizing the purposes of retribution and deterrence served by this statute. The prosecutor also invoked both general and specific deterrence again in his conclusion:
The death penalty is called for. Ask yourselves this question, how would you feel living in this community if you looked out of your window one night and saw Freddie Davis walking down the street coming up toward your house. If that wouldn’t put a feeling of cold terror in your heart, what would?
One thing and one thing only will stop or reduce this type of crime from happening is that jurors must do their duty and stand up and be counted and tell Freddie Davis and people like him that they have had enough. That we are going to execute you if you participate in crimes like this. If you don't do it, why should they ever stop doing it? Why should they? If you are not willing to impose the death penalty in this case or cases like this, what will ever stop these people from committing these types of horrible, unspeakable crimes.
In Jurek v. Texas, 428 U.S. 262, 96 S.Ct. 2950, 49 L.Ed.2d 929 (1976), the Supreme Court held that the future dangerousness of a defendant is a proper consideration in imposing death. See Tucker, 762 F.2d at 1507; Bowen v. Kemp, 769 F.2d 672, 679 (11th Cir.1985). In the above quoted excerpt, the prosecutor dramatically illustrated this future dangerousness. In Brooks, the prosecutor brought this very matter home to the jury by asking, “Who’s daughter will be killed next?” We found such an argument to be constitutional, concluding that: “A legitimate future dangerousness argument is not rendered improper merely because the prosecutor refers to possible victims.” Brooks, 762 F.2d at 1412. The argument made in this case is no more emotion laden than the imagery created by the prosecutor in Brooks.
Davis also attacks two portions of the prosecutor’s arguments which he argues tend to lessen the jury’s role in the sentencing process. The prosecutor argued:
This is an important task. It’s a task that only the jury can decide. This is a task, a decision, that is so important that only the people, the people themselves, can decide this. The people decide this in the person of your twelve citizens picked from this county, twelve upstanding, intelligent citizens, as the law requires and decide what you think should be done. Punishment can’t be decided by the Sheriff. You can’t blame him if the person doesn’t get the electric chair. You can’t blame the judge if he doesn’t give him the electric chair, you can’t blame the District Attorney or the Governor or the GBI. The Governor doesn’t sentence, nor the State Legislature or the State Appeal Court or anybody else. This decision, what a sentence will be, is to be decided by a jury and only be decided by you, by this jury.
A similar argument was made toward the conclusion of the prosecutor’s argument:
What this case comes down to is a question of duty. You must do your duty as you see fit as the citizens of this country. And I — this is a difficult thing to do at times. Everyone else has had a duty in this case. The other people have done their duty as well as they saw fit. The citizens who found Miss Coe, found her body, they did their duty by bringing this to light. The officers, GBI, the Sheriff's office, Sheriff Branch, Mr. Bert Davis, they did their duty as well as it could be done, and we are very fortunate, ladies and gentlemen, to have people like this working for you. I think you realize that. All the witnesses who testified in the case, officers, or people reported the crime or Crime Lab — the Crime Lab did its duty and they did their duty by performing the tests that they did and coming and testifying about it. The Grand Jury did its duty by returning an indictment. The Judge did his duty deciding on the legal points that came up and with intelligence. The juries — first jury did its duty by finding this one guilty of the offenses that he committed. I have attempted to do my duty by trying to bring the truth out to you and let you know what happened. It’s your duty and nobody else’s you can’t delegate it to anyone else. No one else but you and your duty is clear, and to not find — not recommend the death penalty is to leave your duty undone and only halfway complete this case.
These arguments bear some resemblance to an argument made by the prosecutor in Tucker v. Kemp, 762 F.2d 1480 (11th Cir. 1985):
[The defense attorney will] mention that, well, can you sleep well if this man is executed? Won’t it bother you if you ever read about it or hear about it whenever it happens? But I for one want to tell you that you are not the ones who did it if he is executed. It does not rest on your shoulders, ladies and gentlemen. Policemen did their duty and they went out and made the case. The grand jury down there did its duty and it indicted him and charged him with these horrible offenses. The district attorney’s office prosecuted the case, located the witnesses, and brought them in. The judge, the court came in and presided at the trial. And ladies and gentlemen, you are the last link in this thing, and if this man suffers the death penalty it’s no more up to you than it is to anybody else, the grand jury or the police, or the district attorney’s office. All of us are coming in and doing our duty.
In Tucker, the Court concluded that such an argument was improper because it “suggested] that the jury is only the last link in a long decision” to impose death and therefore trivializes the jury’s importance. Tucker, 762 F.2d at 1485-86.
In Brooks v. Kemp, the en banc court also considered a prosecutor’s argument which is remarkably similar to the argument made in the present case:
Now I’m sure another question that might be going through your mind at this time is, when I get back to that jury room, and we have to vote, and I vote to take somebody’s life, can I do it? I know it’s rough, it would be hard for me to do. Can I take somebody’s life? Well the truth, you’re not pulling the switch in the electric chair; the police who investigated this case and who apprehended William Brooks, they’re not taking his life; the Recorder’s Court Judge who heard the evidence in the preliminary hearing, are you going to say he’s responsible for taking his life? Of course not. How about the Grand Jury who listened to the evidence and indicted him for murder; are the Grand Jurors responsible for his life, can you say they’re about to take his life? Of course not. How about me and my staff, we put the case together and we prosecuted him, and we’re here now asking you to bring back the death penalty, do we feel responsible? I don’t. I don’t think anybody in my office does. How about the man, if he’s electrocuted, who actually pulls the switch, is he responsible for taking his life? Of course not. The person who is responsible for his life is William Brooks himself, and if the switch is pulled and he’s put to death, he pulled the switch the morning that he was walking along Saint Mary’s Road when he put the gun in the back of Carol Jeannine Galloway and kidnapped her, that's when he took his own life. He’s a grown man, and he knew what he was doing.
This argument was found to be proper because it did not minimize the role of the jury as the prosecutor had sought to do in Tucker, rather the argument emphasized the responsibility of the jury. In the present case, the prosecutor’s arguments are more closely analogous to the argument made in Brooks rather than the argument used by the prosecutor in Tucker. Here, the jury was instructed as to the importance of its task. The prosecutor informed the jury that they alone could determine the appropriate sentence and that this task could not be delegated.
In Dutton v. Brown, 788 F.2d 669, 675 (10th Cir.1986) the United States Court of Appeals for the Tenth Circuit considered a prosecutor’s argument which informed the jury that they were not “functioning as individuals” but functioning as part of the legal system in the same manner that the judge and district attorney performed their roles within this system. The court held that such an argument did not diminish the jury’s responsibility:
[T]he statement of the prosecutor was not constitutionally impermissible. The statement was not designed to, nor did it, suggest to the jury that it was not ultimately responsible for deciding [the defendant’s] punishment. The prosecutor merely underscored that the jury was part of the whole system of justice, and within that system it had a grave responsibility.
The same must be said concerning the arguments delivered in this case. It certainly was not improper for the prosecutor to argue that the jury should return a verdict of death in this particular case. Accordingly, the argument by the prosecutor in this case was proper.
Finally, even if we were to find the prosecutor’s argument to be improper, Davis’ sentencing proceeding was not rendered fundamentally unfair. In Tucker v. Kemp, 762 F.2d 1480 (11th Cir.1985), the court concluded that the prosecutor’s “last link” argument was improper but proceeded to find the argument was not so egregious as to create a constitutional error. The decision in Tucker, however, was vacated and remanded by the Supreme Court in light of the Supreme Court’s subsequent decision in Caldwell v. Mississippi, 472 U.S. 320, 105 5. Ct. 2633, 86 L.Ed.2d 231 (1985). In Caldwell, the court reversed a death sentence where the jury was informed that a sentence of death is not final and the sentence would be subject to automatic review by the State Supreme Court. In so ruling, the Court, per Justice Marshall, wrote:
In this case, the state sought to minimize the jury’s sense of responsibility for determining the appropriateness of death. Because we cannot say that this effort had no effect on the sentencing decision, that decision does not meet the standard of reliability that the Eight Amendment requires.
Id., 105 S.Ct. at 2646. On remand, the Tucker court concluded that its previous holding was consistent with Caldwell. Tucker v. Kemp, 802 F.2d 1293 (11th Cir. 1986) (en banc), cert, denied, — U.S.-, 107 S.Ct. 1359, 94 L.Ed.2d 529 (1987). The court noted that “[vjiewing the entire sentencing proceeding, there can be little doubt that the jury understood it had the sole responsibility to determine the sentence to be received by petitioner.” Id. at 1296; see also Coleman v. Brown, 802 F.2d 1227, 1238 (10th Cir.1986) (“[W]e do not find that this ‘last link’ remark made during the guilt stage of the trial — even taken together with the prosecutor’s persistent attempts to evoke sympathy for [the] victims and his comments on matters not in evidence — rose to the level of constitutional error.”). In the present case, the prosecutor’s closing arguments repeatedly emphasized the role played by the jury. The prosecutor began by informing the jury that only they could impose death. Later in his argument, the prosecutor commented:
If you think that the aggravated circumstances are there, but you think he should get life, then, that’s your prerogative and you can give him life. It’s totally your decision.
Defense counsel began his arguments by commenting upon the “very awesome responsibility” to which the prosecutor had referred. Furthermore, the judge informed the jury it had the discretion of imposing life even if the statutory aggravating factors were proven beyond a reasonable doubt. In light of these circumstances, we conclude that “the jury was fully apprised of and appreciated the decision that it alone had to make — whether to impose a sentence of death or one of life imprisonment.” Tucker, 802 F.2d at 1297. The sentencing proceeding was not fundamentally unfair.
Ill
Davis argues that, given the facts and procedural posture of his case, he should not have been put on trial again for his life. He contends that the evidence produced at his guilt/innocence trial failed to demonstrate beyond a reasonable doubt that he committed the offense of rape. At Davis’ first sentencing hearing, the state relied on only the subsection (b)(2) aggravating circumstance — murder committed in connection with the rape. Thus, Davis argues that the state could not resentence him to death after his first sentencing hearing because, given the lack of evidence to prove the rape, the double jeopardy clause bars placing him again on trial for his life. See Bullington v. Missouri, 451 U.S. 430, 101 S.Ct. 1852, 68 L.Ed.2d 270 (1981). We will consider the constitutional validity of both his rape conviction and his resentencing together.
When a habeas petitioner raises a sufficiency of the evidence claim, “the relevant question is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.” Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979). At trial, the state produced evidence that the victim had been forcibly assaulted around the vaginal area. Although the medical examiner testified that he found no sperm and only trace elements of seminal fluid, the position of the victim’s body — sweater open, slip pulled up, pantyhose and panties pulled down — was entirely consistent with the jury’s conclusion that a rape occurred. Davis argues that the injury could have been accomplished with a foreign object such as a stick. Although this may be true, a reasonable juror could have found beyond a reasonable doubt that the victim was raped.
Davis argues that, although a juror could conclude that the victim was raped, the state introduced no evidence tending to show that Davis, as opposed to his co-defendant Spraggins (who was tried separately), committed the crime. We agree that the state failed to exclude all doubt that Davis, as a principal, committed the rape himself; however, the evidence clearly placed him in the victim’s house at the time of the crime. Although both Davis and Spraggins testified that the victim was not raped (assertions controverted by the evidence), Spraggins testified that Davis was not only present during the crime but that Davis instructed Spraggins as to how next to torture and kill the victim. Davis had a cut on his hand; and blood matching Davis’ blood type, but not Spraggins’, was found in the victim's bedroom and in other portions of the house. Given this evidence, the jury properly could decide that either Davis or Spraggins raped the victim and that the other participated as an aider and abetter, thus making him guilty as a principal under O.C.G.A. § 16-2-20. The judge gave the appropriate jury charge. Thus, we reject both Davis’ contention that his rape conviction lacks validity and his contention that the invalidity voids his death sentence.
IV
In a somewhat related claim, Davis next argues that the double jeopardy clause, as construed in Bullington v. Missouri, 451 U.S. 430, 101 S.Ct. 1852, 68 L.Ed.2d 270 (1981), prevents the state from relying on an aggravating circumstance to support his death sentence at his second sentencing hearing (the subsection (b)(7) circumstance) not relied on at his first sentencing hearing. Davis is not entitled to relief on this claim. The recent Supreme Court decision in Poland v. Arizona, 476 U.S. 147, 106 S.Ct. 1749, 90 L.Ed.2d 123 (1986), disposes of this issue.
In Poland, the trial judge had found as an aggravating factor that the murder was “especially heinous, cruel, or depraved,” and imposed a sentence of death. The judge, however, concluded that the crime did not fall within the “pecuniary gain” aggravating circumstance because the murder was not a contract killing. The Arizona Supreme Court found the evidence insufficient to support a finding that the murder was especially heinous; the court, however, concluded that the trial judge could have found that the crime was committed for pecuniary gain. At Poland's second sentencing, the prosecution presented additional evidence as to the “especially heinous” and “pecuniary gain” aggravating factors. The prosecutor also introduced evidence concerning a third aggravating circumstance — conviction of a previous violent felony. At the second sentencing, the trial judge found all three aggravating circumstances present and resentenced Poland to death. The Supreme Court held that the reimposition of the death penalty was not precluded by the Double Jeopardy Clause. Concluding that the defendant had never been “acquitted” of the death penalty, the court noted that the prosecutor was writing upon a “clean slate” in seeking a sentence of death at the second sentence hearing. The Supreme Court stated:
We reject the fundamental premise of petitioners’ argument, namely, that a capital sentencer’s failure to find a particular aggravating circumstance alleged by the prosecution always constitutes an “acquittal” of that circumstance for double jeopardy purposes. Bullington indicates that the proper inquiry is whether the sentencer or reviewing court has “decided that the prosecution has not proved its case” that the death penalty is appropriate. We are not prepared to extend Bullington further and view the capital sentencing hearing as a set of mini-trials on the existence of each aggravating circumstance. Such an approach would push the analogy on which Bullington is based past the breaking point.
Aggravating circumstances are not separate penalties or offenses, but are “standards to guide the making of [the] choice” between the alternative verdicts of death and life imprisonment. Id. at 438, 101 S.Ct., at 1858. Thus, under Arizona’s capital sentencing scheme, the judge’s finding of any particular aggravating circumstance does not of itself “convict” a defendant (i.e., require the death penalty), and the failure to find any particular aggravating circumstance does not “acquit” a defendant (i.e., preclude the death penalty).
It is true that the sentencer must find some aggravating circumstance before the death penalty may be imposed, and that the sentencer’s finding, albeit erroneous, that no aggravating circumstance is present is an “acquittal” barring a second death sentence proceeding. Arizona v. Rumsey, [467 U.S. 203, 104 S.Ct. 2305, 81 L.Ed.2d 164 (1984).] [The] concern with protecting the finality of acquittals is not implicated when, as in this case, a defendant is sentenced to death, i.e., “convicted.” There is no cause to shield such a defendant from further litigation; further litigation is the only hope he has.
Davis has at no time been “acquitted” of the death penalty. Therefore, at his second sentencing hearing, the prosecution was free to introduce any and all aggravating circumstances supported by the evidence.
V
At Davis’ second hearing, the jury found the aggravating circumstance that the crime was “outrageously or wantonly vile, or an aggravated battery to the victim.” O.C.G.A. § 17-10-30(b)(7). Davis contends that application of the (b)(7) circumstance in this case is unconstitutional under Godfrey v. Georgia, 446 U.S. 420, 100 S.Ct. 1759, 64 L.Ed.2d 398 (1980), because the trial judge failed to give a limit ing instruction to the jury and because the facts of this case do not provide a basis for distinguishing this murder from any other murder on the basis of subsection (b)(7). Both arguments are without merit.
We have previously rejected the contention that the trial judge must give a limiting instruction. Westbrook v. Zant, 704 F.2d 1487, 1504 (11th Cir.1983); Stanley v. Zant, 697 F.2d 955, 971 (11th Cir.1983). In this case, as in Stanley, the instruction directed the jury that they must find that the murder involved “torture, depravity of mind on the part of the defendant and aggravated battery on the defendant [sic].” Cf. Stanley, 697 F.2d at 971-72. Thus, there is not a possibility here, as there was in Godfrey, that “the jury [might] find depravity of the mind even absent any serious physical abuse of the victim before death.” Id. at 971. Davis thus has no basis for a faulty-instruction claim absent a requirement for a limiting instruction.
Given the review conducted by the Georgia Supreme Court, however, we would uphold application of the circumstance in this case even if the instruction had been stated in the disjunctive. As we noted in Westbrook, “the Godfrey plurality intimated that the uncontrolled discretion of an uninstructed jury could be cured by review in the Georgia Supreme Court.” 704 F.2d at 1504. The Georgia Supreme Court analyzed the application of the (b)(7) circumstance in this case as follows:
Pursuant to the mandate of the Supreme Court of the United States we have considered both appellant Spraggins’ sentence of death which rests upon Code Ann. § 27-2534.1(b)(7) and Davis’ sentence of death which rests partially upon Code Ann. § 27-2534.1(b)(7). We find material differences between Godfrey and the cases under review which distinguish this murder from the murder in Godfrey and from other “ordinary murders” for which the death penalty is not appropriate. See generally, Hance v. State, 245 Ga. 856 (268 S.E.2d 339) (1980); Dampier v. State, addendum, 245 Ga. 882 (268 S.E.2d 349) (1980).
Unlike the murder in Godfrey, death was not instantaneous, the victim was not related to either defendant, and the victim was in no way threatening or hostile to the defendants. Both defendants had planned to rob the victim. Thereafter the defendants fled and made every effort to conceal their crimes.
Code Ann. § 27
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.
MILLER, Associate Justice.
This appeal is from a decree of the District Court in a condemnation proceeding involving the site of the War Department Building in Washington, D. C. The Government contends that, by reason of their failure to move to set aside the verdict and for a new trial, appellants are foreclosed from maintaining this appeal. But this contention cannot be sustained. We held in Walker v. Hazen, that when condemnation proceedings are brought in the name of the District of Columbia such failure bars an appeal. But this result was reached under a section of the Code, pertinent to such proceedings and not pertinent to condemnation proceedings for the acquisition of land in the District for use of the United States. Proceedings of the latter character are governed by entirely different sections of the Code.
In Willis v. United States, we reviewed, historically, the legislation which eventuated in the divergent and mutually exclusive procedures now required to be followed by the two governments. The sections which govern proceedings brought for the use of the United States contain no counterpart of Section 46, which was interpreted in Walker v. Hazen. Such provisions as appear in those sections, concerning motions for new trial and other proceedings after verdict, are permissive; in sharp contrast to the provisions of Section 46. And the only specified condition of appeal is that it shall be by a party aggrieved by a final judgment.
Evidence was offered -to prove the price which was paid by the United States, following negotiation and purchase, for some of the parcels, other than those of appellants, which constitute the site of the new War Department Building in Washington, D. C. The offer was rejected by the District Court. Appellants, relying upon the case of Washington Home for Incurables v. Hazen, assign this ruling as error. Assuming the admissibility of the evidence, it does not appear that its exclusion in the present case was error. In the first place, the burden is upon the party who offers such evidence to establish as a preliminary fact that the purchase, concerning which evidence is offered, was made without compulsion, coercion or compromise. In the present case this was not done. Consequently, appellants are in no position to complain of its exclusion.
In the second place, the reception of such evidence, in each case, calls for the exercise of discretion by the trial court. Wigmore says that the question should be left to the trial court “in its discretion to exclude such evidence when it does involve a confusion of issues, but otherwise to receive it, * * *.” Where the trial judge is vested with large discretion in the admission and exclusion of evidence to the end that the jury may be placed in the best position to pass judgment upon the ultimate question of fact, the manner of his exercise of that.discretion should not be stigmatized as abusive, except for good reason. In the light of the present record we find no such reason here.
The court excluded opinion evidence as to whether the price paid by appellant for one of the lots in issue was reasonable. The evidence related to a sale made fifteen years prior to the commencement of condemnation proceedings. Conditions in the District of Columbia have changed markedly in the intervening period; the record fails to reveal the witness’ qualifications to testify upon the subject or to give other than hearsay testimony. The relevancy of such speculative evidence is doubtful, and there is no reason to question the ruling.
The District Court excluded evidence of an offer to purchase made to the owner by a third person. The consideration offered consisted in part of other property and, consequently, involved collateral issues concerning its value. There was no error in this ruling.
In conclusion it may be noted that evidence of private sales and expert opinion concerning values of property in the vicinity was freely admitted by the trial court. The record shows that the case was fairly presented, to the end that the jury was in the best position to pass judgment upon the ultimate question of fact. Upon careful consideration of appellants’ contentions we conclude that the judgment of the District Court should be affirmed.
Affirmed.
67 App.D.C. 188, 190, 90 F.2d 502, 504, certiorari denied 302 U.S. 723, 58 S.Ct. 44, 82 L.Ed. 559. See also, Shannon & Luehs Const. Co. v. Reichelderfer, 61 App.D.C. 36, 57 F.2d 402.
D.C.Code (1929) tit. 25, § 46.
See Willis v. United States, 69 App. D.C. 129, 131, 99 F.2d 362, 364.
D.C.Code (1929) tit. 25, §§ lOO-llOo.
69 App.D.0. 129, 130, 99 F.2d 362, 363.
D.C.Code (1929) tit. 25, §§ 50 and HOo.
D.C.Code (1929) tit. 25, §§ llOe, f, g.
D.C.Code (1929) tit. 25, § llOi. See also, Federal Rules of Civil Procedure, Rule 46, 28 U.S.C.A. following section 723c.
63 App.D.C. 185, 70 F.2d 847.
See O’Malley v. Commonwealth, 182 Mass. 196, 65 N.E. 30; Eames v. Southern New Hampshire Hydro-Electric Corp., 85 N.H. 379, 159 A. 128. Cf. Albert Hanson Lumber Co., Ltd. v. United States, 261 U.S. 581, 589, 43 S.Ct. 442, 67 L.Ed. 809. Contra: United States ex rel. and for Use of Tennessee Valley Authority v. Bailey, 5 Cir., 115 F.2d 433, 434; United States ex rel. and for Use of Tennessee Valley Authority v. Reynolds, 5 Cir., 115 F.2d 294, 296; Wise v. United States, D.C.W.D.Ky., 38 F .Supp. 130, 134; United States v. Beaty, D.C., W.D.Va., 198 F. 284, 291, reversed on other grounds, 4 Cir., 203 F. 620, writ of error dismissed on procedural ground, 232 U.S. 463, 34 S.Ct. 392, 58 L.Ed. 686; United States v. Freeman, D.C.D.Wash., 113 F. 370, 371. See also, Notes, 32 Col.L.Rev. 1053; 118 A. L.R. 869, 893 ; 43 L.R.A..N.S., 985.
1 Wigmore, Evidence (3d Ed.1940) § 18(E); Kankakee Park Dist. v. Heidenreich, 328 Ill. 198, 204, 159 N.E. 289, 292; Wright v. Commonwealth, 286 Mass. 371, 373, 374, 190 N.E. 593, 594; State Highway Commission v. Buchanan, 175 Miss. 157, 189, 190, 166 So. 537, 538.
Ornstein v. Chesapeake & O. R. Co., Ohio App., 36 N.E.2d 521, S26; Kankakee Park Dist. v. Heidenreich, 328 Ill. 198, 204, 159 N.E. 289, 292; City of Mt. Olive v. Braje, 366 Ill. 132, 136, 7 N.E. 2d 851, 854.
Kankakee Park Dist. v. Heidenreich, 328 Ill. 198, 204, 159 N.E. 289, 292; Wright v. Commonwealth, 286 Mass. 371, 373, 190 N.E. 593, 594.
2 Wigmore, Evidence (3d Ed. 1940) § 463.
Franzen v. Chicago, M. & St. P. Ry. Co., 7 Cir., 278 F. 370; United States v. Nickerson, 1 Cir., 2 F.2d 502. See Washington Home for Incurables v. Hazen, 63 App.D.C. 185, 70 F.2d 847.
Maryland Cas. Co. v. Citizens State Bank, 5 Cir., 84 F.2d 172, 174; Brigham Young Univ. v. Lillywhite, 10 Cir., 118 F.2d 836, 841, 137 A.L.R. 598, cer-tiorari denied 314 U.S. 638, 62 S.Ct. 73, 86 L.Ed. 512; Robinson v. Parker, 11 App.D.C. 132, 138; Washington Times Co. v. Bonner, 66 App.D.C. 280, 290, 86 F.2d 836, 846, 110 A.L.R. 393; District of Columbia v. Chessin, 61 App.D.C. 260, 264, 61 F.2d 523, 527.
Cf. United States v. Freeman, D.C. D.Wash., 113 F. 370.
3 Wigmore, Evidence (3d Ed. 1940) § 718.
3 Wigmore, Evidence (3d Ed. 1940) § 719.
Cf. Hall v. Providence, 45 R.I. 167, 169, 121 A. 66, 67, admitting the testimony of an expert as to the reasonableness of the price paid for improvements on the property taken. But the transaction there was recent. Franzen v. Chicago, M. & St. P. Ry. Co., 7 Cir., 278 F. 370, 373.
Sharp v. United States, 191 U.S. 341, 348 — 350, 24 S.Ct. 114, 48 L.Ed. 211; Jefferson Park District v. Sowinski, 336 Ill. 390, 168 N.E. 370. Cf. Erceg v. Fairbanks Exploration Co., 9 Cir., 95 F. 2d 850, 853, 854, certiorari denied 305 U.S. 615, 59 S.Ct. 74, 83 L.Ed. 392; Notes, 84 L.Ed. 248; 32 Col.L.Rev. 1053, 1058.
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.
COFFIN, Circuit Judge.
This is an appeal from a judgment of conviction by the district court for wil-fully refusing to submit to induction. 50 U.S.C. App. § 462(a). Appellant was first ordered to report for induction on July 16, 1968. Through a mistake in dates he reported a day late; his local board excused him and postponed his induction date to August 15. Appellant duly reported but, having in the meantime been arrested on a charge of being in the presence of marijuana, a “moral waiver” was required. Army Reg. 601-270, jjjf 3-9. The waiver was issued and the board ordered appellant to report for induction on September 18. It is appellant’s failure to report on this date which led to his prosecution and conviction.
While appellant raises a number of issues relating to local board procedure and trial, of chief concern to us are two letters received by the board on July 17 from two doctors concerning appellant’s mental and emotional disorders. One, from appellant’s local doctor of some years, stated that appellant was deeply disturbed, with neurotic depression and anxiety, was a chronic user of drugs, that induction might have “severely destructive” results, and that further psychotherapy was being arranged. The second letter, from a Boston psychiatrist to whom appellant had been referred, reported observations made after a number of visits and psychological testing. His conclusion was that appellant had a pathological personality condition, that he should have long term therapy, and that military service would harm appellant and possibly others. These letters were not brought to the attention of the board but were, in August, sent by the clerk to the Armed Forces Examining and Entrance Station (AFEES) where they were stamped as “Received and Considered”, at the time when an Army psychiatrist, after an office interview, found appellant acceptable for induction.
Appellant contends that the September induction order was invalid because the local board did not at any time consider the contents of these letters received prior to the date of that order. He argues that the use of a procedure which does not afford the local board the opportunity to consider whether to reopen a registrant’s classification, based on letters received by the board whose contents present a nonfrivolous case for such a reclassification, vitiates a subsequent induction order.
The district court cited Selective Service regulation 32 C.F.R. § 1625.2 which says that a local board “may reopen and consider anew the classification of a registrant * * * based upon facts not considered when the registrant was classified which, if true, would justify a change in the registrant’s classification.” It observed that this was permissive, not mandatory, and noted as even more important the fact that the letters did go forward with the file to AFEES where appellant was given a special psychiatric examination. It saw no violation of due process.
The matter is, we feel, more complex. That the board is given wide discretion whether or not to reopen a case is obvious. But it is far from obvious that a clerk should have the power to determine what the board should see as a basis for exercising its discretion. We can readily conceive of a case in which the facts supplied to a local board about a registrant might demonstrate a dramatic change in the dependency of his family or in his own physical condition. In such a case we doubt that a board could justify its failure to reopen on the ground that the clerk had chosen not to submit the vital new information to it. If the reposing of discretion in the board is to have meaning and substance, it must be that the facts prerequisite to the exercise of judgment should come to its attention. We find such an analysis implicit if not explicit in Mulloy v. United States, 398 U.S. 410, 90 S.Ct. 1766, 26 L.Ed.2d 362 (1970). Although the registrant in that case made a written request for a reconsideration of his classification and no such request was made here by appellant, the Court’s resolution is directly relevant to our situation. Under 32 C.F.R. § 1625.2 there are two events which can trigger a reopening of a registrant’s classification: (a) a written request by persons within certain categories; or (b) action by the board itself. Both sections require the same quantum of evidence to support a reopening, i. e., “facts not considered when the registrant was classified, which, if true, would justify a change in the registrant’s classification.” 32 C.F. R. § 1625.2. The Court in Mulloy considered the operations of the first triggering device, the written request by a registrant. It pronounced the following standard:
“Where a registrant makes nonfriv-olous allegations of facts that have not been previously considered by his board, and that, if true, would be sufficient under regulation or statute to warrant granting the requested reclassification, the Board must reopen the registrant’s classification unless the truth of these new allegations is conclusively refuted by other reliable information in the registrant’s file.” 398 U.S. at 416, 90 S.Ct. at 1771.
The motivating consideration behind the Court’s circumscribing of local board discretion in reopening classifications is that there is a critical difference between a simple refusal to reopen and reopening followed by a decision not to alter the registrant’s classification. Once the local board reopens, it is required by regulation to “consider the new information which it has received and [to] again classify the registrant in the same manner as if he had never been classified. Such classification shall be and have the effect of a new and original classification even though the registrant is again placed in the class that he was in before his classification was reopened.” 32 C.F.R. § 1625.11. As a result of this new classification the registrant is guaranteed both the right of personal appearance before the local board and the right of appeal from its determination. 32 C.F.R. § 1625.13. The effect of a board’s failure to reopen upon receipt of new information is a denial of these essential procedural rights. A local board may refuse to reopen, therefore, only “where the claim is plainly incredible, or where, even if true, it would not warrant reclassification, or where the claim has already been passed on, or where the claim itself is conclusively refuted by other information in the applicant’s file.” 398 U.S. at 418, n. 7, 90 S.Ct. at 1772.
We see no logical basis for differentiating between cases where the registrant files a request based on non-frivolous grounds and those where, from other sources, information of equivalent weight is supplied. In either case whether or not a reopening is granted is a matter of substance”. Mulloy v. United States, supra, at 415, 90 S.Ct. at 1770. It might well be that the registrant is incapacitated, physically or mentally incapable of acting for himself, or so deluded or misled as not to be able to appraise his own condition. Indeed, the report of a responsible doctor with ample opportunity to diagnose a registrant might be more credit-worthy than the request of the registrant himself. This does not mean that every request or any information rises to the level where reopening is required. But the board must at least make the assessment as to whether “nonfrivolous allegations of facts” of sufficient significance were presented. If it concludes that the contents of the correspondence meet this standard, it must reopen the classification and afford the registrant the procedural rights provided by regulation. As we cautioned in United States v. Stoppelman, 406 F.2d 127, 130 (1st Cir. 1969), cert. denied 395 U.S. 981, 89 S.Ct. 2141, 23 L.Ed.2d 769, where we dealt with a far less pertinent communication, “* * * clerks file such communications without calling them to the board members’ attention at considerable risk to the validity of subsequent proceedings.”
In the case at bar, the information in the doctors’ letters not only evidenced apparently serious and competent medical advice based on adequate opportunity to observe, but contained statements of professional opinion which could have entitled appellant to a different classification. The failure of the board to consider the letters is not, as the district court thought, cured by the subsequent special psychiatric examination conducted by the Army, since appellant at this point had been denied his rights to appear and appeal within the Selective Service system. This deprivation of procedural rights was such that the final order to report for induction was invalid and appellant’s conviction cannot stand. Mulloy v. United States, supra.
Accordingly, we do not consider the appellant’s further contentions concerning other practices of the local board, Selective Service headquarters and AFEES. Nór must we resolve the question of appellant’s intent in failing to report for induction. Let it suffice to say that the lodging of broad discretion in local Selective Service boards carries the concomitant duty of its exercise and that such exercise is predicated upon consideration of available information.
Reversed.
. The waiver, it appears, was erroneously issued on the basis of misinformation. This error is asserted as another ground for reversal but on the view we take of the ease requires no further discussion.
. While the letters were received by the board subsequent to the sending of the first order to report, they antedated the sending of the third and critical induction notice of September 3 by six weeks. They cannot, therefore, be considered as “post-induction order” information.
. Following this examination, appellant was ordered to report on September 18 but did not, having voluntarily entered a Connecticut mental hospital at the urging of his doctor and family. He was discharged a month later. On January 6, 1969, appellant’s case was reported to the U. S. Attorney for prosecution.
. Even if the letters were thought to be received after the order to report for induction was mailed, the board can reopen if it “specifically finds there has been a change in the registrant’s status resulting from circumstances over which the registrant had no control”, 32 C.F.R. § 1625.2. We would assume that in this circumstance the board should have access to the facts before it made its decision as to a change in status.
. Including the registrant, the government appeal agent, any person claiming to be a dependent of the registrant, or any person who has on file a written request for the current deferment of the registrant in a case involving occupational deferment.
. The Army Regulations list as cause for rejection for induction personality disorders including the following:
“a. Character and behavior disorders, as evidenced by
(1) Frequent encounters with law enforcement agencies, or antisocial attitudes or behavior which, while not a cause for administrative rejection, are tangible evidence of an impaired char-acterological capacity to adapt to the military service.
(4) Drug addiction.
b. Character and behavior disorders where it is evidence of history and objective examination that the degree of immaturity, instability, personality inadequacy, and dependency will seriously interfere with adjustment in the military service as demonstrated in school, with employers and fellow-workers, and other society groups.” Army Regulation 40-501.
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.
COFFIN, Circuit Judge.
These are appeals from an attorney’s fee award covering work performed by counsel for the plaintiff class, residents of the Northampton State Hospital, during two and one half years subsequent to entry of a complex consent decree. The decree bound the responsible Massachusetts officials to establish a system for the care and treatment of mentally disabled persons in community residential facilities and nonresidential programs.
The litigation commenced in 1976; the decree was entered in 1978; and the dis-. trict court made its first fee award in 1982, covering work performed from 1976 through 1981, in the amount of $386,204. The decision, resulting in a two-thirds reduction of the amount claimed, included an extensive analysis in which the court discussed and distinguished four kinds of work done by plaintiffs’ counsel in implementing and monitoring the decree. The court established different rates for court work, decree implementation and monitoring, general work, and travel. Id. at 1076. Although the decree called for a court-appointed Monitor, the decree also bestowed various responsibilities on the parties. Id. at 1072.
The present fee application covered the period from January 1, 1982 through June 30, 1984, and included 2537.93 hours of services performed by two lawyers and a paralegal. The 191-page application included some 3500 entries (at roughly eighteen items a page) accounting for time in tenths of an hour, and coded to identify six different kinds of work. The entry described the kind of activity (e.g., “spoke w/”, “met w/”, “drafted letter”, “reviewed letter”, “deposition”, “hearing”, etc.), as well as the other person or group involved, and, usually, the subject matter (e.g., “on budget”, “on crisis intervention program”, “on deposition”). The amount claimed was $239,772.10.
The district court awarded $132,639.55, a reduction of forty-four percent. The court decided three issues in favor of the plaintiffs: (1) it rejected defendants’ contention that, to recover post-judgment fees, plaintiffs must show that their efforts produced a better result than otherwise would have occurred, holding that “reasonable monitoring”, under Garrity v. Sununu, 752 F.2d 727, 738 (1st Cir.1984) imposes a lesser burden; (2) it rejected defendants’ challenge to time spent on three motions to hold defendants in contempt, all settled before hearing, finding that the efforts helped produce favorable results; and (3) it rejected defendants’ claim that the fee award should be reduced to the extent that hours included in the fee application were also compensated by the Association of Service Providers for Persons with Handicaps (“Association”), accepting counsel’s representation that all time claimed was for service benefiting the plaintiff class.
The court decided five issues in whole or in part against the plaintiffs: (1) it disallowed time spent in the unsuccessful defense on appeal of a legal services program ordered by the district court; (2) it disallowed time spent in a candidate search for the position of court Monitor; (3) it cut in half time claimed in connection with a Supplemental Agreement that never came to fruition; (4) it reduced, among other items, the claimed hourly rates from $125 and $115 for court activities to $95, from $115 and $105 for decree implementation to $85, and from $105 and $95 for general work to $75; and (5) it refused to grant plaintiffs’ request for a fifteen percent upward adjustment of the lodestar, while also denying defendants’ request for a downward adjustment.
Defendants appeal the court’s refusal to adopt a rigorous “but for plaintiffs’ efforts” standard for post-judgment monitoring fees and its refusal to reduce the award to reflect payments received from the Association. Plaintiffs cross appeal from the court’s elimination of time spent in helping select a Monitor, from its reduction of time spent on the Supplemental Agreement, and from its reduction of hourly rates.
I. Post-Judgment Monitoring
Defendants’ position is that in a post-judgment context where a defendant-funded court monitor is created by the decree, the only way to avoid creating a state-funded, open-ended “sinecure for counsel” is “to compensate counsel only where a substantial issue arises as to the defendants’ obligations under the decree, and the work of plaintiffs’ counsel yields a resolution more favorable to the class than the defendants were prepared to concede.” They argue that such an extra burden is required to sift out progress or benefits flowing from the decree itself. They seek to distinguish Garrity v. Sununu, supra, on the ground that the instant case has in place a court Monitor, paid some $70,000 during the period at issue, whose presence presumably should have made unnecessary all time spent in routine monitoring. They argue alternatively that Garrity may need to be limited in light of Webb v. Board of Education of Dyer County, — U.S. —, 105 S.Ct. 1923, 85 L.Ed.2d 233 (1985), which held that there should be no 42 U.S.C. § 1988 fee award for work in optional ad-. ministrative proceedings unless it is “of a type ordinarily necessary” to advance the litigation. Id. 105 S.Ct. at 1929.
We appreciate the fact that devising workable ways, fair to performer and pay- or, to compensate legal services during the formative period (following issuance of a complex system-creating decree and before satisfactory implementation becomes largely routine) is a difficult and sensitive task. The services are of lower profile and often of a more routinized nature than services preceding judgments. Missing the refining fire of the basic litigation, plaintiffs’ attorney may slip into a mode of spending too much time on too many matters, with the result that the decree institutionalizes the attorney, as well as the system.
Defendants’ preferred standard, however, leaves us traumatized at the prospect of a multitude of trials — not necessarily mini-trials — on whether issue A, for which X hours are claimed, was really a “substantial” issue regarding a defendant’s obligations, and, if so, did plaintiffs’ work produce a more favorable resolution than defendants “were prepared to concede”. Must the result be measurably more favorable? How may one prove what defendants were prepared to concede, but did not? Such a standard implies the availability of appellate review of each issue, an addition to our domain that we would welcome with something less than unbridled enthusiasm. Moreover, as Amicus points out, defendants’ proposed standard would stimulate posturing and undercut the amicable cooperation that a consent decree is designed to foster; plaintiffs would opt for a combative, litigious route in preference to quiet negotiation. Whether we view the likely results in terms of delay, cost to the parties, inflated counsel fees, acrimony, or the additional burden on both the district court and the court of appeals, we see little to recommend the suggested innovation.
Perhaps the most salient approach is to see if the normal method of determining fees for monitoring has broken down. We cannot say that it has in this case, because, while it was begun, it was never completed. Plaintiffs supplied their compendious fee application, which, while often not facially self-explanatory, contained the necessary keys to testing its reasonableness. Defendants generally knew the dates, subject matter, and people involved. They, at some expense to be sure, could have mounted challenges to specific claims — if not on a comprehensive basis, at least on a random one. Had this happened, the district court would have had the benefit of the adversary process and could have developed a sense of the extent to which the claim for services was reasonable. We recognize that a specific challenge to every item in a 3500-item catalogue of time charges would be impracticable, but it is not too much to expect the Commonwealth, relying on its deep involvement in the litigation, to target significant and vulnerable areas for testing. We would have confidence that, given reasonable assistance by counsel, a court could arrive at a fair decision without a dismaying investment of time, particularly during the later, “tapering off” stages of implementing a decree.
This traditional approach not having been attempted, we are left with the general attack on the standard, together with the “Association issue”, infra. Without specific indicia of unreliability, we are left with more general indicators, which do not support the Commonwealth. We note first the consistency of the district court’s fee decision-making in this case with the approach taken in its earlier decision on the 1976-1981 applications. Second, we are mindful of the extensive forty-four percent reduction made in this case. Third, we do not think it excessive for attorney Schwartz to have spent about one-fourth of his time for two and one half years on this case (i.e., 1323 hours out of 5000), attorney Fleischner one eighth (i.e., 602 hours out of 5000), and paralegal Costanzo one eighth (i.e., 613 hours out of 5000). Fourth, we observe that the Commonwealth, when it perceives that matters have been sufficiently clarified and stabilized, may and indeed should petition the court to relieve it of the burden of paying for private party monitoring. Fifth, we note that plaintiffs will have waited from two to four years for their attorney’s fees.
Finally, we are impressed by the fact that defendants have not been able to muster any authority for their proposition. Against the full array of authority for allowing fees for reasonable post-judgment monitoring, the defendants can say only that these decisions are “a series of ad hoc assessments of factual circumstances quite unlike those presented here.” As for their invocation of Webb v. Board of Education of Dyer County, — U.S. —, 105 S.Ct. 1923, 85 L.Ed.2d 233 (1985), as Amicus points out, its requirement that services (in an optional administrative proceeding) be “useful” and “ordinarily necessary” is fully consonant with our insistence in Garrity that services be “necessary for reasonable monitoring of a consent decree”. 752 F.2d at 738. And finally, defendants’ effort to justify departure from the Garrity standard where a court-appointed monitor is in place seems to us to have been adequately answered by the district court in its first fee opinion.
We therefore hold that the district court properly rejected defendants’ plea to accept a different standard of proof for post-judgment monitoring.
II. The Association Issue
Plaintiffs’ fee application was filed on August 16, 1984. Oral argument was had on October 19, 1984. Shortly thereafter, a routine audit revealed that the Association, a group of state funded contractors providing services to plaintiffs under the consent decree, had entered into a retainer agreement with a charitable corporation staffed by plaintiffs’ counsel, the Center for Public Representation (“Center”). Under this agreement, the Center was obligated to provide fourteen hours of service a week to the Association, in return for which the Center received from each Association member one-third of one percent of its contract funding received from the Department of Mental Health. Between 1982 and 1984, the Association paid the Center $87,-468.
Defendants moved to reopen the evidence and sought additional discovery on December 3, 1984 on the issues whether all of the time claimed was in reality for work done for plaintiffs and whether plaintiffs had already been compensated by the Association. Plaintiffs immediately moved to supplement their application and also opposed the motion to reopen, stating that the information as to compensation from the Association was irrelevant and that, in any event, they had now provided full information. Defendants countered with a proposal that the parties try to stipulate facts concerning the Center’s representation of the Association, failing which they would seek discovery.
On December 13, 1984, the court allowed the defendants’ motion to reopen for purposes of receiving written briefs — within thirty days from defendants and sixty days from plaintiffs. It further stated that evidence on alleged conflicts of interest concerning payments of attorney’s fees “shall be brought forward to the Court Monitor and he shall conduct hearings on same and make recommendations to the Court.” On December 21, noting that the court had allowed the motion to reopen, defendants sought leave to file interrogatories requesting a list of all persons named in the fee application who were employees of a provider agency, and information concerning the make-up of the “Litigation Committee” mentioned in the retainer agreement, including whether it was the “Litigation Committee” referred to in various entries in the fee application. They also sought to telescope the time for responses so that they could incorporate them in their written brief. Plaintiffs opposed these requests, stating that the court had limited any reopening to written briefs. On January 4, 1985, the court denied leave to propound interrogatories, writing: “The Court did not intend that discovery should be reopened.” We have traced this bit of procedural history in detail because it plays a large role in shaping our decision.
Defendants’ position is that case authorities such as our Palmigiano v. Garrahy, 616 F.2d 598 (1st Cir.1980), holding that the presence of financial support for a public interest legal services organization is irrelevant to the calculation of a reasonable fee under 42 U.S.C. § 1988, do not apply to the instant case where the Association’s retainer payments to the Center were for legal services rendered in the Association’s behalf and where the Association’s Litigation Committee has the power to determine the scope and type of work and legal positions to be taken by the Center. Defendants further point to specific portions of the record, which indicate to them that certain services were performed solely or dominantly for the Association (for example, meetings with the Litigation Committee and time recorded for conferring with employees of various providers). They also claim that their inability to probe further leaves an “irresolvable ambiguity” as to the object of counsels’ work, which justifies a fee reduction of between fifteen and twenty-five percent (i.e., between $20,000 and $33,000).
Plaintiffs, on the other hand, claim that the principles of cases like Palmigiano govern, that the existence of additional sources of funding is irrelevant to the disposition of their fee application, that the overarching purpose of the Association, necessarily controlling its Litigation Committee, is the welfare of the plaintiff class, and that plaintiffs’ attorneys have often taken positions contrary to the interests of individual providers and have always accorded the plaintiff class their “exclusive and unconditional loyalty”. Most pertinently, they assert that their fee application includes no time spent for the Association on unrelated matters but only hours spent for the Association (50% of their total work for the Association) where the interests of the plaintiff class and the Association were identical.
The district court, noting that the key question was whether the time claimed in the fee application was expended for the benefit of the plaintiff class, proceeded to rely “on the demonstrated integrity of plaintiffs’ counsel ... who have shown themselves to be extremely conscientious and honest attorneys”. The court stated that “[w]hen they represent to the Court that 50% of their Association hours were also for the benefit of the plaintiff class, quite frankly, the Court believes them. Defendants’ position that plaintiff’s hours must be reduced for this reason is, therefore, rejected.”
Such a credibility judgment and exercise of discretion would normally be unexceptionable, particularly in attorney’s fee matters. But, as we earlier have signalled, the procedural history of this issue places the ruling in a different light. We have criticized defendants for not making discrete challenges to specific kinds of services performed or the time spent in performing them. But the issue of dual compensation and possibly divided loyalty did not arise until after the October 1984 hearing. Although plaintiffs’ attorneys cannot be criticized for any concealment of the retainer arrangement, it clearly was not known by these defendants or their counsel.
The district court itself recognized the importance of the issue, but, when the issue arose, gave signals which were variously interpreted. Plaintiffs felt that only written briefs could address the issue; defendants felt that they were permitted to gather some facts. The court specifically allowed evidence on possible conflicts of interest to be submitted to the Court Monitor for his recommendations. Pour months later, the Monitor did recommend, following the joint agreement of the parties, that the retainer arrangement be terminated. This of course avoids recurrence of any problem but did not dissipate any cloud hovering over the instant fee application.
We conclude that the district court should have allowed at least a limited discovery on this newly realized issue to test whether or not some of the time claimed was solely or principally in pursuit of Association purposes that were not coterminous with those of the plaintiff class. While our own impression of the time sheets is that plaintiffs’ attorneys pursued a generally scrupulous approach to conscientious reporting, a cursory scrutiny reveals some twenty-five hours recorded as being spent in meetings with the Litigation Committee. Plaintiffs’ attorney Schwartz, in an affidavit, stated: “As a practical matter, these communications [at meetings] were primarily for the purpose of my providing information to the Committee, and through them to the members, concerning the status of implementation of this Decree.”
This indicates to us that the time spent in these meetings might well not have been spent for the principal benefit of the plaintiff class. Perhaps in the long run the class benefited, but, in view of the fact that defendants were precluded from any discovery or testing, the entries are sufficiently suspect, to warrant exclusion. Rather than remand these already prolonged proceedings for reconsideration by the district court, we think it both fair and appropriate to deduct from the award a sum roughly equal to twice the amount of the entries that appear suspect to us — $5,000.
III. The Cross-Appeal
Plaintiffs, regretfully, have engaged in three frivolous claims in their cross-appeal. Their fee application claimed hourly rates of $125 and $115 for court activities for their two attorneys and $115, $105, and $40 for decree implementation for their two attorneys and paralegal. The court, having allowed $80 an hour for court activities and $70 for decree implementation in 1982, increased the rates to $95 for court activities and $85 for implementation. Plaintiffs rely on their evidence of prevailing market rates in Springfield to urge that, as a matter of law, their evidence should carry the day. The legal work involved in this case was most intimately known by the district court; that the district court chose to increase fees by nineteen percent and no more was clearly within its discretion, especially in this advanced stage of implementation of the decree.
Plaintiffs’ other two claims are that the court abused its discretion in excluding 64.7 hours of time spent (and consequently $12,629) in the search for a new court monitor and in excluding one-half of the 366 hours for what proved to be an unsuccessful attempt to negotiate a supplemental agreement. As to the former, the court acknowledged that the parties’ attorneys were to consult and advise, but noted that the choosing was the court’s responsibility. As to the latter, the court gently suggested that plaintiffs had “perhaps put in too much effort” on a supplemental agreement. Both judgment calls were clearly within the discretion of the court.
Accordingly, the judgment below is reduced from $132,639.55 to $127,639.55 and, as reduced, is affirmed. The plaintiffs not having prevailed on part of the defendants’ appeal and having lost on their cross-appeal, it is the judgment of the court that the parties bear their own costs and that no counsel fees be awarded for the appeals.
. We have had two prior occasions to address this litigation: Brewster v. Dukakis, 675 F.2d 1 (1st Cir.1982); Brewster v. Dukakis, 687 F.2d 495 (1st Cir.1982).
. Brewster v. Dukakis, 544 F.Supp. 1069 (D.Mass.1982).
. The six kinds of work were as follows: court hearings, papers, and negotiations; work in connection with a Supplemental Agreement; decree implementation and monitoring — meetings, communications, and drafting; general— telephone calls, correspondence, and meetings not included in prior categories; work in connection with attorney fees; travel.
. See Garrity v. Sununu, 752 F.2d 727, 738 (1st Cir.1984); Burke v. Guiney, 700 F.2d 767, 771 (1st Cir.1983); Wuori v. Concannon, 551 F.Supp. 185, 190-191 (D.Me.1982) (court monitor in existence); New York Ass'n for Retarded Children v. Carey, 711 F.2d 1136, 1145 (2d Cir.1983); Delaware Valley Citizens' Council for Clean Air v. Commonwealth, 762 F.2d 272, 276 (3d Cir.1985); Willie M. v. Hunt, 732 F.2d 383, 387 (4th Cir.1984); Miller v. Carson, 628 F.2d 346, 348 (5th Cir.1980); Northcross v. Board of Education, 611 F.2d 624, 637 (6th Cir.1979); Bond v. Stanton, 630 F.2d 1231, 1233 (7th Cir.1980); Rutherford v. Pitchess, 713 F.2d 1416, 1421 (9th Cir.1983); Williams v. City of Fairburn, 702 F.2d 973, 976-77 (11th Cir.1983).
. “Despite the use of the term ‘monitoring’ the activities of plaintiffs’ counsel have not duplicated those of the court-appointed Monitor. The Monitor evaluates services under the Decree, resolves minor disputes, attempts to mediate major disputes, makes suggestions for implementation and submits reports to the Court. He does not have direct responsibility for insuring implementation of the Decree or advocating on behalf of plaintiff class members.” Brewster, supra, 544 F.Supp. at 1079 n. 6.
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.
RIDDICK, Circuit Judge.
The appellee Curl brought this action against the appellant railway company to recover damages for injuries received by him while employed by appellant as a railroad fireman. The action is based on the Federal Employers’ Liability Act, as amended, 45 U.S.C.A. §§ 51-60.
The appellant admitted liability, but in defense relied upon a release executed by the appellee, which on its face, for a consideration of $700, released the railway company “from all claims and demands which I now have or may have against it by reason of personal injuries sustained by me.” The printed forrar of release contained this statement: “I have read this release and understand that I can make no further claim against the railway company even though my injuries are more serious or different than I now know or understand them to be”; and in the release form the appellee copied the sentence just quoted.
At the conclusion of all the evidence, the appellee moved the court for a peremptory charge on the question of the validity of the release, leaving to the jury only the question of damages. The grounds advanced in support of this motion were.: (1) that it conclusively appeared from the evidence that the release was obtained from the appellee by fraud and deceit practiced upon him by the claim agent of the appellant; or (2) that it conclusively appeared from the evidence that the alleged settlement of appellee’s claim against the railway company was the result of a mutual mistake of the parties concerning the nature and extent of appellee’s injuries. The appellant moved the court for judgment in its favor on the ground that it conclusively appeared from the evidence that the release was valid and not the result of fraud or mistake. Both motions were denied. Counsel for both parties then agreed that the court should submit two interrogatories to the jury:
(1) Do you find that the release in evidence in this suit was entered into between plaintiff and defendant as a result of a mutual mistake of fact?
(2) Was the release obtained from the plaintiff by the defendant or its agent, by misrepresentation, fraud and deceit ?
This was done, and the jury were instructed that if they answered both questions in ¡the negative the appellant must prevail, but if they answered either in the affirmative they should proceed to determine the amount appellee was entitled to recover under the evidence.
The jury answered t'he first question in the affirmative and the second in the negative, and returned a verdict for the appellee for $50,000 on which judgment was entered.
Appellant assigns error in the court’s refusal to grant its motion for judgment and in denying appellant’s requested instructions which were (1) appellant’s request No. 3 to the effect that there was no evidence in the case which would warrant a finding that the release was invalid because of a mutual mistake of fact, (2) appellant’s request No. 4 to the effect that the release was effective to release appellant from liability for injuries to appellee not within the knowledge of the parties, as well as from injuries to the appellee known at the time the release was made, and (3) appellant’s request No. 5, a charge that the release executed by the appellee was prima facie valid; and error of the court in excluding evidence offered by appellant. Appellant also contends that the verdict is excessive.
The accident in which the appellee was injured occurred on September 19, 1947. The release was executed by the appellee on November 4, 1947, while he was still under the care of a physician employed by the appellant. Appellant’s physician, on September 23rd, after an examination of appellee, reported to appellant that in his opinion the length of appellee’s disability would be from 10 to 14 days. He diagnosed the injury received by appellee as a severe sprain of the neck, contusion of the left scalp followed by headaches and possible mild cerebral concussion, and mild sprain of the dorsal spine. X-rays taken at the time, in the opinion of the doctor, revealed no evidence of injury to the dorsal or cervical spine. The appellee was treated by ¡heat and massage, occasional novocain injections to relieve the pain of which he complained, and injections of vitamin B.
Appellant’s claim agent testified that at the time of the 'alleged settlement he had no idea that appellee was seriously injured. In securing the release 'he accepted as a fact the diagnosis made by the railway company’s doctor. It was his understanding that appellee acted upon the same belief. He testified that he knew that the claim of appellee against the railway company was one for which the appellant was absolutely liable, and that, if he had known at the time the release was taken that appellee was seriously injured, he would not have attempted to settle the case.
From the execution of the release until November 18, 1947, appellee continued to see appellant’s physician and to receive the heat and massage treatments from a doctor in private practice called into consultation by the railway company’s doctor. On November 18, 1947, the railway company’s doctor reported to the railway company that appellee would be able ¡to resume his regular duties as fireman on November 25. The doctor testified that he gave the appellee this certificate of recovery at appellee’s request. Appellee’s testimony was that he returned to work because the railway company’s doctor told him that he was able to return to work.
Appellee returned to ¡his work as a fireman on a steam engine, and worked without interruption through the month of December. His testimony was that he suffered severe pain continually during this month and thait he was able to remain at work only because the engineer did most of the work that his employment as a fireman required him to do. By January 1948 appellee was suffering from such pain and physical disability that he found it impossible to continue on his regular run. He arranged to be transferred to a diesel locomotive where his work as a fireman required less exertion. From January 1948 until June of that year appellee worked regularly except for 35 days when the pain he suffered from his injuries, was too severe to permit him to work. During ¡that time he continued to see the railway company’s physician and to receive treatments from him. Appellee’s testimony is that he was able to remain on duty during this period only because either the engineer or a brakeman performed the work he was supposed to do, and that by June 1948 he was compelled by his injury to abandon his attempt to work.
At the trial the railway company’s physician, who treated 'the appellee fallowing his injuries, denied that he told appellee there was nothing wrong with him, but he admitted that he did tell him that he could go back to work; and that within a month after the accident, in his opinion, appellee had shown marked improvement and was able to return to his regular work. At the time he gave appellee permission to return to work 'he thought appellee was virtually well. He made it clear in his testimony that he at no time ¡thought that the appellee was suffering from a serious injury.
Four medical experts were called to testify at the trial, two for the appellee and two for the appellant. Of these, appellee’s witnesses diagnosed appellee’s condition as a slipped or prolapsed cervical disc caused by the accident. In their opinion, appellee had suffered a permanent injury which would disqualify him from returning to his duties as a fireman for the rest of his life, subject only to ¡the possibility that his condition might be improved, but not completely cured, by a delicate major operation on the cervical spine. Appellant’s experts admitted that appellee’s history and symptoms, revealed at the examination they made of him, suggested a prolapsed disc in the cervical spine. They found a condition of cervical nerve root irritation, but would not say positively that it was caused by a disc injury. One of appellant’s experts testified that appellee had either a very profuse and serious soft tissue damage in the neck and shoulders, or a prolapsed disc. He said that the probability of an injured disc in the neck was so great that he would advise that appellee have a spinogram made. The other thought the appellee’s symptoms could be explained on the basis of a severe nerve injury in the vicinity of the cervical spine. He admitted that appellee’s recovery was problematical, but he thought that with . proper treatment he might in time be able to resume 'his former occupation.
At the time of the trial in November 1948, more than a year after the accident in which appellee received his injury, the expert witnesses testifying for the appellant admitted that appellee was a very sick man, was in no condition to perform hard labor, and unable to work as a railroad fireman.
In support of its contention that the trial court should have granted its motion for judgment, appellant relies on the rule that a release of the character involved in the present proceeding is presumptively valid, Callen v. Pennsylvania Ry. Co., 332 U.S. 625, 68 S.Ct. 296, 92 L.Ed. 242, and that the burden is upon the appellee to establish its invalidity for mutual mistake of a material fact by clear and convincing evidence, citing Chicago & N. W. Ry. Co. v. Wilcox, 8 Cir., 116 F. 913, 914, in which this court said: “Again, it is not every mistake that will lay the foundation for the recission of an agreement. That foundation can be laid only by a mistake of a past or present fact material to the agreement. Such an effect cannot be produced by a mistake in prophecy or in opinion, or by a mistake in belief relative to an uncertain future event. A mistake as to the future unknowable effect of existing facts, a mistake as to the future uncertain duration of a known condition, or a mistake as to the future effect of a personal injury, cannot have this effect, because these future happenings are not facts, and in the nature of things are not capable of exact knowledge; and everyone who contracts in reliance upon opinions or beliefs concerning them knows that these opinions and beliefs are conjectural, and makes his agreement in view of the well-known fact that they may turn out to he mistaken, and assumes the chances that they will do so. Hence, where parties have knowingly and purposely made an agreement to compromise and settle a doubtful claim, whose character and extent are necessarily conditioned by future contingent events, it is no ground for the avoidance of the contract that the events happen very differently from the expectation, opinion, or belief of one or both of the parties.
The validity of the release relied on as a defense in an action brought under the Federal Employers’ Liability Act is a question of Federal Law. Irish v. Central Vt. Ry. Co., 2 Cir., 164 F.2d 837, 839; Thompson v. Camp, 6 Cir., 163 F.2d 396, 400. We do not question the rule of the Wilcox case. See Lion Oil Refining Co. v. Albritton, 8 Cir., 21 F.2d 280; Southwest Pump & Machinery Co. v. Jones, 8 Cir., 87 F.2d 879. But appellant is in error in its appraisal of the evidence. The difference between the facts in this case and in the Wilcox case is at once apparent. Compare Great Northern Ry. Co. v. Fowler, 9 Cir., 136 F. 118, 123. In the Wilcox case the injury for which the plaintiff gave her release was known. There was no mistake as to the character or extent of her injury. The mistake upon which she relied for the rescission of the release was a mistake in the prophecy or opinion of her physician as to the time required for her recovery from a known injury. In this case there was much more. The evidence was sufficient to justify the jury in finding that the release was given as the result of a mutual mistake as to the nature of the injury sustained. Appellant’s evidence leaves little room for doubt that the physician who examined the appellee on behalf of the railway company, the claim agent who settled the claim, and the appellee honestly believed that appellee’s injuries were of minor character and that •his complete recovery was assured for the immediate future. There was a mistake of •both parties concerning a present fact material to the contract.
In order to establish mutual mistake in the execution of a release fatal to its validity it was not necessary, as appellant contends, that appellee show the exact and particular nature of the injury received by him. Appellee was not under the burden of proving with absolute certainty that he suffered from a prolapsed cervical disc. It was only necessary that he produce evidence which, read in the light most favorable to him, supported a finding of the jury that at the time of the release appellee was suffering from a substantial and severe injury -from which, at best, recovery was doubtful, and that the release was given in the mistaken belief on the part of appellee and appellant, honestly but erroneously held, that appellee’s injury was not permanent nor serious, but on the other hand of a minor character from which his complete and early recovery was certain.
Appellant’s instructions Nos. 4 and 5 were sufficiently covered by the court’s charge to the jury. In its charge the court told the jury that the language of the release was broad enough to cover all damage sustained by the appellee; and, if the jury believed from the evidence that appellee when signing the release understood its full import and knew that he was releasing the appellant from all claims and damages resulting from his injuries he was bound by the release. The jury were told that the •burden was on the appellee to prove that the execution of the release was induced by a mutual mistake of the parties by clear and convincing evidence. The court charged that the mutual mistake to invalidate the release must have been a mistake of both parties as to a fact material and substantial, and amplified this statement by saying that appellee was required to show that a mistake was made in that appellee at the time of the release was suffering from a substantial injury unknown to either of the parties.
Appellant is in no position to urge on appeal error of the trial court in refusing to give appellant’s requested instruction No. 3, which told the jury that there was no evidence in the case which would warrant them in finding that the release was the result of a mutual mistake of fact, since appellant agreed that the question should be submitted to the jury. The error, if any, was appellant’s and not the court’s. The position on this question which appellant takes in this court is wholly inconsistent with the position it took in the trial of the case. United States v. Wurtsbaugh et al., 5 Cir., 140 F.2d 534, 537; Smails et al. v. O’Malley, 8 Cir., 127 F.2d 410, 414; Lake City, Nettleton & Bay Road Improvement Dist. et al. v. Luehrmann et al., 8 Cir., 113 F.2d 458, 469.
Appellant’s assignment of error in the court’s refusal to receive evidence offered by appellant raises the question whether the present value of appellee’s probable future earnings was to be computed upon his average gross income as a railroad fireman, or upon his average income in that capacity after deductions for income tax, railroad retirement, and other •miscellaneous deductions. The actuary who testified for appellee based his computations on appellee’s average gross income for several years prior to the action, and the court refused to receive appellant’s offer of proof of appellee’s average net earnings after deduction's. Appellant offers no authority in support of this contention. But see and compare Stokes v. United States, 2 Cir., 144 F.2d 82, 87; Cole v. Chicago, St. P., M. & O. Ry. Co., D.C., 59 F.Supp. 443, 445; Majestic v. Louisville & N. R. Co., 6 Cir., 147 F.2d 621, 626-627. We conclude that there was no prejudicial error in the court’s refusal to accept appellant’s offer of proof. Appellee’s expert witness made it plain that his evidence was based upon the experience of insurance companies and that neither the life expectancy of the appellee nor the earning power of money could be foretold with certainty. We may assume that tire jury were aware of these facts, as well as the fact that the average earnings, net or gross, of the appellee for the future could not be definitely known.
There remains for consideration appellant’s assignment that the verdict is excessive. In a long line of cases this court has held that this assignment is not properly addressed to this court. See New York, C. & St. L. R. Co. v. Affolder, 8 Cir., 174 F.2d 486, 493. Assuming, as appellant contends, Virginian Ry. Co. v. Armentrout, 4 Cir., 166 F.2d 400, 407-409, 4 A.L.R.2d 1064, that this court may and should reverse a judgment in the exceptional case, “where the verdict is so manifestly without support in the evidence that failure to set it aside amounts to an abuse of discretion” on the part of the trial court, we are unable to find anything in this record to justify that action in this case.
The judgment is affirmed.
. Much is made by appellant of the fact that a spinogram was not made of appellee. It is argued that this was needed in order to be certain that appellee had a disc injury. Disc injuries will not show up in an ordinary x-ray. The spinogram is a special x-ray procedure used in disc cases. It is to be noted that none of appellant’s doctors ever requested appellee to submit to a spinogram. The spinogram is a somewhat delicate and serious procedure. About half of the patient’s spinal fluid is withdrawn and. replaced with a certain type of oil which enables the condition of the spine to be detected in the fluoroseope and x-ray. The oil has to be removed after the test is completed. Because of the after effects the patient is usually hospitalized. All of the doctors stated that it would be of great help in diagnosing a disc injury— in confirming a diagnosis. But all of them admitted that it is used only as a 1 diagnostic aid and only when an operation is to be performed. Dr. George, one of appellant’s orthopedic surgeons, stated that disc injuries could be diagnosed without a spinogram; that spinograms are successful in diagnosis in only about three-fourths of the cases; that an exploratory operation is the only sure way to determine whether or not a patient has a disc injury; and that if the patient can get by with conservative treatment he ought to do so and not be operated on. It is a fair inference from all the medical testimony that the diagnosis of a prolapsed disc was not based upon speculation, but upon appellee’s symptoms, which made its presence in the cervical spine a reasonable certainty, and that a spinogram was advised by all the doctors not only for confirming a reasonably certain diagnosis, but also for the important purpose of locating the exact position of the injury in the cervical spine in preparation for a possible operation.
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.
BARNES, Circuit Judge.
Bruce Arnold Haserot (appellant) having waived jury trial, was tried and convicted by the district court under an indictment charging him, on or about May 14, 1962, with returning to and entering the United States without registering with a Customs official, agent or employee at his point of entry as required by law, and without surrendering the certificate (which the law required him to obtain before leaving the United States) to said Customs official, agent or employee, in violation of 18 U.S.C. § 1407. Appellant was sentenced to two years imprisonment, subject to the provisions of 18 U.S.C. § 4208(a) (2).
The jurisdiction of the district court was based on 18 U.S.C. § 3231; this court has jurisdiction under the provisions of 28 U.S.C. §§ 1291 and 1294 d).
There is no factual dispute in this case. Title 18 United States Code § 1407 (a) provides, in part:
“[I]n order to facilitate more effective control of the international traffic in narcotic drugs, and to prevent the spread of drug addiction, no citizen of the United States who is addicted to or uses narcotic drugs * * or who has been convicted of a violation of any of the narcotic or marihuana laws of the United States, or of any State thereof, the penalty for which is imprisonment for more than one year, shall depart from or enter into or attempt to depart from or enter into the United States, unless such person registers, under such rules and regulations as may be prescribed by the Secretary of the Treasury with a customs official, agent, or employee at a point of entry or a border customs station. Unless otherwise prohibited by law or Federal regulation such customs official, agent, or employee shall issue a certificate to any such person departing from the United States; and such person shall, upon returning to the United States, surrender such certificate to the customs official, agent, or employee present at the port of entry or border customs station.”
On October 19, 1959, in the Superior Court, County of Los Angeles, State of California, appellant had been convicted of a violation of Section 11502 (now Section 11503) of the California Health and Safety Code. This section states:
“Every person who agrees, consents, or in any manner offers to unlawfully sell, furnish, transport, administer, or give any narcotic to any person, or offers, arranges, or negotiates to have any narcotic unlawfully sold, delivered, transported, furnished, administered, or given to any person and then sells, delivers, furnishes, transports, administers, or gives, or offers, arranges, or negotiates to have sold, delivered, transported, furnished, administered, or given to any person any other liquid, substance, or material in lieu of any narcotic shall be punished by imprisonment in the county jail for not more than one year, or in the state prison for not more than 10 years.”
On May 14, 1962, appellant, a citizen of the United States, did return and enter the United States at the Port of San Diego (San Ysidro), California, without registering with a Customs official, agent or employee at this point of entry, and without surrendering a certificate, showing that he had registered, to the Customs official, agent or employee.
The sole question on appeal is whether Section 11503 is a “narcotic or marihuana” law of the State of California within the meaning of 18 U.S.C. § 1407 (a).
Appellant contends that Section 11503 is “merely a legislative enlargement of the California ‘bunco’ law,” and not a narcotic law. (Appellant’s Brief, p. 7).
It seems clear to us that Section 11503 is a “narcotic or marihuana” law of the State of California. It is found in the California Health and Safety Code under Division X, entitled “Narcotics,” and under Chapter 5, entitled “Illegal Narcotics.” This section is listed among the prior narcotics offenses precluding probation in the event of a subsequent conviction. (Cal. H. & S. Code, § 11715.-6.) It is one of those narcotic offenses involving increased potential punishment limits in the event of a subsequent conviction. (Cf. Cal. H. & S. Code §§ 11500, 11500.5, 11501, 11502 and 11502.-1.) Persons convicted of violating Section 11503 are required to register under Article 6 of the California Health and Safety Code, entitled “Registration of Narcotic Offenders” (Cal. H. & S. Code §§ 11850.)
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.
ROBERT VAN PELT, Senior District Judge.
This case again presents the issue of the proper application of the Dangerous Special Offender Act, 18 U.S.C. § 3575. An earlier panel of this court was confronted with nearly identical issues in United States v. Kelly, 519 F.2d 251 (8th Cir. 1975), and decided the case contrary to the government’s position in Kelly and in this case.
We are asked to determine in the instant case
1) whether the government’s original notice seeking sentencing under 18 U.S.C. § 3575 was adequate;
2) whether the district court erred in holding the provisions of 18 U.S.C. §§ 3575 and 3577 to be inconsistent with due process and unconstitutional.
In the original notice of November 28, 1972, the government did little more than repeat the language of the statute.
The government contends that its notice was sufficient and that the statute does not require the notice to set forth separate reasons supporting both a special offender classification and a dangerous classification. It contends that the requirements of dangerousness as set forth in § 3575(f) can be met with a finding of special offender status under § 3575(e)(3).
Any evaluation of the merits of the government’s claim must be made within the limits of Kelly, and since that case, in effect, found against the government on the issue presented, we must affirm the lower court’s finding and hold the notice in this case inadequate.
Because our holding is limited to the sufficiency of the notice under this court’s interpretation of § 3575 in Kelly, supra, we do not need to reach, and should not decide, the more important question concerning the constitutionality of the Dangerous Special Offender Act.
For the reasons given we affirm.
.Now comes the United States, by and through its attorneys, Bert C. Hurn, United States Attorney for the Western District of Missouri, and Gary Cornwell, Special Attorney, United States Department of Justice, who are charged with the prosecution of the above named defendants before the United States District Court for the Western District of Missouri for alleged violations of 18 U.S.C. §§ 371 and 1952, which are felonies committed when the defendants were each over the age of 21 years, and hereby files this notice with the Court, in compliance with the provisions of 18 U.S.C. § 3575(a), stating that upon conviction for said felonies these defendants are each subject to the imposition of sentences under 18 U.S.C. § 3575(b) as dangerous special offenders.
We do believe that said defendants are dangerous special offenders for the reason that such felonies constituted, and were committed by defendants in furtherance of a conspiracy with three or more persons to engage in a pattern of conduct criminal under the laws of the United States, and the State of Oklahoma, and the defendants agreed to and did organize, plan, finance, direct, manage and supervise all or part of such illegal conduct and activities, and agreed to give and receive a bribe and to use force as part of such conduct, all within the meaning of § 3573 [sic] (e)(3) of Title 18, United States Code.
. (f) A defendant is dangerous for purposes of this section if a period of confinement longer than that provided for such felony is required for the protection of the public from further criminal conduct by the defendant.
. (e) A defendant is a special offender for purposes of this section if—
******
(3) such felony was, or the defendant committed such felony in furtherance of, a conspiracy with three or more other persons to engage in a pattern of conduct criminal under applicable laws of any jurisdiction, and the defendant did, or agreed that he would, initiate, organize, plan, finance, direct, manage, or supervise all or part of such conspiracy or conduct, or give or receive a bribe or use force as all or part of such conduct.
. The writer of this opinion, if, to borrow a recent expression of Judge Heaney of this court, he could “write on a clean slate,” would not subscribe to the conclusions of Kelly. It is an approved practice as to most indictments to charge a crime in the language of the statute and defendants are then afforded rights to a bill of particulars. Coupling these facts with the broad alternatives available to the court under 18 U.S.C. § 3575 in holding a hearing and sentencing, the writer would vote to hold the notice sufficient.
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.
COFFEY, Circuit Judge.
The defendants, John P. Koberstein and the Ho-Chunk Management Corporation, appeal the determination of the district court that its Bingo Management Agreement with the Wisconsin Winnebago Business Committee is null and void under 25 U.S.C. § 81. We affirm.
I.
On July 9, 1983, the Wisconsin Winnebago Business Committee (“Business Committee”), the governing body of the federally recognized Wisconsin Winnebago Tribe (“Tribe”), hired Koberstein, the defendant, as its tribal attorney. At Koberstein’s suggestion, the Tribe entered into a Bingo Management Agreement (“Agreement”) with the co-defendant, the Ho-Chunk Management Corporation (“Ho-Chunk”), providing that Ho-Chunk would construct and manage a tribal bingo hall located near Lake Delton, Wisconsin. Koberstein is the president of the Ho-Chunk Management Corporation. Under the terms of the Agreement, Ho-Chunk was to receive $27,-000 for preparing a proposal to be presented to the federal Department of Housing and Urban Development for federal funds and for supervising the construction of the hall. Ho-Chunk also was engaged under the terms of the contract for a five-year period “commencing the first day of operation of the Bingo Hall, to assist the [Business Committee] in obtaining financing, construct, improve, develope [sic], manage, operate and maintain the Property as a facility for the conduct of bingo games____” The Agreement granted Ho-Chunk the exclusive right to “operate and maintain the Property” as a tribal bingo hall and to control “all business and affairs in connection with the operation, management and maintenance of the Property.” Furthermore, the Business Committee
“specifically warranted] and represented] to [Ho-Chunk] that [the Business Committee] shall not act in any way whatsoever, either directly or indirectly, to cause this Management Agreement to be altered, amended, modified, canceled, terminated and/or attempt to assign or transfer this Management Agreement or any right to or interest in said Agreement. Further, [the Business Committee] warranted] and represented] that it shall take all actions necessary to ensure that the Management Agreement shall remain in good standing at all times.”
The Agreement recited a legal description of the Property, located on tribal trust land, and allowed Ho-Chunk to record the Agreement “in any Public Record.” Furthermore, the Agreement provided that the Business Committee “shall not act in any way whatsoever, either directly or indirectly to cause any party to become an encumbrancer of the Property subject to this Agreement without the prior written consent of [Ho-Chunk].” In return for providing management services, Ho-Chunk was to receive “25 percent of net operating profits for each fiscal year resulting from and in connection with any business activities upon the Property.”
On August 23,1983, Ho-Chunk submitted the Agreement and the Wisconsin Winnebago Business Committee resolution adopting the Agreement to the Bureau of Indian Affairs (“BIA”) for approval under 25 U.S.C. § 81. 25 U.S.C. § 81 provides in relevant part:
“No agreement shall be made by any person with any tribe of Indians, or individual Indians not citizens of the United States, for the payment or delivery of any money or other thing of value, in present or in prospective, or for the granting or procuring any privilege to him, or any other person in consideration of services for said Indians relative to their lands, or to any claims growing out of, or in reference to, annuities, installments, or other monies, claims, demands, or thing, under laws or treaties with the United States, or official acts of any officers thereof, or in any way connected with or due from the United States, unless such contract or agreement be executed and approved as follows: * * * * * *
“(2) It shall bear the approval of the Secretary of the Interior and the Commissioner of Indian Affairs endorsed upon it. Sic * * * * *
“All contracts or agreements made in violation of this section shall be null and void.”
Sometime during the second week of November, 1983, the Minnesota Area Office of the BIA requested an opinion from the Department of Interior’s Office of the Field Solicitor concerning the Agreement. On November 16, 1983, the Field Solicitor’s Office advised the BIA that the Department of the Interior’s approval was required only of contracts in which a “tribe purports to pay ‘money or other thing of value’ when such money or thing derives from amounts due to the tribe from the United States or is trust property or proceeds from trust property.” Although the Field Solicitor found “[t]here is no doubt that the Agreement is related to lands of the Wisconsin Winnebago Tribe,” section 81 did not apply because the funds Ho-Chunk was to receive were not “trust funds or proceeds of trust property.” Ho-Chunk was not formally notified of this decision until February 28, 1984.
Sometime during the late summer or early fall of 1983, the Ho-Chunk Management Corporation directed that the construction of the Bingo Hall proceed even though it had not received a response from the BIA. On November 12, 1983, the same day that the Bingo Hall opened, the Business Committee voted to rescind the Agreement with Ho-Chunk. Some two weeks thereafter, on November 27, 1983, the Business Committee enacted, an ordinance regulating bingo on tribal lands providing inter alia “No person shall engage in the operation of bingo games on Wisconsin Winnebago trust lands, unless duly licensed or permitted to do so by the Wisconsin Winnebago Tribe in accordance with the terms of this ordinance.” Even though the Bingo Management Agreement had been rescinded, Ho-Chunk, which had not applied to the Winnebago tribe for a bingo license, continued to operate the bingo enterprise.
On December 8, 1983, the Business Committee filed suit in the United States District Court for the Western District of Wisconsin to enjoin Ho-Chunk from operating bingo games on tribal trust lands on the Winnebago Reservation. The Business Committee alleged that the Agreement between Ho-Chunk and the Business Committee was void under 25 U.S.C. § 81, and alternatively that Ho-Chunk’s bingo operation violated the Tribe’s Bingo Ordinance. Subsequently, the Business Committee moved for summary judgment. On April 2, 1984, the district court granted summary judgment holding that the Agreement was null and void since it had not been approved by the Department of Interior as required by 25 U.S.C. § 81. Because the court “believe[d] that equity demands that defendants be given a period of time to cure the defect which mandated summary judgment against them or to resolve its responsibilities in an orderly fashion,” it declared that the Agreement would become null and void effective June 30, 1984. Additionally, the district court found that the bingo ordinance “left the WWBC in the position to exercise absolute discretion as to whether Ho-Chunk would be allowed to operate a bingo game. There is little doubt, under the facts in this case, that the WWBC would exercise its discretion against Ho-Chunk.” The Court concluded that it could “see no reason why the bingo ordinance adopted by the tribe, respecting the manner of operation, and to the extent not specifically in conflict with contract provisions, cannot be given immediate implementation. However, the requirement that Ho-Chunk be licensed is directly contrary to the powers granted Ho-Chunk in the contract.” The parties raise three issues on appeal: (1) whether the Bingo Management Agreement must be submitted for approval to the Secretary of the Interior pursuant to 25 U.S.C. § 81; (2) whether the Ho-Chunk Management Corporation relied on the Field Solicitor’s opinion that § 81 did not apply to the Bingo Management Agreement; and (3) whether the Bingo Management Agreement could bar application of the tribal licensing ordinance to Ho-Chunk.
II.
A. Applicability of Section 81.
Ho-Chunk argues that the question of whether a contract is “relative to Indian lands” is irrelevant when determining whether section 81 requires Interior Department approval of a contract with Indian tribes. According to Ho-Chunk, the only relevant inquiry is whether “the tribe purports to pay ‘money or other thing of value’ when such money or thing derives from amounts due to the tribe from the United States or is trust property or proceeds from trust property.” Section 81 was enacted in 1872 “to protect the Indians from improvident and unconscionable contracts____” In re Sanborn, 148 U.S. 222, 227, 13 S.Ct. 577, 579, 37 L.Ed. 429 (1893). No federal cases have been presented to us nor have we been able to discover any federal case law that comprehensively analyzes the scope of coverage of section 81. Moreover the Supreme Court cases that do address the scope of section 81 in a cursory fashion do not present a detailed explanation of why the statute applied and are quite ancient. In Green v. Menominee Tribe, 233 U.S. 558, 34 S.Ct. 706, 58 L.Ed. 1093 (1914), the Supreme Court held that an oral contract between an Indian tribe and a trader for supplies to be used in logging Indian land was
“so clearly within the text of the statute that it suffices to direct attention to such text without going further. But if it be conceded for argument’s sake that there is ambiguity involved in determining from the text whether the statute is applicable, we are of the opinion that the case made is so within the spirit of the statute and so exemplifies the wrong which it was intended to prevent and the evils which it was intended to remedy as to disspell any doubt otherwise engendered.”
Id. at 569, 34 S.Ct. at 710. In Pueblo of Santa Rosa v. Fall, 273 U.S. 315, 47 S.Ct. 361, 71 L.Ed. 658 (1927), the Supreme Court held that a contract by a tribal chief agreeing that an attorney should represent the tribe in its claim “to an enormous tract of country” for a fee of one-half interest in the tract was “void by force of § 2103 [now § 81] and § 2116 [now § 177] of Title 25....” Id. at 320, 47 S.Ct. at 362. Ho-Chunk distinguishes these decisions by arguing that they were rendered at a time when Indians were more in need of the protection of the statutes and at a time prior to the present federal policy favoring tribal self-determination. Ho-Chunk urges us to consider intervening acts of Congress and to consult present federal Indian policy for guidance in construing section 81. According to Ho-Chunk, present federal Indian policy strongly promotes tribal self-determination and tribal capacity to deal effectively in the business world. Furthermore, the defendant argues that Congress has taken explicit action where it believed necessary to protect Indian property interests. Ho-Chunk concludes that requiring Interior Department approval of contracts “relative to their land” would “create a situation in which both the tribal entity and any outside contractor dealing with the tribe would operate in an atmosphere- of complete uncertainty.”
Initially, we note that the defendants have failed to cite a case holding that when construing Indian statutes, the courts are “guided” by intervening acts of Congress and current federal Indian policy. The rule enunciated by the Supreme Court is that, “[u]ntil Congress repeals or amends the Indian ... statutes ... we must give them ‘a sweep as broad as their language’ and interpret them in light of the Congress that enacted them.” Central Machinery Co. v. Arizona State Tax Com’n., 448 U.S. 160, 166, 100 S.Ct. 2592, 2596, 65 L.Ed.2d 684 (1980) (citations omitted) (emphasis added) (Indian Trader Statutes).
“ ‘Indian law’ draws principally upon the treaty drawn and executed by the Executive Branch and legislation passed by Congress. These instruments, which beyond their actual text form the backdrop for the intricate web of judicially made Indian law, cannot be interpreted in isolation but must be read in light of the common notions of the day and the assumptions of those who drafted them.”
Oliphant v. Suquamish Indian Tribe, 435 U.S. 191, 206, 98 S.Ct. 1011, 1019, 55 L.Ed.2d 209 (1978) (jurisdiction of Indian tribal courts) (emphasis added). Our inquiry when determining the effect of intervening acts of Congress on Indian statutes is whether the Indian statute has been repealed by implication. See Morton v. Mancari, 417 U.S. 535, 546; 94 S.Ct. 2474, 2480, 41 L.Ed.2d 290 (1974) (effect of the Equal Employment Opportunities Act of 1972 on the Indian Reorganization Act of 1934); United States v. Crawford, 47 Fed. 561, 569 (1891) (section 81 impliedly repealed by statutes specifically dealing with the sale of Oklahoma). “Repeals by implication are not favored.” Mancari, 417 U.S. at 549, 94 S.Ct. at 2482. “In the absence of some affirmative showing of an intention to repeal, the only permissible justification for a repeal by implication is when the earlier and later statutes are irreconcilable.” Id. at 550. Absent a clear and manifest legislative intent to repeal a statute, apparently conflicting statutes must be read to give effect to each if such can be done by preserving their sense and purpose. Watt v. Alaska, 451 U.S. 259, 267, 101 S.Ct. 1673, 1678, 68 L.Ed.2d 80 (1981). If a later act covers the whole subject matter of an earlier act and embraces new provisions which plainly show that the later act was intended as a substitute for the earlier act, the later act will operate as a repeal of the earlier act. Crawford, 47 Fed. at 569. It is obvious from the broad language “relative to their lands” that Congress intended to cover almost all land transactions in Indian property. This literal reading of the statute is supported by the history of Federal regulation of Indian lands. Before independence, colonial legislatures safeguarded the Crown’s right to negotiate exclusively with the Indian tribes for the extinguishment of their aboriginal title by restraining private land purchases from the Indians and by requiring all acquisitions of Indian land to be licensed or approved in advance by the colonial authorities. F. Cohen, Handbook of Indian Law, 508 (1982 ed.). After the War of Independence, the Federal government continued the policy of restraining alienation of Indian land in order to avoid war with the Indian tribes. Id. at 508-09. Because of this longstanding policy of regulating all transactions in Indian land, we find no reason to disregard the plain language of the statute and hold that Congress intended to continue its policy of regulating all transactions in Indian land when it enacted § 81 in 1872. Indeed, Congress continues to regulate transactions in Indian land to insulate Indian lands from the full impact of market forces and to preserve the Indian land base for the furtherance of Indian values. Id. at 509. Specifically, Congress has passed a number of statutes requiring the Department of Interior’s approval of Indian land transactions, including leases, mineral agreements and mortgages. However, in arguing that § 81 has been impliedly repealed, Ho-Chunk does not contend that Congress has passed statutes subsequent to § 81 specifically regulating every conceivable form of transaction relative to Indian land. As we previously stated, the Supreme Court has held that Indian statutes must be construed in light of the Congress that enacted the statutes; holding that a particular statute has been repealed “by implication” is disfavored by our courts. Thus, a party seeking to make such a showing must demonstrate that the statute has been effectively amended or repealed by subsequent acts of Congress affecting the conduct covered by the statute’s original terms. Ho-Chunk has not presented any evidence that Congress has passed legislation affecting the broad coverage of 25 U.S.C. § 81 and its application to the facts of this case. Thus, because the later acts of Congress do not cover the entire subject matter of § 81, we are convinced the later acts of Congress pertaining to Indian land transactions did not impliedly repeal § 81. Because subsequent acts of Congress have not covered the whole subject matter of the “relative to their lands” provision of section 81, we hold that section 81 governs transactions relative to Indian land for which Congress has not passed a specific statute.
Our second inquiry is whether the Bingo Management Agreement is an “agreement ... relative to [Indian] land.” The bingo facility, located near Lake Del-ton, Wisconsin is situated on tribal trust lands that have been proclaimed and designated by Congress as part of the Wisconsin Winnebago Indian Reservation. The Agreement granted Ho-Chunk the exclusive right to “operate and maintain the Property as a tribal bingo hall and to control “all business, management and maintenance of the Property.” Furthermore, Ho-Chunk was allowed to record the Agreement “in any Public Record” and the Business Committee was prohibited from “causpng] any party to become an encumbrancer of the Property subject to this Agreement without the prior written consent of [Ho-Chunk].” Because the Agreement gives Ho-Chunk the absolute right to control the operation of the bingo facility located on tribal trust lands and prohibits the exercise of the Business Committee’s right to encumber tribal trust property, we hold that the Bingo Management Agreement is an “agreement ... relative to [Indian] land,” as that term is used in 25 U.S.C. § 81. Cfi, Contracts for the Employment of Managers of Indian Tribal Enterprises, 61 Op. Solicitor, Dept, of Interior, No. M-36119 (Feb. 14, 1952) (contract to operate a tribal farming enterprise, including the cultivation of tribal lands, the development of livestock industries to utilize the crops raised by the enterprise, and the marketing of surplus crops is relative to Indian lands as that term is used in § 81).
Our final inquiry is whether section 81 applies to the Bingo Management Agreement. As we held above, unless Congress has passed a statute specifically regulating the transaction in question, § 81 applies to Indian land transactions concerning their tribal trust property. Ho-Chunk has failed to produce, and our research has failed to reveal, a statute governing a management contract of the nature of the Bingo Management Agreement. Because in our research we have been able to discover no statute expressly regulating management contracts such as this agreement to manage a bingo facility located on tribal trust lands, we hold that it is the intent of Congress that § 81 govern this transaction. We therefore affirm the judgment of the district court finding the contract null and void as of June 30, 1984 for failure to gain the approval of the Department of the Interior.
B. Estoppel.
Ho-Chunk argues that it justifiably relied on the representations of the Depart-
ment of Interior’s Field Solicitor Office that approval of the Bingo Management Agreement by the Department of the Interior was not required under section 81 and that “it is grossly inequitable for the district court to now order that the Department must approve the contract after the WWBC has since taken a position in opposition to the contract.” To establish an estoppel, “the party claiming the estoppel must have relied on its adversary's conduct ‘in such a manner as to change his position for the worse’ and that reliance must have been reasonable in that the party claiming the estoppel did not know nor should it have known that its adversary’s conduct was misleading.” Heckler v. Community Health Services of Crawford, — U.S. -, 104 S.Ct. 2218, 2223, 81 L.Ed.2d 42 (1984). The party claiming the estoppel must demonstrate that its reliance caused it to lose “[a] legal right, either vested or contingent, or suffer [an] adverse change in its status.” Id. 104 S.Ct. at 2225. In Community Health Services, the Supreme Court declined to decide whether “estoppel may not in any circumstance run against the Government” because the private party litigant was unable to demonstrate the presence of the judicial element of an estoppel. Id., 104 S.Ct. at 2224-25. In the case at hand, we need not decide whether the Government can under any circumstances be estopped because examination of the facts presented to the district court reveals that the traditional elements of an estoppel are not present. “To analyze the nature of a private party’s detrimental change in position, we must identify the manner in which reliance on the Government’s misconduct has caused the private citizen to change his position for the worse.” Id. at 2224-25. The Field Solicitor’s letter to the Area Director of the Minnesota Area Office of BIA stating that section 81 did not apply to the Bingo Management Agreement was dated November 16, 1983, four days after the Bingo Hall opened for business. Because the government did not act before the Bingo Hall was opened, Ho-Chunk cannot assert that it relied on-the Field Solicitor’s opinion when it opened the Bingo Hall. To the contrary, Ho-Chunk relied on its unilateral expectation that the contract would be approved by the Department of Interior. Furthermore, Ho-Chunk fails to specify any action it took after learning of the Field Solicitor’s Opinion in reliance on that opinion. Because Ho-Chunk fails to establish the traditional elements of an estoppel —specifically, because Ho-Chunk fails to set forth any action taken by Ho-Chunk in reliance on the government’s conduct to Ho-Chunk’s detriment — we hold that the government is not estopped by the Field Solicitor’s opinion that § 81 did not apply to the Bingo Management Agreement.
C. Bingo Ordinance.
The last issue presented for our consideration is whether the Bingo Ordinance was an exercise of the tribal governing body’s authority to regulate activities in the interest of the tribe’s health and welfare thus overriding any rights granted to Ho-Chunk under the contract. The district court found that the Bingo Ordinance “left the WWBC in the position to exercise absolute discretion as to whether Ho-Chunk would be allowed to operate a bingo game. There is little doubt, under the facts in this case, that the WWBC would exercise its discretion against Ho-Chunk.” Thus, the specific harm to the Ho-Chunk Management Corporation advanced by the defendants was the possibility that the Business Committee would deprive it of its contract rights by refusing to grant Ho-Chunk a bingo license. “Federal courts lack jurisdiction to decide moot cases because their constitutional authority extends only to actual cases or controversies.” Iron Arrow Honor Society v. Heckler, 464 U.S. 67, 104 S.Ct. 373, 374, 78 L.Ed.2d 58 (1983). “[Mjootness has two aspects: ‘when the issues presented are no longer live or the parties lack a legally cognizable interest in the outcome.’ ” United States Parole Com’n. v. Geraghty, 445 U.S. 388, 396, 100 S.Ct. 1202, 1208, 63 L.Ed.2d 479 (1980); Davis v. Ball Memorial Hosp. Ass’n., Inc., 753 F.2d 1410, 1416 (7th Cir.1985). Mootness has been defined as “the doctrine of standing set in a timeframe: The requisite personal interest that must exist at the commencement of the litigation (standing) must continue throughout its existence.” Geraghty, 445 U.S. at 397, 100 S.Ct. at 1209. At the initiation of this litigation, Ho-Chunk’s “personal interest” in the validity of the bingo ordinance was grounded upon its fear that the Business Committee would deprive it of its rights under the Bingo Management Agreement by refusing to grant it a bingo license. We affirm the district court’s judgment that the Bingo Management Agreement was null and void as of June 30, 1984 because it had not been approved by the Department of Interior as required by 28 U.S.C. § 81. Ho-Chunk failed to obtain contract rights because of its failure to receive approval of the Bingo Management Agreement from the Department of Interior. Because Ho-Chunk’s Bingo Management Agreement with the Business Committee is null and void, it may no longer argue that the Business Committee may possibly deprive it of its rights under the Agreement by refusing to grant it a bingo license. Thus, Ho-Chunk, whose contract is null and void and without legal effect, fails to assert a personal interest in the question of whether the Tribe’s Bingo Ordinance would override previously existing contract rights. Since Ho-Chunk’s “personal interest” no longer exists, i.e., the fear that the Business Committee would deprive it of its contract rights by refusing to grant it a bingo license, the question of whether the Bingo Ordinance could override the rights granted to Ho-Chunk under the Bingo Management Agreement is moot.
We AFFIRM the judgment of the district court.
. For convenience, the defendants will be referred to collectively as “Ho-Chunk."
. "The Office of the Solicitor performs all of the legal work of the Department [of the Interior] with the exception of that performed by the Office of Hearings and Appeals and the Office of Congressional and Legislative Affairs____ The Division of Indian Affairs [of the Office of the Solicitor] is responsible for legal matters involving the programs of the Assistant Secretary — Indian Affairs and the Bureau of Indian Affairs.”
The United States Government Manual, Office of the Federal Register (1984-85).
. "‘Indian tribes are unique aggregations possessing attributes of sovereignty over both their members and their territory1____ The sovereignty retained by tribes includes 'the power of regulating their internal and social relations.' ” New Mexico v. Mescalero Apache Tribe, 462 U.S. 324, 103 S.Ct. 2378, 2385, 76 L.Ed.2d 611 (1983) quoting White Mountain Apache Tribe v. Bracker, 448 U.S. 136, 100 S.Ct. 2578, 65 L.Ed.2d 665 (1980) and United States v. Kagama, 118 U.S. 375, 6 S.Ct. 1109, 30 L.Ed. 228 (1886). The Wisconsin Winnebago Tribe rather than the State of Wisconsin regulates bingo games conducted by the tribe on the Winnebago reservation because Wisconsin's bingo law, a civil regulation, is inapplicable to games conducted on Indian reservations. Oneida Tribe of Indians of Wis. v. State of Wis., 518 F.Supp. 712 (W.D.Wis.1981). See also Barona Group v. Duffy, 694 F.2d 1185 (9th Cir.1982) (California law regulating bingo games inapplicable to bingo games conducted on the Barona Tribe's reservation because the state law was civil and regulatory rather than criminal and prohibitive in nature); Seminole Tribe v. Butterworth, 658 F.2d 310 (5th Cir.1981) (Florida law regulating bingo games inapplicable to bingo games conducted on the Seminole Tribe's reservation because the state law was civil and regulatory rather than criminal and prohibitive in nature.)
. On April 10, 1984, Ho-Chunk resubmitted the Agreement to the BIA for approval. The Director of the BIA's Minnesota Area Office found that tribal control over trust lands, tribal self-government and tribal economic development were jeopardized because the Agreement gave inequitable financial advantages and excessive control over the bingo operations to the defendants. Furthermore, the Area Director determined that “by his failure to disclose the [potential conflict of interest between his duties as tribal attorney and his position as president of Ho-Chunk] prior to the execution of the Agreement, ... Mr. Koberstein took unfair advantage of the Tribe at a time when it was most susceptible to his influence.” The Area Director of the BIA Minnesota Area Office disapproved the Agreement. The Area Director's disapproval of the Agreement was affirmed by the Interior Department’s Deputy Assistant Secretary-Indian Affairs on September 11, 1984.
. See, e.g., 25 U.S.C. § 311 (public highways); §§ 312-318 (railroad, telegraph, telephone line rights-of-way, and town site stations); § 319 (telephone and telegraph rights-of-way); § 320 (railway reservoirs or materials); § 321 (pipeline rights-of-way); § 323 (rights-of-way for any purpose); §§ 396a-396g (leases for oil and gas mining and permits to prospect); § 399 (leases for mining purposes); § 407 (sale of dead and fallen timber); § 415 (leases of tribal land for public, religious, educational, recreational, residential or business purposes); §§ 416-416j (leases on Sand Xavier and Salt River Reservations); §§ 641-646 (authorizing Hopi Tribal Council to mortgage Hopi land for industrial park); 25 U.S.C. §§ 2101-2108 (mineral agreements).
. On November 18, 1983, a bill was introduced in the United States House of Representatives which would regulate bingo management agreements. The bill provided that, "subject to the approval of the Secretary, a tribe may enter into a management contract for the operation and management of a tribal gambling enterprise for a reasonable fee which shall not be based upon any percentage of the gross or net revenue from operation____" H.R. 4566, 98th Cong., 1st Sess. (1983). The bill died in committee but has been reintroduced. H.R. 1920, 99th Cong., 1st Sess. (1985); S. 902, 99th Cong., 1st Sess. (1985).
. In an affidavit dated January 23, 1984, Kurt V. Blue Dog, an attorney for the defendants, stated "that in the course of my representation of these parties, I inquired by telephone with the Field Solicitor for the Department of Interior for this area, Mr. Mark Anderson, as to why the Department of Interior had not taken formal action on the Ho-Chunk Management Contract with the Wisconsin Winnebago Business Committee signed and enacted on July 9, 1983. Mr. Anderson, on January 20, 1984, informed me in no uncertain terms that Secretarial approval under 25 U.S.C. § 81 or otherwise, was not required in this instance, and that he had so informed the Bureau of Indian Affairs." Although Ho-Chunk may have learned of the Field Solicitor’s opinion that section 81 did not apply to the Bingo Management Agreement on January 20, 1984 rather than November 16, 1983, this would not change our analysis because in either case, Ho-Chunk learned of the Field Solicitor’s opinion after it opened the Bingo Hall. Because Ho-Chunk learned of the government's position on the applicability of § 81 after it opened the Bingo Hall, it cannot argue that it relied on the Field Solicitor’s opinion before it opened the Bingo Hall.
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.
ENOCH, Senior Circuit Judge.
This cause arose out of an automobile accident. Plaintiff, Grace D. Graham, brought suit to recover damages from the defendant, Jaime Luis Colon, for injuries sustained by her because of his alleged negligence in the operation of his automobile in which the plaintiff was riding at the time.
Plaintiff appeals from the judgment for defendant entered on the general verdict of the jury. It is plaintiff’s position that the Trial Judge erred in giving and refusing certain instructions.
Defendant, himself a student, testified that he had driven other students from Cincinnati to Chicago on several occasions. He described one incident when he had three passengers. On arrival at Chicago be found his gasoline had cost a little more than $12. He had divided that with the other three students by accepting contributions of $3 from each. On another occasion he had driven only one student and had accepted $3 from her.
He testified further that he had told other students that when he went to Chicago on certain weekends, other students might travel with him. He had a conversation, he said, with the plaintiff about two weeks before March 5, 1965, the date of the accident, in the course of which she asked whether he could take her to Chicago and what he would charge her. He had told her that on previous trips the several riders had shared the gasoline cost with him and that this had come to about $3 per person, but that if fewer riders came, he would say, “Just give me three dollars, so that you don’t have the burden of the rest.”
He stated that on all these trips he was going to Chicago whether or not he had other riders with him.
The plaintiff testified that she telephoned the defendant about two or two and one-half weeks before March 5, 1965, asked him if he were going to Chicago and how much he would charge, that he had said “three dollars” to which she replied “fine” and that she had given him the $3 when she boarded his automobile on March 5,1965.
Plaintiff contends that these facts show an express contract for transportation between plaintiff and defendant for which plaintiff paid a cash consideration which rendered inapplicable the Indiana Statute in effect on the day of the accident, March 5, 1965, which provided:
The owner, operator, or person responsible for the operation of a motor vehicle shall not be liable for loss or damage arising from injuries to or death of a guest, while being transported without payment therefor, * * * [absent wanton or wilful misconduct] Acts 1937, Ch. 259, § 1, p. 1229, Burns’ Indiana Statutes Annotated 47-1021.
The Trial Judge instructed the jury:
In order for you to find that plaintiff was a paying passenger in defendant’s automobile, you must find that the transportation of plaintiff by defendant was motivated primarily by business reasons, as distinguished from hospitable, friendly, or other social motives. In other words, plaintiff’s presence must have in some way directly compensated defendant in a substantial and material way, as opposed to providing a social benefit or incidentally contributing to the expenses of the trip.
Incidental benefits, even the payment of money by plaintiff to defendant, do not constitute plaintiff a fare-paying passenger if her presence was due primarily to hospitable, friendly or other social motives, rather than business ones.
Expectation of a material gain rather than social companionship must have motivated the defendant in inviting or permitting the plaintiff to ride.
The plaintiff charges that it was error for the Court to refuse to instruct the jury that as a matter of law, the plaintiff was a paying passenger outside the scope of the aforesaid Indiana guest statute.
The defendant, on the other hand, argued that only where the monetary consideration paid was the sole motivation for the transportation did such monetary consideration remove the occupant from the operation of the Indiana guest statute.
The plaintiff accordingly feels that the Court improperly admitted evidence of subjective intent and motive and relative costs of transportation. Plaintiff’s position is that a bad bargain is still a bargain and that adequacy of consideration is open to question only where there is an issue of fraud, which is admittedly lacking here.
Plaintiff draws analogies from cases in other jurisdictions dealing with statutes similar to that of Indiana to the effect that payment under an express contract (as distinguished from an implied contract) removes the passenger from operation of a guest act. Thus plaintiff argues that it was in the case of an implied contract for transportation, that an Ohio Court in Burrow v. Porterfield, 1960, 171 Ohio St. 28, 168 N.E.2d 137, 141, followed the rule that the guest statute applied unless the payment for transportation in money or other property is substantially commensurate with the cost to the driver. The Court there (p. 142) quoted from Duncan v. Hutchinson, 1942, 139 Ohio St. 185, 189, 39 N.E.2d 140, 142, to the effect that payment of expense money which was not substantially commensurate with cost would not take the passenger out of the guest status unless payment for transportation as such was actually agreed upon.
The Court said in Burrow that it would be unfair to hold the motorist to liability for injuries to his guest due to the hazards of transportation unless he was compensated for such transportation in a manner substantially commensurate with the cost and hazard of the undertaking. The plaintiff contends that the evidence here unequivocally shows payment for transportation as such was actually agreed on. We disagree.
The defendant invites our attention to Lawson v. Cole, 1953, 124 Ind.App. 89, 96, 115 N.E.2d 134, 138, where there was an express agreement that the appellee would pay for gasoline, oil and any food on the trip if the appellant furnished his automobile. The appellee did provide the initial tank of gasoline and the only meal the parties had prior to the accident. The Indiana Appellate Court said that if the trip were primarily social, incidental benefits though monetary would not exclude the guest relationship, and that the Appellate Court must determine whether the evidence led inescapably to the conclusion that social companionship rather than material gain motivated the appellant in permitting the appellee to ride with him. The Court went on to say that the jury could properly have found that the relationship was of a business nature rather than social, that the trip was undertaken by virtue of an agreement, both appellant and appellee saving money by virtue of the arrangement.
Both parties cite Liberty Mutual Insurance Co. v. Stitzle, 1942, 220 Ind. 180, 41 N.E.2d 133, and Allison v. Ely, 1960, 241 Ind. 248, 170 N.E.2d 371. In the Liberty Mutual case, the occupants were traveling to Chicago to select furnishings to be sold to the defendant by the company which employed some of the other occupants of the vehicle. The Indiana Supreme Court held that the words in the Statute “without payment for such transportation” implied some valuable consideration for the ride, that the presence of the injured party must have directly compensated the operator in a substantial and material way; that expectation of material gain rather than social companionship must have motivated the operator in permitting the other person to ride. The plaintiff argues that the use of the word “implied” indicates that an express contract, as plaintiff contends was made here, would have removed the injured person from operation of the statute. We think that is a strained interpretation.
In a Washington case, cited by plaintiff, Parrish v. Ash, 1949, 32 Wash.2d 637, 203 P.2d 330, the jury were permitted to decide whether a 100 payment by the plaintiff to the defendant on the day prior to the accident was made and accepted for transportation on a 7-mile stretch of road as such or whether it was paid for a quantity of stale bread which was in the automobile and which was intended for chicken feed. There was a conflict in the evidence as to whether the rider paid the 100 specifically for the ride and then asked to buy one loaf of the bread, paying an additional 50 therefor or whether she paid the initial 100 for two loaves of the bread, saying nothing about the transportation. The rider claimed that on the day of the accident, she would have paid another 100 at the end of the ride. These parties who lived at farms close to each other were going to and from a place of mutual employment. Evidence was offered of a customary payment of such small sums for transportation in the community. The jury found for the plaintiff and the Court said that there was sufficient evidence to sustain a jury finding that the sum paid was for the transportation as such and operated to remove the plaintiff from the scope of the guest act.
The plaintiff contends that the District Court here erroneously relied on Allison v. Ely, which held that the motives and purposes actuating the transaction were of prime importance. Plaintiff seeks to distinguish Allison in that regard because the Court in Allison stated that there was no express contract as to the payment of money for gasoline and oil or any other expenses of the trip “which would make appellee-Ely a fare-paying passenger and the trip one primarily for business purposes.” In that case there was an arrangement for transportation of a number of college students including payment toward purchase of gasoline for the trip. The Court there said that the arrangement was made solely to get the students home for Thanksgiving more conveniently and expeditiously, that under the decisions of the Indiana Courts such an arrangement could not be said to be motivated by business reasons; that it was purely social and no material gain was anticipated, even though there might have been some cash differential accruing. Plaintiff interprets the statement above as indicating that a specific sum contributed in advance instead of payment along the way for such gasoline etc., as was needed would have converted Ely into a fare-paying passenger and the trip itself one for primarily business purposes. We do not agree.
In effect we have a similar case here. Plaintiff contributed toward the gasoline costs of a trip purely social in nature despite the fact that she paid her contribution in advance as she entered the automobile. She testified that she had it in her hand because she had a bad habit of forgetting things and she handed it to the defendant and told him that she didn’t want to forget to give it to him.
The Court in Allison held that if the trip were primarily social or for pleasure as distinguished from business, incidental benefits, even the payment of money, did not exclude the guest relationship. The Court then discussed the motives which actuated the parties such as the saving of time, avoidance of inconvenience and expense of available public transportation. Similar motives were obviously at work here.
In Knuckles v. Elliott, Ind.App.1967, 227 N.E.2d 179, there was an arrangement for appellant to provide the automobile and appellee to pay the expenses. The Court there said that to exclude such cases from the guest statute, consideration must be given in excess of expenses incidental to the trip, that there must be a clear intent on the part of the owner of the vehicle to receive something more than mere reimbursement for such expenses as are incurred.
As in Knuckles, little or no economic benefit accrued to defendant here. The record shows that defendant planned to go from Cincinnati to Chicago and that he would have gone alone. He took along with him the plaintiff who wanted to visit Chicago, having told her his guests generally contributed toward gas and oil in a sum which was usually $3. There was no evidence of any business motive and the financial aspects of the trip were incidental.
The Court also said in Knuckles:
Whether or not the kind of payment here alleged was such as was intended by the Legislature in § 47-1021, where it is said, “while being transported without payment therefor,” is a matter of law to be decided by the court. * * *
citing inter alia Allison v. Ely, 1960, 241 Ind. 248, 170 N.E.2d 371.
The District Judge here submitted to the jury, with appropriate instructions, the issue of motivation which involved a question of fact. In effect, however, the Trial Judge did rule on the legal issue when he refused to instruct the jury that plaintiff was a paying passenger as a matter of law and when he later denied a motion for new trial. On this record, we would be somewhat loathe to hold as not clearly erroneous any contrary ruling by the Trial Judge that as a matter of law the payment here was such as intended by the legislature to take the appellant out of the scope of the guest statute.
Nor can we agree with plaintiff that it was error not to withdraw the issue of contributory negligence from the jurors who were charged on that issue.
The plaintiff testified that she was turned around in her seat, looking over her shoulder out the side to the back window, with her left leg drawn up on the seat and probably under her. She had no idea how long she had been looking in that direction. The jury might well have decided that her assumption of such a vulnerable position in a moving vehicle constituted contributory negligence.
We have carefully considered all points and authorities to which our attention has been invited and remain convinced that the judgment of the District Court must be 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.
POSNER, Circuit Judge.
This is a personal injury suit under the diversity jurisdiction; the substantive issues are governed by the tort law of Illinois. The suit arises from an accident that occurred in 1983. The plaintiff, Davis, was 33 years old at the time, an experienced railroad worker who for the past six years had been employed as an inspector of cars by the Trailer Train Company, a lessor of piggyback cars to railroads. He made the inspections in railroad yards, among them Conrail’s marshaling yard in East St. Louis. On the day of the accident, Davis, driving an unmarked van that was the same color as the Conrail vans used in the yard but that lacked the identifying “C” painted on each Conrail van, arrived at the yard and saw a train coming in from east to west. He noticed that several of the cars in the train were Trailer Train cars that he was required to inspect. The train halted, and was decoupled near the front; the locomotive, followed by several cars, pulled away to the west. The remainder of the train was stretched out for three-quarters of a mile to the east; and because it lay on a curved section of the track, its rear end was not visible from the point of decoupling. An employee of Conrail named Lundy saw Davis sitting in his van, didn’t know who he was, thought it was queer he was there, but did nothing.
Shortly afterward Davis began to conduct the inspections. This required him to crawl underneath the cars to look for cracks. One of the cars was the third from the end (that is, from the point where the train had been decoupled). Unbeknownst to Davis, a locomotive had just coupled with the other (eastern) end of the train. It had a crew of four. Two were in the cab of the locomotive. The other two, one of whom was designated as the rear brakeman, were somewhere alongside the train; the record does not show just where, but neither was at the western end of the train, where Davis was. The crew was ordered to move the train several car lengths to the east because it was blocking a switch. The crew made the movement, but without blowing the train's horn or ringing its bell. The only warning Davis had of the impending movement was the sudden rush of air as the air brakes were activated. He tried to scramble to safety before the train started up but his legs were caught beneath the wheels of the car as he crawled out from under it. One leg was severed just below the knee; most of the foot on the other leg was also sliced off. The train had not been “blue flagged.” It is law (49 C.F.R. § 218) as well as custom in the railroad industry that whenever work is being done on a train a blue metal flag be placed at either end to warn employees not to move the train. Though well aware of the custom, Davis had neither blue flagged the train before crawling under it nor asked an employee of Conrail to blue flag it.
Davis brought this suit against Conrail, charging negligence. Conrail impleaded Trailer Train, seeking contribution in the event it had to pay damages to Davis, on the ground that Trailer Train had been negligent in failing to instruct Davis in proper safety procedures. A jury found for Davis, assessed damages at $3 million, but found that Davis’s own negligence had been one-third responsible for the accident, and therefore awarded damages of $2 million. In Conrail’s third-party suit against Trailer Train, which had been tried with the main claim, the jury held that Trailer Train had been one-third responsible for the accident; it therefore ordered Trailer Train to reimburse Conrail for one-third of the $2 million in damages. Conrail and Trailer Train appeal. Conrail argues that it was not negligent at all (which if correct would mean that Davis was entitled to zero damages) but that if it was, still the reduction in its liability of only one-third shows that the jury was carried away by “passion and prejudice,” so that there should be a new trial, or at the least a reduction in Conrail’s share of the damages vis-a-vis Davis. Trailer Train argues that it was not negligent even if Conrail was, and therefore it should not have to pay any part of the damage award.
Neither appellant challenges the $3 million price tag that the jury put on Davis’s injury, although Davis is able to walk with the aid of prosthetic devices, to drive, to work, and in short to lead almost a normal life. Of course the loss of a leg is a terrible disfigurement, especially for a young man, and a substantial award of damages would therefore be entirely justified even without any evidence of pain (and there was evidence of severe though transitory pain) or reduced longevity. But $3 million — only $170,000 of which represents lost earnings and past and future medical expenses — may well be excessive; and although appellate review of the amount of damages awarded by a jury or trial judge is highly deferential, we and the other courts of appeals have not hesitated to cut down grossly excessive damage awards. See, e.g., Joan W v. City of Chicago, 771 F.2d 1020, 1025 (7th Cir.1985); Douglass v. Hustler Magazine, Inc., 769 F.2d 1128, 1144 (7th Cir.1985); Abernathy v. Superior Hardwoods, Inc., 704 F.2d 963, 972-74 (7th Cir.1983); Dixon v. International Harvester Co., 754 F.2d 573, 590 (5th Cir. 1985); Harper v. Zapata Off-Shore Co., 741 F.2d 87, 91-93 (5th Cir.1984); Shaw v. United States, 741 F.2d 1202, 1210 (9th Cir.1984); Stratis v. Eastern Air Lines, Inc., 682 F.2d 406, 415 (2d Cir.1982). But as we have said, the defendants have not asked us to do that here.
The defendants do complain, however, that the jury allocated too small a share of responsibility for the accident to Davis. They ask us to order either a remittitur or a new trial limited to damages, but alternatively they argue that the jury’s allocation shows that the jury was carried away by passion and prejudice, so that a new trial on liability as well as on damages should be ordered. See Douglass v. Hustler Magazine, Inc., supra, 769 F.2d at 1143. This argument has no merit. Although (as will become clear when we discuss the evidence of Conrail’s and Trailer Train’s negligence) the jury probably allotted too little of the blame for the accident to Davis, the error is not of such magnitude as to call into question the rationality of its verdict on whether the defendant was liable. Only in an unusual case will a court order a new trial on liability because of an error in assessing damages or in apportioning them among multiple defendants. This is not an unusual case. The jury may well have underestimated Davis’s relative fault, but it did not so take leave of its senses in dealing with tfiis issue that we are entitled to conclude that it did not use its reason in deciding whether Conrail was negligent at all.
On the question of Conrail’s negligence, Davis presented three theories to the jury. The first was that Conrail’s employee Lun-dy, whose auto was equipped with a two-way radio, should have notified the crew of the train that an unknown person was sitting in a van parked near the tracks. We consider this a rather absurd suggestion. Lundy had no reason to think that the man in the van would climb out and crawl under a railroad car. If he had called the crew and told them there was a man in a van by the tracks, they undoubtedly would have replied, so what? Maybe, since the van resembled the vans used by Conrail employees, it should have occurred to Lundy that the person in the van had business on the tracks. But it is a big jump from recognizing that possibility to thinking that the man was in danger because he might crawl under a car without taking the usual precautions. And any Conrail employee would know better than to crawl under a car on a live track (a track that had not been blue-flagged). In sum, the probability that Davis would crawl under a car without first asking that it be blue flagged was too low, as it reasonably appeared to Lundy, to obligate Lundy to warn Davis or alert the train’s crew.
In the famous negligence formula of Judge Learned Hand, which is recognized to encapsulate the more conventional verbal formulations of the negligence standard, see Prosser and Keeton on the Law of Torts 173 and n. 46 (5th ed. 1984), a defendant is negligent only if B < PL, meaning, only if the burden of precautions is less than the magnitude of the loss if an accident that the precautions would have prevented occurs discounted (multiplied) by the probability of the accident. See United States v. Carroll Towing Co., 159 F.2d 169, 173 (2d Cir.1947). If P is very low, elaborate precautions are unlikely to be required even if L is large, see United States Fidelity & Guaranty Co. v. Ja-dranska Slobodna Plovidba, 683 F.2d 1022, 1027-28 (7th Cir.1982); and here the necessary precautions would have been elaborate.
Davis’s second theory of Conrail’s negligence is even more fantastic. It is that before the train was moved, a member of the crew should have walked its length, looking under the cars. The probability that someone was under a car was too slight, as it reasonably would have appeared to the crew, to warrant the considerable delay in moving the train that would have been caused by having a crew member walk its entire length and then walk back, a total distance of a mile and a half. It might have taken an hour, since the crew member would have had to look under each one of the train’s 50 cars, and since the cars were only 12 inches off the ground, so that he would have had to get down on all fours to see under them.
Davis’s third theory is more plausible. He argues that it was negligent for the crew to move the train without first blowing its horn (also referred to as the whistle) or ringing its bell. Since no member of the crew was in a position where he could see the train’s western end, which was now its rear end, a reasonable jury could find — we do not say we would have found if we had been the triers of fact— that it was imprudent to move the train without a signal in advance. Although the crew had no reason to think that Davis was under a car, someone — whether an employee of Conrail or some other business invitee to the yard (such as Davis) — might have been standing in or on a car or between cars, for purposes of making repairs or conducting an inspection; and any such person could be severely, even fatally, injured if the train pulled away without any warning or even just moved a few feet. Regarding the application of the Hand formula to such a theory of negligence, not only was B vanishingly small — for what would it cost to blow the train’s horn? — but P was significant, though not large, once all the possible accidents that blowing the horn would have averted are added together. For in determining the benefits of a precaution — and PL, the expected accident costs that the precaution would avert, is a measure of the benefits of the precaution— the trier of fact must consider not only the expected cost of this accident but also the expected cost of any other, similar accidents that the precaution would have prevented. Cf. Conway v. O’Brien, 111 F.2d 611, 612 (2d Cir.1940), rev’d on other grounds, 312 U.S. 492, 61 S.Ct. 634, 85 L.Ed.2d 969 (1941). Blowing the horn would have saved not only an inspector who had crawled under the car (low P), but also an inspector leaning on a car, a railroad employee doing repairs on the top of a car, a brakeman straddling two cars, and anyone else who might have business in or on (as well as under) a car. The train was three-quarters of a mile long. It was not so unlikely that somewhere in that stretch a person was in a position of potential peril to excuse the crew from taking the inexpensive precaution of blowing the train’s horn. Or so at least the jury could conclude without taking leave of its senses.
Against this conclusion Conrail and Trailer Train hurl a number of arguments. One is that precautions would not have been effective; Davis himself testified that he would not have heard the train’s bell. But we do not consider this so damaging a concession as the defendants do. Davis would not have heard the bell, no, but it does not mean that he would not have heard the horn. The horn is deafening, and Conrail’s assertion (for which no evidence was offered) that the horn would have been inaudible at three-quarters of a mile is as implausible as it is unsubstantiated.
A better point is that there is so much traffic in a marshaling yard that sounding the horn every time a train is moved would cause a cacophony that would deprive the horn of its efficacy as a warning. If horns were blowing all the time, Davis would not know, when the horn sounded, whether it was the horn for this train or some other train. Either he would ignore it or he would be spending all his time scrambling out from under and then back under the cars he was inspecting. The problem with this argument is that Conrail put in no evidence on how busy the marshaling yard was either at the time of the accident or at any other time. We know it is a large (four square miles) and busy yard, but we do not know how frequently trains are actually moved in a large and busy yard. Every 15 minutes? Every hour? Conrail could easily have put in evidence on this point, but did not. Moreover, Davis is not contending that due care requires that the horn be blown before every move. Maybe this move was special, because of the length of the train in combination with the curvature of the track and the fact that all of the crew members were at or near the front of the train. Even if the yard is very busy, if the horn were sounded only in the unusual case where there was more than average danger from a sudden movement the danger of cacophony would be diminished.
The defendants’ strongest argument is that Conrail had no duty to warn persons who might be in or on or under the train— given the blue flag rule. There is in general no duty to anticipate and take precautions against the negligence of another person. Such a requirement would tend to induce potential injufers to take excessive safety precautions relative to those taken by potential victims; the cost of safety would rise. Thus, “If the motorist on the through highway had to travel at such a speed that he could stop his car in time to avoid collisions with vehicles which ignore stop signs on intersecting roads, the purpose of having a through highway in the first place would be entirely thwarted.” Hession v. Liberty Asphalt Products, Inc., 93 Ill.App.2d 65, 74, 235 N.E.2d 17, 22 (1968). See Kofahl v. Delgado, 63 Ill. App.3d 622, 626, 20 Ill.Dec. 429, 433, 380 N.E.2d 407, 411 (1978); LeRoy Fibre Co. v. Chicago, Milwaukee & St. Paul Ry., 232 U.S. 340, 352, 34 S.Ct. 415, 417, 58 L.Ed. 631 (1914) (separate opinion of Holmes, J.); Phillips v. Croy, 173 Ind.App. 401, 405, 363 N.E.2d 1283, 1285 (1977); Kelsay v. Consolidated Rail Corp., 749 F.2d 437, 451 (7th Cir.1984) (dissenting opinion). It is true that if precautions necessary to prevent an undue risk of injury to persons who are exercising due care are omitted and a careless person is injured as a result, then in a jurisdiction such as Illinois where the complete defense of contributory negligence has given way to the partial defense of comparative negligence the careless victim can recover some damages. But he can do so, in general, only if there was a breach of duty to the careful.
The defendants argue that the rule regarding blue flagging excuses the crew from any duty of care to persons who might be injured by a sudden starting of the train, because all such persons can protect themselves by blue flagging and are careless if they fail to do so. There is some evidence, however, that the rule was honored in the breach. Davis inspected cars at the yard three or four times a week, never posted or requested the posting of a blue flag, and was seen by many employees of Conrail without remonstrance from them. Maybe all these people were careless but maybe the rule of blue flagging is not so universal as the defendants claim. Common sense tells us that there must be times when there are no blue flags handy; and if the railroad thought it could prove that the rule of blue flagging was so steadily observed (though not in this instance) that the probability that someone, not careless, would be working on or in or under a train that had not been blue flagged was so small as to excuse the crew from a duty to sound any warning signal before moving the train, it should have put in evidence to this effect — evidence, for example, of where the flags are stacked.
Of course there was much evidence that Davis was negligent in failing to blue flag the train (or request that it be blue flagged) before crawling under it. When he saw the western end of the train pull away he assumed the train would stay put. Yet as an experienced railroad worker he knew perfectly well that the train could be pulled from either end, and since he couldn’t see the other end from where he was working, he was taking a grave risk that a locomotive would hook on to that end and pull the train east, crushing him beneath it. He may well have been more negligent than the railroad. But we do not think the jury was irrational to find that the railroad was negligent as well. The burden of sounding the horn would have been trivial, and the expected benefits positive; for despite the blue flag rule there was some probability that an employee or invitee was working in or dangerously near the train, reasonably believing that he would receive some warning before the train pulled away. Of course, the horn might have done no good, because Davis might not have known (given his distance from the locomotive) that it was the horn of the train he was under; this possibility qualifies any possible estimate of the benefits. But this was a matter for the jury to consider; a rational jury could have concluded that the horn would have warned him.
Moreover, we were careful to qualify our statement of the rule that a potential injurer is entitled to assume that potential victims will exercise due care, by saying that this was true “in general.” A certain amount of negligence is unavoidable, because the standard of care is set with reference to the average person and some people have below-average ability to take care and so can’t comply with the standard, and because in any event efforts at being careful produce only a probability, not a certainty, of avoiding careless conduct through momentary inattention. Potential injurers may therefore be required to take some care for the protection of the negligent, especially when the probability of negligence is high or the costs of care very low. See Prosser and Keeton on the Law of Torts, supra, § 33, at pp. 198-99. You cannot close your eyes while driving through an intersection, merely because you have a green light. If, as the jury could have found, Conrail could have avoided this accident by the essentially costless step of blowing the train’s horn, it may have been duty-bound to do so even if only a careless person would have been endangered by a sudden movement of the train.
Conrail’s next argument is that the danger to Davis was open and obvious, and that this is a complete defense to liability. We agree with the premise but not the conclusion. The Illinois Supreme Court has held that, as a corollary to the replacement of contributory by comparative negligence, assumption of risk is no longer a complete defense to liability for negligence. Coney v. J.L.G. Industries, Inc., 97 Ill.2d 104, 119, 73 Ill.Dec. 337, 344, 454 N.E.2d 197, 204 (1983); Duffy v. Midlothian Country Club, 135 Ill.App.3d 429, 433-37, 90 Ill.Dec. 237, 241-43, 481 N.E.2d 1037, 1041-43 (1985). This proposition must not be taken too literally. If you agree to engage in a dangerous activity, such as hang gliding or technical rock climbing or riding a high-spirited horse, and one of the known dangers materializes with no negligence by the defendant, you cannot recover damages from him. Clark v. Rogers, 137 Ill.App.3d 591, 92 Ill.Dec. 136, 484 N.E.2d 867 (1985). There is by hypothesis no negligence in such a case and the term “assumption of risk” as used in it merely explains why there is not rather than providing a defense to a prima facie case of negligence. The defense of assumption of risk — the defense that ceased to be a complete defense when contributory negligence ceased to be a complete defense — comes into play if the defendant’s negligence created a danger that was apparent to the plaintiff, who nonetheless decided to risk it, as where a man dashes into a house that is on fire because of the defendant’s negligence, in an attempt to save his battered fedora, and is burned to death in the attempt. And that is conduct that can equally well be described as encountering an open and obvious danger — a defense assumed to be equivalent to assumption of risk in Nordhaus v. Vandalia R. Co., 242 Ill. 166, 173, 89 N.E. 974, 977 (1909). Davis knew there was a chance that the train would pull away without warning, but reckoned the chance small (perhaps counting on the railroad to be more careful than it was), and decided to take it. Such conduct in the face of an obvious danger of negligence is the type of assumption of risk that closely resembles contributory negligence (“secondary” assumption of risk, it is sometimes called) and that has been abolished along with contributory negligence as a complete defense to liability. It does not presuppose the defendant’s lack of negligence. It reduces the injurer’s liability, but not to zero, if the injurer is negligent.
Both appellants argue that the jury should not have found Conrail twice as negligent as Davis. If this is what the jury did, the argument is sound and a remittitur should be ordered, subject to a technical question whether remittitur is proper in a case of malapportionment of damages, as distinct from excessive damages. Strictly speaking it is not, for we have just seen that the decision on apportionment is a decision on liability, and not on the amount of damages. But we think logic ought to give way to practical convenience and to the policy behind the device of remittitur, which is that if the plaintiff is willing to accept a lower amount of damages rather than incur the risks and expense of a new trial, and the defendant cannot complain because that lower amount would have been within the jury’s power to award, it is a just economy to terminate the suit without a retrial. The policy is fully applicable to a case such as this where the defendants are complaining that the jury placed too large a share of the blame on them, as we implicitly held in Davis v. United States, 716 F.2d 418, 430-31 (7th Cir.1983) (additur). See also Schwartz, Comparative Negligence § 18.4, at pp. 306-07 (1974).
Although we thus have the power to cut down Conrail’s share of the damages, we decline to exercise it. Maybe the jury thought Conrail twice as negligent as Davis — an unreasonable allocation — but there is another interpretation of what the jury did which saves its verdict. Although there was only one defendant, Conrail, there were two tortfeasors, Conrail and Trailer Train. They inflicted an indivisible injury and thus were joint tortfeasors, meaning that each was fully liable to the plaintiff for the damages attributable to the other, though the one that was sued had a right to seek contribution from the other. The jury’s decision to shift one-third of the damages it had assessed against Conrail to Trailer Train implies that the jury divided up the $3 million damage assessment as follows: % to Davis, % to Conrail, and % to Trailer Train. Although as an original matter we would think Davis more rather than slightly less blameworthy than Conrail, we are not prepared to say that the allocation of fault is unreasonable.
Trailer Train makes two further arguments. The first, which we shall not consider, is that one of the instructions invited the jury to attribute Davis’s negligence to his employer, Trailer Train, and thus, once the jury had found Davis one-third responsible for the accident, to hold Trailer Train one-third liable for the damages assessed against Conrail in Davis’s claim. The instruction did invite this weird mode of assessment, but Trailer Train did not object to the instruction when given. It first objected in its post-trial motions. That was too late. If plain error is ever a valid basis in a civil case for overlooking an appellant’s failure to have objected to the instruction that he claims was given erroneously before the jury was instructed, it is only so in an exceptional case. Parrett v. City of Connersville, 737 F.2d 690, 698 (7th Cir.1984); Exxon Cory. v. Exxene Cory., 696 F.2d 544, 549 (7th Cir.1982). A case is not exceptional when a substantial corporation, well able to afford effective legal representation, asks us to give it a new trial, merely because its lawyer made a mistake at the first trial. No excuse for the mistake is . offered, though we do not mean to suggest that any excuse would have been adequate. A litigant cannot allow the case to go to the jury on instructions that he knows or should know are incorrect, and if he loses get a new trial. Trailer Train cannot put Conrail to the expense of a new trial because of an error that Trailer Train should have caught when the error could still have been corrected.
Since the jury merely acted in accordance with an instruction to which no objection was made, perhaps no more need be said to reject Trailer Train’s appeal. A jury verdict that is reasonable in light of the instructions given and not objected to cannot be upset by being shown to be unreasonable in light of instructions that were never given. “[I]n a civil case each party must live with the legal theory reflected in instructions to which it does not object.” Will v. Comprehensive Accounting Corp., 776 F.2d 665, 675 (7th Cir.1985). We also think, however, that there was some evidence of Trailer Train’s negligence. The nature of the inspections that Davis’s job for Trailer Train called for him to make required that he crawl under the cars, but Trailer Train never told him how he should protect himself when he did so. It relied on the fact that Davis was an experienced railroad worker who knew all about blue flags and the danger of being under a car when the train started to move. Trailer Train had no safety rules for its employees. This we think is some evidence of negligence. It is true that a firm of electricians is not liable for negligence because it fails to tell its employees that they shouldn’t stick their fingers into sockets without shutting off the power. Some dangers are too obvious to warrant work rules. But Trailer Train’s inspectors do not control their work environment in the same way that an electrician or plumber controls his. Davis could not switch off the power for the train. All he could do was either personally or by requesting a Conrail employee blue flag the train so that the crew would be warned not to move it.
A reasonable jury could find (if barely) that Trailer Train should have made clear to Davis that he was not to inspect any car without insisting on blue flagging and should have prescribed a procedure for implementing this requirement. Since blue flagging takes some time, the absence of a work rule put Davis in a potential dilemma. If he was too meticulous about safety, this might slow down his inspections too much and jeopardize his job. Trailer Train should have dispelled any doubt that safety must come first. It strikes us (and more important must have struck the jury) as unusual that a worker in such a dangerous job should be allowed to go about his work without receiving any instructions with regard to safety. He should have been more careful and if so would have averted this terrible accident. But that just means he was contributorily negligent; it does not completely excuse Trailer Train for relying entirely on his prudence and caution.
Although the evidence of the defendants’ negligence is thin, the instructions were defective, and the damages probably too large both before and after being reduced for Davis’s negligence, some, perhaps all, of these errors were within the power of the defendants’ counsel to prevent. Although not fully satisfied that justice was done, we can find no reversible error.
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.
CYNTHIA HOLCOMB HALL, Circuit Judge:
OVERVIEW AND JURISDICTION
Wendell Woods appeals the district court’s order revoking his conditional release pursuant to 18 U.S.C. § 4246(f). The district court had jurisdiction under 18 U.S.C. §§ 3231, 4246(f). This court has jurisdiction under 28 U.S.C. § 1291. We reverse.
BACKGROUND
On November 5, 1979, Mr. Woods was sentenced to twelve years imprisonment for bank robbery. While in prison, Mr. Woods was diagnosed with a mental impairment. He spent the next eight years shuttling between penitentiaries and medical centers. On February 26, 1987, he was transferred to the Federal Medical Center at Rochester, Minnesota.
In anticipation of Mr. Woods’ release from custody, the district court for the District of Minnesota (“Minnesota district court”) held a hearing to determine whether Mr. Woods posed a threat to society. On September 29, 1987, the Minnesota district court found that Mr. Woods was suffering from a mental disease or defect which would create a substantial risk of bodily injury to another person or serious damage to the property of another if he were released from the Rochester facility. As a result, the Minnesota district court ordered that Mr. Woods remain hospitalized pursuant to 18 U.S.C. 4246(d).
On December 1, 1987, the Minnesota district court granted Mr. Woods a conditional discharge pursuant to 18 U.S.C. 4246(e). However, Mr. Woods violated the terms of his conditional release and was recommitted on March 30, 1990.
Mr. Woods then filed a second petition for release. On November 7,1990, the Minnesota district court granted his request. Mr. Woods’ release was made conditional on the acceptance of certain terms. He signed a document indicating that he understood that he was required to follow the conditions set out in the Minnesota district court’s conditional release order. One of the terms of Mr. Woods’ conditional release was that he abide by the rules and regulations established by the United States Probation Office (USPO) for the Central District of California — the agency responsible for monitoring his conditional release.
Mr. Nagshineh, the USPO officer assigned to Mr. Woods’ ease, spoke with several psychiatrists and psychologists familiar with Mr. Woods’ condition. He was told that the consumption of alcohol would negatively affect the defendant’s medication. As a result, he instructed Mr. Woods not to drink alcohol.
Mr. Woods chose not to comply with this condition. On two occasions, Mr. Nagshineh discovered that Mr. Woods had consumed alcohol and had become violent. Mr. Nagshi-neh informed the district court for the Central District of California (“California district court”) of this violation. The California district court responded by issuing a bench warrant for Mr. Woods’ arrest. On August 14, 1991, Mr. Woods was taken into custody.
On August 16, 1991, the California district court held an evidentiary hearing to determine whether Mr. Woods’ conditional release should be revoked. It found that one of the terms of Mr. Woods’ release was that he abide by the conditions established by the USPO and that he had been instructed by Mr. Nagshineh to avoid alcohol. Because he consumed alcohol, Mr. Woods had violated the terms of his conditional release. The use of alcohol made Mr. Woods a danger to other people and the property of other people. Under 18 U.S.C. § 4246(f), the California district court concluded that these circumstances justified revocation of Mr. Woods’ conditional release.
STANDARD OF REVIEW
The district court’s findings of fact are reviewed under the clearly erroneous standard. United States v. Stone, 813 F.2d 1536, 1538 (9th Cir.), cert. denied 484 U.S. 839, 108 S.Ct. 125, 98 L.Ed.2d 83 (1987). The district court’s interpretation of 18 U.S.C. § 4246 is reviewed de novo. United States v. Valencia-Roldan, 893 F.2d 1080, 1082 (9th Cir.), cert. denied, 495 U.S. 935, 110 S.Ct. 2181, 109 L.Ed.2d 509 (1991).
DISCUSSION
A. Mootness
Mr. Woods contends that the California district court erred in revoking his conditional release. Before reaching the merits of this claim we must first determine whether this controversy is moot. At oral argument we were informed that following the district court’s revocation order of August 1991, Mr. Woods was granted another conditional release. This release was revoked in September 1992. Thus, Mr. Woods’ current confinement is not due to the revocation order being challenged in this action.
Nonetheless, we decline to apply the mootness doctrine in this case. Mr. Woods’ hospital detentions are usually for relatively brief time periods, and are not likely to persist long enough to allow for the completion of appellate review. Moreover, Mr. Woods continues to be subject to the terms of the Minnesota district court’s conditional release order. Violation of this order served as the basis of the revocation order at issue. Finally, the proper construction of 18 U.S.C. § 4246 is an issue of continuing and public importance. For these reasons we hold that Mr. Woods’ claim is not moot. Friend v. United States, 388 F.2d 579 (D.C.Cir.1967).
B. Revocation Order
Turning to the merits of Mr. Woods’ claim, we note that the Courts of Appeals have not had occasion to interpret 18 U.S.C. § 4246(f). In resolving Mr. Woods’ claim we focus exclusively on the text of the statute. We note, however, that the legislative history of this section is not helpful. See S.Rep. 225, 98th Cong., 2d Sess., 1984 U.S.Code Cong. & Ad.News 3182, 3435.
Under 18 U.S.C. § 4246(f), a district court may revoke a conditional discharge if two conditions are met. First, a person must fail to comply with his prescribed regimen of medical, psychiatric, or psychological treatment. Second, the court must conduct a hearing and determine whether in light of this failure the person’s continued release would pose a risk to society.
Mr. Woods contends that the regimen of medical, psychiatric, or psychological treatment established for him failed to comply with statutory requirements. He argues that revocation based on the failure to comply with a flawed regimen violates due process. We agree.
The Minnesota district court was required to provide a regimen of medical, psychiatric, or psychological treatment for Mr. Woods under 18 U.S.C. § 4246(e)(2)(A). This section does not expressly state who should prescribe the treatment regimen. However, the statute clearly envisions that a medical expert will be consulted or retained. Indeed, the statute requires that medical experts both approve and administer the treatment regimen. 18 U.S.C. §§ 4246(e)(2)(A), 4246(f).
In the instant case, the Minnesota district court did not consult or retain a medical expert. Instead, it delegated the responsibility for prescribing a treatment regimen to the USPO for the Central District of California. The Minnesota district court seemed to consider Mr. Woods’ discharge from civil commitment as analogous to a person serving a sentence of probation. This is evidenced by the boilerplate language used in the conditional release order. Although not prohibited by the statute, this approach makes little sense. Unskilled in the field of medicine, penal officers are hardly equipped for the complex task of prescribing individualized treatment regimens.
The Minnesota district court also erred by ignoring the express requirements of 18 U.S.C. 4246(e)(2)(A). This section requires that a prescribed regimen of medical, psychiatric, or psychological care must be approved by both the district court and the director of the medical facility in which the person is committed. There is no evidence that either the Minnesota district court or the director of the Rochester facility where Mr. Woods was located prior to his release ever approved the regimen established by Mr. Nagshineh.
It could be argued that these omissions are excusable because of the unique circumstances of this case. The Minnesota district court transferred jurisdiction over Mr. Woods’ case to the Central District of California before Mr. Nagshineh had an opportunity to develop a treatment regimen. As a result, the court did not have an opportunity to review the prescribed regimen or obtain the approval of the medical director of the Rochester facility.
If the Minnesota district court was unable to comply with the statutory requirements, the California district court should have filled this void. There is no indication that the California district court addressed the deficiencies in the Minnesota district court’s release order. It did not approve the regimen developed by Mr. Nagshineh or consult the director of the Rochester facility. In addition, no effort was made to retain a medical expert to ensure that Mr. Woods was receiving proper care.
The California district court had the opportunity to ensure that the statutory requirements were followed. It could have acted when it assumed control of the case during the revocation proceeding. The California district court should have realized that the proper procedures were not being followed when Mr. Nagshineh informed the court that Mr. Woods had failed to comply with his prescribed treatment regimen. Section 4246(f) provides that the director of the medical facility responsible for administering a person’s treatment regimen should make this disclosure.
Cases involving the transfer of conditionally discharged persons such as Mr. Woods present difficult situations. A certain amount of discretion must be afforded to the district courts. However, this cannot come at the expense of the significant liberty interests at stake in civil commitment proceedings. See United States v. Sahhar, 917 F.2d 1197, 1206 (9th Cir.1990), cert. denied, — U.S. -7-, 111 S.Ct. 1591, 113 L.Ed.2d 655 (1991); United States v. Baker, 807 F.2d 1315, 1320-22 (6th Cir.1986).
Congress was cognizant of this liberty interest and set forth specific procedural guidelines to ensure that it was not infringed. Id. In this case, the district courts failed to comply with these procedures. The result was a flawed treatment regimen. Revoking Mr. Woods’ conditional release based on noncompliance with this flawed regimen violates due process. As a result, we reverse the district court’s decision.
On remand, we instruct the district court to determine whether Mr. Woods currently poses a threat to society. If so, he should be recommitted. However, if the court determines that Mr. Woods is sufficiently recovered, he should be conditionally discharged under a treatment regimen adopted by the district court. This treatment regimen will have to be developed in accordance with the dictates of the statute. This will require the district' court to consult or retain medical experts, including the director of the Rochester facility. In addition, the district court should select a medical facility to administer the plan. If Mr. Woods violates the terms of his treatment regimen his conditional release will be subject to revocation and he will risk recommitment.
REVERSED.
. Mr. Woods was placed in a halfway house in Los Angeles and jurisdiction over his case was transferred to the district court for the Central District of California.
. Section 4246(f) provides:
The director of a medical facility responsible for administering a regimen imposed on a person conditionally discharged under subsection (e) shall notify the Attorney General and the court having jurisdiction over the person of any failure of the person to comply with the regimen. Upon such notice, or upon other probable cause to believe that the person has failed to comply with the prescribed regimen of medical, psychiatric, or psychological care or treatment, the person may be arrested, and, upon arrest, shall be taken without unnecessary delay before the court having jurisdiction over him. The court shall, after a hearing, determine whether the person should be remanded to a suitable facility on the ground that, in light of his failure to comply with the prescribed regimen of medical, psychiatric, or psychological care or treatment, his continued release would create a substantial risk of bodily injury to another person or serious damage to property of another.
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.
RIVES, Circuit Judge:
A longshoreman brought this libel in the District Court for the Eastern District of Louisiana against a vessel, the SS PHILIPPINE JOSE ABAD SANTOS, and its owner, the National Development Company, for injuries received while unloading the vessel in New Orleans. Since the owner is not qualified to do business in Louisiana and is without an assigned agent for service of process there, service was made on the Louisiana Secretary of State pursuant to the Louisiana Watercraft Statute, LSA-R.S. 13:3479-80. The respondents moved to quash service, asserting that the Watercraft Statute is unconstitutional. The motion was denied, and this appeal was certified and granted in accordance with 28 U.S.C. § 1292(a) (3), (b).
The respondents contend that the issues presented by this case are whether the Watercraft Statute is unconstitutional as being in conflict with the commerce clause and federal admiralty jurisdiction, and whether, if constitutional, the statute’s use is precluded by the Supreme Court Admiralty Rules.
The Louisiana Watercraft Statute provides for substituted service on the Louisiana Secretary of State in actions against non-resident vessel owners if the suit grows out of any accident or collision while the owner is operating the vessel in Louisiana. It is patterned after the Louisiana non-resident motorist statute, LSA-R.S. 13:3474-75. The Louisiana Watercraft Statute has been held to be valid in three previous district court opinions. Similar non-resident vessel-owner statutes of other states have been uniformly upheld and applied. Although the respondents in this case do not attack the statute on due process grounds, such attacks have been rejected in the past on the theory that there is no substantial difference between a nonresident vessel-owner statute and a nonresident motorist statute.
Admiralty suits in federal courts, being of a nondiversity nature, .are governed by federal substantive and procedural law. Federal law, however, often adopts state law either by express or implied reference or by virtue of the interstitial nature of federal law. So the initial question to be decided is whether it was proper for the district court to apply the state substituted service statute in the instant case.
The Rules of Practice in Admiralty and Maritime Cases were promulgated by the Supreme Court in 1920. 'The present Admiralty Rule 1, which is substantially the same as the Rule 1 .adopted in 1844, provides:
“Rule 1. Process on filing libel
“No mesne process shall issue from the District Court in any civil cause of admiralty and maritime jurisdiction until the libel, or libel of .information, shall have been filed in •the clerk’s office from which such process is to issue. All process shall be served by the marshal or by his deputy, or, where he or they are interested, by some discreet and disinterested person appointed by the court.”
.Admiralty Rule 2 states:
“Rule 2. Suits in personam — process in — arrest in same
“In suits in personam the mesne process shall be by a simple monition in the nature of a summons to appear and answer to the suit, or by a simple warrant of arrest of the person of the respondent in the nature of a capias, as the libellant may, in his libel or information pray for or elect; in either case with a clause therein to attach his goods and chattels, or credits and effects in the hands of the garnishees named in the libel to the amount sued for, if said respondent shall not be found within the district. But no warrant of arrest of the person of the respondent shall issue unless by special order of the court, on proof of the propriety thereof by affidavit or otherwise.”
No other admiralty rules deal with service of process. It is significant to this case that although Rule 1 states that the marshal shall serve process, neither Rule 1 nor Rule 2 designates who is an authorized agent to receive process. Prior to the promulgation of the Federal Rules of Civil Procedure, the Supreme Court in In re Louisville Underwriters, 1890, 134 U.S. 488, 10 S.Ct. 587, 33 L.Ed. 991, was faced with whether service could properly be made on an agent appointed by a corporation so as to meet state requirements for doing business there. The Supreme Court noted:
“In the present case, the libellee had, in compliance with the law of Louisiana, appointed an agent at New Orleans, on whom legal process might be served, and the monition was there served upon him. This would have been a good service in an action at law in any court of the state or of the United States in Louisiana. * * * And no reason has been, or can be suggested why it should not be held equally good in admiralty.”
As the court in Doe v. Springfield Boiler & Mfg. Co., 9 Cir. 1900, 104 F. 684, 686, summarized, “Service of monition in admiralty may be made under the provisions of a state statute regulating the mode of service in actions at law and in equity.”
Since the adoption of the Federal Rules of Civil Procedure, however, the tendency has been to use the Civil Rules “to fill the gaps in, or to improve upon, the admiralty practice”:
“There is a general trend to apply the liberal rules of the F.R.C.P. where there is no specific rule in the Admiralty Rules and the rule of the F.R.C.P. sought to be applied is not inconsistent with any provision of the Admiralty Rules or any justifiable construction thereof.”
This has been particularly true with respect to service of process and Rule 4 of the Federal Rules of Civil Procedure. Since the Admiralty Rules are silent as to who is an authorized agent to receive process *and since Civil Rule 4(d) (7) specifically adopts state law, the Seventh Circuit was correct in applying a state non-resident vessel-owner statute:
“At the outset, we reject the argument of those respondents that valid process can never be served under the Illinois Act in admiralty cases because the Act provides a method of service of process which conflicts with the provision of Admiralty Rule 1, 28 U.S.C., that all process ‘shall be served by’ a United States marshal, or deputy marshal. The Illinois Act provides that the operation of watercraft in waters of that State by a non-resident constitutes a designation by such non-resident of the Secretary of State of Illinois as his agent upon whom process may be served.
“In a proper case, and upon a proper finding of an implied designation of the Secretary of State as the agent of an non-resident for receipt of process, there is sufficient compliance with Admiralty Rule 1 when the marshal serves process upon that State official. Here, process for both Irish and Pinkster was served by the marshal upon the Secretary of State, and a copy of the libel was then mailed to each of those respondents as the Illinois statute required. We think the rule is no bar to that procedure if the libel is a proper ease for substituted service under the provisions of the Act.”
The Louisiana Watercraft Statute applies as adopted federal law. Thus, the district court’s use of the statute was in no way contrary to federal admiralty jurisdiction or the commerce clause.
The district court’s denial of the motion to quash service is
Affirmed.
. The Louisiana Watercraft Statute, La. Bev.Stat. 13:3479-80, reads as follows:
“§ 3479. The operation, navigation or maintenance by a non-resident or nonresidents of a boat, ship, barge or other water craft in the state, either in person or through others, and the acceptance thereby by such non-resident or non-residents of the protection of the laws of the state for such water craft, or the operation, navigation or maintenance by a non-resident or non-residents of a boat, ship, barge or other water craft in the state, either in person or through others, other than under the laws of the state, shall be deemed equivalent to an appointment by each such non-resident of the Secretary of State, or his successor in office or some other person in his office during his absence he may designate, to be the true and lawful attorney of each such non-resident for service of process, upon whom may be served all lawful process in any suit, action or proceeding against such non-resident or non-residents growing out of any accident or collision in which such non-resident or non-residents may be involved while, either in person or through others, operating, navigating or maintaining a boat, ship, barge or other water craft in the state; and such acceptance or such operating, navigating or maintaining in the state of such water craft shall be a signification of each such non-resident’s agreement that any such process against him which is so served shall be of the same legal force and effect as if served on him personally.” “3480. Service of citation in any case provided in B.S. 13.3479 shall be made by serving a copy of the petition and citation on the Secretary of State, or his successor in office, and such service shall be sufficient service upon any such non-resident ; provided that notice of such service, together with a copy of the petition and eitation are forthwith sent by registered mail by the plaintiff to the defendant, or actually delivered to the defendant, and the defendant’s return receipt, in case notice is sent by registered mail, or affidavit of the party delivering the petition and citation in case notice is made by actual delivery, is filed in the proceedings before judgment can be rendered against any such non-resident. The court in which the action is pending may order such continuances as may be necessary to afford the defendant reasonable opportunity to defend the action.”
. Paige v. Shinnihon Kishen, E.D.La.1962, 206 F.Supp. 871, Tardiff v. Bank Line, Ltd., E.D.La.1954, 127 F.Supp. 945; Goltzman v. Rougeot, W.D.La.1954, 122 F.Supp. 700; cf. Sioux City & New Orleans Barge Lines, Inc. v. Upper Miss Towing Corp., S.D.Tex.1963, 221 F.Supp. 737, 739. See generally, Kierr, “Use of State Statutes to Effect Service on a Non-Resident Vessel Owner,” 8 La.Bar J. 113 (1960).
. See Valkenburg, K.-G. v. The S.S. Henry Denny, 7 Cir. 1961, 295 F.2d 330 (Ill. Rev.Stat. c. 110, § 263b); Franklin v. Tomlinson Fleet Corp., N.D.Ill.1957, 158 F.Supp. 850 (same); Frase v. Columbia Transp. Co., N.D.Ill.1957, 158 F.Supp. 858 (same); Coyle v. Pope & Talbot, Inc., E.D.Pa.1962, 207 F.Supp. 685 (12 P.S.Pa. §§ 336, 337); Edmundson v. Hamilton, Fla.1962, 148 So.2d 262, 264-265 (Fla.Stat.Ann. § 47.162).
. See authorities cited in notes 2 and 3, supra. Compare Hess v. Pawloski, 1927, 274 U.S. 352, 47 S.Ct. 632, 71 L.Ed. 1091.
. See generally, Hart & Wechsler, The Federal Courts and the Federal System 435-36 (1953); Hill, “State Procedural Law in Federal Nondiversity Litigation,” 69 Harv.L.Rev. 66 (1955); Mishkin, “The Variousness of ‘Federal Law’,” 105 U.Pa. L.Rev. 797 (1957); Note, 69 Yale L.J. 1428 (1960); Fahs v. Martin, 5 Cir. 1955, 224 F.2d 387, 392.
. The present Rule 2 is the same as the Rule 2 adopted in 1844, except that the text of the first sentence has been rearranged and the Rule 7 of 1844 was made the second sentence of the present rule.
. 134 U.S. at 493, 10 S.Ct. at 589.
. Letter of Transmittal of Proposed Amendments to Rules of Civil Procedure by the Advisory Committee on Admiralty Rules, printed in Preliminary Draft of Proposed Amendments to Rules of Civil Procedure for the United States District-Courts p. 2 (1964).
. Monsieur Henri Wines, Ltd. v. S.S. Covadonga, D.N.J.1963, 222 F.Supp. 139, 140; accord D/S A/S Flint v. Sabre Shipping Corp., E.D.N.Y.1964, 228 F. Supp. 384, 389.
. See, e.g., Seawind Compania, S.A. v. Crescent Line, Inc., 2 Cir. 1963, 320 F.2d 580; cases cited note 9, supra.
. Thus there is no conflict between the Admiralty Rules and the Watercraft Statute, so that 28 U.S.C. § 2073, which states-that, “All laws in conflict with such [admiralty] rules shall be of no further force or effect after such rules have taken effect,” is of no relevance.
. Valkenburg, K.-G. v. The S.S. Henry Denny, 7 Cir. 1961, 295 F.2d 330, 333; accord Paige v. Shinnihon Kisken, E.D. La.1962, 206 F.Supp. 871.
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.
WILKINSON, Circuit Judge:
Mervyn Thompson was shot by a man who had identified himself as “Mr. Palmer.” Thompson described his assailant to the police, and some weeks later was hypnotized in the hope that he would recall more details of the shooting. At a show-up a few days after the hypnosis session, Thompson identified his assailant as a man named David Harker. Harker was convicted of assault with intent to murder by a Maryland jury, and later filed a petition for habeas corpus, under 28 U.S.C. § 2254.
We affirm the district court’s denial of Harker’s petition. Testimony by a witness who has previously been hypnotized must meet criteria of independence and reliability, but such testimony does not per se violate either the sixth amendment right to confrontation or the fourteenth amendment right to due process. In addition, the testimony given by Harker’s fellow inmate did not constitute the admission of an uncoun-seled confession, because the inmate was not a government agent.
I.
On the evening of December 7, 1980, a man who called himself “Mr. Palmer” telephoned Mervyn Thompson to say that Palmer’s son had cut his hand playing on an old truck on Thompson’s property. Palmer asked Thompson to meet him at the truck, to see if any damage had been done to it. At approximately 10:00 p.m., Thompson’s daughter-in-law Barbara drove him down the driveway to the place where the truck and Palmer’s car were parked. Next to the truck was a pole with a hanging light, which had been turned on. Barbara’s headlights were on, as were the headlights of Palmer’s car. Thompson was carrying a six volt flashlight, which he used to inspect the truck with Palmer. They found no recent damage; Thompson signalled Barbara to leave, and she did so.
Thompson had begun to walk back to the house when Palmer called him, saying he had dropped a glove. Thompson looked for a glove, but did not see one. Palmer jumped in his car and Thompson saw that he had a shotgun. Palmer shot Thompson, mangling his left arm so badly that it later had to be amputated. After a few shots, Thompson remembered that he was carrying a revolver and fired back. Palmer drove off. Thompson returned to his house for help.
Thompson described Palmer’s car as a red, four-door Honda Accord. According to the testimony of Sergeant Van Horn, Thompson described his assailant as a white male, aged thirty-five to forty-five, about six feet, two inches tall, medium build, medium brown hair, wearing a flannel shirt, tan trousers and glasses. Thompson also worked with police to develop a composite, which was later published in a Harford County newspaper.
Two weeks after the assault, a Maryland state trooper spotted a red Honda Accord driven by a man who resembled the composite. The officer recorded the license plate number and determined that the car was registered to David Harker. At some point between the assault and the hypnosis session, Thompson also looked at a photo array that did not contain a picture of Harker. Thompson did not select any of the photographs as a picture of his assailant.
On January 30, 1981, Thompson consented to be hypnotized by James Roby of the Montgomery Police Department. During that session, Roby told Thompson that he would be able to visualize the events of December 7, and Roby asked Thompson to describe what he was seeing. Roby attempted to record the hypnosis session both on video tape and audio tape. Unfortunately, the lens cap was never removed from the video camera, and Roby succeeded only in producing an audio recording.
A few days after the hypnosis session, police showed Thompson ten photographs. Thompson selected a photo of Harker, and said that it resembled his assailant. The next day, police learned that Harker would be at the Baltimore County Circuit Court within the week. Thompson and his daughter-in-law Barbara went to the courthouse with two police officers, and sat on benches in the hall. Sergeant Van Horn estimated that there were hundreds of people milling around. Thompson saw a man in a camel’s hair coat, and said that it looked like his assailant. The man walked into a courtroom. When he came out, and Thompson was able to get a better look at him, Thompson positively identified the man as his assailant. Later that day, police arrested the man Thompson had identified, David Harker.
Thompson’s photographic, courthouse, and courtroom identifications of Harker were admitted at trial over objection that they were impermissibly tainted by the hypnosis session. Harker was convicted of assault with intent to murder, and sentenced to thirty years. The Maryland Court of Special Appeals affirmed the conviction, Harker v. State, 55 Md.App. 460, 463 A.2d 288 (1983); the Maryland Court of Appeals denied Harker’s petition for a writ of certiorari. Harker then petitioned for a writ of habeas corpus, contending that the trial judge erred in admitting Thompson’s identifications, and in permitting a jailhouse informant to testify. The district court found that the Maryland courts had offered Harker a full and fair opportunity to litigate his contentions, and that the record disclosed no violation of Harker’s constitutional rights. We affirm the decision of the district court that Harker is not entitled to federal habeas relief.
II.
Much of the legal debate over the use of post-hypnotic testimony has its origin in the scientific dialogue on the functioning of human memory. The theory that the memory holds a certain snapshot of the crime has now come into question. Instead, “[mjany memory theorists believe ... that what appears to be recall is actually a constructive process in which information received after an event is integrated by the mind into the memory representation of that event.” United States v. Valdez, 722 F.2d 1196, 1200 (5th Cir.1984). This view of the malleability of memory has caused courts to treat the refreshment of witness recollection through hypnosis with some caution.
In cases where hypnosis is used, it is often the victim of the crime who is hypnotized. See, e.g., People v. Shirley, 31 Cal.3d 18, 181 Cal.Rptr. 243, 641 P.2d 775, cert. denied, 459 U.S. 860, 103 S.Ct. 133, 74 L.Ed.2d 114 (1982); State v. Hurd, 86 N.J. 525, 432 A.2d 86 (1981); Harding v. State, 5 Md.App. 230, 246 A.2d 302 (1968), cert. denied, 395 U.S. 949, 89 S.Ct. 2030, 23 L.Ed.2d 468 (1969); United States v. Narciso, 446 F.Supp. 252 (E.D.Mich.1977). Hypnosis, it has been suggested, can help people to remember things that they would not otherwise remember. Dr. Martin Orne, a psychiatrist and frequent expert witness, believes that “hypnosis may be useful in some instances to help bring back forgotten memories following an accident or a crime.” Orne, The Use and Misuse of Hypnosis in Court, 27 Int. J. Clinical & Experimental Hypnosis 311, 317-18, quoted in State v. Hurd, 432 F.2d at 93.
For example, in Chowchilla, California, twenty-six children were kidnapped from a school bus, and the bus driver was able to recall, under hypnosis, a license plate number which was instrumental in the capture of the kidnappers. Note, Excluding Hypnotically Induced Testimony on the “Hearsay Rationale, ” 20 Val.U.L.Rev. 619, 619 n. 6 (1986). Often police attempt to use hypnosis as a trigger to the recollection of the visage of a criminal suspect. See Clay v. Vose, 771 F.2d 1 (1st Cir.1985).
The dilemma, of course, is that the very process that yields investigative fruits may sow testimonial dangers. We recognize that hypnosis has drawbacks, specifically, the potential for suggestibility, confabulation, and hardening of memory, and the attendant danger of misidentification. "While many of the same problems inhere in eyewitness testimony generally, they can be compounded by the technique of hypnosis, a powerful tool, yet one imperfectly understood. Many psychologists believe that a hypnotized person is more likely to be led by suggestions made by a hypnotist or questioner. See Diamond, Inherent Problems in the Use of Pretrial Hypnosis on a Prospective Witness, 68 Calif.L.Rev. 313, 333 (1980); United States v. Valdez, 722 F.2d at 1201. “The attitude, demeanor, and expectations of the hypnotist, his tone of voice, and his body language may all communicate suggestive messages to the subject.” Diamond, 68 Calif.L.Rev. at 333. Moreover, the relationship between hypnotist and subject may be both intense and intimate. Subconsciously, the subject may give the response he or she thinks the hypnotist wants to hear. People v. Shirley, 181 Cal.Rptr. at 269, 641 P.2d at 801. The result may be that the subject’s description of the event departs from reality in order to conform to the questioner’s expectations.
A related problem, called “confabulation,” occurs when the subject fabricates missing details, often using parts of other real memories that are unrelated to the situation the subject is trying to remember. “People want to give an answer, to be helpful, and many will do this at the risk of being incorrect. People want to see crime solved and justice done, and this desire may motivate them to volunteer more than is warranted by their meager memory.” E. Loftus, Eyewitness Testimony at 109 (1979), quoted in People v. Shirley, 181 Cal.Rptr. at 270, 641 P.2d at 801.
The problems of suggestibility and confabulation are compounded by a third phenomenon: memory hardening. After the hypnosis session has ended, the subject may not remember being hypnotized. Diamond, 68 Calif.L.Rev. at 334. Moreover, the subject may not be able to distinguish between events recalled before hypnosis, and those recalled during hypnosis. State v. Hurd, 432 A.2d at 93. “Once a witness makes a recitation under hypnosis, his confidence in that supposed memory — whether genuine or invented — is greatly strengthened. The witness then may have an unshakeable subjective conviction that gives his account on the witness stand the imprimatur of absolute confidence.” United States v. Valdez, 722 F.2d at 1202 (footnote omitted). The worst fear then, is that an eyewitness will inaccurately reconstruct the memory of the crime in question, either by suggestion or confabulation, and will then become convinced of the absolute accuracy of the reconstruction through memory hardening.
The purpose of hypnosis, of course, is to improve recall without distorting it. In a sense, hypnotizing an eyewitness is similar to cleaning a valuable painting. A picture covered with grime may have little value for anyone. However, in cleaning the picture, hoping to restore its full distinction; one risks changing the original work.
III.
The legal framework for dealing with the problem of hypnosis must closely parallel the medical debate. The dangers of distortion in witness recollection have led courts to agree upon two basic propositions. First, no witness should ever be permitted to testify while under hypnosis. See State v. Collins, 296 Md. 670, 464 A.2d 1028, 1034 (1983). Second, neither the government nor the defendant should be permitted to introduce statements made under the influence of hypnosis for the truth of the matter asserted. In both cases, courts have considered that statements made under hypnosis are too unreliable. People v. Shirley, 181 Cal.Rptr. at 251, 641 P.2d at 783.
At the same time, the possible utility of hypnosis in the refreshment of memory has persuaded the federal courts and a substantial number of state courts that the testimony of a previously hypnotized witness should not be subject to a rule of per se exclusion at trial. See, e.g., Clay v. Vose, 771 F.2d 1 (1st Cir.1985); United States v. Valdez, 722 F.2d 1196 (5th Cir. 1984); United States v. Awkard, 597 F.2d 667 (9th Cir.), cert. denied, 444 U.S. 885, 969, 100 S.Ct. 179, 460, 62 L.Ed.2d 116, 383 (1979); State v. Hurd, 432 A.2d 86. To formulate a per se rule would foreclose whatever investigative benefits may be derived from the responsible use of this technique. The inquiry rather is a more balanced one, and addresses whether the ineourt testimony of a previously hypnotized witness has a basis which is in fact independent of hypnotic influence.
Harker contends that the testimony of Thompson was the product of hypnotic influence and accordingly violated both his fourteenth amendment due process rights and his sixth amendment right to confront the witnesses against him. For the reasons that follow, we reject these two contentions.
A.
It is clear that Harker’s sixth amendment right to confrontation was not violated in any conventional sense. Thompson was present as a witness, and was subject to extensive cross-examination, which explored the circumstances of the criminal encounter by the truck. The defense probed the events the night of the assault, the specifics of the assailant’s appearance, his pattern of speech and accent, and when Thompson first heard the name David Harker. Any inconsistencies in Thompson’s testimony, any flaws in his demeanor, any limitations on his observation, were there for counsel to explore and the jury to evaluate. See Clay v. Vose, 771 F.2d at 4.
Moreover, the jury was fully aware that Thompson had been hypnotized. Lieutenant James Roby, the hypnotist, testified at trial and also submitted to cross-examination. Defense counsel properly inquired into Roby’s position in law enforcement, his training in hypnosis, the circumstances of the hypnosis, the possibility of suggestiveness, and the formulation of the questions Roby asked of Thompson. For example, counsel elicited the fact that after Thompson had described his assailant, Roby asked, “Do you think you would recognize his face?” This extensive probing of the hypnotic session itself conforms to the general view of federal courts that prior use of hypnosis on a witness goes to the weight to be given his testimony rather than its admissibility. See United States v. Awkard, 597 F.2d 667 (9th Cir.1979); Clay v. Vose, 771 F.2d 1 (1st Cir.1985).
Expert witnesses on the subject of investigative hypnosis also testified for both sides. The state called Dr. Daniel Stern, who said that in eighty-two percent of the cases in which he had been involved, hypnosis had led to additional information. Stern described hypnosis as a specialized interview technique and discussed the necessary safeguards. The defense cross-examined Stern on the problems with hypnosis, and on compliance with customary safeguards in the hypnosis of Thompson. Dr. Dennis Harrison testified for the defense on the pitfalls of hypnosis, its potential for inaccuracy, and the level of acceptance of investigative hypnosis in the scientific community. Harrison specifically criticized Thompson’s hypnosis session because of problems with recording equipment, the interruption for changing the tape, and the use of a police officer as the hypnotist. Thus the jury had substantial information in the form of expert testimony to aid it in evaluating the effect of the hypnotic session in this case. See Clay v. Vose, 771 F.2d at 4.
Harker nonetheless suggests that hypnosis so programs and fixes the perceptions of a witness that effective cross-examina-becomes impossible. To begin with, the circumstances of this case belie that assertion. The Maryland courts found specifically “that the hypnotic session would not impair defense counsel’s ability to cross-examine the victim because the manner in which Thompson made the photographic and confrontational identification (not positive as to the photograph; hesitant at the confrontation) indicated that he Retained critical judgment, unimpaired by the hypnosis.” Harker v. State, 463 A.2d at 294.
Nor do we think a per se rule of exclusion for post-hypnosis identification testimony on sixth amendment grounds is justified. Suggestibility and memory hardening are not unique to hypnosis; they are potential problems whenever an eyewitness makes an identification. “Without underestimating the seriousness of the problems associated with hypnosis, it should be recognized that psychological research concerning the reliability of ordinary eyewitnesses reveals similar shortcomings.” State v. Hurd, 432 A.2d at 94. These shortcomings occur for several reasons. Any witness who repeats a story a number of times is likely to become increasingly confident in its accuracy. Williams and Hammelmann, Identification Parades, Part I, 1963 Crim.L.Rev. 479, 482, quoted in United States v. Wade, 388 U.S. 218, 229, 87 S.Ct. 1926, 1933, 18 L.Ed.2d 1149 (1967). No one likes to admit error. Moreover, the line-up, photo or hypnotic identification is more recent in time than the witnessing of the crime. “Regardless of how the initial misidentification comes about, the witness thereafter is apt to retain in his memory the image of the photograph rather than of the person actually seen, reducing the trustworthiness of subsequent lineup or courtroom identification.” Simmons v. United States, 390 U.S. 377, 383-84, 88 S.Ct. 967, 971, 19 L.Ed.2d 1247 (1968).
Despite this widespread recognition of the problem, the Supreme Court has never suggested that memory hardening, a danger in all identifications, poses a per se violation of the sixth amendment right. See Simmons v. United States, 390 U.S. at 384, 88 S.Ct. at 971. If that were the case, a vast amount of critical eyewitness testimony would ipso facto be excluded. The answer lies in apprising the jury of the uses and dangers of hypnosis, in permitting full exploration of the hypnotic event, and in cross-examining the subjection the opportunity for pre-hypnotic observation. These steps were taken in this case, and Harker accordingly suffered no violation of his sixth amendment right to confrontation.
B.
We next consider whether Thompson’s identification of Harker was so unreliable that it violated Harker’s fourteenth amendment right to due process. Harker contends that the hypnosis session was imper-missibly suggestive and tainted the subsequent photo array and show-up. We affirm the decision of the district court that Harker’s right to due process was not violated and that neither pre-trial procedures nor Thompson’s courtroom testimony gave rise to “a very substantial likelihood of irreparable misidentification.” Simmons v. United States, 390 U.S. at 384, 88 S.Ct. at 971.
The testimony of a previously hypnotized witness may contravene due process in one two ways. First, the in-court identification may lack a basis which is independent from the hypnotic session, and second, the procedures used during the hypnosis session may themselves be defective. The exclusion of evidence from the jury is, however, a drastic sanction, one that is limited to identification testimony which is manifestly suspect. “Short of that point, such evidence is for the jury to weigh ... for evidence with some element of untrustwor-thiness is customary grist for the jury mill.” Manson v. Brathwaite, 432 U.S. 98, 116, 97 S.Ct. 2243, 2254, 53 L.Ed.2d 140 (1977).
The Supreme Court has previously established the factors to be considered in assessing the quality of an independent basis for the identification. There is no violation of due process if
under the ‘totality of the circumstances’ the identification was reliable even though the confrontation procedure was suggestive____ [T]he factors to be considered in evaluating the likelihood of misidentification include the opportunity of the witness to view the criminal at the time of the crime, the witness’ degree of attention, the accuracy of the witness’ prior description of the criminal, the level of certainty demonstrated by the witness at the confrontation, and the length of time between the crime and the confrontation.
Neil v. Biggers, 409 U.S. 188, 199, 93 S.Ct. 375, 382, 34 L.Ed.2d 401 (1972). See also Manson v. Brathwaite, 432 U.S. at 114, 97 S.Ct. at 2253; Willis v. Garrison, 624 F.2d 491 (4th Cir.1980).
Thompson had a good opportunity to see his assailant. The lights along the driveway were lit, and the headlights of the assailant’s car were on. Thompson estimated that he spent between five and eight minutes with his assailant. Before hypnosis, Thompson and the police produced a composite. Deputy Jordan Watts testified that he had shown the composite to David Harker’s father, and that the father had said it closely resembled his son. Under hypnosis, Thompson gave a description of his assailant that closely matched the description he had given to police shortly after the shooting; he did not change his story during or after hypnosis. The consistency in Thompson’s identifications before, during, and after hypnosis provided ample basis for permitting Thompson to testify before the jury.
This clear independent basis for Thompson’s identification of Hark'eFcompensates for the deficienciSs in the hypnosis session itself. We agree with the Maryland Court of Special Appeals that “it would obviously have been better to have a video tape of the hypnosis session,” Harker v. State, 463 A.2d at 295, enabling the accused to challenge the techniques used by the hypnotist and the “court to determine what information or suggestions the witness may have received during the session and what recall was first elicited through hypnosis.” State v. Hurd, 432 A.2d at 97. Although the hypnotist attempted to record the session on both audio and video tape, the lens cap was never removed from the video camera. The audio tape of the session was, however, available with some small inaudible gaps.
The person who hypnotized Thompson, Lieutenant James Roby, was a trained law enforcement hypnotist and a member of the Montgomery County Police Department. The shooting occurred in Harford County, and Roby did not participate in the investigation except for the hypnosis session. Thus there was much less temptation for the hypnotist to ask questions which would confirm a desired result. Roby, in fact, testified that he knew very little about the case prior to the hypnosis session; he had not heard the name David Harker, nor had he ever seen a photograph or sketch of Harker. Perhaps for that reason, no photographs or sketches of the assailant were shown Thompson during the session. It has been said that “inaccuracy in hypnotic recall increases with the number and detail of questions” and that “the least-distorted recollections are provided by free narration,” United States v. Valdez, 722 F.2d at 1203 (citing Orne, The Use and Misuse of Hypnosis in Court, 27 Int’l J. Clinical and Experimental Hypnosis 311, 319-321 (1979)). The Maryland trial court found that the session in this case did not exhibit an excess of direction or guidance. See Harker v. State, 463 A.2d at 294.
Finally, Harker’s rights were not violated by the photo array or the show-up. Harker argues that of the ten photographs shown to Thompson, only his showed a subject wearing a plaid flannel shirt over another shirt. During the hypnosis session, Thompson had described his assailant as wearing a plaid flannel shirt over a colored shirt with a collar. The picture of Harker showed him wearing a flannel shirt over a white tee shirt. Another photograph in the array also showed a subject wearing a flannel or velour shirt over a dark shirt with a collar. The large number of photographs shown Thompson further militates against impermissible suggestiveness. See Simmons v. United States, 390 U.S. at 385, 88 S.Ct. at 971. Moreover, facial features, rather than clothing, appear to have been more important to the identification in this case, and police often lack a variety of photographs of the same suspect from which to select.
The testimony on the show-up at the courthouse reveals no due process violation. Police did not tell Thompson that his assailant would be at the courthouse. Thompson was not sure of the identification at first, but was positive after a second look at Harker. The show-up was not so suggestive as to produce any substantial likelihood of misidentification. See Willis v. Garrison, 624 F.2d 491.
IV.
Harker also objects to the use of the testimony of one Larry Eley, a fellow inmate, who testified that Harker had told him about shooting Thompson. Harker contends first that Eley was an incompetent witness and secondly that Eley was a government agent and extracted an un-counseled confession. We find no merit in either contention.
Pointing to post-conviction testimony from a single psychiatrist, Harker moved for a new trial, arguing that the state should have known that Eley was mentally unstable, and that the use of his testimony was therefore fundamentally unfair. This argument fails for several reasons, the most compelling of which is the trial court’s conclusion that exclusion of the evidence would not have changed the outcome of the trial. The evidence did not tend to establish affirmatively the innocence of the accused, and there remained substantial evidence that established his guilt.
Harker next argues that Eley was a government agent who extracted an uncounseled confession. In United States v. Henry, 447 U.S. 264, 100 S.Ct. 2183, 65 L.Ed.2d 115 (1980), the Supreme Court held that the use of testimony by a fellow inmate of the accused who was a paid informant acting under instructions of the government violated the sixth amendment right to counsel. However, “the mere presence of a jailhouse informant who had been instructed to overhear conversations and to engage a criminal defendant in some conversations would not necessarily be unconstitutional.” Henry, 447 U.S. at 276, 100 S.Ct. at 2190 (Powell, J. concurring).
Eley was not paid, nor was he acting under the instructions or solicitations of the government. He responded to a general request for information, and no promises were made to him. Since Eley was not a government agent, there was no violation of Harker’s right to counsel. “[T]he Sixth Amendment is not violated whenever — by luck or happenstance — the State obtains incriminating statements from the accused after the right to counsel has attached.” Maine v. Moulton, — U.S.-, 106 S.Ct. 477, 487, 88 L.Ed.2d 481 (1985). See also Kuhlmann v. Wilson, — U.S. -, 106 S.Ct. 2616, 91 L.Ed.2d 364 (1986).
For the foregoing reasons, the decision of the district court is
AFFIRMED.
. Some courts have held that the use of hypnosis affects credibility, but not admissibility. Others have permitted post-hypnotic testimony only if certain procedural safeguards are present. Still others have found post-hypnotic testimony inadmissible per se. Ruffra, Hypnotically Induced Testimony: Should It Be Admitted?, 19 Crim.L.Bull. 293, 293-94 (1983). For a thorough discussion of the development of the case law, see People v. Shirley, 31 Cal.3d 18, 181 Cal.Rptr. 243, 641 P.2d 775 (1982).
When Harker was tried, Maryland permitted the introduction of post-hypnotic testimony provided that the judge found it reliable. Polk v. State, 48 Md.App. 382, 427 A.2d 1041 (1981). Currently, under Maryland law, hypnotically-enhanced testimony is not admissible, although a witness would be permitted to testify in accord with statements made prior to hypnosis. State v. Collins, 296 Md. 670, 464 A.2d 1028 (1983). Our only inquiry in a federal habeas proceeding is, of course, a constitutional one.
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.
WIDENER, Circuit Judge:
Lance J. Marchiafava, Inc. (Marchiafava, Inc.), a Virginia corporation solely owned and controlled by Lance J. Marchiafava, was a tenant operating a hair salon business in the Rolling Valley Shopping Mall in Fairfax, Virginia, under a lease dated August 1, 1980. It brought this diversity action against the five general partners of Combined Properties Limited Partnership (Combined Properties), the owners of the Rolling Valley Mall, seeking damages for breach of contract, and claiming that Combined Properties had breached an oral agreement not to lease space in the shopping mall to competing businesses. A jury awarded Marchiafava, Inc. $6,300 in damages, upon which verdict judgment was entered and from which this appeal is taken. Because we believe that the statute of frauds barred Marchiafava, Inc.’s claim on this oral agreement, we reverse the judgment of the district court.
I
Lance J. Marchiafava was a professional hairdresser. In March 1980, Vincent Gesumaria, a local real estate developer, called Marchiafava about taking over certain rental space in the Rolling Valley Shopping Mall that was at that time occupied by another hair salon, Vincent et Vincent Hair Masters. Marchiafava advised that he was interested in leasing the space but only if he was given a new lease that included the following terms: Marchiafava would only take one of the two store spaces formerly occupied by Vincent et Vincent; the lease would be for a term of ten years or for a combination of term and options adding up to ten years; the lease would not include a Consumer Price Index clause providing for adjustments of the rental payments, or that, if included, the amount of increase would have a maximum limit; Marchiafava would be allowed to enclose the front part of his store to avoid having to contribute to the mall’s general utilities; and the shopping mall would not contain any competing hair salons. An appointment was then arranged for Marchiafava to discuss the lease with Combined Properties.
Marchiafava first discussed the lease with a representative of Combined Properties, Vana Martin, in June 1980. As a result of this meeting, Marchiafava testified that Martin acceded to each of Marchiafava’s five demands in return for Marchiafava’s payment of $5,000 toward the previous tenant’s defaulted rent. In addition, Marchiafava was to receive title to the equipment that the previous tenants had left in the store.
On July 17, 1980, Marchiafava met with Gesumaria and Bernard Fagelson, counsel for Combined Properties and its representative during this meeting. During this meeting, Marchiafava initially refused to sign the proposed lease, which Combined Properties had drafted. Marchiafava based his refusal, in part, on the fact that he had visited the premises involved in the lease and had discovered that the equipment alluded to in his previous discussions with Vana Martin was not on the premises. Marchiafava also based his refusal to sign the lease on the fact that the proposed lease did not contain all the conditions that he had demanded and to which he insisted Martin had previously acceded.
Marchiafava testified that Fagelson discussed the lease terms with Martin by telephone and then told Marchiafava that Combined Properties agreed to all of Marchiafava’s conditions, including the condition that Combined Properties would not lease any space in the Rolling Valley Shopping Mall to competing hair salons. Fagelson does not deny that he discussed the lease conditions with Martin by telephone on July 17, 1980. He does deny, however, that he ever discussed the noncompetition provision with Martin.
Marchiafava signed the lease, which was dated August 1, 1980, at the conclusion of the July 17, 1980 meeting. Martin subsequently signed the lease on behalf of Combined Properties. The lease as signed did not contain any reference to the noncom-petition provision. The lease also did not contain any direct reference to Marchiafava’s request for permission to enclose the front wall of his store. Finally, the lease did not contain the cap on the extent of increase in rent based on the Consumer Price Index that Marchiafava had requested. The lease did contain provisions reflecting Marchiafava’s demand for a combination of term and option provisions for a period of ten years, as well as Marchiafava’s demand that the lease only cover one store instead of two.
On July 23, 1980, Marchiafava delivered his check for $5,000 to Combined Properties. Marchiafava testified that he delivered the check as his consideration for Combined Properties’ accession to his five proposed lease terms and for the equipment in the store. After Combined Properties cashed the check and it was returned to him, Marchiafava made certain notations on it. On the front of the check, he wrote “leasehold improvements.” On the back of the check, he wrote, “Donna, justify this payoff under leasehold im[provements] even tho’ its for the wall & N.C.” Marchiafava testified that the notations on the back of the check were instructions to his bookkeeper. Marchiafava also testified that the “N.C.” in the notation on the back of the check referred to the noncompetition provision in his oral agreement with Combined Properties. Subsequently, Marchiafava enclosed the front of his store at Rolling Valley Shopping Mall. Combined Properties also signed over to him title to the equipment that Vincent et Vincent had left in the store, the precise value of which is not indicated in the record.
In March 1983, a competing hair salon began operating in the Rolling Valley Shopping Mall. In February 1984, Marchiafava, Inc. filed this case against Combined Properties. In its amended complaint, Marchiafava, Inc. sought only damages for the breach of the alleged oral agreement between itself and Combined Properties. Marchiafava, Inc. did not seek specific performance of the agreement or any other form of equitable relief. At both the close of the plaintiff’s case and at the close of all the evidence, Combined Properties moved for a directed verdict on the grounds that the parol evidence rule and the statute of frauds precluded enforcement of the alleged oral agreement. The district court denied the motions to the extent that they were based on the statute of frauds, stating that the doctrine of part performance took the oral agreement out of the statute. The district court took under advisement the question concerning the applicability of the parol evidence rule to the oral agreement in question, and eventually denied Combined Properties’ motions on this ground as well.
On appeal, Combined Properties raises two issues. First, it argues that the district court erred in not holding that the parol evidence rule barred as a matter of law Marchiafava, Inc.’s claim for breach of an oral agreement made prior to the execution of the written lease; and, second, that the district court erroneously applied the doctrine of part performance, ruling that the statute of frauds did not prohibit enforcement of the oral agreement. Since we decide the case on the basis of the statute of frauds, we do not reach the appellants’ contention regarding the applicability of the parol evidence rule.
II
In this diversity case, we apply the substantive law of the forum, Virginia. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).
Combined Properties has contended throughout that the statute of frauds barred the enforcement of Marchiafava, Inc.’s claim because the claim was predicated on an oral agreement. In the deliberations concerning Combined Properties’ motions for a directed verdict, the district court assumed, and the parties did not contest, that the statute of frauds did apply to the oral agreement in question. On appeal, neither party contends that the statute does not apply to the oral agreement in question. Marchiafava, Inc., however, does and did contend that although the statute of frauds applies to the agreement in question, either the doctrine of part performance took the agreement out of the statute, or Combined Properties was estopped from asserting the statute as a defense. Because the parties are in agreement on this point, we assume, without deciding, that the statute of frauds does, in fact, apply to the oral agreement in question. Consequently, in resolving this appeal, the sole issues that we address are whether the doctrine of equitable estoppel prevents Combined Properties from asserting the statute of frauds as a defense and whether the doctrine of part performance removed the agreement in question from the statute’s protection.
A. Equitable Estoppel as a Bar to Statute of Frauds Defense
Marchiafava, Inc. contends, in part, that Combined Properties’ failure to perform its obligations under the oral agreement in question resulted in substantial detriment to Marchiafava, Inc., including causing it to sign a lease that it would never have otherwise signed, as well as undertaking leasehold improvements on the store property leased. The argument goes that Combined Properties’ actions in negotiating the lease and its subsequent failure to perform on the obligations in its oral agreement estop it from asserting a statute of frauds defense to Marchiafava, Inc.’s claim.
Virginia recognizes the doctrine of equitable estoppel as a bar to the assertion of a statute of frauds defense. See T ... v. T ..., 216 Va. 867, 872-73, 224 S.E.2d 148, 151-52 (1976). It is well established, however, that the doctrine of equitable estoppel does not apply to situations in which the party asserting the estoppel has suffered detriment resulting solely from another party’s failure to perform an obligation under the oral agreement. Cottrell v. Nurnberger, 131 W.Va. 391, 47 S.E.2d 454, 461-62 (1948) (plurality opinion), followed by the court in Bennett v. The Charles Corp., 159 W.Va. 705, 226 S.E.2d 559 (1976); see also WILLISTON ON CONTRACTS § 533A, at 806 (3d ed. 1960) (use of doctrine of equitable estoppel as bar to assertion of statute of frauds defense requires more than one party’s mere refusal to perform his agreement because either party has right to refuse to execute parol contract within statute).
Marchiafava, Inc. attempts to circumvent this well established principle in its argument on appeal by invoking a case in which the Virginia Court estopped the vendor of a parcel of land from asserting a statute of frauds defense to a claim incidental to a sale of land due to certain oral representations that the vendor had made to the vendee concerning the establishment and use of an adjoining alley. See Trueheart v. Price, 16 Va. (2 Munf.) 468 (1811) (upholding injunction against vendor of real property from closing alley that vendor had represented as having been “established, and always to be kept open,” despite assertion of statute of frauds defense). The holding in Trueheart, however, does not control the present case because in that case there was a misrepresentation that the alley had been established, a past as well as an existing fact, not merely the giving of an oral promise that it would be kept open in the future. See Cottrell v. Nurnberger, 131 W.Va. 391, 47 S.E.2d 454, 458-59 (1948). MINOR ON REAL PROPERTY § 105, at 145 (2d ed. 1928) states the accepted rule in cases respecting claimed oral restrictions on land use: “Estoppel, however, is not strictly applicable where the restriction involves a promise for the future rather than a representation of past or existing fact.” In this case, Marchiafava’s testimony at trial clearly indicates that he considered the noncompetition provision in the oral agreement in question to be one of the promises that he obtained from Combined Properties in exchange for his $5,000. Misrepresentations of past or existing facts were neither claimed nor proven. Neither was there any claim that Combined Properties did not intend to carry out the promise when made, sometimes considered a species of fraud. Because the detriment to Marchiafava resulted solely from Combined Properties’ failure to perform on an oral promise, we conclude that this case falls within the rule stated in Minor and that Combined Properties has not done other than exercise its statutory right to refuse to execute a parol contract that falls within the statute of frauds. Consequently, we hold that Combined Properties was not estopped from asserting the statute of frauds as a defense to Marchiafava, Inc.’s claim.
B. Part Performance as Bar to Statute of Frauds Defense
In denying Combined Properties’ motions for directed verdict on the statute of frauds ground, the district court held that although the statute applied to the agreement in question, the doctrine of part performance took the agreement out of the statute. Marchiafava, Inc. brought this action seeking only damages for Combined Properties’ alleged breach of the oral agreement in question. It did not seek specific performance of the alleged oral agreement, nor did it seek any other form of equitable or legal relief. The doctrine of part performance is not available in Virginia in such actions at law for damages for breach of contract to take an oral agreement out of the statute of frauds. See Porter v. Shaffer, 147 Va. 921, 933, 133 S.E. 614 (1926) (part performance by one party to contract within statute of frauds will not, at law, entitle that party to recover upon contract itself); Ricks v. Sumler, 179 Va. 571, 576, 19 S.E.2d 889 (1942) (statute of frauds prohibits action at law for damages for breach of parol agreement); CORBIN ON CONTRACTS § 422 (1952) (part performance doctrine not applicable to take a contract out of the statute of frauds in actions at common law for damages for breach of the contract). Because the doctrine of part performance does not operate in actions at law for damages for breach of an oral contract to take the contract out of the statute of frauds, the district court committed error in ruling that the doctrine took the oral agreement in question out of the statute of frauds.
The judgment of the district court is
REVERSED.
. Gesumaria was a guarantor on the Vincent et Vincent lease. In early 1980, Vincent et Vincent had defaulted on their lease and were in arrears on their rental payments for between $20,000 and $30,000. An arrangement to Combined Properties was proposed under which Combined Properties would excuse Gesumaria on his guarantee if a new tenant could be found. Combined Properties agreed to the proposal, whereupon Gesumaria called Marchiafava in March 1980.
. Marchiafava later admitted, however, that the lease did contain two of his conditions: that Marchiafava would only lease one of the two stores previously occupied by Vincent et Vincent; and that the term of the lease with an option cover a period of ten years.
. Marchiafava, Inc. cross-appeals on the ground that the jury verdict of $6,300 was so clearly inadequate that this court should set it aside. Because we vacate the district court’s judgment on the issue of liability, we do not consider Marchiafava’s contention concerning the adequacy of the jury’s damage verdict.
. In its brief, Marchiafava, Inc. combined two separate arguments concerning the viability of Combined Properties’ statute of frauds defense, contending that the district court properly es-topped Combined Properties from asserting a statute of frauds defense in the face of Marchiafava’s part performance. Under Virginia law, as in most other States, the doctrine of estoppel and the doctrine of part performance constitute two separate, albeit related, bars to the assertion of a statute of frauds defense. See T ... v. T ..., 216 Va. 867, 872, 224 S.E.2d 148 (1976); WILLISTON ON CONTRACTS § 533A, at 791-92 (3d ed. 1960). Although the district court apparently rested its decision concerning the applicability of the statute of frauds defense solely on the doctrine of part performance, because each doctrine can separately constitute a bar to a statute of frauds defense in Virginia, this opinion will discuss the applicability of both doctrines to the agreement in question.
. We caution that our discussion with reference to the application or non-application of the statute of frauds in breach of contract actions, because of part performance or estoppel, should not be read as necessarily applying where a plaintiff proceeds on other theories for relief such as specific performance, unjust enrichment, money had and received, quantum meruit, etc. In many of such cases, different rules apply.
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.
WASHINGTON, Circuit Judge.
This case involves an appeal from a decision of the Public Utilities Commission of the District of Columbia, relative to rates of bus and streetcar fares charged by appellee D. C. Transit System, Inc. Section 43-705 of the D.C.Code provides that “Any * * * person * * * affected by any final order or decision of the Commission, other than an order fixing or determining the value of the property of a public utility in a proceeding solely for that purpose, may” appeal to the District Court and from that court to this. See Pollak v. Public Utilities Commission, 1951, 89 U.S.App.D.C. 94, 191 F.2d 450. Appellants’ petition of appeal, filed pursuant to this section, was dismissed by the District Court on the ground “that the record certified to the Court contains no evidence to support the plaintiffs’ allegation that they are riders of Transit vehicles or are persons affected by the Order of the Commission appealed from [and] that, accordingly, within the purview of the statute governing review of orders of the Commission, the plaintiffs are without standing to bring this appeal. * * * ” The present appeal followed.
Appellants contend that the record certified to the court demonstrates, at a minimum, that appellant Goodman is a “transit rider,” i. e., a user of Transit System vehicles; that from an affidavit properly before the court, although not a part of the certified record, it should have concluded that appellant Bebchick is also a “transit rider”; and that as such, both are “persons * * * affected” within the meaning of the statute.
Appellant Goodman filed a petition to intervene in the proceedings before the Commission in which he made the sworn statement that he is a regular commuter on Transit • System vehicles. In its order granting intervention the Commission expressly relied upon this allegation. We believe that upon this evidence, which was a part of the record certified by the Commission, the District Court should have found that appellant Goodman is a transit rider.
Although appellant Bebchick did not file a petition to intervene, he did join in the petition for reconsideration and alleged therein that he is a transit rider. Moreover, appellant Bebchick subsequently filed with the District Court an affidavit in which he stated that he is “an occasional and casual customer and rider of the buses and streetcars of D. C. Transit System, Inc.” We are of the opinion that this affidavit, although dehors the certified record, was proper for consideration below, the question being one of standing to bring the appeal, and that on the basis of all the evidence properly before it the trial court should have found that appellant Bebchick is also a transit rider.
On the facts here, we believe that appellants, as transit riders, qualify as persons entitled to appeal. In United States v. Public Utilities Commission, 1945, 80 U.S.App.D.C. 227, 231, 151 F.2d 609, 613, we held that the language of Section 43-705 of the D.C.Code and its companion sections-manifests “an intention that consumers [of electric power] shall have a right to challenge the Commission’s actions.” This right accrues with equal force to users of transit facilities. Poliak v. Public Utilities Commission, supra. The order appealed from raises the cash fare for a single trip from 20 cents to 25 cents, but does not increase the token fare of 5 for $1.00, or 20 cents each. Appellees argue that transit riders are not affected by the change in cash fare sinee they can continue to travel at the old rates if they use tokens. The vice of this argument is that it proves too much, since presumably it would bar appeal from an order raising cash fares to 40 cents or 50 cents or even a dollar, so long as token fares were not increased. Manifestly appellees expect the new fare schedule to affect Transit’s revenues in a favorable and meaningful way, or they would not have provided for it. It must therefore affect transit riders, from whose pockets the additional revenues are expected to come.
We hold that the complaint ought not have been dismissed for lack of standing, and order the ease remanded to the District Court for further proceedings.
Reversed and remanded.
. Reversed on other grounds, 1952, 343 U.S. 451, 72 S.Ct. 813, 96 L.Ed. 1068.
. See Seatrain Lines, Inc. v. United States, D.C.Del.1957, 152 F.Supp. 619, 622-623. This point is conceded by ap-pellee Transit System, although not by appellee Commission.
. Single tokens, however, are not offered: a lot of 5 is the smallest unit sold.
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.
SCHNACKENBERG, Circuit Judge.
Amadore Porcella, a citizen of the Republic of Italy, plaintiff, appeals from a judgment of the district court granting the motion of Time, Inc., a New York corporation, defendant, dismissing plaintiff’s cause at his costs, on the ground that his complaint fails to state a claim upon which relief may be granted.
The parties are in agreement that the substantive law of Illinois governs in this case.
According to his brief, plaintiff, an art expert, brought this action for libel against defendant, publisher of Life, a weekly magazine, to recover damages resulting from an article published in the issue of December 7, 1959, wherein allegedly libelous language concerning plaintiff in his professional capacity as an art expert imputed to him lack of skill and competence, as well as dishonesty, trickery and misconduct, to the injury and damage of plaintiff’s reputation as an art expert.
The court ruled that the language is not libelous within the meaning of the innocent construction rule, and that the language complained of constituted fair comment.
According to plaintiff, the article pertained to the discovery of certain paintings in California which were attributed to certain old masters by plaintiff in his capacity and profession as an art expert.
In the. interest of complete accuracy we set forth the article:
WHAT IS SO RARE AS A RARE FIND?
California produces the latest reasons for viewing “Old Masters” suspiciously.
The news item from California was a rarity even in that land of overnight fairy-tale fortunes. Ten paintings, owned by Italian immigrants in Pasadena, were said to be Old Masters worth millions of dollars—“the greatest art find of the century!” This was the latest of a long line of “fabulous discoveries” that have burst upon the art world in recent years. The California canvases had long been in the Naples family of Maria and Alfonso Folio. When Maria married a GI, she brought them to her new home in Pasadena and tucked them away in a closet and under a bed.
A year ago Alfonso Folio, a TV repairman who had come to live with his sister, dropped in at the neighborhood electrical supply store of Charles and Jay di Renao and invited them to come up and see the family paintings some time. The Di Renzos came, saw and promptly made a deal with the Folios to help sell the art. Their first step: to find an expert to identify the paintings. They telephoned one Amadore Porcella, an Italian who had just authenticated a Raphael in Chicago.
Hurrying out to Pasadena, Porcella took one ecstatic look at the paintings and pronounced them masterpieces. One, he said, was a long-lost painting (above) by the 17th Century Italian master, Caravaggio, and he valued it at more than $1 million. Porcella then called in his friend, Alexander Zlatoff-Mirsky, a Chicago art restorer, for some heavy work. After a few weeks of working with “powerful solvents,” Zlatoff-Mirsky declared the paintings almost as good as new and ready for unveiling.
Shortly after the “masterpieces” were made public, ominous doubts began to gather about their authenticity. A Pasadena expert said he had seen the paint-tings several years ago and found them worthless. A New York scholar said the long-lost Caravaggio was known through authentic copies (opposite, top) and bore no resemblance to the Pasadena work. Finally an Italian priest disclosed that the Folios’ so-called Caravaggio was in fact a copy of a minor 17th Century painting (center) which hangs in Naples. The California fairy tale was showing signs of being just that.
BUSY TEAM AND ITS THRIVING OUTLET
Discovering a trove of valuable Old Masters would be a once-in-a-lifetime stroke of luck for most mortals. But Porcella and Zlatoff-Mirsky have, as one of their friends observed, a “remarkable talent” for it. Just in the course of the past year they have authenticated more than a dozen “masterpieces.”
The pair’s instinct for art showed up early. Porcella started out to be a painter in Rome. At the age of 17, he explains, he switched to art criticism. Around 1934 he worked briefly at the Vatican gallery (compiling a guidebook of the art collection). Since then he has written a number of books and “authenticated” innumerable paintings. Zlatoff-Mirsky worked as a painter in Russia until the 1930s when he migrated to Chicago and took up the more remunerative profession of restoring art.
In 1958 the two “experts” met for the first time in New York. Soon after, Porcella went to Chicago and settled down in Zlatoff-Mirsky’s studio to inspect the paintings which the Russian was restoring. In a short time they identified “millions of dollars” worth of art, tagged with such top-drawer names as Leonardo da Vinci, Rembrandt and Raphael.
The dual role of source and thriving outlet for most of the team’s discoveries is played by the Sheridan Art Galleries, a Chicago auction house which specializes in old and modern “masterpieces.” For the past 20 years their highly prized consultant and art restorer has been none other than Zlatoff-Mirsky. Recently the gallery’s reputation was slightly tarnished when two buyers proved that the paintings they bought there were fakes. The gallery refunded the complainants’ money, later sold one of the paintings for an even higher price.
THE INS AND OUTS OF AUTHENTICATING
Active as they are, Professor Porcella and his colleague Zlatoff-Mirsky have not cornered the art “discoveries” market. Rival authenticators continue to turn up, armed with new-found treasures and long-lost masterpieces. Some of them are reputable authorities. Others are “experts” with elusive or spurious credentials. Whatever their background, many authenticators seem to be in the business at least as much for love of money as love of art.
How much an authenticator makes depends generally on the importance of the painter’s name and the authenticator’s evaluation of the particular painting. An expert is inclined to charge more for recognizing a Leonardo than a Lastman. Often the price of authenticating a painting far exceeds the amount paid for the work. Porcella received $2,000 for authenticating a work that was bought for half that price (left). Professor Erik Larsen received $550 for certifying a painting that originally cost his client $20 (opposite).
To enhance their prestige and give validity to their judgment, authenticators often publish books or articles reproducing their “discoveries.” But their talent for writing is apt to show up best in the flamboyant certificates they compose for their “masterpieces.”
The more unscrupulous authenticators have found a bonanza in providing income tax outs. A buyer who pays $1,000 for an old painting may call upon an “expert” to evaluate his purchase. For a comfortable fee, the “expert” values the painting at many times its actual worth. The buyer then donates the painting to a museum or some other institution, thereby getting a sizable write-off on his income tax for his charitable donation.
So far in the U. S. there are no legal penalties for such dealings. The quasi experts are not held responsible for their authentications. The auction houses are not required to back up the authenticity of the works they sell. And with the art market currently enjoying its biggest boom, the flood of dubious “masterpieces,” both old and new, is sure to continue.
Several photographs and printed explanations appeared with the article.2
1. The question arises in this case as to what extent public comment may be made about plaintiff in the practice of his profession as an art expert, in the course of which, as he alleges in his complaint, he renders “expert counsel, advice, opinions, evaluations and authentications pertaining to paintings, drawings and related works of art, to art museums, art collectors, art dealers and persons possessing such works of art.” Plaintiff claims “a reputation for professional skill, competency and proficiency as an art expert in the eyes of the public.”
We know of no governmental control of this profession, or requirement that a diploma or other authorization from any seat of learning must have been held by plaintiff.
Certainly plaintiff would be entitled, as any other person would be, to redress against any false statements of fact maliciously published in regard to him. However, in his complaint, as explained in his brief, ante 1, plaintiff’s denial of the truth of the statements in the article has been limited to those charging or implying that plaintiff is not a qualified and recognized art expert and those imputing to plaintiff, as an art expert, a lack of skill, competence and fitness, as well as dishonesty, trickery and misconduct.
It is these statements which plaintiff charges defendant “wilfully, recklessly and maliciously wrote, edited * * * published * * * ”.
In addition to plaintiff’s own admission that he occupied a position in a public field, it is obvious that as an expert he was able in the appraising of works of art to not only have an effect upon the market for the paintings and the prices paid therefor, but he also was in a position to appraise art donated by patrons for charitable purposes, who thereby would be the beneficiaries of tax deductions under the tax laws of the United States. In the latter activity he was in a position to leave his imprint upon the federal government’s collection of revenue from the public.
Our analysis of the alleged libelous article convinces us that, insofar as the complaint charged it to be false, it is an expression of the publisher’s comments and opinions upon the activities of plaintiff as an art expert with a description of the entire setting in which he was active. It might well be characterized as a satirical recital by an author who made no effort to conceal his belief that there were some authenticators of paintings less reliable than others. The article, insofar as it offended plaintiff, merely expressed the author’s opinion, rather than made a false statement of any fact. Plaintiff was engaged in a field which he admits (and even boasts) was in the public domain and, as such, he was subject to comment by the public press as to his activities in that field. Certainly there are no facts alleged to even suggest any personal animus between him and defendant in this ease.
Because of the public nature of plaintiff’s activities and the controversial question as to the genuineness of the alleged work of old masters, it is for the court to decide whether the publication was reasonably capable of the meaning ascribed to it by plaintiff. Kulesza v. Chicago Daily News, Inc., 311 Ill.App. 117, 125, 35 N.E.2d 517.
In Brewer v. Hearst Publishing Co., 185 F.2d 846, at 850 we said:
“The publications in the instant case are fair comment and criticism on a matter of public interest and as such are not actionable. The essential elements of fair comment in order to be deemed not actionable are: (1) that the publication is an opinion; (2) that it relates not to an individual but to his acts; (3) that it is fair, namely that the reader can see the factual basis for the comment and draw his own conclusion; and (4) that the publication relates to a matter of public interest.”
2. Moreover, in the ease at bar, we are required to apply the rule recognized in Illinois as the innocent construction rule.
As we said in Crosby v. Time, Inc., 254 F.2d 927, at 929:
“The so-called innocent construction rule, that is, if language is capable of innocent construction it should be read and declared non-libelous, is firmly established in Illinois. La Grange Press v. Citizen Pub. Co., 252 Ill.App. 482, 485; Dilling v. Illinois Publishing and Printing Co., 340 Ill.App. 303, 306, 91 N.E.2d 635; Parmelee v. Hearst Pub. Co., Inc., 341 Ill.App. 339, 343, 93 N.E.2d 512; Epton v. Vail, 2 Ill.App.2d 287, 119 N.E.2d 410. In the latter case, the Court in dismissing a complaint stated (opinion not published) :
“ ‘The language must receive an innocent construction when susceptible of such interpretation and cannot by innuendo be extended beyond a reasonable construction. [Citing cases.]’ ”
More recently, in John v. Tribune Company, Jan. 23, 1962, 181 N.E.2d 105, the Illinois Supreme Court said:
“We further believe the language in defendant’s articles is not libelous of plaintiff when the innocent construction rule is consulted. That rule holds that the article is to be read as a whole and the words given their natural and obvious meaning, and requires that words allegedly libelous that are capable of being read innocently must be so read and declared nonactionable as a matter of law. Although this court has not heretofore expressed the rule, it has been adopted and applied by our Appellate Courts and by Federal Courts sitting in Illinois. * * * ”
We hold that the district court correctly ruled that the article is not libelous within the meaning of the innocent construction rule and that the language complained of constituted fair comment.
For these reasons the judgment from which this appeal has been taken is affirmed.
Judgment affirmed.
. In this opinion, unless otherwise indicated, the word “article” refers to the alleged libelous article.
. In Dilling v. Illinois Publishing & Printing Co., 340 Ill.App. 303, 91 N.E.2d 635, 637, which was a libel action, the court said:
“According to the allegations of her complaint, plaintiff sought public support and patronage, thus inviting public criticism. The fact that defendants were reporting and commenting on a matter of public interest appears from the complaint. Hence, defendants’ right of fair comment in a matter of public interest was properly presented for determination by their motion to dismiss, and it was unnecessary to plead this right as an affirmative defense. Manifestly the executive committee of the California American Legion does not share plaintiff’s views on Americanism. In our view this expression of difference of opinion as reported in the article here complained of is not actionable per se.”
These explanations (designated alphabetically) are:
(a) THE “DISCOVERY” in Pasadena was labeled Caravaggio’s long-lost painting of Mary Magdalene by the Folios’ so-called experts. Other well-known authorities say that the stiff figure and the murky landscape are unlike the art of Caravaggio.
(b) THE ORIGINAL from which the Pasadena painting was probably copied hangs in the art gallery of the Gerolomini Friars in Naples. It was not done by Caravaggio, according to Father Antonio Bellucci (above, talking to TV interviewer) but probably by an undistinguished contemporary name Gian Battista Caraceiolo, who was called “Battistello.” The work has hung in this gallery for 300 years. The subject of the Magdalene was popular with painters of the Baroque period.
(c) ALTHOUGH A COPY, this is what Caravaggio’s still-lost Magdalene looked like. It was made by Dutch artist a few years after Caravaggio painted his picture. This is in Barcelona. Another copy made in 1612 by a Flemish artist, is in Marseilles.
(d) OWNERS OF “MASTERPIECES” are Alfonso Folio (second from right), his sister Maria and her husband Chester Hataburda (left). Here they talk to lawyer Lester Olson about their personal dispute with their partners, the di Kenzos.
(e) DISPLAY of name artists at tbe Sheridan Art Galleries in Chicago is supervised by the director, Jack Shore (above). The paintings have been labeled as (right, from top) a “Poussin,” “Rembrandt,” and “Steen”; (center, from top) “Correggio,” “Metsys” and a “Leonardo da Vinci” which is held by Shore.
(f) REPAIR SHOP for “masterpieces” is the studio of Alexander Zlatoff-Mirsky (right) who sports artist’s beret when he is on the job. He is surrounded by paintings which he discovered and Porcella authenticated. They include a “Rubens” (left, middle), “El Greco” (left, bottom), “Van Dyck” (center).
(g) AUTHENTICATOR Amadore Poreella inspects a painting in his Rome apartment. In foreground are photographs of controversial paintings in Pasadena.
(h) COMPARISON of Pasadena painting which Porcella attributes to Luca Giordano with an authentic Giordano in Florence reveals few similarities, many striking differences. Pasadena picture (left), showing centaur carrying off Hercules’ wife, seems based on Giordano’s Rape of Persephone (detail, right). But ungainly poses, theatrical faces and claw-like hands in Pasadena work indicate it was done by an unskilled follower of the 17th Century master.
(i) AUCTION VICTIM, Richard Feigen, bought painting (right) which Sheridan Art Galleries attributed to modern master, Paul Klee. Feigen, a Chicago art dealer, cheeked work with two Klee 'experts who identified it as a forgery. He then returned picture to the Sheridan galleries and got his money back.
(j) BUYER J. P. De Laney hired Porcella and Larsen to identify purchase. Porcella labeled it Giorgione; Larsen, a del Piombo. Others doubt both labels.
(k) DISCOVERER Maurice Goldblatt attributes latest “find” to Raphael’s father, Giovanni Santi. Goldblatt has authenticated art for Sheridan galleries.
(l) MEDIUM was called into the act by Antonio Folio, brother of the Pasadena Folios, to give advice on his family’s paintings. In a table-tipping session in Naples, medium (above, right) professed to have made contact with 18th Century prince. Prince said that the paintings are worth “millions of dollars.”
(m) .BEAMING BENEFICIARIES of an “art treasure” are children of Mr. and Mrs. Alex Schiffelbian Jr. of Center Moriches, N. Y., whose future education is partly tied to painting of Magdalene on wall. Schiffelbians bought painting in furniture shop in Northport for $20. They showed it to Professor Erik Larsen of Georgetown University who declared it was long-lost Van Dyck worth at least $15,000. Other experts reject his attribution — underlining the problems in this controversial field.
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.
DENISON, Circuit Judge.
Marshall and Neely owned and operated a sawmill in Mississippi. Dacus was a broker or dealer in manufactured lumber in Memphis. He made advances to the mill,' to secure which advances lumber as cut was to be piled and marked for him. Pursuant to the contract, this gave Mm, at that stage, at least an equitable interest. The contract also provided that at frequent intervals bills of sale pf the new lumber should be given to him to secure him for his advances. TMs- was done. The lumber was insured with the companies above named. A portion was later burned, and these suits were brought to recover the loss. At the end of a jury trial, both parties moved for directed verdict, and asked no alternative instructions. The court directed verdicts for plaintiffs.
The insurance policies contained the usual provision that they should be void if the interest of the insured be other than the sole and unconditional ownership, or if the property be or become incumbered by chattel mortgage, unless, in each case, otherwise provided by agreement on or in the poliey. The policies on their face were made payable to Marshall and Neely, and covered lumber, “their own or held by them .in trust or on commission, or sold, but not delivered,” etc. They contained the further provision that “any loss * * * proven to be due to the assured under tMs poliey shall be held payable to [Dacus], as interest may appear.” In defense to the action's it was urged that the bills of sale constituted chattel mortgages, and that, in any event, Marshall and Neely were not the unconditional and sole owners.
Upon the undisputed evidence these defenses were rightly overruled. There is no occasion to consider the extent of the effect of the word phrase “their own or,” etc.; plainly even this was an agreement in the policy that the insured were not the unconditional and sole owners, and it might here well be thought to be language selected by the parties for properly covering the true situation. However that might be, the stipulation that the loss should be payable to Dacus “as interest may appear,” under the facts of this case, applied to his interest, whatever it was, and was notice to and recognition by the insurer of his interest in the property, then or thereafter, and whatever it might be. It becomes unnecessary to consider whether his interest was that of a chattel mortgagee, or of the owner of the title, or of the owner of an equitable lien. Those things might be important in shaping the recovery; they do not affect the validity of the poliey.
It is argued that, since Dacus might have an interest in the poliey as security for a debt, without having any interest in the insured property, this clause does not necessarily imply a mutual understanding that he did have such interest in the property. This, we think, is not the natural construction of the language used. An interest in the poliey, or in the right of action thereon, as collateral security, would not only usually be nonexistent when the policy issued, and so could not be the subject of this reference, but no indorsement on the poliey with reference to such an interest would have beén required. It is to be supposed that this indorsement was put into the policy for a necessary purpose, and the only such purpose would be to preserve the policy against invalidity arising from outstanding unnamed interests in the insured property.
In holding that the effect of the loss payable clause was to consent to Dacus’ interest in the property, whatever it might be at the time of the loss, we do not overlook the eases cited and said to establish the contrary rule. All but one of them hold merely that the mortgagee in such a policy is interested only as the appointee of the insured, .and cannot recover unless the insured could. With such a. clause as we have here, tMs is not to be disputed. With tMs one exception, none of the cases cited hold or suggest that an outstanding mortgage to the person named in this clause can itself be the mortgage which will be a breach of the condition and invalidate the poliey. In each of the other eases, the invalidity was caused by some other breach.
This exception is Atlas Reduction Co. v. New Zealand Co. (C. C. A. 8) 138 F. 497, 9 L. R. A. (N. S.) 433. It does not seem ever to have been cited and followed upon this point, unless in one District Court case. Its value as authority is, to say the least, weakened by the forceful dissenting opinion of Judge Hook. It is not necessary to decide between the two views expressed in that case, because, in the present ease, all doubt is removed by the fact that the clause is found in a policy which insured the interest of Marshall and Neely described in general and indefinite terms, and because the fact of which Judge Hook thought the court might take judicial notice here expressly appeared, viz. that according to the usages and practices of the community and of these insurance companies, this phrase “as interest may appear” was understood to cover and include a chattel mortgage interest, and was the form of words in a printed rider regularly used by the insurance companies for covering and describing that kind of interest.
It is also said that, although the effect of the loss payable clause might be to evidence an agreement as to the interest of Dacus existing at the time the policy issued, yet, whenever a later bill of sale was executed for a specific lot of lumber, that became a chattel mortgage not within the contemplation of such earlier agreement. This language, like other policy provisions, must be interpreted in view of the existing situation, of which both parties had knowledge. The lumber was being manufactured and piled and shipped under the provisions of the Daeus contract. At first, it was subject at least to a lien for the advances made against it. A little later, and from time to time, a particular lot was covered by a bill of sale to the same creditor and securing the same advances. The policy insured the lumber which was to come into existence from time to time, and pass through this course of treatment under the contract. It cannot be said, in any clear sense, that when the bills of sale were given the property thereby “became incumbered by a chattel mortgage.” It always had been incumbered by a generally equivalent security for the same indebtedness.
It was also urged that there had been a breach of the condition which required the insured to keep inventories of their lumber, and it is said that the inventories which were kept did not show the grades, and hence were insufficient. Manifestly such a stipulation must be interpreted with reference to- the usages of the particular business involved; the most perfect inventory which could be kept in one business might in another business be so vague as to be insufficient. The proof shows that there were well-established log-run average grades of the lumber being cut for Daeus by this mill from a certain tract of timber; that the insured in all their dealings relied upon the existence of these average grades as applied to the whole yard; and that there was no doubt about the propriety of this application to the burned lumber. In this situation, the duty to keep inventories did not require that the lists of quantity and sizes should specify grades.
Marshall» and Neely also bring error because they were allowed to recover only 88 per cent, of the face of the policies. This was because of the effect given by the trial court to the so-called distribution average clause, reading as follows: “It is a consideration of this contract that the amount insured hereunder shall attach at all times during the life of this policy, in each building, shed, and other structure and/or place, in that proportion of the total amount hereby insured that the value of the property covered by this policy in each such building, shed, other structure and/or place, shall bear to the value of all property insured hereby.”
The policy covered by blanket form the lumber in the mill yard and in the shipping yard at the railroad. The proofs tended to show, and the judge in directing the verdict had a right to assume, as he did, that at the time of the fire the mill yard held 88 per cent, and the shipping yard 12 per cent, of the total property covered. The property-burned was in the mill yards only, but was of a value greater than the whole face of the policies. The plaintiffs’ objection to this limitation of its recovery to the 88 per cent, figure was because the distribution average clause was not pleaded as a defense. Aside from all other questions, such pleading was not necessary, because this was not a defense. It did not even amount to such a reduction in plaintiffs’ claim as would be affected by a coinsurance clause. It was plainly incumbent upon plaintiffs to prove what property was destroyed and what insurance existed upon it; and plaintiffs’ own proofs show that there was no insurance in force upon the property burned, except to the extent of 88 per cent, of the face of each policy.
Marshall and Neely also complain because they were not allowed to recover the 25 per cent, penalty which the statutes of Tennessee provide that the jury may award, in addition to the loss, when it finds that the defense was made in bad faith. Even if the Tennessee penalty statute applied to a Mississippi contract, and even if there had been any evidence tending to show bad faith in the defense, plaintiffs could not complain, in the face of their submission to the court of any issue of fact there might be, and his implied finding that there was no bad faith in the defense. However, there was no such evidence. Not only did defendants prevail as to 12 per cent, of the controversy, but their contest, based on the chattel mortgage theory, was plainly one which justified them in taking the opinion of the court of last res'Crt. Columbia Nat. Life Ins. Co. v. Harrison (C. C. A. 6) 12 F.(2d) 986, 990.
No other assignments of error require attention. 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:
|
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.
HATCHETT, Circuit Judge:
In this appeal involving a claim for tor-tious interference with a business relationship, we affirm the district court’s rulings on several issues and certify to the Supreme Court of Florida one issue regarding damages recoverable under Florida law.
BACKGROUND
This appeal follows protracted litigation involving several claims and counterclaims between a furniture manufacturer, Ethan Allen, Inc. (“Ethan Allen”), and its former furniture dealer, Georgetown Manor, Inc. (“Georgetown”). The unraveling of the longstanding dealership relationship between Ethan Allen and Georgetown began in December, 1984, because of a dispute over Georgetown’s credit for future furniture deliveries. On January 9, 1985, Georgetown informed Ethan Allen that it had decided to convert its five Ethan Allen galleries to Thomasville Furniture Industries, Inc. (“Thomasville”) furniture outlets. Georgetown’s owner, George Levin, formed a new corporation, Thomasville Showcase Interiors to operate the new Thomasville galleries at the old Georgetown locations. On January 11, 1985, Georgetown issued a press release announcing the conversion of its stores from Ethan Allen to Thomasville, stating that “Thomasville offers the best opportunities for our company as we look into the future.” Georgetown also sent a letter to its past customers advising them of the conversion and announcing a conversion sale of the Ethan Allen furniture in stock.
On January 24,1985, Ethan Allen’s chairman of the board, Nathan Ancell, sent a memo to other Ethan Allen dealers stating that Georgetown owed $1.6 million as of May, 1984, and that Georgetown had allowed the bills to mount without proper payment even though Ethan Allen had been willing to help Georgetown recover. In addition, on February 3, 1985, Ethan Allen placed a one-day advertisement in several South Florida newspapers, stating:
Dear Valued Customer:
Ethan Allen recently announced a major change in the distribution in the Miami [or General Pompano] Area. Since this change affects you, our valued customer, I would like to explain the situation directly. For about 20 years, Ethan Allen enjoyed a wonderful relationship with the Blau family who operated the Georgetown Manor stores in the Miami area. Because of family illness, the business was sold to a new group. Financial problems developed and our bills were not paid. The debt rose to a high level and we could no longer deliver merchandise to them until the debt was reduced. Reluctantly, we then had to discontinue distribution of Ethan Allen by Georgetown completely. We, therefore, are presently opening new Ethan Allen galleries in this area to serve our many customers of long standing.
One of our fine dealer families in the area, Bob and Brenda Stacy, have established an Ethan Allen office in our present Ethan Allen Contemporary Gallery at 5070 N. Federal Highway, Lighthouse Point (Pompano). The phone number is 305-421-5300. This Gallery will soon become an Ethan Allen American Traditional Gallery. The Stacys will be opening other Ethan Allen Galleries very shortly to serve you.
Many Ethan Allen customers have unfilled orders with Georgetown Manor. We and the Stacys are very anxious to effect deliveries of these orders and can handle them very expeditiously.
Please contact Stacy’s Service Center in Pompano and they will handle your inquiries and orders. Again, the number is 305-421-5300.
The new galleries will be called Ethan Allen Carriage House and will continue to bring you our beautiful furniture and professional services.
We are sorry about this disruption as we took great pains to avoid it.
We look forward to serving you again.
Nathan S. Ancell /s
Nathan S. Ancell
Chairman of the Board
Ethan Allen Inc.
Danbury, CT 06811
PROCEDURAL HISTORY
On January 8, 1985, Georgetown filed an action against Ethan Allen seeking damages and a preliminary injunction compelling Ethan Allen to deliver furniture pursuant to the dealership relationship. During the next several months, Georgetown amended its complaint to include the following six claims against Ethan Allen: (1) intentional interference with the advantageous business relationship between Georgetown and Thomasville; (2) conversion of commissions which Georgetown would have earned on undelivered furniture; (3) breach of contract based on Ethan Allen’s failure to provide Georgetown with an adequate period of time to terminate their relationship, and based on Ethan Allen’s failure to arrange less burdensome payment terms for it as a dealer with satisfactory credit standing; (4) misrepresentation based on Ethan Allen’s failure to provide adequate notice of termination and failure to arrange less burdensome payment terms; (5) trade libel and slander based on the publication of a January 24, 1985 dealer memorandum to all Ethan Allen dealers and the publication of a February 3, 1985 advertisement; and (6) violations of the Sherman and Clayton Acts based on Ethan Allen’s alleged attempts to maintain market power and monopoly position as a furniture supplier in South Florida. Georgetown also added Levin as a plaintiff and Ancell as a party defendant in its amended complaint.
Ethan Allen answered Georgetown’s complaints and asserted the following eight counterclaims against Georgetown, George Levin, and another company which Levin owns, Classic Motor Carriages, Inc. (“Classic Motor”); (1) an account stated claim for the amount that Georgetown owed Ethan Allen for previously delivered furniture; (2) misrepresentations based on Georgetown’s representations that it had sufficient funds to make timely payments for the furniture being delivered; (3) fraudulent concealment of the fact that Georgetown did not have sufficient funds to pay for furniture being delivered; (4) fraudulent conveyance based on transfers of Georgetown’s assets to Levin, Thomasville, Classic Motor, or others without adequate consideration and without regard to Georgetown’s debts to Ethan Allen; (5) conspiracy to commit civil theft based on an alleged scheme to obtain Ethan Allen’s furniture without paying for it; (6) civil theft; (7) conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (RICO); and (8) violations of RICO.
On July 28, 1986, the district court dismissed all of Georgetown’s claims except the tortious interference claim. On April 13,- 1987, the district court granted summary judgment against Georgetown on four new claims (breach of fiduciary duty, violation of the Connecticut Franchise Act, maintenance, and violation of Florida’s Security of Communications Act) it raised in a third amended complaint. In addition, on October 24, 1988, the district court granted summary judgment against Georgetown on its renewed claim that Ethan Allen violated the Sherman and Clayton Acts. Georgetown filed its fourth and final amended complaint on November 6, 1989, dropping Levin and Ancell as parties and alleging only a tortious interference claim and a conversion claim against Ethan Allen. Georgetown’s amended tortious interference claim alleged that “Ethan Allen wrongfully interfered with plaintiff Georgetown’s customers, past, present, and future,” as opposed to its earlier allegation of interference with its relationship with Thomasville. In an order denying Ethan Allen’s motion for summary judgment, the district court limited the scope of proof on Georgetown’s tortious interference claim to exclude prospective customers as a yardstick for lost profits. Order Denying Motions for Summary Judgment (March 30, 1990) (ruling that “Georgetown must show interference with an existing contractual or business relationship, coupled with legal rights and damages.”) (emphasis in original).
Thus, the case proceeded to trial before a jury on Georgetown’s conversion, claim, Georgetown’s tortious interference as limited in the March 30, 1990, order, and Ethan Allen’s several counterclaims. At the close of Georgetown’s case, the district court directed a verdict in favor of Ethan Allen on the conversion claim. At the close of the trial, on February 12, 1991, the district court entered an order dismissing Ethan Allen’s civil theft, RICO, and two conspiracy counts without prejudice based on a stipulation between the parties.
The jury returned the following verdicts on the remaining claims and counterclaims: (1) on the tortious interference claim, the jury returned a special verdict finding that Ethan Allen had intentionally and maliciously interfered with Georgetown’s business relationships with its customers and that this interference proximately caused damages to Georgetown in the compensatory amount of $285,000 for lost profits on existing contracts, and $7,380,000 for the “loss of the value of Georgetown’s business, including goodwill”; (2) that Ethan Allen was privileged in placing the disputed advertisement because it sought to protect a legitimate economic interest, but that Ethan Allen had not “fairly and truthfully” represented to Georgetown’s customers the reason.for the termination of the dealership relationship; (3) on the interest due on the account stated claim (the amount was not disputed), the jury found that the parties had agreed that Georgetown would pay simple interest at the prime rate for the past due debt; (4) the jury found against Ethan Allen on its misrepresentation, fraudulent concealment, and fraudulent conveyance counterclaims.
Based on the jury’s finding that it was privileged to place the disputed advertisement, Ethan Allen moved that Georgetown’s tortious interference claim be dismissed. On February 27, 1991, the district court denied Ethan Allen’s motion to dismiss the tortious interference claim based on its authority to harmonize the answers to the interrogatories and the jury’s special verdict. In light of the instructions to the jury, the evidence, and other surrounding circumstances,.the district court found that the jury’s responses was a determination that “Ethan Allen did not exercise its privilege truthfully and in accordance with contemporary business standards” and concluded that its use of improper means vitiates its privilege of protecting its economic interest.
ISSUES AND CONTENTIONS
Ethan Allen raises the following claims of error: (1) the district court erred in denying its motion for judgment notwithstanding the verdict (JNOV) or new trial because Georgetown could not, as a matter of law, establish that the advertisement caused the alleged loss of profits on existing orders, or establish a protected interest in potential future sales to past customers, or state a valid tortious interference claim for alleged interference with business relationships in which Ethan Allen was a party; (2) the district court erred in failing to dismiss Georgetown’s tortious interference claim based on its common law privileges of competition and the protection of its legitimate economic interest, and its privilege to publish truthful information under the First Amendment; (3) the district court erred in refusing to grant a new trial based on its admission of prejudicial hearsay; (4) insufficiency of the evidence to support the jury’s award of damages for alleged loss of profits on existing furniture orders, and alleged loss of value of Georgetown’s business, including goodwill; (5) insufficiency of the evidence to support the jury’s finding that Georgetown agreed to pay only simple interest on its outstanding indebtedness for the account stated claim; (6) the district court erred in refusing to instruct the jury on “badges of fraud” factors to consider in determining Georgetown’s intent for purposes of the fraudulent conveyance counterclaim; and (7) the district court erred in refusing to instruct the jury that under capitalization is relevant for purposes of Ethan Allen’s alter ego theory of fraudulent conveyance.
Georgetown responds that it did establish that Ethan Allen’s placement of the advertisement caused the alleged loss of profits on existing orders, and did establish a protected interest in potential future sales to past customers under Florida law. Georgetown contends that Ethan Allen’s other claims of error are waived based on its failure to present the issues in a timely fashion for a ruling in the district court. Alternatively, Georgetown contends that the evidence was sufficient to support the jury’s award of damages, and sufficient to support the finding that Georgetown was obligated to pay only simple interest on the account stated claim. In addition, Georgetown contends that the district court did not abuse its discretion in failing to give Ethan Allen’s proposed jury instructions where the actual instructions adequately covered the relevant law on Ethan Allen’s fraudulent conveyance claim.
DISCUSSION
(i) Jury Instructions
We find no reversible error in the district court’s denial of Ethan Allen’s motion for a new trial on its fraudulent conveyance counterclaim based on the district court’s refusal to identify “badges of fraud” on the issue of intent, and refusal to instruct the jury that under-capitalization is relevant to its theory that Levin was the alter ego of Georgetown and the other counter-defendants. We note that a district court has “broad discretion in formulating a jury charge.” United States v. Turner, 871 F.2d 1574, 1578 (11th Cir.), cert. denied, 493 U.S. 997, 110 S.Ct. 552, 107 L.Ed.2d 548 (1989). “In reviewing the adequacy of a jury instruction, the appellate court must examine the entire charge and determine whether, taken as a whole, the issues and law presented to the jury were adequate.” United States v. Bizzard, 674 F.2d 1382, 1389 (11th Cir.), cert. denied, 459 U.S. 973, 103 S.Ct. 305, 74 L.Ed.2d 286 (1982). Contrary to Georgetown’s argument, Ethan Allen did preserve this claim of error for appellate review based on its objections to the proposed charge during the charge conference. See Mark Seitman & Associates, Inc. v. R.J. Reynolds Tobacco Co., 837 F.2d 1527, 1530 (11th Cir.1988) (holding that the right to appellate review of jury instructions for error is not barred where a party apprises the trial court of its objections during the charge conference).
On the badges of fraud claim, Ethan Allen based its proposed charge on the codification of the “badges of fraud” in Fla.Stat.Ann. § 726.105(2) which lists factors that “may” be considered along with other factors in determining intent. See Fla.Stat.Ann. § 726.105(2) (1988). Ethan Allen expressly conceded at the charge conference that the badges of fraud factors are relevant only if a transfer is made without receiving a reasonably equivalent value in exchange for the transfer. Because Ethan Allen relied on section 726.-105(2) which provided that consideration “may” be given to the badges of fraud factors, we hold that the district court did not err in refusing to specifically recite the particular badges of fraud factors in the jury instructions, which we find otherwise sufficient on the issue of intent. See Bizzard, 674 F.2d at 1389 (holding that “the mere failure to recite the jury instructions in the precise language requested by defendant is not error where, as here, the instructions are otherwise sufficient”). Moreover, in light of the undisputed jury finding that Georgetown did receive reasonably equivalent value in exchange for the disputed transfers, Ethan Allen cannot be heard to complain since it conceded at the charge conference that the badges of fraud factors are relevant only if the disputed transfers were made without Georgetown receiving a reasonably equivalent value.
We also find no error in the district court’s refusal to give Ethan Allen’s proposed charge on under-capitalization as relevant to its alter ego theory of fraudulent conveyance. Ethan Allen’s proposed jury instruction on under-capitalization did not merely state that under-capitalization is relevant to an alter ego claim. Rather, it would have charged the jury that “if a company has been under-capitalized and as a result prevents creditors from being able to collect their debts, the person who caused the under-capitalization is considered to be the alter ego of the company and thus personally liable for its debts.” Because under-capitalization is only one of the factors relevant to an alter ego claim, we hold that the district court properly refused to charge the jury that the person who caused the under-capitalization of a corporation must be considered the alter ego of the company. In addition, we find no error in the district court’s actual charge to the jury on Ethan Allen’s alter ego theory because it adequately summarizes the factual controversies under the applicable law. See Bizzard, 674 F.2d at 1389. Accordingly, we hold the district court did not err in denying Ethan Allen’s motion for a new trial based on its refusal to give requested jury instructions.
(ii) Interest on Account Stated Claim
As to Ethan Allen’s challenge of the jury’s award of only simple interest on Georgetown’s outstanding indebtedness, we find that Ethan Allen waived its right to challenge the jury’s finding as not supported with sufficient evidence. A party challenging sufficiency of the evidence on appeal must file a timely motion for a directed verdict at the end of all the evidence. Fed.R.Civ.P. 50(b); Coker v. Amo co Oil Co., 709 F.2d 1433, 1437-38 (11th Cir.1983), superseded by statute in part on other grounds as stated in Wilson v. General Motors Corp., 888 F.2d 779 (11th Cir.1989). Ethan Allen failed to move for a directed verdict on the issue of simple interest at the end of all the evidence.. Thus, we would ordinarily review the district court’s submission of the issue to the jury under the plain error standard to determine whether any evidence supported submission of the issue. Coker, 709 F.2d at 1437 (applying the plain error standard of review where the objecting party failed to make a timely objection).
In this case, however, Ethan Allen agreed to submit the question of how interest was to be calculated on the undisputed principal amount of its account stated claim. At the charge conference, the parties agreed to provide the jury with three alternatives, including one calculated with simple interest. In addition, Ethan Allen suggested submitting a fourth alternative of the statutory rate in case the jury could not agree on one of the other three alternatives. Ethan Allen cannot now complain that the jury elected one of those three alternatives because “[i]t is a ‘cardinal rule’ of appellate procedure ‘that a party may not challenge as error a ruling or other trial proceeding invited by that party.’ ” Charter Co. v. United States, 971 F.2d 1576, 1582 (Johnson, J., concurring in part and dissenting in part) (quoting Crockett v. Uniroyal, Inc., 772 F.2d 1524, 1530 n. 4 (11th Cir.1985) and citing additional cases). Accordingly, we hold that the district court did not err in denying Ethan Allen’s motion for a new trial on the question of simple interest for its account stated claim.
(iii) Hearsay
We also reject Ethan Allen’s contention that the district court erred in denying its motion for a new trial based on the alleged admission of prejudicial hearsay. The claim concerns the district court’s admission of the testimony of two Georgetown witnesses about statements that customers made about the reason for their demand for a refund of their deposits on existing orders. The district court struck the testimony of one of the two disputed witnesses, Preve, and ruled that the testimony of the other witness, Cormick, was • admissible only as evidence of verbal acts under Fed.R.Evid. 801(c). The district court instructed the jury that “the statements of the customers that they saw the ad and demanded their money back is not admissible for the truth of the statements,” but only as support for the plaintiff’s position that “these customers demanded their refunds from Georgetown. Nothing else. Just the act of demanding the money.”
Because of the district court’s clear limiting instruction that the testimony be considered only as evidence of the verbal acts of demanding refunds, we hold that the district court did not abuse its discretion in admitting Cormick’s testimony as non-hearsay under rule 801(c). See United States v. Rodriguez-Cardenas, 866 F.2d 390, 394 (11th Cir.1989) (recognizing that this court will not disturb an evidentiary ruling absent a clear showing that the district court abused its discretion), cert. denied, 493 U.S. 1069, 110 S.Ct. 1110, 107 L.Ed.2d 1017 (1990); United States v. Peaden, 727 F.2d 1493, 1500 (11th Cir.) (noting that rule 403 is the appropriate standard of reviewing a district court’s admission of a statement for a non-hearsay purpose of rule 801(c), and setting forth the two limited categories of cases warranting reversal under that standard), cert. denied, 469 U.S. 857, 105 S.Ct. 185, 83 L.Ed.2d 118 (1984).
(iv) Privileges and Affirmative Defense
For the reasons stated in the district court’s excellent February 27, 1991 Memorandum of Decision and Order, we hold that the district court did not err in denying Ethan Allen’s motion to dismiss the tortious interference claim based on the asserted common law privileges to compete and to protect legitimate economic interest.
We also hold that Ethan Allen waived its right to assert that its publication of the February 3, 1985 advertisement is not actionable as tortious interference, based on its status as a party to the relationships allegedly interfered with and its privilege to publish truthful information. Contrary to Ethan Allen’s claims, we find that Ethan Allen failed to assert either argument as a ground for a directed verdict at the close of all evidence. After the district court denied Ethan Allen’s motion to dismiss the tortious interference claim, the court specifically asked Ethan Allen to clarify the basis for its contention that it was protecting its own rights when publishing the ad. In response, Ethan Allen.cited cases and made arguments for the sole proposition that its publication of the ad was privileged because it has “an economic interest in the marketplace.” Ethan Allen made absolutely no argument that it was protecting its right to publish truthful information under the common law and First Amendment. Moreover, even though Ethan Allen cited cases which also discuss the principle that a tortious interference claim does not lie against a party to the disputed relationship, Ethan Allen pointed to these cases only as support for the argument that it was privileged to protect its "economic interest in the marketplace.” We note that Ethan Allen voiced no objection to the district court’s jury charge, which did not include any instructions on a truthful information privilege or a defense based on Ethan Allen’s alleged status as a party to the disputed business relationships.
Because a motion for JNOV is technically only a renewal of a motion for a directed verdict made at the close of the evidence, Ethan Allen cannot assert grounds supporting its motion for JNOV that were not included in its motion for a directed verdict. See Litman v. Massachusetts Mutual Life Ins. Co., 739 F.2d 1549, 1557 (11th Cir.1984). Accordingly, we hold that the district court did not err in denying Ethan Allen’s motion for JNOV or new trial based on the truthful information privilege and its alleged status as a party to the disputed business relationships, because Ethan Allen waived its right to assert these grounds through its failure to assert them in its motion for directed verdict.
(v) Merits of Tortious Interference Claim
■ Having concluded that the district court did not err in denying Ethan Allen’s motion for JNOV or a new trial on the grounds of privilege and the party to the business relationship defense, we now turn to the merits of Ethan Allen’s claims of error regarding the judgment in favor of Georgetown on the tortious interference claim. Under Florida law, a plaintiff must prove the following elements to state a valid tortious interference with advantageous business relations claim:
(1) the existence of a business relationship under which the plaintiff has legal rights; (2) an intentional and unjustified interference with the relationship; and (3) damage to the plaintiff as a result of the tortious interference with that relationship.
Ad-Vantage Telephone Directory Consultants, Inc. v. GTE Directories Corp., 849 F.2d 1336, 1348-49 (11th Cir.1987) (citations omitted); see also Tamiami Trail Tours, Inc. v. Cotton, 463 So.2d 1126, 1127 (Fla.1985).
Ethan Allen contends that Georgetown did not establish a tortious interference claim as a matter of Florida law. Ethan Allen also argues that the evidence was insufficient to support the jury’s award of damages under either theory of Georgetown’s tortious interference claim. We note that Ethan Allen properly preserved its arguments on the tortious interference claim for appellate review. Ethan Allen twice moved for summary judgment on the tortious interference claim which resulted in the district court’s April 13, 1987 and March 30, 1990 orders limiting Georgetown’s proof to showing “interference with an existing contractual or business relationship, coupled with legal rights and damages.” At the close of all evidence, Ethan Allen moved for a directed verdict on Georgetown’s tortious interference claim based on the absence of evidence showing causation between the disputed advertisement and the cancellation of existing orders, based on the absence of evidence demonstrating causation between the advertisement and lost future profits, and based on an argument that the 89,000 persons in Georgetown’s prospective customer base cannot be the basis for any tortious interference claim under Florida law. After the court denied Ethan Allen’s motion at the close of evidence and the jury returned its verdict, Ethan Allen raised the same arguments in its motion for a JNOY or new trial, and remittitur of damages.
Existing Orders
We find Ethan Allen’s first argument concerning Georgetown’s failure to establish causation to be without merit. Ethan Allen contends that Georgetown did not establish causation between the advertisement and the lost profits on existing orders. Ethan Allen argues that Georgetown could no longer fill the existing orders fo.r Ethan Allen furniture, regardless of the advertisement, once Ethan Allen had exercised its right to terminate the dealership relationship. Ethan Allen’s causation argument is flawed because it takes too narrow a view of an “advantageous business relationship” under Florida law. “An action for intentional interference is appropriate even though it is predicated on an unenforceable agreement, if the jury finds that an understanding between the parties would have been completed had the defendant not interfered.” Landry v. Hornstein, 462 So.2d 844, 846 (Fla. 3d D.C.A. 1985) (citation omitted). Based on our review of the evidence, we find that a reasonable jury could have concluded that Georgetown and the customers with existing orders had an “understanding,” not evidenced in the written orders, that they would purchase furniture from Georgetown even if that meant converting their orders to Ethan Allen furniture already in stock or Thomasville furniture. Therefore, we hold that the district court did not err in denying Ethan Allen’s motion for a JNOV based on the argument that Georgetown failed to establish causation between the publication of the advertisement and the cancellation of Georgetown’s existing orders. See Ad-Vantage Telephone, 849 F.2d at 1351 (stating that a motion for JNOV is inappropriate where jury’s determination of causality is adequately supported in the record).
In addition, we affirm the jury’s award of $285,000 damages for the lost profits on existing orders. Georgetown’s expert estimated the lost profits on existing orders to be $285,000, after reducing his original estimate to account for ordinary cancellations not attributable to the alleged interference. Based on the expert testimony, we hold that the district court did not err in denying Ethan Allen’s motion for a new trial based on the sufficiency of the evidence supporting the jury’s award of damages for lost profits on existing orders.
Loss of Georgetown’s Business, Including Goodwill
The gravamen of this appeal and the issue most troubling to this court is Ethan Allen’s assertion of error regarding the legal basis for the jury’s award of $7,380,000 for the “loss of the value of Georgetown’s business, including goodwill.” Ethan Allen argues that Georgetown’s tortious interference claim is limited to alleged interference with existing advantageous business relations, as opposed to prospective customers. Thus, Ethan Allen argues that Georgetown could not establish a protected interest under Florida law for the loss of potential future sales to the 89,000 past customers in its customer database. Georgetown responds that Florida law does recognize a tortious interference claim based on the future profitability of an existing business enterprise, and based on prospective contractual or business relationships. Georgetown also argues that damages for a tortious interference claim need not be attributable to lost profits caused to identifiable contracts or relationships under Florida law.
We note that Georgetown’s fourth amended complaint alleged that Ethan Allen had interfered with its “past, present, and future customers.” In the March 30, 1990 order, the district court expressly limited Georgetown’s proof to showing “interference with an existing contractual or business relationship.” In addition, based on our review of the charge to the jury, we cannot say as a matter of law that Georgetown failed to establish intentional and unjustified interference with existing advantageous business relationships that caused some damages. Indeed, we' have already held that Georgetown stated a valid tor-tious interference claim as it relates to the cancellation of existing orders. Thus, the issue before us is not simply whether Georgetown failed to establish a prima fa-cie case for tortious interference with a business relationship under Florida law. The question before us is properly recast as whether the evidence supporting the jury’s $7.38 million damage award is within the scope of damages under Florida law. It was on the issue of damages that the district court gave the jury instructions, which countenanced both Georgetown’s theory for lost profits on existing orders, and its theory that Florida law on tortious interference allows recovery of damages for interference with an existing business enterprise, including goodwill.
Ethan Allen argues that “the tort of interference with a business relationship does not operate as a broad protection of commercial reputation or potential businéss opportunities generally. Rather, [Florida law] protects only actual, identifiable relationships.” Ethan Allen acknowledges that a protectible business relationship need not be evidenced in an enforceable contract, but argues that a plaintiff must identify particular relationships, which accord the plaintiff some legal rights against the other party, in order to recover damages for a defendant’s interference. Ethan Allen relies on decisions from several Florida appellate courts. See, e.g., Southern Alliance Corp. v. City of Winter Haven, 505 So.2d 489, 496 (Fla. 2d D.C.A.1987) (rejecting the tortious interference claim of a bar owner who did not identify a particular advantageous business relationship, after finding no case that recognized “a cause of action exists for the tortious interference with a business relationship with the community at large”); Insurance Field Services, Inc. v. White & White Inspection and Audit Service, Inc., 384 So.2d 303, 306 (Fla. 5th D.C.A.1980) (holding that “economically advantageous business relationships, capable of ascertainment, existed between [the plaintiff] and its numerous insurance company clients, pursuant to which [the plaintiff] had legal rights”); Lake Gateway Motor Inn v. Matt’s Sunshine Gift Shops, Inc., 361 So.2d 769, 771-72 (Fla. 4th D.C.A. 1978) (rejecting a tortious interference claim because “a mere offer to sell a business which the buyer says he will consider, does not by itself give rise to legal rights which bind the buyer or anyone else with whom he deals”).
In contrast, Georgetown relies on Insurance Field and other Florida decisions as recognizing that a plaintiff may recover damages in a tortious interference action for the loss of goodwill with past customers, even in the absence of present legal rights. In considering the scope of damages that an insurance auditor could recover from a former employee for his tortious interference with sixteen insurance company clients, the court in Insurance Field concluded that the plaintiff could recover damages based on loss of goodwill “occasioned solely by [the defendant’s] conduct.” See Insurance Field, 384 So.2d at 308 (noting that “Plaintiff’s business, like most companies, revolves, in large measure, upon the building of goodwill accomplished when a client becomes accustomed to dealing with someone who is regularly performing a service. [The plaintiff’s] field representatives and the individual [defendants] had been performing services for [plaintiff’s] customers in a satisfactory manner, and the record provides no indication that its customers had any inclination to terminate using appellee’s services”). Based on the Insurance Field court’s decision and its favorable citation to the Restatement (Second) of Torts, Georgetown argues that Florida law allows recovery for the loss of value in a continuing business, including goodwill, in a tortious interference action. See Restatement (Second) of Torts § 766B, comment c (1979).
Because we do not find the decisions of the Florida district courts of appeal determinative of whether a business may recover for the loss of its value, including goodwill, and we find no controlling precedent of the Florida Supreme Court on the scope of damages under the tortious interference cause of action, we consider it appropriate to certify to the Florida Supreme Court for resolution this potentially recurring question on whether loss of a business’s goodwill with past customers is recoverable under the tortious interference cause of action.
CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT TO THE SUPREME COURT OF FLORIDA, PURSUANT TO ARTICLE 5, SECTION 3(b)(6) OF THE FLORIDA CONSTITUTION
TO THE SUPREME COURT OF FLORIDA AND THE HONORABLE JUSTICES THEREOF:
Based upon the facts recited herein, we certify the following question in the above-styled case to the Florida Supreme Court:
Under Florida law, in a tortious interference with business relationships tort action, may a plaintiff recover damages for the loss of goodwill based upon future sales to past customers with whom the plaintiff has no understanding that they will continue to do business with the plaintiff, or is the plaintiff’s recovery of damages limited to harm done to existing business relationships pursuant to which plaintiff has legal rights, as discussed in Landry v. Hornstein, 462 So.2d 844, 846 (Fla. 3d D.C.A.1985); Douglass Fertilizers & Chemical, Inc. v. McClung Landscaping, Inc., 459 So.2d 335, 336 (Fla. 5th D.C.A.1984); Insurance Field Services, Inc. v. White & White Inspection and Audit Service, Inc., 384 So.2d 303, 306 (Fla. 5th D.C.A.1980); and Lake Gateway Motor Inn v. Matt’s Sunshine Gift Shops, Inc., 361 So.2d 769, 771-72 (Fla. 4th D.C.A.1978)?
Our phrasing of this question is not intended to limit the Supreme Court of Florida in considering the issue presented. The entire record in this case and the briefs to the parties shall be transmitted to the Florida Supreme Court for assistance in answering this question.
CONCLUSION
We affirm the judgment of the district court in all respects on Ethan Allen’s counterclaims. On Georgetown’s tortious interference claim, we reject the various claims of error and affirm that portion of the judgment of the district court that awards Georgetown $285,000 in damages for its lost profits attributable to Ethan Allen’s tortious interference with Georgetown’s advantageous business relationships with those customers who had existing orders. We certify the loss of the value in Georgetown’s business, including goodwill, question to the Florida Supreme Court. We affirm the judgment of the district court on Georgetown’s other claims.
AFFIRMED in part and CERTIFIED.
. Georgetown also contends that the district court abused its discretion in denying its motion to amend the claim of tortious interference pursuant to rule 15(b), to include other alleged wrongful acts of Ethan Allen that interfered with its business relationships. The district court denied Georgetown’s mid-trial motion to amend its theory on the tortious interference claim based on a finding that Georgetown failed to articulate the proposed new theory in its fourth amended complaint, and also failed to develop the theory during its examination of previous witnesses. The district court noted the likelihood of confusion to jurors and prejudice to the defendant if it allowed Georgetown to amend its theory of tortious interference at that date. We find Georgetown’s arguments that the district court abused its discretion in denying Georgetown’s motion to amend to be clearly without merit and warranting no further discussion. We also find Georgetown’s arguments that the district court erred in entering judgment on Georgetown’s illegal wiretapping and conversion claims to be clearly without merit and warrant no discussion.
. In addition to the special interrogatory on the issue of intent to hinder or delay Ethan Allen in collecting the indebtedness, the district court cautioned the jury that "you must determine when the transfer was made, at that time what was the condition of Georgetown, what was the extent of the indebtedness, the amount, and whether at the time the transfers were made in light of Georgetown’s financial condition and Ethan Allen's indebtedness, did it hinder or delay Ethan Allen in collecting that indebtedness?”
. Although Ethan Allen makes a different causation argument than the one specifically delineated in its motion for directed verdict, we find that Ethan Allen preserved the argument based on its express incorporation of the earlier motion for directed verdict at the close of Georgetown’s case which specifically set forth the causation argument on appeal.
. For purposes of context, we note that the $7.38 million damage calculation is based on the testimony of Georgetown’s experts who opined that a hypothetical investor would have paid up to $6,223,000 for Georgetown before the February 3, 1985 advertisement, but that Georgetown had no value after the publication of the advertisement.
. The district court charged the jury on three theories of compensatory damages: (1) loss of profits and existing contracts as of February 3, 1985; (2) loss of profit in the going out of business sale; and (3) loss of value of Georgetown’s business, including goodwill. On the goodwill theory, the district court charged the jury as follows:
The goodwill of a company is an intangible business value which reflects the basic human tendency to do business with a merchant who offers product of the type and quality which the customer desires and expects. Service to the customer and a willingness to stand behind the product which is sold’ by the merchant are all factors. In determining goodwill, whether goodwill attaches, where the goodwill attaches to a product or a business, it may be symbolized in part by the public’s acceptance and recognition of the product.... And so here as part of the damages, Georgetown claims a destruction of its goodwill. You first determine whether Georgetown proved by a preponderance of the evidence that it was destroyed or not destroyed, the extent to which it
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.
BRYAN, District Judge.
Holding that the agency commission agreement between the appellant and the appellees, which was clearly not performable within a year, is evidenced by such a signed writing as is required of it under the statute of frauds of South Carolina, but even if not so evidenced, that the agreement has been so far performed by the appellees as to save it from the bar of the statute, the District Court has entered judgment against the appellant on the agreement. As we think these conclusions erroneous, the judgment cannot stand.
By a written contract, dated February 1, 1951, and supplements thereto, all signed by the appellant, the Southern States Life Insurance Company, as well as by the appellees, S. V. and J. W. Foster, the company appointed the Fosters as its agents to solicit applications for insurance. The contract stipulated that the claim loss experience of the company upon the policies procured by the appellees would vary the latter’s compensation, putting it below or above the normal commission of 25% of the premiums, according to the losses as reviewed each month. Should they be discharged without cause, the agents would become entitled to receive one-half of their renewal commissions for five years. Effective September 4, 1952, the company terminated the contract, as it had the right to do, and the appellees were removed without cause.
Thereupon the company offered a different arrangement to satisfy the appellees’ right to the half-commissions for five years. Its proposal was rejected, but, the Fosters say, another agreement for the appellees’ compensation after discharge was reached with the appellant on November 12, 1952. The new agreement, they state, provided not only for a five-year commission to them of 12% % (one-half of the regular), but, more especially, that there should be no variation of it for claim loss experience. Appellant’s checks and accompanying statements of the account were the only writings touching the new agreement.
Upon conclusion of their negotiations on November 12, 1952, the company gave appellees its check for half of the normal commissions for September and October, 1952, and thereafter for each month through August, 1953, the company paid the half-commissions without deduction or addition for loss experience. In September, 1953, further remittances were discontinued. The reason given for the suspension was that, upon reckoning the claim loss experience of the Foster policies, the company discovered it had overpaid the appellees. Appellees protested; they declared that by the new agreement of November 12, 1952, both parties had waived the right to adjustments for claim losses, the Fosters were due monthly payments at a constant rate of 12%%, and appellant’s conduct in omitting all such adjustments since November, 1952, had established the waiver. Appellant denying the factum and force of the new agreement, the appellees began this action for damages, pitching their cause solely on the new agreement.
A jury has said the new agreement existed in fact; but we are of the opinion that its enforcement is prohibited by the South Carolina statute of frauds, worded as follows:
“No action shall be brought whereby: * * *
“(5) To charge any person upon any agreement that is not to be performed within the space of one year from the making thereof;
“Unless the agreement upon which such action shall be brought or some memorandum or note thereof shall be in writing and signed by the party to be charged therewith or some person thereunto by him lawfully authorized.” Code 1952 S.C. § 11— 101.
Revealing itself as one “not to be performed within the space of one year”— indeed, in barely less than five years— the new agreement is not evidenced by “some memorandum or note * * * in writing and signed by the party to be charged”. The appellees’ documents plainly do not fulfill this commandment of the statute. They consist exclusively of the company’s monthly checks and the supporting unsigned statements of account. Not a term of the agreement can be identified in them. But, even if the absence from the statements of any adjustment by the company for claim loss experience evidences the cancellation of this factor, it does so only in respect to the payments already made. The omission does not evidence an obligation to forego the adjustment for the future; and it is the future payments that are the subject of this litigation. As the papers lack even a suggestion of the waiver, parol evidence cannot be used to implant it there. In fine, , the cheeks and statements do not meet the salutary precaution of South Carolina’s' statute. Boozer v. Teague, 1887. 27 S.C. 348, 3 S.E. 551; Ruff v. Hudspeth, 1923, 122 S.C. 391, 115 S.E. 626; Speed v. Speed, 1948, 213 S.C. 401, 49 S.E.2d 588.
To escape the foil of the statute, the appellees call upon the doctrine of part performance. Undoubtedly, complete performance of his obligations by one party to an oral agreement otherwise within the statute of frauds, with acceptance of the performance by the other party, will both in law and in equity at times exclude or withdraw the agreement from the statute. Gee v. Hicks, 1831, Rich.Eq.Cas., S.C., 5, 17, 22; Bates v. Moore, 1832, 2 Bailey, S.C., 614, 616; Walker v. Wilmington C. & A. R. Co., 1887, 26 S.C. 80, 1 S.E. 366, 372; McLellan v. McLellan, 1925, 131 S.C. 245, 126 S.E. 749, 750; Carter v. McCall, 1940, 193 S.C. 456, 8 S.E.2d 844, 848, 151 A.L.R. 641; Restatement, Contracts, sec. 198; 1 Williston on Contracts, section 504. But in no aspect of this case is the present agreement excepted or removed from the statute.
To begin with, if the promise of the appellees to waive the benefits of the claim loss experience be treated as a present surrender of all future claims, and not a promissory waiver to be executed as and when such benefits should thereafter appear, then there has been no performance by the appellees, for nothing was demanded of them to be done. Their promised course was simply inaction. Non-action is an adequate consideration but it does not constitute a part performance to excuse or lift the agreement from the exactions of the frauds statute. Augusta Southern R. Co. v. Smith & Kilby Co., 1899, 106 Ga. 864, 33 S.E. 28, 29; Hawkins v. Studdard, 1909, 132 Ga. 265, 63 S.E. 852, 856; Hesterlee v. Hesterlee, 1921, 27 Ga.App. 169, 107 S.E. 889, 890; notice Levi v. Murrell, 1933, 9 Cir., 63 F.2d 670, 672. The South Carolina decisions already cited disclose, in their reasoning, that nón-action is not such part performance as exempts a contract from the statute. Negative conduct of this kind does not enrich the other party at the expense of the passive party, and for that reason it does not in law imply an obligation by the former to execute his agreement or estop him to deny it. Carter v. Brown, 1872, 3 S.C. 298, 308. On principle, too, the conclusion is sound because it effectuates the aim of the statute that long term promises be not left to parol proof with its attendant uncertainties of human memory.
On the other hand, if the appellees’ agreement be treated as a promise of waiver, to be carried out each month of the contract’s span, through abstention from pressing the claim loss experience, rather than as an immediate relinquishment of all future claims, the agreement is obviously still within the statute, because the appellees have never fully performed that promise. Until the arrival of each of those months, the waiver for that month could not be tendered; until then, neither the appellant, nor the appellees, could perform their agreement for that month — the one to pay, the other to waive. True, appellees’ promise to waive passed at once to appellant and was a present consideration for the new agreement; but appellees’ waiver clearly could not be at once performed, necessarily continuing as a periodic promissory obligation.
Again, for part performance to put the agreement beyond the pale of the statute, the claimant must, save under exceptional circumstances, first acquit himself of his burdens in full, leaving only the other party in non-compliance. Gee v. Hicks, supra, Rich.Eq. Cas., S.C., 5, 18; White v. McKnight, 1928, 146 S.C. 59, 143 S.E. 552, 59 A.L.R. 1297; 1 Williston on Contracts, sections 504 and 533. The exceptional circumstances are estoppel or resultant fraud. This case does not exemplify these exceptions. The appellees have not, in reliance upon the new agreement, so changed their position that the appellant is estopped to plead the statute or that application of the statute would impose a fraud upon the appellees. Florence Printing Co. v. Parnell, 1935, 178 S.C. 119, 182 S.E. 313; McMillan v. King, 1940, 193 S.C. 14, 7 S.E.2d 521. We are not concerned here with what remedy such a claimant might have outside the contract, for instance by way of quantum meruit or quantum valebant.
Finding the new agreement unenforceable under the law of South Carolina, we set aside the judgment now on review and remand the case to the District Court with directions to allow the appellees, the plaintiffs, to proceed in this action upon the written and signed contract of February 1, 1951, with the supplements thereto, if they be so advised, permitting each party to amend their pleadings to this end.
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.
WIDENER, Circuit Judge:
This suit, originally filed in a Virginia state court, was removed to federal- district court pursuant to 28 U.S.C. § 1441(b) as a claim arising under §§ 301 and 303 of the Labor Management Relations Act, 29 U.S.C. §§ 185 and 187.
This appeal results from two jury trials in which the appellant-defendant union, International Brotherhood of Teamsters, etc. (IBT), was found to have been responsible for damages resulting from illegal secondary boycotts conducted by three of its local unions in violation of 29 U.S.C. § 158(b)(4).
The employer, Great Coastal Express, Inc. (the company), contended throughout both trials that all of its damages, alleged to be $942,065, resulted from the illegal acts of IBT because the company had not suffered damage until IBT supplemented its legal tactics with illegal ones. The first jury returned a general verdict against IBT for $1,300,000, which the district court set aside on IVT’s motion for judgment non obstante veredicto, or in the alternative for a new trial, as being excessive. See 350 F.Supp. 1377 (E.D.Va.1972). A new trial was ordered to reconsider the issue of damages, and the verdict reached at the second trial was for $806,093, upon which the district court entered judgment.
IBT contends on appeal that the court wrongfully allowed the issue of whether or not the local unions, and their officers and members, were the agents of IBT to go to the jury in the first trial; that the company should not recover any damages because it failed to particularize its losses to those caused by illegal activity as distinguished from losses caused by legal union activity; that the court erred in restricting the second trial to damages; and that the instructions to the second jury were erroneous. For reasons which follow, we affirm the judgment of the district court. Because of our resolution of the case, it will not be necessary to reach the issue of the violent conduct of the unions raised on cross appeal by the company.
The company is an interstate truck common carrier, based in Richmond, whose business consists primarily of transporting general commodity freight from twenty-six Virginia counties into New Jersey and parts of New York, Connecticut and Pennsylvania. The company had been a party to the National Master Freight Agreement with IBT from 1964 until expiration of the 1967 contract on March 31, 1970. The parties reached an impasse during negotiations for a new contract, and the company refused to become a party to the new National Master Freight Agreement. Richmond Local 592 applied for strike benefits from IBT on August 6, 1970 and went on strike August 9, 1970. IBT approved payment on the strike benefits on August 10, 1970, and, on August 13, Local 107 in Philadelphia and Local 641 in Jersey City, New Jersey also went on strike against the company. Retroactive strike benefit payments were also approved by IBT for the latter two locals. All three locals were striking over the company’s refusal to become a party to the National Master Freight Agreement, and no contention is made that the cause for the strike was not quite a legal reason.
The strike initially had little or no effect on the company. It was able to continue all its operations by using office employees, salesmen, supervisors, and newly-hired replacement drivers. Employees not on strike willingly crossed union picket lines at Richmond, and the company began making direct pickups and deliveries in its northern territories so that the picketed Jersey City terminal was practically unused. At the end of the seven or eight month continuance of the strike, however, the company’s freight-hauling business had been effectively shut off. The argument between the parties is over the legality of a roving picket operation, and the extent to which illegal secondary boycott activities damaged the company.
The company’s attack in the first trial was two-pronged, in that it sought damages for alleged secondary boycott activities in violation of LMRA § 303, 29 U.S.C. § 187, and also damages for various alleged acts of violence and sabotage. At the close of the company’s evidence, the court granted defendant’s motion for a directed verdict as to the violence aspect of the case, holding that the burden of proof for finding IBT liable for acts of violence committed is the higher standard of proof of clear and convincing evidence, rather than a preponderance, and that the company had failed to meet this higher standard. See U.M.W. v. Gibbs, 383 U.S. 715, 735, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966), construing Norris-LaGuardia Act, § 6, 29 U.S.C. § 106.
We should say here, and we emphasize, that the union does not contest the fact that there was evidence from which a jury could find an illegal secondary boycott. Indeed, the matter is admitted to be clearly a jury question. And the matter having been decided in favor of the plaintiff under proper instructions, it is, in all events, removed from our consideration. Lavender v. Kurn, 327 U.S. 645, 66 S.Ct. 740, 90 L.Ed. 916 (1946). The only question before us as to that finding is whether or not a partial new trial was proper.
The company offered evidence as to illegal secondary activities by representatives of customers it had serviced during the strike, and drivers it had hired to replace the strikers, as well as from its own executives and other employees and the president of the Richmond local and an international director of the union.
The principal witness concerning the amount of the company’s damages was a Certified Public Accountant, Lepp, who testified that he had worked with Great Coastal for several years and had examined the books of Great Coastal for periods before, during and after the strike. Lepp stated that he noted a disruption in the company’s general pattern of receipts and profits after the strike started. On the basis of the company’s business growth pattern and operating ratio over a period of time prior to the strike, Lepp projected a figure of anticipated profit during the seven months of the strike as being $322,438. He added to this the actual loss incurred by the company during the strike, $274,895, to reach a total damage figure of $597,333 during the strike. Lepp then computed a projected profit figure of $495,715 for the period from the end of the strike to the end of 1971, subtracted $150,983 actual profit which the company showed in this post-strike period, and added the additional damage figure of $344,732 to $597,333 in arriving at the total damage estimate of $942,065.
The key witness for IBT with respect to union activity after the strike began was William A. Hodson, president of the Richmond Local No. 592. Hodson testified that he generally was in charge of the strike, and was personally involved in the picketing on occasion. The union began utilizing roving, or ambulatory, pickets to follow company trucks to customer business locations, and Hodson testified that these pickets were assigned on a weekly basis to go throughout the company’s territory. All of the roving pickets’ expenses were paid, in addition to strike benefit payments, by the union; Hodson testified that over $49,000 in strike benefits were paid, and that Local 592 had also received $10,000 from IBT, $10,000 from the Eastern Conference of IBT, and $2,500 from various Joint Councils of IBT, apparently in addition to authorized strike benefits, to further assist in financing the strike. Hodson sent a letter to all of the company’s customers, advising them that Local 592 was on strike against Great Coastal because of its unfair labor practices, expressing a desire to lawfully picket on their premises when Great Coastal trucks were present, and requesting their cooperation during the strike. He further testified that a purpose of the roving pickets was to receive assistance or cooperation from the company’s customers, and that he had complained to IBT about sister Teamster locals, not employed by the company, who refused to respect their picket lines. At the first trial he admitted that a purpose of the roving pickets was to induce employees of Great Coastal customers not to unload Great Coastal freight, and at the second trial he admitted such was their primary purpose. Taken as a whole, Hodson’s testimony left little doubt that Local 592 tried to get all IBT local unions, whether they represented Great Coastal employees at other locations or not, to assist in this strike in refusing to unload Great Coastal freight, and that non-teamster unions had also been asked to help.
Evidence, in addition to Hodson’s testimony, indicated that Local 592 kept close contact during the strike with both the Eastern Conference of IBT and IBT headquarters itself, and that almost all of Local 592’s requests for assistance, financial or otherwise, were complied with. IBT was advised on numerous occasions of the existence of the roving pickets. On one occasion, Eastern Conference director and IBT director and vice president Trerotola wrote to over 100 other teamster locals advising them that the roving pickets had not been entirely successful and requested any assistance they could legally give. He enclosed a list of Great Coastal customers.
The gist of Trerotola’s testimony as to IBT’s involvement and assistance during the strike may be summarized in short order; Trerotola stated consistently that he was a busy man, that it was his signature on various letters written to Local 592 and IBT, but that he did not specifically recall signing the letters because of the bulk of correspondence his office receives and the fact that he delegates many responsibilities. He said the Eastern Conference may have assisted Local 592 in getting various correspondence mailed and in obtaining contributions to its strike fund; that IBT often asked other unions to help in any way they could; and that he had requested only lawful assistance from other teamster locals. He said he had no knowledge of any illegal secondary activity in connection with this strike.
The district court’s opinion on the motion for judgment non obstante veredicto following the first verdict of $1,300,000 is reported at 350 F.Supp. 1377. IBT raised the same issue in that motion as here with respect to whether the company had made the requisite showing of agency, and also argued that the jury charges were contradictory, and that the jury had awarded punitive damages in violation of the Labor Management Relations Act, § 303. The court relied on the case of International Brotherhood of Teamsters v. United States, 275 F.2d 610 (4th Cir. 1960), in concluding that there had been a sufficient showing of agency to let the jury consider it. The court also ruled against IBT on the jury charge issue, but did hold that the excessive verdict of damages was partially caused by the jury’s consideration of the gross and vicious conduct attributed to the members of the local union and their sympathizers. The court stated the damage question was complicated and concluded a remittitur was improper. The motion for judgment N.O.V. was then denied, and a retrial ordered on the issue of damages.
At the second trial, the company relied primarily on testimony of its president and vice-president, who testified at length concerning the deterioration of company business and loss of customers, and Lepp’s testimony concerning the $942,065 damages claimed. IBT called no witnesses. Pertinent exhibits from the first trial were introduced by both sides for the jury to consider in arriving at damages. The company again took the position that no damage had been caused until the unlawful secondary boycott commenced. A part of the uncontradicted evidence was that numbers of freight shipments went undelivered because of the illegal secondary boycott actions. The jury concluded that the company had proved damages of $806,093.
IBT’s first contention, that the court should have ruled as a matter of law that there was insufficient evidence for the jury to find an agency relationship between it and the striking local unions, is without merit. The Supreme Court has recognized, in suits brought under the LMRA § 303, that the responsibility of a union for the acts of its officers and members “is to be measured by reference to ordinary doctrines of agency.” United Mine Workers v. Gibbs, 383 U.S. 715, 736, 86 S.Ct. 1130, 1144, 16 L.Ed.2d 218 (1966). This court has previously held, in another context (a criminal case With its more stringent burden of proof), that the IBT constitution provides for such far-reaching control of local unions that the locals, in essence, are not autonomous but are subdivisions of IBT. International Brotherhood of Teamsters v. United States, supra, 275 F.2d at 614. The district court here compared the constitution in effect when the Teamsters case was decided, found no significant differences, and concluded, quite correctly, that under the evidence in this case the jury was entitled to decide the issue. 350 F.Supp. at 1379. That being so, the issue is closed, for the weight of the evidence and the credibility of witnesses is solely within the province of the jury. A. & G. Stevedores v. Ellerman Lines, 369 U.S. 355, 358 — 359, 82 S.Ct. 780, 7 L.Ed.2d 798 (1962); Lavender v. Kurn, 327 U.S. 645, 652-653, 66 S.Ct. 740, 90 L.Ed. 916 (1946). IBT claims no error as to the evidence admitted, which was ample to show participation by IBT, or in the jury charge, so the jury’s finding of an agency relationship must stand.
The above discussion as to agency applies in large part to the jury finding that IBT had committed illegal secondary acts. As stated before, the defendant admits this was a jury question. The court, at the first trial, very carefully charged the jury as to the law concerning secondary boycotts, and IBT does not contest the charge on appeal. From the testimony and other evidence recited, it goes without saying that the jury had abundant evidence to find that IBT had induced, encouraged, threatened, or coerced employees of Great Coastal customers to withhold the labor from their employers, with whom they had no dispute, and that IBT so acted for the purpose of achieving the unlawful objectives set out in the National Labor Relations Act, § 8(b)(4), 29 U.S.C. § 158(b)(4). The record also contains abundant evidence from which the jury could have found, as it obviously did, that almost every truck of Great Coastal was followed by roving pickets from the inception of the strike; that initially they were to little or no avail; that after requests of Trerotola and Hodson were made to the other unions the roving pickets became almost completely effective because the employees of the consignees would not accept delivery from Great Coastal; and on account of the illegal secondary boycott activities Great Coastal was damaged.
The thrust of IBT’s complaint concerning the second trial, though, is not the sufficiency of the evidence, but that the company should have separated union activity that was clearly lawful, and for which no damages could be had, from the alleged unlawful activities, and thus established the proximate cause of its damages with more specificity. The company’s theory throughout both trials was that it had suffered no damages at issue here because of lawful union activity, but that all of such damages resulted from IBT’s unlawful acts which ultimately shut down business entirely.
What IBT does not take into account is that at the second trial, the trial judge, out of an abundance of precaution, submitted not only the amount of damages, but also the proximate cause thereof to the jury. Thus, there were the two issues tried at the second trial, not only the issue of the amount of damages.
The judge again correctly charged the jury which ambulatory picketing activities were lawful, and which were unlawful, and, among several references to proximate cause in his charge which required the company to prove its damages were proximately caused by the unlawful activities of the union as contrasted to the lawful, told the jury:
“You understand, of course, that you may not award the plaintiff damages simply because of lost money during the strike or for money lost as a result of the union engaging in legal and permitted activity. In a strike sitúation, infliction of losses both upon the union and the employer is to be expected. It is not an occasion for liability unless the losses resulted from illegal strike activity. For this reason, you may only award damages where Great Coastal has proved by a preponderance of the evidence that it was so damaged.”
We think this case is not one where the plaintiff should be faulted out of its judgment for not proving its damages with more exactness and precision. The Supreme Court has held, in an anti-trust case, that where the amount of damages cannot be ascertained with certainty, “it would be a perversion of fundamental principles of justice to deny all relief to the injured person, and thereby relieve the wrongdoer from making any amend for his acts.” Story Parchment Co. v. Paterson Parchment Co., 282 U.S. 555, 563, 51 S.Ct. 248, 250, 75 L.Ed. 544 (1931). This circuit has previously adopted the Story Parchment reasoning in an action under 29 U.S.C. § 187 very similar to the one at hand. United Mine Workers v. Patton, 211 F.2d 742 (4th Cir. 1954). IBT’s contention that Local 20, Teamsters Union v. Morton, 377 U.S. 252, 84 S.Ct. 1253, 12 L.Ed.2d 280 (1964), would mandate a contrary result is not well founded, for Morton was a completely different case. In Morton, the district court, sitting without a jury, awarded the plaintiff $9,000 damages, under state law as a pendent claim, for loss of one of its customers, as a part of plaintiff’s total damages. The customer had been persuaded by the union to cease doing business with the plaintiff, but its employees had not been approached. The Supreme Court held that the district court had no power to award damages proximately caused by such lawful, primary activities, since permitted by federal law, even though state law would have allowed a recovery in such a case. 377 Ú.S. at 259 — 260, 84 S.Ct. 1253. Along the same line, the court set aside the judgment for loss of certain customers whose business had been discouraged because of the strike, but who were not affected by any unlawful activity, because the union should not be responsible for damage by lawful activity even though it. may have been engaged in unlawful activity elsewhere. 377 U.S. at 261-262, 84 S.Ct. 1253. But the court sustained the judgment of the trial court for damages for unlawful secondary boycott activities, the district court having in its opinion separated the items of damage.
In this regard, IBT argues that the court should have required a special verdict from the jury. F.R.Civ.P. 49 gives district courts broad discretion in determining the form of verdict. While we have no occasion here to decide whether the district judge has uncontrolled discretion in this regard, we do note that there apparently has never been a reversal for abuse of discretion in determining the form of verdict. We hold, with Toth v. Corning Glass Works, 411 F.2d 912, 914, n. 2 (6th Cir. 1969), that where the complaining party made no request for a special verdict to the trial court, it cannot raise the issue for the first time on appeal. Since IBT acceded to the general verdict without complaint in both trials in the court below, it may not now assign error in the district court’s submission of the issues by way of general verdict.
Turning now to the issue of whether a partial new trial was appropriate, we note that such is expressly permitted by F.R.Civ.P. 59(a). The principal case with respect to ordering a new trial as to damages only is Gasoline Products Co. v. Champlin Co., 283 U.S. 494, 51 S.Ct. 513, 75 L.Ed. 1188 (1931). The court, in Gasoline Products, held “that, where the requirement of a jury trial has been satisfied by a verdict according to law upon one issue of fact, that requirement does not compel a new trial of that issue even though another and separable issue must be tried again.” 283 U.S. at 499, 51 S.Ct. at 515. The court then proceeded to analyze the contracts in dispute to determine whether the damages and liability issues were separable, and concluded that, although the verdict on the contract sued upon by the plaintiff was affirmed, since the first verdict on the counterclaim was for less than the total damages claimed on various contracts, the extent of the damages depended on the extent of the undertakings which were in dispute, and the issues were so interwoven that a second jury could not fairly consider damages alone in a new trial on the counterclaim. And, it is noteworthy that the court did separate and let stand the verdict for the plaintiff on the contract sued upon without a new trial.
This court has considered new trials limited to damages on several occasions since the Gasoline Products case. It is well settled that granting or denying a new trial, either for excessiveness or inadequateness of- the verdict, is discretionary with the trial court, and not reviewable absent a showing of abuse of discretion. Young v. International Paper Co., 322 F.2d 820, 822 (4th Cir. 1963). Most of the cases considered by this court have concerned the district court’s discretion in ordering a partial new trial for inadequate damages, but the same general principles apply whether the verdict is attacked either for inadequacy or excessiveness. DeFoe v. Duhl, 286 F.2d 205 (4th Cir. 1961) (citing Virginia law); see Note, 29 A.L.R.2d 1202 (on inadequacy). The only case where a new trial' on all issues was suggested because of excessive damages was United Construction Workers v. Haislip Baking Co., 223 F.2d 872 (4th Cir. 1955), cert. den., 350 U.S. 847, 76 S.Ct. 87, 100 L.Ed. 754 (1955).
In Haislip Baking, an action based on 29 U.S.C. § 185(b), it is true the court stated that “[t]he verdict on the first trial was so excessive and so manifestly based on improper consideration, instead of upon the record, that it should have been set aside in its entirety and a complete new trial ordered,” but the court then proceeded to direct entry of judgment for the defendant instead of remanding for a new trial. The jury in that case had erroneously not been instructed on mitigation of damages and had erroneously been allowed to consider the parent union as responsible for a wildcat strike. It was this latter consideration the court referred to in its reference to the record. Neither consideration is present here, and even considering the above quoted statement from Haislip as a holding, it does not control the disposition of this case.
In another Fourth Circuit case involving excessive damages, the trial court ordered a remittitur instead of a partial new trial. Ford Motor Co. v. Mahone, 205 F.2d 267 (4th Cir. 1953). This court reversed and ordered a new trial as to all the issues when it was found that one of the jurors had obvious partisan bias in favor of one of the parties, and this in a “hotly contested” trial as to both liability and damages which resulted in a verdict the court found based on pity and sympathy. Likewise, that problem is not presented in this case.
This court has noted that there is “always a presumption in favor of the validity of a verdict if it is the result of honest judgment,” City of Richmond v. Atlantic Co., 273 F.2d 902, 916 (4th Cir. 1960), but has found a new trial on all issues to be required where a totally inadequate verdict was rendered which could only have been a sympathy or compromise verdict. Southern Railway v. Madden, 235 F.2d 198 (4th Cir. 1956), cert. den., 352 U.S. 953, 77 S.Ct. 328, 1 L.Ed.2d 244 (1956). But where there is no substantial indication that the liability and damage issues are inextricably interwoven, or that the first jury verdict was the result of’ a compromise of the liability and damage questions, a second trial limited to damages is entirely proper. Young v. International Paper Co., supra; Mason v. Mathiasen Tanker Industries, Inc., 298 F.2d 28 (4th Cir. 1962), cert. den., 371 U.S. 828, 83 S.Ct. 23, 9 L.Ed.2d 66 (1962).
The matter of a partial new trial has been frequently considered since Gasoline Products and its subsequent articulation in F.R.Civ.P. 59(a), and one of the leading texts states that it “may be regarded as settled that if an error at the trial requires a new trial on one issue, but this issue is separate from the other issue in the case and the error did not affect the determination of the other issues, the scope of the new trial may be limited to the single issue.” 11 Wright & Miller, Federal Practice and Procedure, Civil (1973), p. 93; see also Moore’s Federal Practice, 2nd Ed., 1974, U 59.06. And, we have held in Young v. International Paper Company, supra, that the action of a district judge in setting aside a verdict as to damages, and at the same time refusing to set aside the same verdict as to liability, should be affirmed unless the district judge abused his discretion.
In short, our task here is to determine whether the district court’s conclusion that the first verdict was based on honest judgment by a well-intentioned jury, and that the liability and damage issues were not inextricably intertwined, so that a partial new trial was fair to both parties, was an abuse of discretion, and whether the presumption of the validity of the verdict has been overcome. IBT argues that the evidence of violence heard by the jury, before the court directed a verdict against the company as to that issue, so inflamed the jury, and caused them to render a verdict in excess of damages proven, that the entire verdict was tainted. We cannot agree. The court charged the jury that no acts of violence testified to could be considered in assessing any damages, and that damages were limited to losses which flow proximately from any illegal activity the jury might find. During deliberations, the jury inquired of the court, “What amount of damages lost in dollars is the plaintiff asking? Is it the $942,065 figure?,” to which the court responded “ . . . yes ... I must tell you that you are not to concern yourselves with what the plaintiff asks for unless it coincides with the evidence as you find it.” 350 F.Supp. at 1378. It is obvious from the foregoing that the jury did not consider the $942,065 as a limiting figure, but we are unable to say from the record that the excessive verdict was caused from anything more than a misunderstanding of the jury charge as not limiting the recovery to pecuniary loss as mentioned in the question asked the court. There is no basis to support the defendant’s contention that the first verdict was fatally infected by prejudice. To hold otherwise would be speculation on our part as to what the jury considered in its deliberations, and this we should not do, for, in the words of Mr. Justice Brandéis, “[a]ppellate courts should be slow to impute to juries a disregard of their duties, and to trial courts a want of diligence or perspicacity in appraising the jury’s conduct.” Fair-mount Glass Works v. Cub Fork Coal Co., 287 U.S. 474, 485, 53 S.Ct. 252, 255, 77 L.Ed. 439 (1933). Since no error is alleged as to any of the evidence, jury charges, or other relevant proceedings during the first trial, and especially considering the admitted and abundant evidence as to illegal secondary boycott activities, we are of opinion that the presumption in favor of the validity of the first verdict, insofar as it applies to the finding of IBT’s liability, has not been overcome. City of Richmond v. Atlantic Co., supra.
Nor are we able to agree that the issues of liability and damages were so closely intertwined that the second jury should not consider the issue of damages apart from liability. The jury in the first trial, under proper instructions, ascertained liability, and in the second trial the judge ever so carefully charged the jury only that the defendant had been found liable for certain acts of unlawful secondary boycott activity, and having again defined which activities were lawful and which were not, left to the jury the question which of the unlawful acts, if any, caused damage to the plaintiff, and which did not, and also the amount of the damages. We thus find the ruling of the district court as it awarded a partial new trial was not an abuse of discretion and free from exception. We are of opinion the issues in the second trial were properly separated from those in the first, and that the issues of liability and damages were not so inextricably interwoven that a new trial was required on all issues. We are further of opinion this phase of the case is controlled by those cases exemplified by Young v. International Paper Co., and Mason v. Mathiasen Tanker Industries, Inc.
The union’s final contention that the second jury was improperly instructed is likewise without merit. It complains that the district judge only instructed the jury that the activity of the union at certain of the plaintiff’s customers, and as to certain of such customers’ employees, had been found to be unlawful. This instruction, as we have before mentioned, was proper, and indeed could only have been favorable to the defendant, for the plaintiff took the position and offered evidence which tended to show that all its damages claimed in the second trial were caused by the unlawful activities of the defendant as distinguished from the lawful. The defendant had every opportunity, in the second trial as at the first, to contest both the proximate cause of the damage as well as its amount, and yet offered no evidence. The fact that the trial tactics did not succeed may not be laid to the district judge, whose every act complained of was free from exception.
Accordingly, the judgment of the district court is
Affirmed.
. There is a question of some consequence as to whether or not this argument was properly presented to the district court so that it might be argued here. McGowan v. Gillenwater, 429 F.2d 586 (4th Cir. 1970). We do not reach this procedural question.
. Although the matter is unclear from the evidence presented, the $49,000 figure apparently includes all union monies, from whatever source within the union, expended on the strike. IBT records introduced in evidence show that it paid $24,160, as authorized strike benefits, to individual strikers.
. See Skidmore v. Baltimore & Ohio RR., 167 F.2d 54, 66-67 (2nd Cir. 1948), cert. den., 335 U.S. 816, 69 S.Ct. 34, 93 L.Ed. 371 (1948).
. 9 Wright and Miller, Federal Practice and Procedure, Civil, § 2505, p. 492; 5A Moore’s Federal Practice, 2d Ed., 1974, ¶ 49.03(1), p. 2208.
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.
Chemithon Corporation, holder of United States patents 3,024,258 and 3,-058,920, for making synthetic detergents, brought this action against Procter & Gamble Company, charging infringement of its patents and misappropriation of its trade secrets. P & G challenged the validity of the patents and sought attorneys’ fees under 35 U.S.C. § 285.
The district court held that P & G used the processes claimed by the patents for more than a year before Chemithon filed its applications, and that its use was public within the meaning of 35 U.S.C. § 102(b). Consequently, the court held the patents invalid. It also held that P & G had not misappropriated Chemithon’s trade secrets, but it denied P & G’s request for attorneys’ fees. In reaching these conclusions the district judge applied correct principles of law to findings of fact that are amply supported by the evidence. Finding neither error nor abuse of discretion, we affirm on the opinion of the district court. Chemithon Corp. v. Procter & Gamble Co., 287 F.Supp. 291 (D.Md.1968).
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.
BOWNES, Circuit Judge.
Plaintiff-appellant Fidelity Guarantee Mortgage Corporation (Fidelity) appeals from an award of attorney’s fees and costs to defendant-appellee Howard T. Reben pursuant to 42 U.S.C. § 1988. In order to understand the issues, a history of the case is necessary.
I.
Fidelity, a Massachusetts corporation authorized to do business in Maine, opened an office in Portland, Maine, in February of 1980 for the purpose of dealing in residential mortgage loans. In July 1980, the superintendent of the Maine Bureau of Consumer Credit Protection, Barbara Reid Alexander, notified Fidelity pursuant to Me.Rev.Stat.Ann. tit. 9-A, § 6-108 that it was in violation of Maine law prohibiting charging interest in excess of 12.25% on consumer loans without Bureau approval. Alexander issued a cease and desist order at the same time. Between June and September 1980, thirty consumer actions were brought against Fidelity in the federal district court based on its violation of Maine law. Defendant Reben represented the plaintiffs in twenty-one of those cases.
In 1981, Fidelity brought a civil rights action under 42 U.S.C. § 1985 in state court against Alexander. Fidelity alleged that Alexander, her assistant Harry Giddinge, and Reben had conspired to deprive it of equal protection and of its privileges and immunities under federal law. The complaint was dismissed on April 2, 1982, by the state court on the authority of Butz v. Economou, 438 U.S. 478, 98 S.Ct. 2894, 57 L.Ed.2d 895 (1978).
On July 9, 1982, Fidelity commenced this 42 U.S.C. § 1983 action against Alexander, Giddinge, and Reben. The allegations of the complaint pertinent to defendant Reben state:
14. After July 11, 1980, Defendants, BARBARA REID ALEXANDER and HARRY W. GIDDINGS, [sic] encouraged and counseled consumers who had obtained residential mortgage loans from Plaintiff to bring civil actions against Plaintiff for which said Defendants knew or had good reason to know that Plaintiff had a good and valid statutory defense under Title 9-A, MRSA. During the same period, said Defendants also advised consumers, or caused consumers to be encouraged, counseled and advised that they should retain Defendant, HOWARD T. REBEN, to represent them in actions against Plaintiff.
15. After July 11, 1980, Defendants BARBARA REID ALEXANDER, HARRY W. GIDDINGE and HOWARD T. REBEN acted in concert and conspired to deprive Plaintiff of lawful defenses available in consumer actions under the laws of the State of Maine and further to deprive Plaintiff [sic] other rights available under state and federal law.
16. During the period September, 1980 through June, 1981, thirty consumer actions, now pending before this Court, were filed against Plaintiff in various state courts. Defendant HOWARD T. REBEN represents consumers in twenty-one of these actions.
18. Defendants acted in conspiracy with the intent of destroying Plaintiffs business in Maine. As a result of Defendants’ actions, Plaintiff lost so much of its business in Maine that it was forced to close its Portland branch on or about September 28, 1981.
Damages in the amount of five million dollars were sought.
In his answer to Fidelity’s complaint, Reben admitted that after July 11, 1980, some consumers were referred to him by the Maine Bureau of Consumer Protection and that he represented twenty-one consumers in actions pending in the federal district court. He denied the allegations in paragraph fifteen of the complaint charging that he had conspired with Alexander and Giddinge to deprive Fidelity of lawful defenses under Maine law.
On September 9, 1982, Reben took the depositions of Richard M. Arakelian, senior vice-president of Fidelity, and Herbert M. Jacobs, Fidelity’s counsel. Arakelian and Jacobs appeared for Fidelity as its designees. Arakelian was asked to state in detail the nature and basis of the complaint by Fidelity against Reben and the information Fidelity had as the basis for its complaint. Arakelian stated that the only facts he had as a basis for the complaint were that the Bureau of Consumer Protection referred a large number of consumers to Reben and the lawsuits Reben brought were all virtually identical. Jacobs, who had heard the questions asked Arakelian, was asked if he had any “other additional information or facts of supplementation that you care to add____” The only additional information was a copy of a letter from Alexander to a Nicholas Scaccia referring him to Reben concerning a consumer complaint.
On the basis of the depositions, Reben asked Fidelity to dismiss the complaint. Fidelity refused and served a notice to take Reben’s deposition. Reben responded by moving for a protective order and filing a motion to dismiss the complaint. On May 24, 1983, plaintiff’s attorney, James Cooper, withdrew from the case. He was replaced by Attorney Arthur H. Goldsmith who had filed an appearance on May 23. A magistrate’s hearing on Reben’s motions was scheduled for May 25, 1983. On the eve of the hearing, Fidelity moved to amend its complaint. The motion was granted and, on May 27,1983, Fidelity filed a twenty-four-page amended complaint. The magistrate, in an opinion dated May 27, 1983, held that the deposition testimony of Fidelity by Arakelian and Jacobs showed that there was no factual basis for plaintiff’s cause of action against Reben. The magistrate considered the additional allegations in the amended complaint and found that they “cannot overcome the plaintiff’s deposition testimony concerning the nature of its action against the defendant Reben.” The magistrate recommended that Reben’s motion to dismiss the complaint be treated as a motion for summary judgment and be granted.
The most serious allegations in the amended complaint state:
43. During the period August — September 29, 1980, Defendants Alexander, Giddinge and Reben met together, counselled, discussed and planned a strategy for the hearings on Plaintiff’s application.
45. Defendant Reben advised Defendants Alexander and Giddinge that whatever findings or conclusions Alexander wanted to make with respect to Plaintiff’s license application, Alexander must avoid finding that the Plaintiff’s failure to have obtained a supervised lender’s license was “unintentional or the result of a bona fide error notwithstanding the maintenance of procedures reasonably calculated to avoid any such violations or error.”
46. Defendant Reben so advised Defendants Alexander and Giddinge because Defendant Reben knew that such a finding of an unintentional failure or bona fide error would result in no civil liability on the part of the Plaintiff, as provided for in 9-A M.R.S.A. S. 5.201(8), in Defendant Reben’s civil actions against Plaintiff.
50. Defendant Reben attended the public hearings as a behind-the-scenes advis- or to Defendant Alexander.
51. Defendant Alexander conducted the hearings in anything but an impartial, fair, objective, disinterested and unbiased manner.
70. Defendant Reben, in providing secret advice and consultation to Defendants Alexander and Giddinge, assisted and participated in the deprivation of Plaintiff’s rights.
85.....
Defendant Alexander had also been secretly advised by Defendant Reben not to consider or give any credence to Plaintiff’s statutory defense of an unintentional failure to obtain a supervised lender’s license under 9-A M.R.S.A. S. 5.201(8). 91. Defendant Giddinge, in concert with Defendant Reben, urged and counselled Defendant Alexander not to rule upon Plaintiff’s defense of an unintentional failure to obtain a license, knowing that such a ruling would bar Defendant Reben’s civil actions against the Plaintiff.
After the recommendation of the magistrate that plaintiff’s motion for summary judgment be granted was filed, plaintiffs counsel filed an affidavit under Federal Rule of Civil Procedure 56(f) opposing the motion for summary judgment and asking for further discovery. The affidavit stated in pertinent part:
10. Fidelity’s complaint against Reben is that Reben, having received referrals from the Bureau, and having filed suit, met with, counselled, advised, discussed and planned strategy for the Fidelity hearings with state officials responsible for making a fair and impartial decision on Fidelity’s application and otherwise charged with providing Fidelity with due process of law. (Amended Complaint, para. 43-47). It is the private advocacy resulting in the alleged deprivation of Fidelity’s civil right to a fair hearing, coupled with Reben’s undiscovered role in soliciting or encouraging private referrals, that forms the basis for Fidelity’s civil rights action against Reben. Fidelity requires discovery to develop these claims.
11. The Magistrate’s Recommendation to dismiss the action against Reben is premature. Discovery should be permitted to develop facts supportive of Fidelity’s claims; and that genuine issues of material fact exist such that the Summary Judgment recommendation against Fidelity and in Reben’s favor should be reversed. Completion of discovery should flesh out the true basis behind Reben’s involvement with the Bureau and representation of twenty-one of Fidelity’s borrowers.
Reben filed an affidavit stating, inter alia:
Specifically, and without conceding that any particular acts alleged would in any way be improper if in fact committed by me, I did not advise Defendants Alexander and Giddinge as alleged in paragraph 45 and 46 of the amended complaint. Additionally, I never counseled or advised or “conspired” with Bureau officials concerning their regulatory proceedings against Fidelity.
On December 19, 1983, a hearing was held before the district court on the magistrate’s recommendation. Despite the court’s questions about the factual basis for the allegations in the amended complaint and its pointed reference to Federal Rule of Civil Procedure 11, Fidelity’s attorney insisted that he be allowed an opportunity for discovery prior to the hearing on Reben’s motion for summary judgment. The court granted Fidelity’s discovery request, but warned plaintiff’s counsel that if discovery proved fruitless it would be disposed to impose sanction under Rules 11 and 37.
On January 10, 1984, local counsel for Fidelity, Peter K. Sampson, moved for leave to withdraw. In his affidavit, Attorney Sampson gave as reasons that his advice concerning the proposed deposition of Reben and the prosecution of the action was “no longer sought or heeded by either plaintiff or co-counsel, and that I have no control over Plaintiff’s future cause of action” and “to protect myself from the possibility of sanctions being sought against me for matters over which I have no control.” Sampson’s motion to withdraw as counsel for Fidelity was granted. No Maine attorney took Sampson’s place and the case proceeded solely with present counsel, Arthur H. Goldsmith of Massachusetts.
An amended notice to take Reben’s deposition was filed and Fidelity also noticed the depositions of Superintendent Alexander and her assistant, Giddinge. Alexander’s deposition was taken on February 17, 1984. She flatly denied conspiring with Reben or having any communications with him of the type alleged in the complaint. Reben asked again that the action against him be dismissed. Fidelity at first refused and then offered to dismiss the suit if Reben would waive any right to the benefit of sanctions under Rule 11. This offer was refused by Reben. On June 22, 1984, Fidelity moved to dismiss “all claims and appeals” against Reben “with prejudice and without costs.”
A hearing on pending motions was held before the magistrate on November 2, 1984. The magistrate granted the motions of both Reben and Fidelity to dismiss “without prejudice and without ruling on the question of costs and attorney’s fees.” Fidelity filed an objection to that part of the magistrate’s report which granted Reben’s motion to dismiss. The district court overruled Fidelity’s objection to the magistrate’s report and final judgment was entered dismissing the action against Reben on February 12,1985. This was more than two and one-half years after the commencement of the action on July 9, 1982.
Reben moved for attorney’s fees and the imposition of sanctions on March 29, 1985. Fidelity objected and a hearing on the motion was held on September 13, 1985. Subsequent to the hearing, Reben waived any claims for fees and sanctions against counsel for Fidelity. On February 27, 1986, the court issued a written memorandum and order. It concluded “that Fidelity’s action against Reben was frivolous, unreasonable, and groundless from the outset and that, in any event, Fidelity continued to litigate after it clearly became so. The Court holds that Reben is entitled to an award of attorneys’ fees and costs under 42 U.S.C. § 1988.”
After a subsequent hearing, the court, on May 30, 1986, assessed attorney’s fees in the amount of $16,682.86. This was the sum which Reben’s insurance carrier paid to the attorneys who represented him throughout the case. No sanctions were imposed. After unsuccessfully moving to alter or amend the judgment under Federal Rule of Civil Procedure 59, Fidelity appealed.
II.
Fidelity attacks the award of attorney’s fees on the following grounds: (1) that as a civil rights’ plaintiff who sought to dismiss its own case it should not have been ordered to pay the amount of attorney’s fees billed to an insurance company; (2) that the claim for attorney’s fees was not timely filed under the district court’s local rules; (3) that a civil rights defendant is not entitled to fees for work on the case and time spent pursuing his claim for fees when the actual recipient of the fees is an insurance company that had no expectation of recovering such fees; (4) that the district court’s computation of attorney’s fees was clearly erroneous; and (5) that the district court abused its discretion by denying motions of plaintiff, by awarding fees for time spent after plaintiff sought to dismiss its action and by refusing to amend its order.
We find at the outset that Fidelity had absolutely no factual basis for the allegations made against Reben in the original and amended complaint. We agree with the district court that Fidelity “continued to litigate after it became clear that the claims were baseless.” Our reading of the record confirms the district court’s finding that in bringing this action and continuing to pursue it, Fidelity sought to blunt the effect of the suits brought against it by Reben and bring about a favorable resolution of those actions. In short, the record leads us to conclude that Fidelity’s civil rights action against Reben was not bona fide, but a counterattack against the consumer actions. There can be little question that under the pertinent law the district court was well within its discretion in awarding defendant attorney’s fees. In the seminal case in this area, the Court held that “a district court may in its discretion award attorney’s fees to a prevailing defendant in a Title VII case upon a finding that the plaintiff’s action was frivolous, unreasonable, or without foundation, even though not brought in subjective bad faith.” Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421, 98 S.Ct. 694, 700, 54 L.Ed.2d 648 (1978). The Court then cautioned district court judges against assessing attorney’s fees against plaintiffs simply because they do not ultimately prevail. Id. at 422, 98 S.Ct. at 700. In language that is directly applicable to the facts of this case, it stated:
Hence, a plaintiff should not be assessed his opponent’s attorney’s fees unless a court finds that his claim was frivolous, unreasonable, or groundless, or that the plaintiff continued to litigate after it clearly became so. And, needless to say, if a plaintiff is found to have brought or continued such a claim in bad faith, there will be an even stronger basis for charging him with the attorney’s fees incurred by the defense.
Id. (footnote omitted). Unlike Hughes v. Rowe, 449 U.S. 5, 15, 101 S.Ct. 173, 178, 66 L.Ed.2d 163 (1980), where the Court found no “such finding” to support the fee award, the facts and the findings of the district court here amply support a fee award. Cf. Olitsky v. O’Malley, 597 F.2d 303, 305 (1st Cir.1979) (where action not frivolous, unreasonable, groundless or vexatiously brought, district court did not abuse its discretion in denying attorney’s fees).
We reject Fidelity’s argument that because an insurance company is the ultimate recipient of the attorney’s fee award, it should be treated differently than an award to an individual. We have found no cases making such a distinction.' In fact, the only case we have found directly on point is to the contrary:
The Supreme Court concluded in Christiansburg Garment Co. v. EEOC, supra, 434 U.S. at 420, 98 S.Ct. at 699, that the purpose of awarding attorneys’ fees to a defendant in a civil rights case is to deter frivolous or harassing litigation; the fact that a defendant is insured is irrelevant to this purpose.
Ellis v. Cassidy, 625 F.2d 227, 230 (9th Cir.1980). Cf. Duncan v. Poythress, 750 F.2d 1540, 1543 (11th Cir.1985), (court held that “the financial need of the litigant is not the determinative factor in awarding fees under section 1988”). (Footnote omitted.) In a case such as this, where the plaintiff had no factual basis for the complaint and the only reason for persisting in prosecuting the suit was for harassment, an award of attorney’s fees can and should be made to deter such conduct in the future and it makes no difference that the recipient of the fee award is defendant’s insurance carrier rather than the defendant individually.
The next question is the amount of the award. Our examination of the affidavits and other material filed by defendant fully supports the district court’s fee award. In conformity with Blum v. Stenson, 465 U.S. 886, 895, 104 S.Ct. 1541, 1547, 79 L.Ed.2d 891 (1984), the fee was calculated according to the prevailing market rate in the Portland, Maine community. Defendant’s attorney kept and included with the affidavits contemporaneous time records as required under Grendel’s Den, Inc. v. Larkin, 749 F.2d 945, 951-52 (1st Cir.1984). Fidelity has not seriously challenged the reasonableness of the time spent, the reasonableness of the hourly rates, or the reasonableness of the expenses claimed. Id. at 952-57. And there is no basis for such a challenge. Nor is there any legal basis for Fidelity’s position that defendant is not entitled to recover fees incurred in obtaining fees authorized under section 1988. Such “pursuit fees” are recoverable to the extent that they are reasonable. Id. at 957-58. See also Cruz v. Hauck, 762 F.2d 1230, 1233-34 (5th Cir.1985); Institutionalized Juveniles v. Secretary of Public Welfare, 758 F.2d 897, 924-25 (3d Cir.1985); Laffey v. Northwest Airlines, Inc. 746 F.2d 4, 29-30 (D.C.Cir.1984), cert. denied, 472 U.S. 1021, 105 S.Ct. 3488, 87 L.Ed.2d 622 (1985).
The next issue is a variation on the prior one. Fidelity contends that fees should not be assessed against it for the time period after it sought to dismiss its own action. We find no basis in equity or law for the proposition that a mea culpa confession limits the prevailing party’s basis for a fee award under section 1988. On December 19,1983, Fidelity was warned by the district court about the consequences of proceeding without any factual basis for its allegations. It insisted on being given the right to further discovery. Six months later, on June 22, 1984, it finally admitted that it had no basis for its motion against defendant by moving to dismiss all claims against him “with prejudice and without costs.” (Emphasis added). Fidelity started this law suit without any basis and it persisted in it until it was convinced that it could no longer serve any purpose. It ill behooves Fidelity to now claim that the additional time spent by defense counsel in obtaining what was due defendant under section 1988 should not be counted against it. Fidelity’s decision to terminate an ill conceived and wrongly prosecuted law suit cannot serve to limit the consequences of a course of action it initiated and persistently followed.
Fidelity’s reliance on Evans v. Jeff D., — U.S. -, 106 S.Ct. 1531, 89 L.Ed.2d 747 (1986), is woefully misplaced. In that case, the Court found that the district court did not abuse its discretion in upholding a fee waiver in a class action settled by a consent decree where the decree secured plaintiffs broader injunctive relief than they could have reasonably expected to achieve at trial. Id. 106 S.Ct. at 1545. In no way did the Court suggest or intimate that a plaintiff had a right to limit its liability for attorney’s fees under section 1988 by dismissing a civil rights action it had wrongfully brought and prosecuted.
The final issue is whether the claim for attorney’s fees was timely filed under Maine District Court Rule 30, which provides:
Any claim for attorney fees shall be filed with the Court and served upon opposing counsel, together with supporting memorandum and affidavits, within 45 days after entry of judgment. For good cause shown on motion filed within such period, the Court may extend the time for filing the claim for attorney fees.
This rule must be construed in light of Federal Rule of Civil Procedure 6(a) which provides in pertinent part:
(a) Computation. In computing any period of time prescribed or allowed by these rules, by the local rule of any district court, by order of court, or by any applicable statute, the day of the act, event, or default from which the designated period of time begins to run shall not be included.
Judgment was entered on February 12, 1985. Under Rule 6(a), the forty-five-day period began to run the next day, February 13. The motion for attorney’s fees was filed on March 29, exactly forty-five days later. Fidelity argues that because its counsel did not receive a copy of the motion until April 1, service was late because it was not made within the forty-five-day period of the local rule. This ignores, however, the controlling provisions of Federal Rule of Civil Procedure 5(a). “Service upon the attorney or upon a party shall be made by delivering a copy to him or by mailing it to him____ Service by mail is complete upon mailing.” There is no question that a copy of the motion for attorney’s fees was mailed to Fidelity’s counsel on March 29, 1985. The filing of the motion and service of a copy upon opposing counsel met the forty-five-day requirement of Maine District Court Rule 30.
Fidelity makes an additional procedural attack on the motion based upon Local Rule 30. It claims that because the motion did not contain any affidavit evidence of the amount of fees claimed, it was defective and should have been rejected by the district court. No precedent has been cited for this proposition; the argument is pitched upon the grounds of reasonableness and procrastination and delaying tactics by the defendant — the case of a colorblind pot calling a white kettle black. We reject this argument. It is within the discretion of the district court to determine when the supporting affidavits shall be filed. Where the entitlement to any attorney’s fees is hotly contested, the district court may, as it did here, determine that question before reaching the computation of the award. See Lund v. Affleck, 587 F.2d 75, 77 (1st Cir.1978); Sargeant v. Sharp, 579 F.2d 645; 648 (1st Cir.1978). See also Local Rule 1(c) (court may relax local rules in exceptional circumstances when justice so requires). We see no prejudice to either party in such a two-step approach to the question of attorney’s fees. Indeed, in cases where the judge determined either that no attorney’s fees would be appropriate or imposed limits on them, this approach would eliminate the vain effort that would otherwise be spent in determining their amount.
We have considered all of Fidelity’s other arguments and find them to be so flimsy as not to require discussion.
Affirmed.
Since there was no factual or legal basis for this appeal, double costs and attorney’s fees in the amount of $1,000 are assessed against Fidelity. Fed.R.App.P. 38.
Defendant shall file a motion for attorney’s fees and costs attendant upon this appeal along with supporting affidavits within sixty days hereof with the clerk of this court. Fidelity shall have thirty days to file responsive pleadings. Such fees are awarded under 42 U.S.C. § 1988.
So ordered.
. Fidelity raises two other issues that do not warrant discussion: (1) that the court was not warranted in verbally chastising plaintiff s counsel; and (2) that the court erred in issuing execution on the judgment when it did.
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.
WIDENER, Circuit Judge:
Third National Mortgage Company (Mortgage Company or appellant), defendant in the action below, appeals from the decision of the district court holding that it breached an oral commitment to provide construction financing to Coastland Corporation for the construction of a condominium project. The district court awarded Coastland $620,650.00 in damages for the breach. The Mortgage Company contends that the district court erred both in finding that an oral commitment existed and in its award of damages. Coastland has filed a cross-appeal contending that the district court’s limitation of damages was erroneous. Jurisdiction in this case is based upon diversity of citizenship, 28 U.S.C. § 1332, and both parties agree, as they did in the court below, that the disposition of the issues raised on appeal is controlled by the law of Virginia.
Coastland brought suit in the district court against Third National Bank in Nashville; John W. Murphree Company, now Third National Mortgage Company (appellant); Kenneth R. Larish, President of Third National Mortgage Company; and Grover C. Cauthen, former Vice President of John W. Murphree Company, alleging that Third National Mortgage Company breached an alleged agreement made through Cauthen to provide construction financing to Coastland for the proposed construction of a condominium project to be known as the Schooner Point Condominium in Currituck, North Carolina. The district court either dismissed as to, or found for, Third National Bank, Cauthen and Larish. Those actions are not questioned on appeal. As noted, however, it entered judgment against the Mortgage Company.
The evidence adduced at trial includes the following. Coastland, a North Carolina corporation with its principal place of business in Virginia, was formed in 1970 and is engaged in the business of real estate development. In 1971, Coastland purchased approximately 600 acres of land approximately seven miles north of Duck and twenty-four miles north of Nagshead on the Outer Banks of North Carolina, for purposes of residential development. A master plan of development was prepared for this tract of land under the name Ocean Sands Subdivision. The plan included provisions for the construction of a condominium project to be known as the Schooner Point Condominium. This condominium project was envisioned as consisting of 134 units, with seventy-one units being constructed during the first phase of development.
James E. Johnson, Jr., President of Coast-land, and Gary G. Cowan, a former officer of Coastland, testified that in January 1974 Coastland began to seek financing for the first phase (71 units) of the Schooner Point project. Appellant was one of the institutions Coastland went to in search of financing. Johnson and Cowan testified that Coastland sought both construction and permanent financing for the project, and entered into discussions with Cauthen, who was acting on behalf of the Mortgage Company, for that purpose.
In connection with the seeking of financing for the condominium project, Coastland provided appellant with cost breakdowns, projected sales figures, estimated budgets, plans, legal documents and other information relating to the project. Johnson and Cowan testified that after the above documentation was supplied, appellant, acting through Cauthen, verbally agreed in May 1974 to provide Coastland with both construction and permanent financing for the first phase of the project.
The commitment to provide permanent financing to qualifying individual purchasers of the proposed condominiums was reduced to a written agreement dated June 26,1974. It was for a total of $3,100,000.00, and was to expire on December 31, 1975. Coastland agreed to pay a fee of $100,000.00 for the commitment for permanent financing. At the time Coastland accepted the permanent financing commitment, it paid appellant $50,000.00 in cash therefor, and issued a note for $50,000.00 payable on or before November 1, 1974 for the unpaid balance of the commitment fee. There are no contentions between the parties concerning either the existence or terms of the permanent financing commitment.
The verbal commitment to provide construction financing was not reduced to writing. However, Johnson testified that subsequent to Cauthen’s assurance in May 1974 that both construction and permanent financing would be available Cauthen called him by telephone to inform him that he, Cauthen, had worked out the details of the financing with Cowan. Cowan testified that the construction financing was to be in the amount of 2.2 million dollars at 4x/2 percent over the prime interest rate, and that the financing would be available for up to eighteen months. Cowan also testified that Coastland was to pay appellant a fee of $20,000.00 to $40,000.00 for the construction financing commitment, but this fee was never paid.
Both Johnson and Cowan testified that the construction financing commitment was not reduced to writing because of a tight banking situation precipitated by the collapse of the Franklin National Bank. They testified that several weeks after Cauthen assured them of construction financing, and prior to the issuance of the written commitment for permanent financing, Cauthen called Coastland to inform it that appellant’s parent company, Third National Bank, did not want it to make any commitments for approximately six months in order to improve its liquidity. Johnson and Cowan further testified that Cauthen related that because of this policy, funding for the construction financing commitment could not be immediately forthcoming, but that around January 1, 1975 funding for said commitment should be available. Cow-an testified that Cauthen said Coastland would be “on the top of the list and could go ahead and get [its] funding” in January 1975.
Subsequent to the just mentioned telephone conversation and the execution of the written commitment for permanent financing, in a letter dated July 5, 1974, from Cowan to Cauthen, Cowan stated, “As we discussed, the 12/31/75 commitment date [for permanent financing] may be a little tight, and you indicated you would grant a reasonable extension if the need arises.” At trial, Cowan explained the reference to the permanent financing commitment date of December 31, 1975 as being too tight as follows:
“Well, we had negotiated originally the terms of the permanent loan at the same time of the construction loan, and, therefore, we had set that date as a reasonable date because we intended to start construction in the immediate future, but the fact the construction loan now had been deferred for a period of six months we wanted to extend the period of the termination date of the permanent financing.!’
Johnson also testified that Coastland sought an extension of the termination date for the permanent financing commitment because appellant could not provide the construction financing at the time originally anticipated.
Cauthen did agree to extend the termination date of the permanent financing commitment from December 31, 1975 to September 1, 1976. In October 1974, Cauthen went to Coastland’s offices in Virginia Beach, where the extension of time for the permanent financing commitment was executed. At that time, $25,000.00 was paid on the promissory note that had been given for the balance of the fee for the permanent financing commitment. The time for payment of the remaining $25,000.00 balance was extended from November 1, 1974 to April 1, 1975, and a new promissory note was issued for the balance. Johnson testified that this new arrangement for paying the balance of the fee for the permanent financing commitment was adopted “because the permanent loan was extended because the construction loan was going to be provided later.” Additionally, both Johnson and Cowan testified that at this October 1974 meeting Cauthen reassured them that he thought the construction financing would be available in January 1975, and certainly no later than April 1975.
Johnson further testified that in early 1975 he contacted Larish, whom he understood to be the new president of appellant, to exercise the commitment for the construction financing loan. Johnson testified that Larish informed him that he would check into the matter and get back in touch with him, but never did. Johnson said that he tried to contact Larish numerous times via telephone, letter, and his attorney, but never received any response to his inquiries. Larish admitted that he did not respond to these inquiries of Johnson or his attorney.
Larish began his employment with appellant in February 1975. He testified that the construction financing matter first came to his attention in March 1975 during discussions with Cauthen, as well as after receiving a memorandum from Cauthen that discussed the matter. Larish further testified that Cauthen stated to him that he never “verbally or formally” committed appellant to provide Coastland with construction financing but, rather, made a single commitment to provide Coastland with permanent financing.
A number of internal memoranda sent between various employees of the Mortgage Company were introduced by Coastland which support its contention that appellant entered into a binding commitment to provide Coastland with construction financing. Cauthen sent a memorandum dated October 22, 1974 to Richard G. Keeran, then President of John W. Murphree Company, that concerned the Schooner Point project. Cauthen stated in that memo: “I am sure that you will agree with me that this is a fine piece of work on my part to have negotiated such a deal under this intense pressure in the worst money market anyone can remember. As the market begins to turn, I am confident that we can obtain back-up for our commitments from investors in the New Jersey area.” (Emphasis added) No explanation was offered by appellant at trial as to Cauthen’s reference to commitments in the October 22, 1974 memorandum, although opportunity to explain was offered. Cauthen also sent a memorandum dated March 18, 1975 to Larish that stated, in part: “When we originally issued our permanent loan commitment, we had hoped to provide construction financing, however due to market conditions, and our own shortages of funds, we were unable to come up with an interim loan commitment.”
Additionally, Larish sent a memorandum dated April 8, 1975 to Chip Stanley, then appellant’s capital asset manager, that stated, in part: “They [Coastland] paid $75,-000.00 in front end points for our take-out commitment and Grover [Cauthen] indicated to them [Johnson and Cowan] at the time that we would make the construction loan as well. Because we didn’t have ready funds to make this deal, Grover convinced them to just take the end mortgage commitment.” (Emphasis added) Larish testified that he was merely relating to Stanley what Johnson had informed him Cauthen had done and that at the time he sent the above memo to Stanley he assumed Johnson was correct in his assertions. He further testified that after checking into the matter he determined that Johnson was not correct in his assertion that Cauthen had assured Coastland that appellant would provide it with construction financing. But the district court did not accept this explanation.
In this same April 8th memo from Larish to Stanley, Larish further stated: “Would you please have Scott or J.P. dig into this case and acquaint us with all the facts and the genesis of the deal? If it can be solved by us getting a backup take-out commitment now, it might be a way for us to help them [Coastland] and get off the hook at the same time.” (Emphasis added) Regarding the quoted language, Larish testified, “The hook I was referring to is: We had when I got with the company over a hundred million dollars of commitments, 88 percent of which were condominium and land development loans. We were on the hook, to use that terminology, for over 50 million dollars of permanent loans on condominiums. We were trying to reduce that potential outstanding.” Again, the district court did not accept the explanation.
Based, in part, upon the testimony of Johnson and Cowan, which the court characterized as uncontradicted and unchallenged, as well as the above mentioned memoranda, the court determined that there was a binding agreement between the Mortgage Company and Coastland for appellant to furnish construction financing for the first phase of the Schooner Point Condominium project. As previously mentioned, the court awarded Coastland $620,-650.00 as damages for the breach of said agreement. The court arrived at the $620,-650.00 figure by allowing Coastland to recover one-half of its projected profits on the first phase (71 units) of the project; one-half of the expenses it incurred for architectural, engineering and legal services, as well as other expenses it incurred, in preparation for the construction of the first phase of the project; and the $75,000.00 it paid as a fee for the permanent financing commitment. Additionally, the court ordered appellant to surrender to Coastland the unpaid note for $25,000.00 that constituted the balance of the $100,000.00 fee for the permanent financing commitment.
I
Appellant contends the district court erred in finding that it made a commitment to provide Coastland with construction financing for the first phase of the Schooner Point Condominium project. This contention is vitiated somewhat by the fact that the Mortgage Company now acknowledges that the district court’s fact findings are supported by the record, leaving the definiteness of the terms of the contract and the measure of damages as its essential arguments. In any event, after considering the evidence of record, including the testimony of Johnson and Cowan and the memoranda mentioned above, we do not think the district court erred in finding that the Mortgage Company made a commitment to Coastland to provide it with construction financing. FRCP 52(a).
Appellant argues that a construction loan of the magnitude of the one at issue here would not have been so loosely entered into, especially without having been reduced to writing. However, as the Virginia Court stated in Twohy v. Harris, 194 Va. 69, 72 S.E.2d 329, 334-35 (1952), “While there is force to the argument, the fact that the parties did not reduce the agreement to writing was but a circumstance to be weighed ... in determining whether the agreement was entered into.” And, as the Twohy court also stated, the absence of a written memorandum does not, of course, make Johnson’s and Cowan’s testimony as to the verbal contract incredible.
A related contention is the assumption that the Mortgage Company would not have entered into such a construction loan agreement absent an agreement in writing. No writing was executed, however, apparently because of the Mortgage Company’s parent company’s policy, adopted in June 1974, of not making any commitments for approximately six months. Appellant cites Atlantic Coast Realty Company v. Robertson’s Ex’r, 135 Va. 247, 116 S.E. 476, 478 (1923), for the proposition “that when it is shown that the parties intend to reduce a contract to writing -this circumstance creates a presumption that no final contract has been entered into, which requires strong evidence to overcome.” Assuming that a writing was contemplated, and the district court did not address the point, that case is subject to the qualification stated by the Court in Manss-Owens Co. v. H. S. Owens & Sons, 129 Va. 183, 105 S.E. 543, 547 (1921): “the mere fact that a written contract was contemplated does not necessarily show that no binding agreement had been entered into.” The court further stated:
“The whole question is one of intention. If the parties are fully agreed, there is a binding contract, notwithstanding the fact that a formal contract is to be prepared and signed; but the parties must be fully agreed and must intend the agreement to be binding. If though fully agreed on the terms of their contract, they do not intend to be bound until a formal contract is prepared, there is no contract, and the circumstance that the parties do intend a formal contract to be drawn up is strong evidence to show they did not intend the previous negotiations to amount to an agreement.”
Id., citing Boisseau v. Fuller, 96 Va. 45, 30 S.E. 457 (1898).
In the instant case, we think the evidence of record supports the district court’s finding that a binding verbal commitment- was given by appellant to Coastland to provide it with construction financing for the first phase of the Schooner Point project, and that any presumption to the contrary was overcome. We do not think the district court was clearly erroneous in its finding that appellant intended to be bound by its verbal commitment made through Cauthen. FRCP 52(a).
II
Appellant’s primary contention with regard to the existence of a binding agreement is that, even if a commitment was given to Coastland to provide it with construction financing, the terms of the agreement were so incomplete and uncertain so as to render such agreement unenforceable. It argues that a typical construction loan commitment would contain the following terms: amount of the loan; limitation of principal amount; term of the loan; options to extend; interest rate; computation of interest; prepayment penalties; identification of contractors and location of construction; closing agent; loan servicing arrangements; title insurance; construction performance bonds; architectural specifications to be complied with; filing responsibilities; collateral documents to be prepared; provisions for payment of expenses incurred; commitment fee; provisions for the release of individual units when sold; the manner of making disbursements; and special conditions. It contrasts the terms of the construction financing commitment as testified to by Cowan, i. e., amount— $2,200,000.00; term of the loan — 18 months; interest rate — 4V2 percent over an unspecified prime rate; and commitment fee— $20,000.00 to $40,000.00, with the above enumerated terms purportedly contained in a typical construction loan commitment, and argues that the construction financing commitment in issue here is too incomplete and uncertain to be enforceable.
Appellant relies upon Progressive Construction Co. v. Thumm, 209 Va. 24, 161 S.E.2d 687, 691 (1968), in which the court stated:
“It is fundamental that no person may be subjected by law to a contractual obligation, unless the character of the obligation is definitely fixed by an express or implied agreement of the parties. In order to be binding, an agreement must be definite and certain as to its terms and requirements; it must identify the subject matter and spell out the essential commitments and agreements with respect thereto. * * * ”
See also Parker v. Murphy, 152 Va. 173, 146 S.E. 254, 257 (1929), and Smith v. Farrell, 199 Va. 121, 98 S.E.2d 3, 7 (1957).
While it is true that a contract to be valid and enforceable must be complete and definite in its terms, “reasonable certainty is all that is required.” Smith v. Farrell, 199 Va. 121, 98 S.E.2d 3, 7 (1957). For, “[t]he law does not favor declaring contracts void for indefiniteness and uncertainty, and leans against a construction which has that tendency. While courts cannot make contracts for the parties, neither will they permit parties to be released from the obligations which they have assumed if this can be ascertained with reasonable certainty from language used, in the light of all the surrounding circumstances.” High Knob, Inc. v. Allen, 205 Va. 503, 138 S.E.2d 49, 53 (1964). See also McDaniel v. Daves, 139 Va. 178, 123 S.E. 663, 666 (1924). Additionally,
‘Where the relief sought is specific execution, it is essential that the contract itself should be specific. In other words, the certainty required must extend to all the particulars essential to the enforcement of the contract. But where there has been an entire breach, and compensation is asked in damages, it may be sufficient if there be certainty only as to the general scope and stipulations of the contract.’ Manss-Owens Co. v. H. S. Owens & Son, 129 Va. 183, 105 S.E. 543, 547 (1921). See also McDaniel, 123 S.E. at 666.
In the instant case, Coastland brought suit against appellant for damages, not specific performance. Accordingly, it is sufficient if there is certainty as to the “general scope and stipulations of the contract.” Manss-Owens, 105 S.E. at 547.
When the construction financing commitment is construed in the light of the surrounding circumstances, we do not think the court below erred in finding that it was sufficiently complete and definite to be valid and enforceable. Johnson testified that Cauthen informed him that he had worked out the details of the loan with Cowan. Cowan testified that the loan was to be in the amount of $2.2 million at 4V2 percent over the prime interest rate, and that the loan was to be available for up to eighteen months. Cowan also testified that Coast-land agreed to pay a fee of $20,000.00 to $40,000.00 for the construction financing commitment. Appellant introduced no evidence to show that the terms of the alleged agreement were different than those testified to by Cowan. In light of the fact this is a suit for damages and not specific performance, we think the terms testified to by Cowan were sufficiently complete and definite so as to render the construction financing commitment valid and enforceable.
Ill
Appellant also contests the district court’s award of damages for the breach of its commitment to provide Coastland with construction financing. Appellant contends the court erred as a matter of law in allowing Coastland to recover one-half of its projected profits on the first phase (71 units) of the Schooner Point project.
In allowing Coastland to recover one-half of its projected profits on the seventy-one units, the court recited the general rule of damages that, “[w]hen there has been a breach of a contract to lend money for a particular purpose, profits reasonably within the contemplation of the defaulting parties at the time the contract was made and which are lost by reason of the breach may be recovered, if capable of reasonable ascertainment.” Determining that profits were' reasonably within the contemplation of appellant at the time the construction financing commitment was given and that the projected profits were capable of reasonable ascertainment, the court awarded Coastland $482,750.00 in lost profits, such amount constituting one-half of Coastland’s projected profits on the seventy-one units.
Although the rule as above stated may be the general rule, it has a corollary that distinguishes between the recovery of lost profits when an established business is involved and the recovery of lost profits when a new business, venture, or enterprise, or one merely in contemplation, is involved. In Virginia, as in most other jurisdictions:
When an established business, with an established earning capacity, is interrupted and there is no other practical way to estimate the damages thereby caused, evidence of the prior and subsequent record of the business has been held admissible to permit an intelligent and probable estimate of damages. . . . But where a new business or enterprise is involved, the rule is not applicable for the reason that such a business is a speculative venture, the successful operation of which depends upon future bargains, the status of the market, and too many other contingencies to furnish a safeguard in fixing the measure of damages.
Mullen v. Brantley, 213 Va. 765, 195 S.E.2d 696, 699-70 (1973). To the same effect are Kay Advertising Co. v. Olde London Transportation Co., 216 Va. 273, 217 S.E.2d 876, 878 (1975); Pennsylvania State Shopping Plazas, Inc. v. Olive, 202 Va. 862, 120 S.E.2d 372, 377 (1961); Sinclair Refining Co. v. Hamilton & Dotson, 164 Va. 203, 178 S.E. 777, 780 (1935).
Thus, “where the business which is interfered with or prevented as a result of a breach of contract is a new or unestablished nonindustrial business, or one merely in contemplation, the anticipated profits from such business cannot be recovered, for the reason that it cannot be rendered certain that there would have been any profits at all from the conduct of such business.” Sinclair Refining Co. v. Hamilton & Dotson, 164 Va. 203, 178 S.E. 777, 780 (1935).
In Pennsylvania State Shopping Plazas, Inc. v. Olive, 202 Va. 862, 120 S.E.2d 372 (1961), the court reversed a jury’s award of damages because the jury wrongfully considered loss of anticipated profits in arriving at its award. Plaintiff had brought suit for a breach of contract that involved the lease of a service station yet to be constructed. Evidence was offered by plaintiff and others on anticipated profits from the station’s operation. Although plaintiff was an experienced service station operator who successfully operated some fourteen service stations, the court held that anticipated profits based on the estimated number of gallons of gasoline that would be sold at the intended new service station site were not recoverable. The court stated:
Such estimates cannot be made with any degree of certainty for a new business, since they are purely speculative and existing only in anticipation. The successful operation of a gasoline filling station business depends upon many factors, such as the personality of the operator and the service rendered by him and his employees, the popularity of the brand of gasoline sold, the condition of the market, and many other contingencies.
Id. 120 S.E.2d at 378. Thus, the court held plaintiff’s proper measure of damages was the value of the lease in excess of the agreed rent for the term and any expenses or costs which the plaintiff may have reasonably incurred under the contract.
And, in Mullen v. Brantley, 213 Va. 765, 195 S.E.2d 696 (1973), the court again reversed an award of damages that included anticipated profits from the contemplated operation of a Shakey’s Pizza Parlor, despite the fact plaintiff was a successful franchise operator. The court stated:
In the present case it was impossible to determine the profit, if any, Mullen would have derived from the operation of a Shakey’s Pizza Parlor if he had established it on or near the Duke Street site . . Even though Shakey’s Pizza Parlors are a part of a national chain, the establishment of such a pizza parlor at or near the Duke Street site would nevertheless have been a new business. The profits derived from the Annandale, Hybla Valley and Rockville franchises and the national average of all Shakey’s Pizza Parlors, do not represent a reasonable basis upon which to judge with any degree of reasonable certainty what the profits would have been if Mullen had operated a Shakey’s Pizza Parlor at the Duke Street site. The amount of business Mullen would have had at the Duke Street site, and the anticipated profits therefrom, could have been based only on speculation and conjecture.
We hold that Mullen’s proper measure of damages could not be based on loss of anticipated profits from an unestablished business.
Id. 195 S.E.2d at 700.
In the instant case, there is no doubt but that the Schooner Point Condominium project was a new venture or enterprise. Although Coastland has been in business since 1970, the Schooner Point project constituted a new endeavor. See Mullen and Pennsylvania State Shopping Plazas, supra. Consequently, the profits Coastland anticipated could only have been based upon speculation and conjecture. This is so because such business is an adventure, the successful operation of which depends upon future bargains, states of the market, and on too many other contingencies.
Coastland has not attempted to distinguish the new business line of cases from the case at hand. Rather, Coastland argues, based on the general rule of damages, that since appellant was given documentation that included Coastland’s projected profits on the seventy-one units, appellant was aware of Coastland’s potential profits and therefore should be liable in damages for the loss of those potential profits.
As the cases set forth above point out, there is a corollary to the general rule of damages that may be summarized as follows: When the business that is interfered with as a result of a breach of contract is a new business or venture, or one merely in contemplation, the anticipated profits from such business, cannot be recovered as an item of damages because it cannot be rendered reasonably certain that there would have been any profits at all from the conduct of the business. The fact Coastland supplied appellant with documentation that included Coastland’s projected profits on the seventy-one units does not make it certain that there would have been any profits at all from the sale of the seventy-one units. Accordingly, the district court’s award to Coastland of one-half of its anticipated profits on the sale of the seventy-one units is reversed.
IV
Appellant also contends that the balance of the court’s damage award was arbitrary and capricious. Its primary contention is that the court erred in including as an element of damages one-half of the architectural, engineering and attorneys’ fees incurred by Coastland prior to the time the construction financing commitment was given. Appellant also asserts that the court’s inclusion of the permanent financing commitment fee as an element of the damage award was erroneous. We disagree.
A portion of the architectural, engineering, legal and other expenses incurred by Coastland in preparation for the construction of the project was incurred prior to the time appellant agreed to provide Coastland with construction financing. Appellant argues that such expenses were not properly included as an element of damages for breach of contract since those expenditures were not made in reliance upon the contract.
“[0]ne injured by the breach of a contract to which he is a party is entitled to recover special damages which arise from circumstances peculiar to the particular case, where those circumstances were communicated to, or known by, the other party at the time the contract was made; that is, he may recover such damages as are the reasonable and natural consequences of the breach under the circumstances so disclosed and as may reasonably be supposed to have been in the contemplation of both parties.”
22 Am.Jur.2d, Damages § 59, at p. 90. See also 22 Am.Jr.2d, Damages § 69, at pp. 103-04. As previously mentioned, in the instant case, appellant was provided with documentation at the time Coastland applied for construction and permanent financing that included Coastland’s expected total expenditures for architectural, engineering and legal services, as well as other expenses, for the construction of the Schooner Point Condominium project. Consequently, appellant was aware that those expenses were or would be incurred by Coastland and, further, that a breach of its commitment to provide the construction financing might cause Coastland to suffer damages in the amount expended for such services. Without contradiction, and prior to the time such financing became generally unavailable, Coastland rejected offers by others to provide construction financing after the commitment from the Mortgage Company was made. In light of the above, we do not think the district court erred in including expenditures made by Coastland prior to the time the construction financing commitment was given when awarding Coastland one-half of the expenses it incurred in preparation for the construction of the project as damages for the breach of said commitment.
Appellant also contends the district court erred in including the fee for the permanent financing commitment in its award of damages for the breach of the commitment to provide construction financing because appellant never breached its commitment to provide the permanent financing and, in fact, remained ready to provide such financing through the termination date of the commitment. Appellant argues it earned the fee upon the making of the commitment and holding the commitment open through its term.
The evidence of record shows that Coast-land went to appellant seeking both construction and permanent financing. The evidence is that the permanent financing was of no value to Coastland without the construction financing. Additionally, both Johnson and Cowan testified that after appellant informed them that the funding for the construction financing commitment would not be immediately available, Coast-land attempted to secure construction financing elsewhere, but was unsuccessful because of the then existing tight banking situation. Appellant’s breach of its commitment to provide Coastland with construction financing, in conjunction with Coastland’s inability to obtain construction financing elsewhere, did, in a very real sense, render the permanent financing commitment worthless. Accordingly, we are of opinion the district court did not err in including the fee Coastland paid for the permanent financing commitment as an element of Coastland’s damages for appellant’s breach of its commitment to provide construction financing.
In sum, aside from the court’s award to Coastland of one-half of its projected profits on the sale of seventy-one units, we find no merit in appellant’s contentions that the court acted arbitrarily or capriciously, or erroneously as a matter of law, in its award of damages.
V
Coastland has filed a cross-appeal to the district court’s award of damages. It contends that the court erred in awarding Coastland only one-half of the architectural, engineering, legal and other expenses it incurred in preparation for the construction of the Schooner Point project, and in not awarding Coastland interest on the $75,-000.00 it paid to appellant as part of the fee for the permanent financing commitment. We think Coastland’s contentions are without merit.
“When, as in the present case, a defendant is liable for some damages for breach of contract and no evidence is available to show the exact amount, the quantum may be fixed when the facts and circumstances are such as to permit an intelligent and probable estimate thereof.” M&B Construction Co. v. Mitchell, 213 Va. 755, 759, 195 S.E.2d 873, 877 (1973). When describing the total expenses Coastland incurred in preparation for the construction of the project, the court noted that “probably some of the information may yet be used.” It then concluded that considering all of the facts and circumstances in the case, Coastland should be awarded one-half of its expenses as an item of appellant’s breach of contract. As we do not think the court erred in this regard, we do not think the court abused its discretion in concluding that on the facts of this case Coastland should only recover one-half of its total expenses.
Likewise without merit is Coast-land’s assertion that the court erred in not awarding it interest on the $75,000.00 that Coastland paid to appellant for the permanent financing commitment. So far as is relevant to this case, whether to allow Coastland interest on the $75,000.00 was in the sound discretion of the district court. Va.Code § 8.01-382. See Doyle & Russell, Inc. v. Welch Pile Driving Corp., 213 Va. 698, 194 S.E.2d 719, 723 (1973) (interpreting a predecessor statute). We think the denial of interest by the district court was well within its discretion.
Accordingly, on remand the judgment of the district court will be reduced by $482,-750.00, the amount of anticipated profits included therein; otherwise, it is in all respects affirmed.
Each side will bear its own costs on appeal.
AFFIRMED IN PART, REVERSED IN PART, and REMANDED.
. Initially, the Mortgage Company also contended that the district court erred in its determination that Virginia’s Statute of Frauds did not apply and in its admission of parol evidence to prove the existence, conditions and terms of the alleged commitment. However, these contentions were abandoned.
. Johnson and Cowan also testified that during said telephone conversation Cauthen stated that appellant would have no objections if Coastland wanted to try and obtain construction financing elsewhere since appellant could not fund the project immediately. Both Johnson and Cowan testified that Coastland did seek financing elsewhere, but that because of the then existing tight banking situation such financing could not be obtained.
. Prior to the institution of this suit, no effort was made by appellant to collect this $25,-000.00 promissory note, although it was past due.
. Cowan testified that in early 1975 Coastland requested another extension of the termination date for the permanent financing commitment, but never received a response from appellant to its request.
. In its brief, appellant states that, “[a]ccording to Johnson the term of the construction loan was ‘probably’ to be two years.” It makes much of this claimed aspect of Johnson’s testimony as evidence that the terms of the commitment were too indefinite to be enforceable since Cowan had testified that the construction financing was to be available for up to eighteen months. Appellant’s characterization of Johnson’s testimony, however, is not correct. Johnson testified that construction financing for the whole project (134 units) probably would have been for approximately two years. Cowan testified that under the commitment given by appellant construction financing would be available for up to eighteen months. The financing Cowan was referring to was for seventy-one units, the first phase of the project, and not for the whole project (134 units).
. Coastland also contends the court erred in awarding it only one-half of its projected profits. Because we have concluded that no anticipated lost profits were recoverable in this case, we need not address this contention.
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:
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B
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songer_crossapp
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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:
The plaintiffs in a medical malpractice suit appeal from a judgment based on a directed verdict for the defendants. They say the case should have gone to the jury.
Appellants are husband and wife. While the husband was a patient in Doctors Hospital, one of the appellees, the other appellee, Dr. Moretti, removed a cataract from his right eye and after-wards performed a similar operation on his left eye. A urinary infection developed in the left eye, further surgery was necessary, and as a result the eye is sightless.
The evidence must be construed most favorably to the appellants. Goodwin v. Hertzberg, 91 U.S.App.D.C. 385, 201 F.2d 204 (1952). So construed, it would support a finding that both appellees were negligent. But this is not enough. In a suit for personal injuries the plaintiff must prove that negligence caused the injury. Since the appellants produced no significant evidence on this point, the court did not err in directing a verdict.
The judge stated his reasons for directing a verdict, which is commendable. But we suggest that judges may well consider submitting some cases to the jury even though they would set aside a verdict for the plaintiffs. “Where the trial court has any doubt as to whether to grant the motion for a directed verdict, the better practice is for the judge not to direct a verdict but to reserve decision and let the jury bring in a verdict, * * *” 5 Moore’s Federal Practice § 50.05 [3], The jury might return a verdict for the defendants. Furthermore, if a verdict for the plaintiff were erroneously set aside, the appellate court could merely reinstate it and a new trial would be unnecessary. See Shewmaker v. Capital Transit Co., 79 U.S.App.D.C. 102, 143 F.2d 142 (1944); Williams v. Greenblatt, 106 U.S.App.D.C. 335, 272 F.2d 564 (1959).
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.
HASTIE, Circuit Judge.
In these petitions for review the taxpayers complain that the Tax Court has improperly applied to the estate of Myrtle H. Newberry, deceased, the provisions of Section 811 (d)(2) of the Internal Revenue Code, 26 U.S.G. § 811 (d)(2), that the gross estate shall include any property interest which decedent may have transferred in trust, where, at the time of his death, the enjoyment of that interest was sub j ect to change through exercise by, the decedent of a power to alter or revoke. It is admitted that the trusts in controversy gave the decedent until her death such power of alteration. But they were created by transfer of her husband’s property under a trust indenture executed solely by him. Nevertheless, the Tax Court, upholding the Commissioner of Internal Revenue, has ruled that in the particular circumstances of this case the decedent may properly be regarded and taxed as the transferor of the trust property within the meaning of Section 811 (d)(2). 17 T.C. 597.
In 1934 both John J. Newberry and his wife, Myrtle H. Newberry, were independently wealthy. Among other holdings, each owned about 50,000 shares of J. J. New-berry Company common stock, then valued at more than $50 per share. The Newberrys were deeply concerned for the future well being of their young children, a son and a daughter, neither of whom had independent means. In 1934 John Newberry created an irrevocable trust of 2500 shares of J. J. Newberry Company common stock for his daughter and a like trust for his son. In 1935 he repeated the process. In each trust he named himself and his wife as trustees and gave Mrs. Newberry alone broad power to alter, amend or terminate the trust, but in no event to revest principal or income in him. Before Mrs. Newberry’s death in 1944, this power had been so limited by amendment of each instrument that no more could be done in its exercise than to shift interests among the Newberry issue, spouses of such issue and charities. Other amendments of the trusts were made from time to time but their provisions have no bearing upon this case.
On each occasion when Mr. Newberry executed one of these trusts Mrs. Newberry similarly executed a trust placing 2500 of her shares of J. J. Newberry Company common stock in trust for the same child. In each case she named herself and her husband as trustees and gave him the same powers of alteration as she was granted in the trusts created by him. Each time the husband amended the trusts he had created the wife made identical or equivalent changes in those she had created.
The Tax Court, in its findings of fact, had this to say about the circumstances under which these trusts were established:
“The idea of creating these trusts was first suggested to John J. New-berry by his brother, his business associate. After discussing the matter with his brother, John J. Newberry called in his attorney, with whom he discussed a plan that his brother had suggested. After John J. Newberry had the idea of creating the trusts ‘pretty well’ fixed in his mind and shortly after he had first discussed it with his attorney he discussed it with his wife. He and she usually talked over matters as important as the trusts. They always handled the affairs of the family mutually. When decedent joined her husband and the attorney in the discussion she said that ‘ * * * if it was a good thing to create these trusts, if John thought it was a good thing to create these tritsts for the children, she did, too. She thought it was an excellent idea, and she wanted to do the same thing. She wanted to create the same type of trusts.’
“He suggested the trust idea to her; she was interested right away and thought it was a good plan. Her purpose in creating her two 1935 trusts was the same as his. The decedent never gave any indication that she might not possibly execute the trusts. * * *
“The Newberry children at the time of the creation of the trusts in 1934 and 1935 had no independent means of their own. They were very young and the decedent and her husband did not know what kind of lifemates they might choose. They had a great interest in the children and wished to protect their interest.”
In addition, Mr. Newberry was positive in his testimony, and it was in no way rebutted, that he would have created his trusts regardless of whether Mrs. Newberry had decided upon a similar course. He also-testified that the property placed in trust represented a small fraction of the wealth of each spouse and that neither of them contemplated any personal benefit or gain from corpus or income of any of the trusts. Mr. Newberry testified further and the Tax Court found that powers to shift beneficial interests were incorporated in the trust indentures .so as to make sure that no “schemers or ne’er-do-wells” should obtain control of the property in the unhappy event of an unfortunate marriage by either of the children for whose security the trusts were designed.
On this showing the Tax Court reached ultimate factual conclusions that in establishing, and -from time to time amending, these trusts “the decedent and her husband were acting as a unit * * * and that the trust instruments were merely part of an interdependent arrangement whereby neither decedent nor her husband would lose control of the amount of the J. J. New-, berry Company stock transferred to the trusts until they saw fit to do so”. On this' basis, the Tax Court ruled that Mrs. New-berry should be regarded -as the settlor of the trusts created by her husband as well as the holder of a power to change the enjoyment of the trust estate. Accordingly, the court treated the property in question as part of decedent’s gross estate under the requirement of Section 811 (d)(2) that the gross estate include any interests in property over “which the decedent has at any time made a transfer, by trust or otherwise, where the enjoyment thereof was subject at the date of his death to any change through the exercise of a power, either by the decedent alone or in conjunction with any person, to alter, amend, or revoke * *
This case decides the taxable status of the trusts in terms created by Mr. New-berry and those only. The narrow question is whether .the Tax Court erred in treating Mrs. Newberry as the person who had “made a transfer” of this property in trust within the meaning of Section 811 (d)(2).
Normally taxing authorities and courts administering or applying a statute which taxes to a transferor’s estate property he has transferred -in trust reserving certain powers to himself have no occasion to go beyond the trust instrument in order to identify the transferor. At times, however, they have gone further. This procedure has been justified as necessary, and proper to determine whether the significant shifting of economic interests and the change of dominion and control over property has been different from what the trust instrument itself indicates. And if such analysis shows that another than the formal settlor is in reality the transferor, his estate may be taxed accordingly.
The most obviously appropriate occasion for the application of the principle would be presented by a transaction in which one of the formal parties had been essentially a “straw” acting for someone else. Tax consequences, like many other legal and economic consequences of such a transaction, would attach to the real party in interest. A like result is clearly proper where, pursuant to a bargain and exchange, one party has given value to another to induce, and in consideration for, the creation of a trust by the second party wherein disposition is made of some beneficial interest as desired by the first party. Indeed, the taxing authorities need do no' more than apply considered and accepted doctrine of the law of trusts to reach the conclusion that he who pays another for the creation of a trust wherein the payor shall be granted a beneficial interest or a power which he desires may be taxed as one who has transferred property retaining an interest therein. This doctrine has been recognized and applied in a line of cases beginning with Lehman v. Commissioner of Internal Revenue, 2 Cir., 1940, 109 F.2d 99. That leading case clearly turned upon the court’s reasoning that “the transfer by the decedent’s brother, having been paid for and brought about by the decedent, was in substance a ‘transfer’ by the decedent, and the property so transferred formed part of his taxable estate by virtue of [the statutory predecessor of § 811 (d) (2)], to the extent that the decedent had power ‘to alter, amend or revoke’ the enjoyment of it”. 109 F.2d at pages 100—101.
It was also a fact in the Lehman case that the way the decedent, who was treated as transferor, had paid his brother for setting up the trust in question had been by setting up a similar trust conferring an equivalent benefit upon his brother. Thus, procedurally, the establishment of “reciprocal” or “crossed” trusts was a technical device for realizing the quid pro quo of a bargain.
The foregoing analysis is important because some of the subsequent cases which apply the Lehman doctrine have stressed the fact that trusts contained “reciprocal” or “crossed” provisions without spelling out that this circumstance is significant only to the extent that it may reveal a quid pro quo which another than the named grantor has paid for the creation of the trust in controversy. Actually, some of the cases seem to go rather far in inferring such payment or consideration in connection with reciprocal or crossed provisions. But this court in In re Lueders’ Estate, 3 Cir., 1947, 164 F.2d 128, has taken the lead in indicating that payment for the creation of a trust by another must be real if the alleged payor rather than the apparent settlor is to be treated as grantor of the trust. The essential picture which the crossed trusts must reveal to justify the result reached by the Tax Court in the present case is a declared grantor induced to establish a trust giving the party now to be treated for tax purposes as the grantor, a power which the latter has wanted and has paid for by setting up another trust to accomplish something desired by the declared grantor. Such in our view are the rather strict confines of the Lehman doctrine.
What the Tax Court found in this case, and what happened, if the undisputed testimony is to be believed, falls short of the foregoing requirements. The “unity” of action of husband and wife and the “interdependent” character of their transactions which the Tax Court found are not such circumstances as the Lehman doctrine comprehends. Spouses in mutual confidence and common interest work out together what each is going to do with his own money to provide for their children. In the normal case, which this appears to be, it is a distortion of meaning to say that the action of one spouse is a quid pro quo inducing the action of the other. The only “consideration” is the historic “consideration of love and affection” for the dependent members of one’s family. Similarity of action occurs because each spouse is confident that they together have arrived at a wise and benevolent decision concerning the future welfare of their children. That is all there is to the “unity” and “interdependence” of action revealed by such a record as we have here. Neither the substance of the transaction nor the identity of the actor is revealed as any different from what appears on the face of each trust indenture.
We have also considered that in the present decision and one or two others the Tax Court may well be treating as special cases to be governed by rules of construction peculiar to them family trusts so created that husband and wife by separately granting each other powers over the enjoyment of trust property achieve essentially the same controls as would have resulted from reserving powers. Undoubtedly, in this connection as in others, domestic privacy and informality may effectively conceal understandings made and honored between husband and wife at variance with the formal and apparent aspects of family financial transactions. A bargain and exchange, within the meaning of the Lehman doctrine may exist, yet be unprovable. Moreover, regardless of any such bargain, there may be policy considerations favorable to legislation which for particular tax purposes would treat these crossed trusts of spouses like a single joint transaction with both spouses pro tanto transferors of the property over which each will thereafter have certain control. But, absent such legislation, when on the facts the conclusion is inescapable that each spouse by a distinct and bona fide transaction has dispensed of his own separate estate in accordance with his own personal desires and without receiving a quid pro quo from the other, we think a court cannot justifiably refuse to recognize each spouse as the real transferor of the trust he has formally created.
In the present case Mr. Newberry himself executed an operative indenture to transfer his own property in trust for the benefit of his children, pursuant to his personal desire to provide for their security. Of course, the total result of this transaction and the companion transaction of Mrs. Newberry, with each spouse granting a power to the other, could have been achieved by each spouse reserving a power in the trust he created. We have no doubt that the parties, advised by counsel, deliberately chose the alternative which appeared to entail the less burdensome tax consequences. But tax saving motivation does not justify the taxing authorities or the courts in nullifying, or disregarding, the taxpayer’s otherwise proper and bona fide choice among courses of action.
Finally, the Tax Court approved a deduction of $25,000 from the gross estate in anticipation of expenses of apportionment proceedings which its decision would necessitate. There will no longer be occasion for such proceedings or for the deduction.
The decisions of the Tax Court will be reversed and the cases remanded for the entry of dispositive orders consistent with this opinion.
. These were New Jersey trusts. Whether the trustee could have employed his power to shift beneficial interests for his own advantage is as a matter of law at least doubtful. See In re Bender’s Estate, 1937, 122 N.J.Eq. 192, 197, 192 A. 718, 721, affirmed, 1938, 123 N.J.Eq. 171, 196 A. 677; In re Kline, 1948, 142 N.J.Eq. 20, 59 A.2d 14. In any event it seems clear on the record that no such use of the power was intended or contemplated when the trusts were established. And it is agreed that amendments prior to decedent’s death precluded any such use of the power.
. See 1 Paul, Federal Estate and Gift Taxation (1942) 310 f£.
. Grace D. Sinclaire’s Estate, 1949, 13 T.C. 742; see Hall’s Estate, 1946, 6 T.C. 933, 939.
. 1 Scott, Trusts (1939) § 156.3.
. Followed in Hanauer’s Estate v. Commissioner, 2 Cir., 1945, 149 F.2d 857; Cole’s Estate v. Commissioner, 8 Cir., 1944, 140 F.2d 636, 151 A.L.R. 1139; Commissioner of Internal Revenue v. Warner, 9 Cir., 1942, 127 F.2d 913.
. E. g. Orvis v. Higgins, 2 Cir., 1950, 180 F.2d 537; Cole’s Estate v. Commissioner, supra, note 5; Carrie S. Newberry, 1947, 6 T.C.M. 455, affirmed per curiam, 3 Cir., 1943, 172 F.2d 220; Eckhardt’s Estate, 1945, 5 T.C. 673.
. The same approach and emphasis led the Tax Court to the same result where a third person had induced settlors separately to establish crossed trusts, one settlor not being advised what the other was doing. Samuel S. Lindsay’s Estate, 1943, 2 T.C. 174.
. Particularly Werner A. Wieboldt, 1945, 5 T.C. 946; Carrie S. Newberry, supra, note 6.
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.
AINSWORTH, Circuit Judge:
Edgar P. Buchanan was convicted of participating in a conspiracy to steal United States Treasury checks from the mail and then cash them under forged endorsements in violation of 18 U.S.C. § 371 (conspiracy to defraud the United States), 18 U.S.C. § 495 (forgery relating to United States Treasury checks), and 18 U.S.C. § 1708 (possession of stolen mail). On appeal, Buchanan contends that the prosecuting attorney failed to comply with Rule 16(a)(1)(C), Fed.R. Crim.P., by failing to turn over certain specimens of his handwriting prior to trial and that such failure was prejudicial to his substantial rights. He also contends that the trial judge improperly commented on the evidence in a supplemental charge to the jury and thereby denied him a fair trial. We find both contentions meritless.
Buchanan’s Rule 16 contention relates to the Government’s admitted failure to turn over to defense counsel certain specimens of the defendant’s handwriting obtained by government investigators prior to trial. In a written report and in testimony at Buchanan’s trial, a handwriting analyst produced by the Government stated unequivocally that the handwriting of the signatures on two stolen checks was the same as the handwriting of the specimens obtained from Buchanan. Defense counsel repeatedly objected to any reference to the handwriting specimens and to their introduction into evidence on the ground that the Government failed to turn them over to him in advance of the trial as required by Rule 16. Buchanan’s counsel contended that he needed the specimens of his client’s handwriting in order to utilize the testimony of a handwriting analyst of his own choosing to contradict the testimony of the Government’s expert.
Rule 16 requires the Government, upon request of the defendant and without the necessity of a court order, to furnish to the defendant or to permit him to inspect and copy or photograph certain statements made by the defendant, 16(a)(1)(A), the defendant’s prior criminal record, 16(a)(1)(B), certain documents and tangible objects, 16(a)(1)(C), and reports of certain examinations or tests, 16(a)(1)(D). In this case, the handwriting specimens are properly characterized as “tangible objects” subject to disclosure pursuant to Rule 16(a)(1)(C). Pursuant to that section, Buchanan’s counsel requested the Government “[t]o produce any books, papers, documents, photographs or tangible objects which the prosecution intends to use against the defendant or which were obtained from or belong to the defendant.” In response to that request, and to a further request for any reports of experts, the Government turned over to defense counsel, inter alia, a copy of the report of its handwriting analyst and photocopies of the stolen checks showing the forged signatures.
We conclude that, by furnishing defense counsel a copy of the handwriting analyst’s report, which revealed the existence of the handwriting specimens, and by pointedly making himself available for further inquiry, the prosecuting attorney effectively “produce[d]” the specimens and “permitted] the defendant to inspect and copy” them within the meaning of the defendant’s disclosure request and Rule 16(a)(1)(C). Thus, in the absence of a specific demand for the specimens themselves, the failure to furnish them did not constitute a failure to comply with Rule 16.
Our holding conforms to our prior decision in United States v. O’Shea, 5 Cir., 1971, 450 F.2d 298. In that case we found no Rule 16 violation when, in response to a court order to provide “results and reports of scientific tests” and “documents [and] tangible objects . . . which may be introduced into evidence,” the Government provided the written report of a fingerprint expert without also providing photocopies of palm prints found on a note given by a hold-up man to a bank teller. In finding no Rule 16 violation in O’Shea, this court stated:
It is clear from this record that appellant’s counsel, even after the existence of the palm prints was made known to him, neither requested that the Government make these items available nor asked the Court to order the Government to produce them. . . . Under Rule 16, the word “disclosure” encompasses the steps taken by the Government in this case. Defense counsel was made aware of the items of physical and documentary evidence which were or would be in the possession of the Government. Neither Rule 16 nor the pre-trial order requires more.
Id. at 300. O’Shea is therefore dispositive of the Rule 16 issue posed here. Indeed, if Rule 16 does not obligate the Government to provide, without a specific request, copies of fingerprints obtained at the scene of the crime, to which the defense otherwise has no access, it does not require the provision of handwriting specimens which could easily have been duplicated at any time by the defendant himself.
Even if the Government technically failed to comply with Rule 16, Buchanan would still merit no relief from this court, since i,t is well established that an error by the trial court in the administration of the discovery rules is not reversible absent a showing that the error was prejudicial to the substantial rights of the defendant. United States v. Valdes, 5 Cir., 1977, 545 F.2d 957; United States v. Arcentales, 5 Cir., 1976, 532 F.2d 1046; United States v. Saitta, 5 Cir., 1971, 443 F.2d 830. Here, no such prejudice has been shown.
Buchanan also contends that the trial judge improperly commented on the evidence in a supplemental charge to the jury. The trial judge delivered the charge in response to notes from the jury during their deliberations which revealed confusion regarding the two counts of the indictment which involved the possession and forged endorsement of a specific check. The jury was primarily concerned with the effect of the Government’s failure to produce as a witness Orlando M. Jones, the intended payee. In his closing argument Buchanan’s counsel commented on that failure. After carefully emphasizing that he could not answer questions of fact, the trial judge suggested various reasons why Jones might have been unable to testify. Buchanan’s counsel objected to those statements and contends that they denied his client a fair trial.
It is well settled that a trial judge may comment upon the evidence as long as he instructs the jury that it is the sole judge of the facts and is not bound by his comments and as long as the comments are not so highly prejudicial that an instruction to that effect cannot cure the error. United States v. Musgrave, 5 Cir., 1971, 444 F.2d 755; Bursten v. United States, 5 Cir., 1968, 395 F.2d 976; Moody v. United States, 5 Cir., 1967, 377 F.2d 175. In this case, the trial court properly and repeatedly emphasized in the supplemental charge that the jury was the sole trier of fact. Furthermore, the court’s comments were not prejudicial. The trial judge’s comments in the supplemental charge, viewed in context, were therefore proper.
AFFIRMED.
. Rule 16(a)(1)(C) provides:
(C) Upon request of the defendant the government shall permit the defendant to inspect and copy or photograph books, papers, documents, photographs, tangible objects, buildings or places, or copies or portions thereof, which are within the possession, custody or control of the government, and which are material to the preparation of his defense or are intended for use by the government as evidence in chief at trial, or were obtained from or belong to the defendant.
. Although O’Shea was decided prior to the 1975 amendments to Rule 16, it still provides precedent for our holding since the amendments were not addressed to the question raised in O’Shea and in this case regarding the manner of “disclosure” required by the Rule.
. The third count is the general conspiracy count in regard to which evidence relating to several other individual checks was offered.
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.
KEITH, Circuit Judge.
This is an appeal by Harry N. Walters, in his official capacity as the Administrator of the Veterans Administration, from a decision of the United States District Court for the Eastern District of Tennessee. The issue presented is whether a V.A. regulation, 38 C.F.R. § 3.301(c)(2), which equates primary alcoholism with “willful misconduct” was rendered ineffective by the 1978 amendment to Section 504 of the Rehabilitation Act of 1973 (the Rehabilitation Act). 29 U.S.C. § 794. Primary alcoholism, unlike other forms of the disease, is not attributed to underlying psychological problems. The amended version of Section 504 prevents discrimination against handicapped people in programs receiving government aid. Plaintiff-appellee Tinch, who suffers from primary alcoholism, contends that because Section 504 prevents such discrimination, it precludes application of the regulation equating primary alcoholism with willful misconduct. As a veteran, Mr. Tinch was eligible for educational benefits. Benefits were to be available until the delimiting date defined by 38 U.S.C. § 1662(a)(1) as being ten years after Mr. Tinch’s discharge or May 31, 1976, which ever is later in time. In attempting to prevent the application of 38 C.F.R. § 3.301(c)(2), Tinch seeks to take advantage of a provision in 38 U.S.C. § 1662(a)(1) which extends the time during which educational benefits are available to veterans. The time extensions are not available to those who are handicapped as a result of their own willful misconduct. Tinch claims that because the V.A. regulation equating primary alcoholism with willful misconduct was no longer valid after enactment of the 1978 amendment to the Rehabilitation Act, he is entitled to an extension of his delimiting date. The district court held in favor of Mr. Tinch. For the reasons stated below, we affirm the ruling of the district court.
I.
FACTS
Primary alcoholism does not result from an underlying psychological disorder. The V.A. considers primary alcoholism to be the result of “willful misconduct” barring an otherwise eligible veteran from receiving a delimiting date extension under 38 U.S.C. § 1662(a)(1). However, a primary alcoholic who acquires an organic disability as a result of his alcoholism is not barred by the willful misconduct provision, if the organic disability — rather than the primary alcoholism — prevents use of the educational benefits within the basic period prescribed by 38 U.S.C. § 1662(a)(1). Thus, only primary alcoholism is treated as “willful misconduct” within the meaning of V.A. statutes and regulations, and its victims presumptively prevented from obtaining extensions of the delimiting date.
Plaintiff-appellee served on active duty in the armed forces from January 12, 1955 to December 31,1957, when he was honorably discharged. Based upon this service, plaintiff was entitled to 45 months of educational assistance under 38 U.S.C. § 1661(a). Plaintiff applied for and received educational assistance to pursue a mechanical operation course from January 1975 through May 31, 1976. However, these benefits were terminated effective June 1, 1976, because plaintiff had reached his delimiting date pursuant to 38 U.S.C. § 1662(a)(1).
In 1977, Section 1662(a)(1) was amended to extend the delimiting date for those who had been prevented during their period of eligibility from completing their education due to some physical or mental disability which was not the result of their own “willful misconduct.” Based upon this new provision, plaintiff filed a claim for extension on February 9, 1978, contending that he was prevented from engaging in an educational pursuit from 1966 to 1974 due to his alcohol addiction and its associated social, psychological, emotional and physical debilitations. On April 7, 1978, the V.A. denied this claim on the ground that plaintiffs alcoholism constituted “willful misconduct” as defined under 38 C.F.R. § 3.1(n): “an act involving conscious wrongdoing or known prohibited action.”
Plaintiff subsequently filed a Notice of Disagreement and perfected a timely appeal to the Board of Veteran Appeals (Board). On March 7, 1979, the Board denied the appeal. The Board found that the incapacitating disability resulting from plaintiffs alcoholism was due to his own “willful misconduct,” and that he had no innocently acquired disability from June 1966 to January 1975 of sufficient magnitude to prevent him from pursuing his education.
Plaintiff reopened his claim in 1981 with additional medical documentation. The regional office, finding that the evidence submitted was not new and material, denied the claim. The plaintiff then requested and received a hearing before the Board concerning the reopened claim. On December 13, 1982, the Board ruled that no new factual basis had been presented to warrant a change in its 1979 denial of appeal. It noted that the evidence supported the finding that the plaintiffs primary alcoholism prevented his utilization of educational benefits, but that this condition was due to plaintiffs willful misconduct. It also noted that his documented “innocently acquired” organic disabilities (e.g. impaired liver function) were not so severe as to interfere seriously with educational pursuits.
Having exhausted his administrative remedies, plaintiff filed the instant action, challenging the V.A.'s willful misconduct regulations on both constitutional and non-constitutional grounds. The district court rejected plaintiffs due process and equal protection claims. However, the court held that the V.A. policy of treating primary alcoholism as “willful misconduct” violates Section 504 of the Rehabilitation Act, 29 U.S.C. § 794. Accordingly, the court granted plaintiffs motion for summary judgment on this ground. The defendant appeals from this decision while plaintiff cross-appeals the district court’s dismissal of his constitutional claims.
II.
DISCUSSION
A.
The Rehabilitation Act As Amended in 1978 Invalidated the Willful Misconduct Standard As Applied by 38 C.F.R. § 3.301(c)(2).
The Rehabilitation Act, as amended in 1978, protects “an otherwise qualified individual” from discrimination “solely by reason of his handicap.” 29 U.S.C. § 794. We find that, contrary to the mandate of the Rehabilitation Act, 38 C.F.R. § 3.301(c)(2) discriminates against an otherwise qualified individual, Mr. Tinch, solely by reason of his handicap, primary alcoholism.
The government contends that, in amending the Rehabilitation Act in 1978, Congress did not intend to invalidate the willful misconduct standard of the 1977 G.I. Bill Improvements Act, found in 38 U.S.C. § 1662(a)(1), as interpreted in 38 C.F.R. § 3.301(c)(2). The government cites the legislative histories of the post-1978 amendments to the G.I. Bill Improvements Act of 1977 and the Veterans’. Rehabilitation & Education Amendments of 1980 to demonstrate that Congress did not enact the 1978 amendments to the Rehabilitation Act with the intention of nullifying the willful misconduct standard of the 1977 G.I. Bill Improvements Act.
After the 1978 amendments to the Rehabilitation Act, veterans’ legislation was introduced into the House of Representatives in 1979, H.R. 5288, 96th Cong., 1st Sess. (1979), and into the Senate in 1980, S. 870, 96th Cong., 2d Sess. (1980). The Senate bill contained an amendment to 38 U.S.C. § 1662, which stated that for the purpose of determining eligibility for an extension of the delimiting date because a disability had prevented a veteran from pursuing training, alcohol dependence or abuse from which the veteran had recovered would not be considered the result of willful misconduct. The final legislation did not contain such a provision. See Veterans’ Rehabilitation and Education Amendments of 1980, 38 U.S.C. § 101. The V.A. contends that had Congress originally intended to invalidate the willful misconduct standard, it would not have attempted to do so through amendment in 1980. Thus, the V.A. construes these events to mean that Congress did not intend to include recovered alcoholics within the parameters of Section 504 of the Rehabilitation Act, as amended in 1978.
We reject the government’s argument. The views of members of Congress as to the construction of a statute adopted by a previous Congress “have very little, if any, significance.” United States v. Clark, 445 U.S. 23, 33 n. 9, 100 S.Ct. 895, 902 n. 9, 63 L.Ed.2d 171 (1980) (quoting United States v. Southwestern Cable Co., 392 U.S. 157, 170, 88 S.Ct. 1994, 2001, 20 L.Ed.2d 1001 (1968) and Rainwater v. United States, 356 U.S, 590, 593, 78 S.Ct. 946, 949, 2 L.Ed.2d 996 (1958)); see also American Federation of Government Employees v. Federal Labor Relations Authority, 712 F.2d 640, 647 (D.C.Cir.1983) (“It is well settled that courts construing statutory language should give little weight to post-enactment statements by members of Congress.”). Therefore, we should not read a later Congress’ attempt to abolish the willful misconduct standard as “proof” that an earlier Congress had not already vitiated the willful misconduct standard, as applied by 38 C.F.R. § 3.301(c)(2), by enacting the 1978 amendments to the Rehabilitation Act.
The legislative history accompanying the 1979 and 1980 amendments to the G.I. Bill demonstrates that some members of Congress attempted unsuccessfully to abolish the willful misconduct standard. However, the legislative history does not reveal that Congress considered whether the 1978 amendments to the Rehabilitation Act had already abolished the willful misconduct standard. The Explanatory Statement issued by the Congressional committees that developed a compromise between the House and Senate versions of the 1980 Veterans’ Rehabilitation and Education Amendments notes that only the Senate bill would have allowed the delimiting date to be extended for those suffering from alcohol abuse. After commenting that the Senate receded, the statement remarked that: “The Committees note, that in deleting [this provision] they are taking no position as to whether such a provision is necessary in order to authorize the VA to toll the chapter 31 delimiting period in such cases." 1980 U.S.Code Cong. & Ad. News 4555, 4618 (emphasis added).
The government alternatively argues that even if the 1978 amendments to the Rehabilitation Act invalidated the willful misconduct standard, subsequent legislation (the 1980 Veterans’ Rehabilitation and Education Amendments) reenacted the willful misconduct standard. We do not agree. By contending that the 1979 and 1980 amendments to the G.I. Bill reenacted the V.A.’s willful misconduct standard as it applies to alcoholism, the V.A. ignores a recognized rule of statutory construction: subsequent reenactment of an earlier law will not repeal an intermediate act that qualifies or limits the original law. Instead, the intermediate act remains in force and qualifies the new act as it did the initial law. United States v. Wallace & Tiernan, Inc., 349 F.2d 222, 225 (D.C.Cir.1965); United States v. Brown, 36 F.R.D. 204 (D.D.C.1964); 1A Sutherland Statutory Construction § 23.29 (4th ed.). In the instant case, the 1978 Amendment to the Rehabilitation Act of 1973 is an intermediate act that limits both the G.I. Bill Improvement Acts of 1977, as originally enacted, and the subsequent 1979 and 1980 amendments by preventing both laws from discriminating against veterans on the basis of their disability.
B.
The Regulation that Treats Primary Alcoholism Differently from Other Disabilities is Discriminatory.
As noted above in Part A of this discussion, 38 C.F.R. § 3.301(c)(2) treats primary alcoholism differently from other disabilities for the purposes of granting extensions to the ten-year delimiting period and therefore discriminates against some veterans. We are of the view that Mr. Tinch, a recovered alcoholic, is an “otherwise qualified handicapped individual” within the meaning of the Rehabilitation Act, 29 U.S.C. § 706(7)(B). Tinch v. Walters, 573 F.Supp. 346, 348 (E.D.Tenn.1983) (citing and quoting Simpson v. Reynolds Metals Co., Inc., 629 F.2d 1226, 1231 n. 8 (7th Cir.1980)). See also Southeastern Community College v. Davis, 442 U.S. 397, 406, 99 S.Ct. 2361, 2367, 60 L.Ed.2d 980 (“An otherwise qualified person is one who is able to meet all of a program’s requirements in spite of his handicap. The regulations promulgated by ... HEW to interpret § 504 reinforce ... this conclusion.”) Tinch is protected from discrimination solely on the basis of this status. 43 Op.Att’y.Gen. 2 (1977).
The willful misconduct regulation discriminates against Mr. Tinch on the basis of his handicap, primary alcoholism. By presuming that primary alcoholics are disabled solely due to their own willful misconduct, the Board’s interpretation of the regulation precludes it from considering relevant evidence which is causally related to the handicap of primary alcoholism. Because primary alcoholism is presumed to result from lack of will, no finding of fact regarding the cause of the disease can legally rebut the presumption of willful misconduct. Due to this interpretation, a showing that an individual suffers from alcoholism as a primary disease, without an underlying psychiatric disorder or secondary illness, automatically presumes the alcoholic veteran has engaged in willful misconduct.
In contrast, non-alcoholic veterans seeking an extension of the ten-year delimiting date are not conclusively presumed to be guilty of willful misconduct. With respect to non-alcoholics, willful, misconduct “involves deliberate or intentional wrongdoing with knowledge of or wanton and reckless disregard of its probable consequences.” 38 C.F.R. § 3.1(n)(l). Unlike those who suffer from primary alcoholism, veterans who suffer from other maladies including other forms of alcoholism, are not required to prove the existence of a secondary disease in order to escape a presumption of willful misconduct with respect to their primary condition. Thus, the conclusive presumption of willfulness is only directed at primary alcoholics, and constitutes discrimination on the basis of their handicap. See McKelvey v. Walters, 596 F.Supp. 1317 (D.D.C.1984). We are persuaded by the sound reasoning of both Judge Barrington D. Parker in McKelvey and Judge Robert Taylor in the consideration of the instant case below that “the willful misconduct regulation, as applied to primary alcoholics, violates the Rehabilitation Act.” McKelvey, 596 F.Supp. at 1324 (citing Tinch v. Walters, 573 F.Supp. 346, 348 (E.D.Tenn.1983)).
CONCLUSION
In sum, no construction of the legislative history of relevant statutes, nor any governmental concerns supports the discriminatory impact of the V.A. regulation that equates primary alcoholism with willful misconduct. Accordingly, the decision of the Honorable Robert L. Taylor is hereby affirmed.
. Section 3.301(c)(2), including the italicized portion which defines primary alcoholism, provides:
Alcoholism. The simple drinking of alcoholic beverage is not of itself willful misconduct. The deliberate drinking of a known poisonous substance or under conditions which would raise a presumption to that effect will be considered willful misconduct. If, in the drinking of a beverage to enjoy its intoxicating effects, intoxication results approximately and immediately in disability or death, the disability or death will be considered the result of the person’s willful misconduct. Organic diseases and disabilities which are a secondary result of the chronic use of alcohol as a beverage, whether out of compulsion or otherwise, will not be considered of willful misconduct origin.
. Section 504 of the Rehabilitation Act, 29 U.S.C. § 794, as amended in 1978, proscribes discrimination in federal programs and grants and provides that:
No otherwise qualified handicapped individual in the United States, as defined in section 7(7) [29 U.S.C. § 706(7) ], shall solely by reason of his handicap, ... be subjected to discrimination under any program or activity conducted by any Executive agency or by the United States Postal Service.
. Section 1662(a)(1), as amended in 1977, provides in pertinent part:
No educational assistance shall be afforded an eligible veteran under this chapter beyond the date 10 years after the veteran’s last discharge or release from active duty after January 31, 1955; except that, in the case of any eligible veteran who was prevented from initiating or completing such veteran’s chosen program of education within such time period because of a physical or mental disability which was not the result of such veteran’s own willful misconduct, such veteran shall, upon application, be granted an extension of the applicable delimiting period for such length of time as the Administrator determines, from the evidence, that such veteran was prevented from initiating or completing such program of education. (emphasis added)
. Because the instant case can be disposed of on statutory grounds, we decline to devote any discussion or analysis to the plaintiff's constitutional claims. However, it should be noted that the district court opinions, Tinch v. Walters, 573 F.Supp. 346 (E.D.Tenn.1983), and Burns v. Nimmo, 545 F.Supp. 544 (N.D.Iowa 1982), thoroughly discuss these issues.
. The district court rulings in the instant case and in McKelvey both mistakenly suggest that when the federal government has substantial justification, it may discriminate against the handicapped. See Tinch, 573 F.Supp. at 348; McKelvey 596 F.Supp. at 1324. The position in both cases is based on this Court’s holding in Jennings v. Alexander, 715 F.2d 1036 (6th Cir. 1983), before it was reversed by the Supreme Court, Alexander v. Choate, — U.S. -, 105 S.Ct. 712, 83 L.Ed.2d 661 (1985). In Jennings this Court determined that a Tennessee plan reducing Medicaid coverage had a disparate impact on handicapped recipients. However, the Supreme Court stated that the Tennessee plan was valid under a proper construction of Section 504. The Court stated that "[sjection 504 seeks to assure evenhanded treatment and the opportunity for handicapped individuals to participate in and benefit from programs receiving federal assistance.” Choate, 105 S.Ct. at 722 (citing Southeastern Community College v. Davis, 442 U.S. 397, 99 S.Ct. 2361, 60 L.Ed.2d 980 (1979)).
Even if Jennings were still in force, it would not be applicable here. Jennings, considered the potential justifications that would allow a state to institute a policy contrary to the Rehabilitation Act; in the instant case we are considering a federal regulation in light of a federal law. By enacting the 1978 amendments to the Rehabilitation Act, Congress impliedly invalidated the regulation and thus determined there is no justification for discrimination by the V.A. against primary alcoholics.
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
GIBBONS, Chief Judge:
This appeal presents a question concerning the interrelationship between Fed.R. Civ.P. 4(c)(2)(B)(iii) and the 120-day period permitted by Fed.R.Civ.P. 4(j) to effect service of process. We must determine whether the district court properly concluded that the plaintiff’s reliance upon the representation of a specially-appointed process server, that service had been made on time, failed to establish good cause to excuse the plaintiff’s failure to make service of process upon the defendant until 55 days after the 120-day time limit required by Fed.R.Civ.P. 4(j) had expired. We will affirm.
I.
In October, 1976, the plaintiff, Sheldon Lovelace, was hired as a cashier by the defendant, Acme Markets, Inc. (Acme). Lovelace, who is black, contends that throughout the course of his employment he was discriminated against on the basis of his race. He claims that on May 12, 1984 this discriminatory treatment culminated in his discharge.
On October 29, 1984, Lovelace filed a charge of discrimination with the Equal Employment Opportunity Commission (EEOC) in which he alleged that Acme had discriminated against him on the basis of race. The EEOC issued a Notice of Right to Sue on August 1, 1985. On October 29, 1985 Lovelace filed a complaint in the United States District Court for the Eastern District of Pennsylvania alleging a violation of 42 U.S.C. § 2000e-2 (1982) and various pendent state claims.
Lovelace’s counsel selected the Fed.R. Civ.P. 4(c)(2)(B)(iii) method for service of process and filed a Motion for Special Appointment to Serve Process designating Michael Damiano for the purpose of serving the summons and complaint upon Acme. The district court granted this motion on October 29, 1985 and Damiano was provided with all the necessary papers and directions for effective service of process upon Acme. On December 2, 1985, Lovelace’s counsel received a bill from Damiano that represented that process had been served upon Acme.
On February 26, 1986, coincidentally the 120th day following the institution of the action, and as such the last day under Fed.R.Civ.P. 4(j) to effect timely service of process upon Acme, Lovelace’s counsel sent a letter to Damiano requesting adequate proof of such service. Lovelace’s counsel was told that the necessary proof would be forthcoming.
On April 1, 1986, Lovelace’s counsel received a letter from the clerk for the district to which the case was assigned which stated, first, that the court had not yet received the affidavit of proof of service upon Acme required by Fed.R.Civ.P. 4(g) and, second, that unless Acme were served within 15 days from the date of the letter, the court would commence proceedings to dismiss the action.
Service of process was finally made upon Acme on April 23, 1986, eight days after the deadline set forth in the April 1 letter and 55 days after the deadline established by Fed.R.Civ.P. 4(j).
II.
Acme brought a motion to dismiss for failure to serve process within the 120-day period provided by Fed.R.Civ.P. 4(j) without good cause. Lovelace contended that the district court had good cause to excuse his failure to serve process within the 120-day period. To support that contention Lovelace alleged that he was misled by the representation of Damiano that process had been served on time when in fact it had not been.
The district court rejected Lovelace’s contentions and granted Acme’s motion to dismiss without prejudice. The district court concluded that Lovelace did not demonstrate good cause to permit an extension of the 120-day limit. The court determined that Lovelace should have taken additional steps to ensure timely service of process since, under Fed.R.Civ.P. 4(a), the burden to ensure proper and timely service rested upon Lovelace and his attorney.
Lovelace subsequently brought a motion seeking to have the district court reconsider its determination. The dismissal of that motion led to this appeal.
III.
The district court’s determination that good cause had not been shown to justify an extension of the 120-day limit established by Fed.R.Civ.P. 4(j) will be affirmed unless it is clear that the district court abused its discretion. See Fournier v. Textron, Inc., 776 F.2d 532, 534 (5th Cir.1985); Wei v. Hawaii, 763 F.2d 370, 371 (9th Cir. 1985); Edwards v. Edwards, 754 F.2d 298, 299 (8th Cir.1985).
The 1983 amendments to Fed.R. Civ.P. 4 “were intended primarily to relieve United States marshals of the burden of serving summonses and complaints in private civil actions.” 128 Cong. Rec. H9848, 9849 (daily ed. Dec. 15, 1982), reprinted in 1982 U.S.Code Cong. & Admin.News 4434, 4437. Thus, the general service of process rule, Fed.R.Civ.P. 4(c)(2)(A), requires that the “summons and complaint shall ... be served by any person who is not a party and is not less than 18 years of age.” Fed.R.Civ.P. 4(c)(2)(A). Service of the summons and complaint by United States marshals, their deputies, and specially-appointed process servers provided for in Fed.R. Civ.P. 4(c)(2)(B) is a limited exception to that general rule. While we do not believe that a specially-appointed process server was necessary in order that service be properly effected in this action, such a process server was appointed by the court and it was incumbent upon the plaintiff and his attorney to ensure timely service of process. See Fed.R.Civ.P. 4(a). The 120-day limit to effect service of process, established by Fed.R.Civ.P. 4(j) is to be strictly applied, and if service of the summons and the complaint is not made in time and the plaintiff fails to demonstrate good cause for the delay “the court must dismiss the action as to the unserved defendant.” 128 Cong.Rec. H9848, 9850 (daily ed. Dec. 15, 1982) (emphasis added), reprinted in 1982 U.S. Code Cong. & Admin.News 4434, 4441. It was in accordance with the strict interpretation of the 120-day rule intended by its drafters that the district court concluded that good cause had not been shown to excuse the plaintiff’s delay.
Legislative history provides only one example where an extension for good cause would be permissible — specifically when the defendant intentionally evades service of process. 128 Cong.Rec. H9848, 9852 n. 25 (daily ed. Dec. 15, 1982), reprinted in 1982 U.S. Code Cong. & Admin.News 4434, 4446 n. 25.
“Half-hearted” efforts by counsel to effect service of process prior to the deadline do not necessarily excuse a delay, even when dismissal results in the plaintiff's case being time-barred due to the fact that the statute of limitations on the plaintiff’s cause of action has run. See United States For Use of DeLoss v. Kenner General Contractors, Inc., 764 F.2d 707, 710 (9th Cir.1985). Furthermore, when a delay is the result of inadvertance of counsel, it need not be excused. See Wei, 763 F.2d at 372. Similarly, when there is a lack of diligent effort to ensure timely service of process, an extension of the time for service may be refused. See Coleman v. Greyhound Lines, Inc., 100 F.R.D. 476, 477-78 (N.D.Ill.1984).
The strictly-applied time limit of Fed.R.Civ.P. 4(j) and the requirement of Fed.R.Civ.P. 6(a) that the plaintiff and his counsel ensure timely service of process combine to require that the plaintiff and his counsel be denied the luxury of sitting back and waiting until the 120-day period expires before ensuring that process has been served upon the defendant. When the 120-day period reaches its expiration and adequate proof of service of process has not been received, the plaintiff must take additional steps to ensure timely service of process, or, in the alternative, move under Fed.R.Civ.P. 6(b) for an enlargement of the time to effect service of process. See 128 Cong.Rec. H9848, 9851 (daily ed. Dec. 15,1982), reprinted in 1982 U.S. Code Cong. & Admin.News 4434, 4442; 2 J. Moore, Moore’s Federal Practice 114.46 (2d ed. 1986); 4 C. Wright & A. Miller, Federal Practice and Procedure § 1138 (2d ed. Supp.1985).
The misplaced reliance upon the word of the specially-appointed process server produced in the plaintiff and his counsel a belief that process had been served upon the defendant. Secure in that belief, plaintiff and his counsel inadvertently permitted the 120-day period to lapse despite the fact that they were not in possession of adequate proof of service of process upon the defendant. It cannot be said that the acts of plaintiff and his counsel as the 120-day period reached its expiration constituted diligent efforts to ensure timely service of process. Alternative means to effect timely service of process were available, as was Fed.R.Civ.P. 6(b), if additional time to serve process was required. This lack of diligence and inadvertence to the running of the 120-day period, even when dismissal under Fed.R.Civ.P. 4(j) could spell the end of Lovelace’s cause of action, cannot be excused if the legislative intent for a strict interpretation of Fed.R.Civ.P. 4(j) is to be followed and the requirement of Fed. R.Civ.P. 4(a) is not to be rendered illusory. See Braxton v. United States, 817 F.2d 238 (3d Cir.1987).
IV.
We recognize that Lovelace may well be harmed by this determination, but we cannot conclude that the district court abused its discretion by refusing to excuse the 55-day delay under the circumstances presented. The order appealed from will therefore be affirmed.
. We recognize that should we affirm the determination of the district court, Lovelace may effectively be denied his day in court. His EEOC cause of action, to which his state claims are pendent, is subject to a 90-day time limit. Since the EEOC granted Lovelace a Notice of Right to Sue on August 1, 1985, it is arguable that a new suit upon that claim may be time-barred.
. Acme’s contention that the district court’s denial to reconsider its dismissal of Lovelace’s complaint, without prejudice, is not an appeal-able order, is unfounded. A motion to reconsider is a motion to alter or amend under Fed.R.Civ.P. 59(e). Thus, the order of the district court denying the motion to reconsider is clearly subject to review on appeal. See Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880, 883 (9th Cir. 1983).
. Fed.R.Civ.P. 4(c)(3) provides that courts are free to make special appointments to serve process. However, such an appointment can only be made, for the purposes of Fed.R.Civ.P. 4(c) (2)(B)(iii), when such appointment "is required ... in order that service be properly effected in that particular action.” Fed.R.Civ.P. 4(c) (2) (B) (iii). A situation in which such an appointment is required is where violence is anticipated. 128 Cong.Rec. H9848, 9851 n. 19 (daily ed. Dec. 15, 1982), reprinted in 1982 U.S. Code Cong. & Admin.News 4434, 4443-44 n. 19.
The limited purpose to which the Fed.R.Civ.P. 4(c)(2)(B)(iii) method was intended to be used is further evidenced by the fact that there is no provision in the rule for an alternative method to serve process if the specially-appointed process server fails. The use of an alternative method is provided for should service by mail be unsuccessful. See Fed.R.Civ.P. 4(c)(2)(C)(ii). The absence of a similar proviso in Fed.R.Civ.P. 4(c)(2)(B)(iii) is, we believe, justified by the fact that Fed.R.Civ.P. 4(c)(2)(B)(iii) is intended to be an exception to the general rule for service of process and it is to be used only where it is required to effect service of process — i.e., where the other methods provided for in Fed.R.Civ.P. 4 would prove insufficient and inadequate.
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.
BRORBY, Circuit Judge.
After being terminated from his position as Finance Director for the City of Norman, Oklahoma, Plaintiff brought a 42 U.S.C. § 1983 action alleging Defendants’ conduct violated his constitutional rights under the First and Fourteenth Amendments. Plaintiff also alleged a violation of his statutory civil rights under 42 U.S.C. § 1981. Defendants moved for summary judgment, claiming protection from suit under the doctrine of qualified immunity. The district court denied Defendants’ motion with respect to Plaintiff’s § 1983 claim. However, the district court granted Defendants’ Motion for Summary Judgment on grounds of qualified immunity with respect to Plaintiff’s § 1981 claim. These rulings appear before this court on Defendants’ appeal and Plaintiff’s cross appeal. We reverse in part and affirm in part.
I. FACTUAL BACKGROUND
The following facts are undisputed. Plaintiff Fred L. Patrick (Patrick) was employed as Finance Director and City Controller by the City of Norman, Oklahoma (City) from February 16, 1988 to August 17, 1988. Patrick’s employment with the City was terminated on August 17, 1988 by Defendant Eugene Miller (Miller), the City Manager, and Defendant John Bloomberg (Bloomberg), the Director of Administrative Services (collectively “Defendants”). While under the City’s employ, Patrick’s responsibilities included serving as Chairman of the City of Norman Retirement Board and supervising the City print shop. Patrick alleges two incidents pertaining to his performance of these responsibilities ultimately resulted in his termination.
On May 18, 1988, Shirley Franklin, a black print shop employee, initiated a racial discrimination complaint against the City of Norman with the Oklahoma Human Rights Commission. Her affidavit submitted May 26, 1988 charged the City with discriminatory treatment on the basis of race, stemming from Defendant Bloomberg’s denial of a mileage reimbursement request. The official complaint, signed by Franklin and filed with the Oklahoma Human Rights Commission and the Equal Employment Opportunity Commission on June 10, 1988, was served on the City June 16,1988. Patrick, as print shop supervisor, was aware of Franklin’s actions. In fact, Patrick intended to assist Franklin in preparing her discrimination complaints after he realized City officials would take no corrective action. The City officials were aware of Patrick’s involvement because on or about June 16, 1988, Patrick met with City Attorney Jeff Raley to discuss Franklin’s request for Patrick’s assistance. Raley and Patrick met again on or about June 23, 1988, and decided it would not be in Patrick’s best interest to continue to assist Franklin with her complaints.
On June 21, 1988, Patrick, while chairing a meeting of the City of Norman Retirement Board, expressed concern that certain retirement funds were being used to balance the City’s fiscal year 1989 budget. As a result, the Retirement Board voted to seek the City Attorney’s opinion as to the propriety of such conduct. Patrick’s comments at the meeting greatly disturbed Defendant Miller, so much so that he commented to Defendant Bloomberg Patrick should be fired.
Prior to the Franklin and Retirement Board incidents, Patrick’s job performance had never been evaluated. However, on or about June 22, 1988, the day after the Retirement Board meeting, Miller and Bloomberg informed Patrick his continued employment with the City was in jeopardy. Defendants documented this unsatisfactory performance evaluation in a letter to Patrick dated June 28, 1988. Notice of termination was subsequently delivered to Patrick on July 15, 1988.
Patrick was afforded a pretermination hearing on August 16, 1988, conducted by George Shirley, City Personnel Director. Shirley affirmed Bloomberg’s decision to terminate Patrick, and notified Patrick of his right to appeal the decision to Defendant Miller, the City Manager. Patrick pursued his appeal; however, Miller declined to overrule Patrick’s termination. This suit was timely commenced after Patrick received a right to sue letter from the Equal Employment Opportunity Commission, dated March 30, 1990.
II. ANALYSIS
This appeal and cross appeal present a single legal issue: whether Defendants Miller and Bloomberg are qualifiedly immune from Patrick’s § 1981 and § 1983 claims.
Because qualified immunity offers protection from suit rather than a mere defense to liability, the benefits to be gained by asserting qualified immunity would be lost if a case were erroneously permitted to go to trial. Consequently, a district court’s ruling granting or denying qualified immunity is appealable as a “final decision” under 28 U.S.C. § 1291. Mitchell v. Forsyth, 472 U.S. 511, 526, 530, 105 S.Ct. 2806, 2815, 2817, 86 L.Ed.2d 411 (1985); Pueblo Neighborhood Health Centers, Inc. v. Losavio, 847 F.2d 642, 644 (10th Cir.1988). On appeal of such a ruling we need only determine whether defendants violated “clearly established statutory or constitutional rights of which a reasonable person would have known” at the time the challenged conduct occurred. Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396 (1982); Losavio, 847 F.2d at 645. This is a purely legal question which we review de novo. Mitchell, 472 U.S. at 528-30, 105 S.Ct. at 2816-17; McEvoy v. Shoemaker, 882 F.2d 463, 465 (10th Cir.1989).
In order to preserve the protections afforded government officials by the qualified immunity doctrine, see Harlow, 457 U.S. at 816-18, 102 S.Ct. at 2737-38, our analysis varies somewhat from that typically applied when reviewing a summary judgment disposition on grounds of an affirmative defense. Once a defendant asserts qualified immunity, “[t]he plaintiff carries the burden of convincing the court that the law was clearly established.” Losavio, 847 F.2d at 645. More specifically, the plaintiff must “come forward with facts or allegations sufficient to show both that the defendant’s alleged conduct violated the law and that that law was clearly established when the alleged violation occurred.” Id. at 646. Plaintiff’s burden cannot be met merely by identifying in the abstract a clearly established right and then alleging defendant violated that right. Id. at 645. To satisfy his burden, the plaintiff must make a more particularized showing— “[t]he contours of the right must be sufficiently clear that a reasonable official would understand that what he is doing violates that right.” Anderson v. Creighton, 483 U.S. 635, 640, 107 S.Ct. 3034, 3039, 97 L.Ed.2d 523 (1987).
Once plaintiff has identified the clearly established law and the conduct that violated the law with sufficient particularity, the defendant then bears the burden as a mov-ant for summary judgment of showing no material issues of fact remain which would defeat the claim of qualified immunity. Losavio, 847 F.2d at 646; Powell v. Mikulecky, 891 F.2d 1454, 1457 (10th Cir.1989). At this point we “consider in the light most favorable to the plaintiff all undisputed facts discernible from the pleadings and other materials submitted to supplement them by the time the motion for summary judgment is made.” DeVargas v. Mason & Hanger-Silas Mason Co., 844 F.2d 714, 719 (10th Cir.1988) (footnote omitted). “Our task... is not to determine liability... but to determine whether, on the basis of the pretrial record, there exists a conflict sufficiently material to defendants’ claim of immunity to require them to stand trial.” Id. This approach attempts to “balance the need to preserve an avenue for vindication of constitutional rights with the desire to shield public officials from undue interference in the performance of their duties as a result of baseless claims.” Losavio, 847 F.2d at 645.
We now examine the record before us, using the described analysis.
A. § 1983
Patrick asserts distinct violations of his First and Fourteenth Amendment rights actionable under 42 U.S.C. § 1983. First, he alleges Defendants’ conduct deprived him of his property interest in continued employment without due process of law, in violation of the Fourteenth Amendment. Second, Patrick alleges he was terminated in violation of the First Amendment for expressing opposition to discriminatory employment practices based on race and for expressing concerns regarding perceived illegalities in the City’s budgeting process. We examine each allegation individually to determine whether Patrick has shown that Defendants’ alleged conduct violated the law and that the law was clearly established when the alleged violations occurred.
Due Process
General due process principles are beyond dispute — the Fourteenth Amendment prohibits a state from depriving a person of property without due process of law. Thus, it has long been established that an employer cannot deprive an employee of a legitimate claim of entitlement to continued employment without due process. See Perry v. Sindermann, 408 U.S. 593, 601, 92 S.Ct. 2694, 2699, 33 L.Ed.2d 570 (1972). The essence of procedural due process is fair play; hence, the fundamental due process requirement “is the opportunity to be heard ‘at a meaningful time and in a meaningful manner.’ ” Mathews v. Eldridge, 424 U.S. 319, 333, 96 S.Ct. 893, 902, 47 L.Ed.2d 18 (1976) (quoting Armstrong v. Manzo, 380 U.S. 545, 552, 85 S.Ct. 1187, 1191, 14 L.Ed.2d 62 (1965)). This requirement includes three elements: 1) an impartial tribunal; 2) notice of charges given a reasonable time before the hearing; and 3) a pretermination hearing except in emergency situations. Miller v. City of Mission, 705 F.2d 368, 372 (10th Cir.1983).
These clearly established principles are insufficient, however, to defeat Defendants’ Motion for Summary Judgment on grounds of qualified immunity. In order to maintain his claim, Patrick must go beyond these generalities to convince this court 1) he had a clearly established property interest in continued employment with the City at the time of the alleged wrongful discharge, Graham v. City of Oklahoma City, 859 F.2d 142, 145 (10th Cir.1988), and 2) a material issue of fact remains as to whether Defendants’ conduct deprived him of due process.
Whether Patrick had a property interest in continued employment with the City of Norman is a question of state law. Bishop v. Wood, 426 U.S. 341, 344, 96 S.Ct. 2074, 2077, 48 L.Ed.2d 684 (1976); Conaway v. Smith, 853 F.2d 789, 793 (10th Cir.1988). Oklahoma law recognizes “the terms of employment established by an employer... may create a sufficient expectancy of continued employment to constitute a property interest, which must be afforded constitutionally guaranteed due process.” Hall v. O’Keefe, 617 P.2d 196, 200 (Okla.1980). Furthermore, “[u]nder Oklahoma law, where certain terms of employee dismissals are explicitly stated in the city charter, the city manager or other city officials are not authorized to alter or otherwise restrict those terms so as to legally bind the city.” Graham, 859 F.2d at 146. We agree with the district court that the converse is also true. Where a city charter restricts a city manager’s authority to terminate employees, Oklahoma courts would not allow city officials to alter those terms so as to expand their authority to the detriment of employees. City employees therefore have a legitimate expectation of continued employment to the extent that a city charter limits its officials’ power to terminate such employment.
Defendants Miller and Bloomberg assert the Norman City Charter is ambiguous and therefore could not confer a clearly established property interest in continued employment. They further contend Patrick had no property interest in continued employment because he was a probationary employee. See Walker v. United States, 744 F.2d 67, 68 (10th Cir.1984). Although Patrick denies ever being a probationary employee, he asserts the City Charter unambiguously allows termination only on the basis of merit, regardless of employment status. We agree with Patrick.
The Norman City Charter vests the City Manager with the power to appoint and dismiss City employees “at pleasure.” However, the Charter also provides that “such appointments and removals shall be made upon the basis of merit.and fitness alone.” Notably, this provision makes no distinction between permanent and probationary employees. We find the restriction unambiguous.
The question remains, however, as to what effect Oklahoma courts would give the phrase “upon the basis of merit and fitness alone.” Although Oklahoma courts have not yet reviewed this specific language, the Oklahoma Supreme Court has ruled that public employees subject to termination solely “for the good of the service” do not have a property interest in their continued employment. Hall, 617 P.2d at 200; see also Rains v. City of Stillwater, 817 P.2d 753, 756 (Okla.Ct.App.1991). On the other hand, Oklahoma courts specifically recognize a property interest in public employment when the employment terms provide that an employee may not be discharged without “cause”. Id.; Vinyard v. King, 728 F.2d 428, 432 (10th Cir.1984); Poolaw v. City of Anadarko, 660 F.2d 459, 464 (10th Cir.1981) (citing Umholtz v. City of Tulsa, 565 P.2d 15, 23 (Okla.1977)). The language “for the good of the service” implies that an employer has a great deal of discretion and may terminate an employee simply to suit his own needs. The language before us is not so liberal. As with “for cause” provisions, a provision that authorizes removal based on “merit and fitness alone” implies the necessity for a showing of some degree and type of employee fault. Thus, we conclude the terms of the Norman City Charter gave Patrick a legitimate expectation of continued employment amounting to a property interest that was entitled to due process protection. We must next determine whether Patrick has made a sufficient showing Defendants’ conduct denied him such protection.
As mentioned, due process protection provides, at minimum, an impartial tribunal, reasonable notice, and, absent exigent circumstances, a pretermination hearing. Miller, 705 F.2d at 372. Patrick alleges denial of the first element of due process-an impartial tribunal. “A tribunal is not impartial if it is biased with respect to the factual issues to be decided at the hearing.” Miller, 705 F.2d at 372.
In support of his allegation, Patrick presented evidence that both the pretermin-ation hearing and the post-termination appeal were tainted by bias. For example, George Shirley, the City Personnel Director who served as hearing officer during Patrick’s pretermination hearing, testified during deposition that Defendant Bloomberg instructed him to advertise for Patrick’s replacement prior to the pretermination hearing. Shirley also testified he was given a prepared memorandum finding that Patrick should be terminated. Shirley felt coerced into approving Patrick’s termination because he thought his own job might be jeopardized by finding in Patrick’s favor. Thus, he approved the termination although he disagreed with it. In addition, Patrick’s post-termination appeal was conducted by Defendant Miller, who, after the Retirement Board meeting, stated that Patrick should be fired.
Defendants boldly assert this evidence reveals nothing to suggest they “coerced” the hearing officer. They further assert an appeal was not constitutionally mandated, and therefore any impartiality by Defendant Miller is irrelevant. To the contrary, we find Patrick’s evidence sufficient to demonstrate a genuine issue of material fact as to whether Defendants’ conduct denied Patrick an unbiased tribunal. Thus, Defendants are not entitled to qualified immunity with regard to Patrick’s due process claim.
First Amendment
“It is clearly established that a State may not discharge an employee on a basis that infringes that employee’s constitutionally protected interest in freedom of speech.” Rankin v. McPherson, 483 U.S. 378, 383, 107 S.Ct. 2891, 2896, 97 L.Ed.2d 315 (1987). Determining whether a governmental employer has infringed upon an employee’s First Amendment rights requires a case-by-case, two-part analysis: First, we must determine if the speech was on a matter of public concern; and second, we must “balance... the interests of the [employee], as a citizen, in commenting upon matters of public concern and the interest of the State, as an employer, in promoting the efficiency of the public services it performs through its employees.” Pickering v. Board of Educ., 391 U.S. 563, 568, 88 S.Ct. 1731, 1734-35, 20 L.Ed.2d 811 (1968); see also Considine v. Board of County Comm’rs, 910 F.2d 695, 698-99 (10th Cir.1990); Melton v. City of Oklahoma City, 879 F.2d 706, 727 (10th Cir.1989).
Defendants suggest this case-by-case First Amendment analysis cannot be reconciled with the Harlow requirement that the law be “clearly established” before the defense of qualified immunity can be defeated. They argue that “[b]ecause no ‘bright-line standard' puts the reasonable public employer on notice of a constitutional violation in the First Amendment arena, the employer is entitled to immunity.” We have found the application of competing First Amendment/qualified immunity principles difficult, but not impossible:
Harlow is intended as a shield against liability but cannot become an insuperable barrier; therefore, public officials lose immunity in the face of clearly established law. However, because a rule of law determined by a balancing of interests is inevitably difficult to clearly anticipate, it follows that where Pickering, balancing is required, the law is less likely to be well established than in other cases. We believe that except for case-by-case analysis and application, the rule cannot be better stated than in Harlow itself with careful consideration of its underlying principles.
In some circumstances, the fact-specific nature of the Pickering balancing may preclude a determination of “clearly established law,” thereby giving rise to qualified immunity under Harlow.... We believe that the approach we adopt gives proper consideration to the concerns which prompted the Supreme Court to recognize qualified immunity, while it protects individuals from unprincipled behavior by a public employee’s supervisors acting under color of law.
Melton, 879 F.2d at 729. We now apply these principles, de novo, to the facts of the present case to determine whether Patrick’s speech addressed matters of public concern, and, if so, whether the protected nature of his speech was sufficiently clear that Defendants should have known the City’s interests would not survive a balancing inquiry.
Patrick alleges he was terminated in retaliation for two incidents of protected speech: 1) expressing views critical and in opposition to the discriminatory employment practices of each of the defendants and in support of black female employees; and 2) expressing concerns over use of City retirement funds to balance the City budget.
Patrick’s statements in opposition to discriminatory employment practices were made as a result of his awareness that one of his subordinates, Franklin, a black woman supervisor in the print shop, felt she had been discriminated against by Defendant Bloomberg. Franklin’s discrimination claim arose from Bloomberg’s decision to only allow Franklin out-of-pocket gas expense on a conference trip, rather than mileage reimbursement as provided by the Personnel Manual. Patrick supported Franklin’s position in meetings with Defendants Bloomberg and Miller, the affected employees and the City Attorney. Patrick’s statements were first made in the context of attempting to resolve the issue “in house.” However, when that attempt proved unsuccessful, Patrick informed Defendants of the pending complaint and reaffirmed his support of the discrimination complaint.
Speech touching on matters of public concern relates to “any matter of political, social, or other concern to the community,” in contrast to “matters only of personal interest.” Connick v. Myers, 461 U.S. 138, 146-47, 103 S.Ct. 1684, 1690, 75 L.Ed.2d 708 (1983). This threshold inquiry is one of law, not fact, and requires us to consider “the content, form, and context of a given statement, as revealed by the whole record.” Id. at 147-48, 103 S.Ct. at 1690 (footnote omitted). Paying heed to these standards, we hold that Patrick’s statements in opposition to alleged discriminatory employment practices constituted speech on a matter of public concern.
Defendants analogize the present case to Noyola v. Texas Dept. of Human Resources, 846 F.2d 1021 (5th Cir.1988). In Noyola, the plaintiff-employee made a statement to his supervisor suggesting the existence of a large welfare case load and urging a realignment of his own case load. The only evidence as to the content, nature and circumstances of this statement derived from the plaintiff’s affidavit. Based on this scant evidence, the Fifth Circuit concluded that the plaintiff’s speech was not protected because it amounted to nothing more than the airing of an internal grievance with his supervisor. Id. at 1024.
While the precise content of Patrick’s statements is not disclosed by the record, the evidence presented is sufficient to distinguish this case from Noyola. In the present case, Patrick was not addressing concerns relating to employment practices which affected him directly. Rather, he was speaking in support of other employees. In addition, the record indicates Patrick voiced his opposition to the discriminatory practices and his support for his black co-worker on a number of occasions and in the presence of numerous individuals. Contrary to Defendants’ assertion, Patrick’s statements cannot be characterized simply as a personal grievance or an internal personnel matter. The disclosure and attempted remediation of racially discriminatory employment practices is better characterized as a matter of social concern to the community.
In Givhan v. Western Line Consol. Sch. Dist., 439 U.S. 410, 413, 99 S.Ct. 693, 695, 58 L.Ed.2d 619 (1979), the Supreme Court held that First Amendment protection applies when a public employee communicates privately with his employer instead of expressing his views publicly. Referring to the Givhan decision in Connick, the Court stated that “[although the subject matter of Mrs. Givhan’s statements was not the issue before the Court, it is clear that her statements concerning the School District’s allegedly racially discriminatory policies involved a matter of public concern.” Connick, 461 U.S. at 146, 103 S.Ct. at 1689. Likewise, we find Patrick’s statements to City officials concerning allegedly racially discriminatory employment policies addressed a matter of public concern. Moreover, because Connick was published in 1983, both the structure of the public concern inquiry and the protected nature of Patrick’s speech were clearly established at the time Defendants terminated Patrick.
Patrick’s statements expressing concern over the use of retirement funds to balance the City budget were made at a public Retirement Board meeting. As trustee of the retirement fund and chairman of the Retirement Board, Patrick raised the issue with board members after first trying unsuccessfully to meet with Bloomberg and Miller. Applying the “public concern” standards enumerated above, we hold that Patrick’s statements expressing concern over perceived illegal budgeting activities constituted speech on a matter of public concern.
“Speech which discloses any evidence of corruption, impropriety, or other malfeasance on the part of city officials, in terms of content, clearly concerns matter of public import.” Conaway, 853 F.2d at 796. Although Conaway was decided contemporaneously with Patrick’s alleged wrongful termination, this Circuit and most others have applied this same rule for many years. See, e.g., McKinley v. City of Eloy, 705 F.2d 1110 (9th Cir.1983); Key v. Rutherford, 645 F.2d 880 (10th Cir.1981). In other words, courts customarily focus on whether speech “was calculated to disclose wrongdoing or inefficiency or other malfeasance on the part of governmental officials in the conduct of their official duties” when deciding whether speech qualifies as a matter of public concern. Koch v. City of Hutchinson, 847 F.2d 1436, 1445 (10th Cir.), cert. denied, 488 U.S. 909, 109 S.Ct. 262, 102 L.Ed.2d 250 (1988).
Patrick’s statements concerning potential illegalities in the City budget process most certainly addressed a matter of political and social concern to the community. These statements, which were made during a public meeting of the Retirement Board, did not address internal policies relevant only to City personnel; nor did they address essentially a private matter. See Conaway, 853 F.2d at 796. Furthermore, nothing in the record indicates Patrick’s statements were motivated by personal interest or hostility. Rather, as trustee of the retirement fund, Patrick had a duty to inform Board members of what he perceived to be improper conduct. For these reasons, we find it was clearly established when Defendants terminated Patrick that his statements during the Retirement Board meeting would constitute protected speech.
Having thus concluded Patrick met his initial burden of showing the speech involved in both incidents was protected speech, we must now determine whether it was clearly established Patrick’s interest in making those statements would outweigh Defendants’ interest in the effective functioning of the City government. Wulf v. City of Wichita, 883 F.2d 842, 856 (10th Cir.1989).
Patrick’s interest, as a citizen, in free comment upon matters of public concern— racially discriminatory employment policies and budgetary impropriety — is self-evident. “[S]peech on public issues occupies the ‘highest rung of the hierarchy of First Amendment values,’ and is entitled to special protection.” Connick, 461 U.S. at 145, 103 S.Ct. at 1689 (quoting NAACP v. Claiborne Hardware Co., 458 U.S. 886, 913, 102 S.Ct. 3409, 3425, 73 L.Ed.2d 1215 (1982)). We therefore turn to Defendants’ interest in “ ‘promoting the efficiency of the public services it performs through its employees.’ ” Rankin, 483 U.S. at 384, 107 S.Ct. at 2899 (quoting Pickering, 391 U.S. at 568, 88 S.Ct. at 1735).
A number of factors are considered in evaluating Defendants’ interest under the Pickering balancing test. Pertinent considerations include “the manner, time, and place of the employee’s expression... the context in which the dispute arose... [and] whether the statement impairs discipline by superiors or harmony among coworkers, has a detrimental impact on close working relationships for which personal loyalty and confidence are necessary, or impedes the performance of the speaker’s duties or interferes with the regular operation of the enterprise.” Rankin, 483 U.S. at 388, 107 S.Ct. at 2899 (citations omitted). Applying these time-honored considerations which focus “on the effective functioning of the public employer’s enterprise,” id., we find Defendants should have known the City’s interests would not survive a balancing inquiry.
Defendants make no assertion as to the effect of Patrick’s statements regarding racial discrimination on the operation of City government. Defendants assert that Patrick’s statements regarding the alleged inappropriate use of retirement funds to balance the City’s budget were false, interfered with the operation of the budget process and openly discredited their integrity. The record, however, offers no support for these assertions — it discloses no evidence of interference with City operations, personnel relations or Patrick’s job performance. Absent any particularized evidence of the Defendants’ interest in this case, we must surmise that in light of the protected nature of Patrick’s speech and the well-defined contours of the Pickering analysis, Defendants should have known their conduct in terminating Patrick would not survive a balancing inquiry.
In summary, Patrick has sufficiently established that his speech was constitutionally protected and that Defendants should have known their conduct would not survive First Amendment scrutiny. Moreover, Patrick’s evidence raises a genuine issue of material fact as to whether his speech was a substantial or motivating factor in Defendants’ decision to terminate him. Accordingly, Defendants are not entitled to qualified immunity from Patrick’s First Amendment claim at this stage of the proceedings.
B. § 1981
The district court found Plaintiff’s § 1981 claim was supported by this court’s decision in Skinner v. Total Petroleum, Inc., 859 F.2d 1439 (10th Cir.1988). In Skinner we held that a white male plaintiff terminated from his employment for assisting a black co-worker with an EEOC claim, may bring an action under § 1981. Nonetheless, the district court granted Defendants’ Motion for Summary Judgment on grounds of qualified immunity because “[u]ntil the Skinner decision was rendered on October 14, 1988 there was no clear authority in this circuit for allowing a white employee to bring a retaliation claim under Section 1981.” Patrick v. City of Norman, No. CIV. 89-1084-R (W.D.Okla. Oct. 12, 1990). In other words, the district court granted Defendants’ motion because “[t]he Plaintiff’s Section 1981 rights were not clearly established at the time of the individual Defendants’ actions.”'Id.
On cross-appeal, Plaintiff contends this ruling is erroneous as “the district court utilized an incorrect standard in looking solely.at whether there was ‘clear authority in this circuit’ to support Plaintiff’s claim.” Again, whether Plaintiff’s rights were clearly established at the time Defendants terminated Patrick’s employment is a question of law which we review de novo. Mitchell, 472 U.S. at 528-30, 105 S.Ct. at 2816-17; McEvoy, 882 F.2d at 465.
While the district court correctly determined Plaintiff could not rely on Skinner, and while Defendants accurately asserted that “[t]o date, the Supreme Court has not addressed the issue of whether a white person who is allegedly terminated for his efforts to support minorities in vindicating their rights is recognized under § 1981,” we do not end our inquiry here. The law may be found to be clearly established by reference to decisions from other circuits. Walters v. Western State Hosp., 864 F.2d 695, 699 (10th Cir.1988). Moreover, “precise factual correlation between the then-existing law and the case at-hand is not required.” Snell v. Tunnell, 920 F.2d 673, 699 (10th Cir.1990), cert. denied, — U.S. -, 111 S.Ct. 1622, 113 L.Ed.2d 719 (1991). We consider the law to be “clearly established” when it is well developed enough to inform the reasonable official that his conduct violates that law. See Anderson, 483 U.S. at 640, 107 S.Ct. at 3039.
The principal beneficiaries of § 1981 have traditionally been racial minorities. However, federal courts have consistently broadened standing under § 1981. Beginning most decidedly with McDonald v. Santa Fe Trail Transp. Co., 427 U.S. 273, 296, 96 S.Ct. 2574, 2586, 49 L.Ed.2d 493 (1976), § 1981 has supported claims of racial discrimination against white as well as black individuals. More directly on point, prior to Defendants’ challenged conduct in the present case, the Second, Third, Fourth, Fifth, Sixth and Eleventh Circuit Courts of Appeals either expressly held that alleged discrimination against a white person because of his association with black persons states a cause of action under § 1981 or allowed such claims without specifically addressing the issue. DeMatteis v. Eastman Kodak Co., 511 F.2d 306, 312 (2d Cir.) (§ 1981 suit allowed where white employee alleged his company forced him to retire because he sold his house to a fellow black employee), modified on other grounds, 520 F.2d 409 (2d Cir.1975); Liotta v. National Forge Co., 629 F.2d 903, 906-07 (3d Cir.1980) (summary judgment inappropriate where material issues of fact remain regarding § 1981 claim brought by plaintiff allegedly discharged because he espoused the rights of company’s black employees), cert. denied, 451 U.S. 970, 101 S.Ct. 2045, 68 L.Ed.2d 348 (1981); Fiedler v. Marumsco Christian Schl., 631 F.2d 1144, 1149 (4th Cir.1980) (private sectarian school prohibited under § 1981 from terminating a contractual relationship with a white student because of her association with a black schoolmate); Pinkard v. Pullman-Standard, a Div. of Pullman, Inc., 678 F.2d 1211, 1229 (5th Cir.1982) (retaliatory discharge claim allowed under § 1981 where evidence showed plaintiff was discharged for lawful advocacy of minority and union rights), cert. denied, 459 U.S. 1105, 103 S.Ct. 729, 74 L.Ed.2d 954 (1983); Alizadeh v. Safeway Stores, Inc., 802 F.2d 111, 114 (5th Cir.1986) (white plaintiff maintained a § 1981 claim alleging discrimination because of marriage to a non-white); Winston, 558 F.2d at 1270 (plaintiff had standing under § 1981 to sue alleging retaliatory discharge for protesting the alleged discriminatory firing of a black coworker); Parr v. Woodmen of the World Life Ins. Co., 791 F.2d 888, 890 (11th Cir.1986) (white plaintiff maintained a § 1981 claim alleging discrimination because of marriage to a non-white). The remaining circuit courts had not considered the issue; therefore, no split of authority obscured the law in this area.
The above referenced cases were sufficient to inform a reasonable government official in 1988 that retaliatory actions against a white employee because of his efforts to defend the rights of racial minorities may violate the employee’s rights as enumerated in § 1981. Thus, we hold, as a matter of law, that Patrick’s right to sue under § 1981 was “clearly established” at the time Miller and Bloomberg terminated his employment.
Our inquiry does not end here, however. In order to defeat Defendants’ Motion for Summary Judgment, Patrick must present facts and allegations sufficient to demonstrate Defendants’ conduct violated a right protected by § 1981 — facts and allegations demonstrating discriminatory interference with Patrick’s right to make or enforce a contract. After reviewing the record, we conclude Patrick has presented evidence sufficient to establish the essential elements of his § 1981 claim.
First, Patrick alleges Defendants were motivated by racial animus. Racial animus is an element necessary to support a discrimination claim under § 1981. General Bldg. Contractors Ass’n, Inc. v. Pennsylvania, 458 U.S. 375, 391, 102 S.Ct. 3141, 3150, 73 L.Ed.2d 835 (1982). In his First Amended Complaint, Patrick, a white male, asserts he was fired in retaliation for his support of a black co-worker who filed a racial discrimination complaint against the City. The deposition testimony of City Personnel Director George Shirley and City Attorney Jeff Raley supports this allegation. Shirley stated he believed Patrick was terminated because of his support for black employees. Raley advised Patrick it would not be in his best interest to continue to help the co-worker with her discrimination complaint. Moreover, the timing of Patrick’s first and only formal evaluation suggests, the possibility of pretext. This evidence is sufficient to raise a genuine issue of material fact as to Defendants’ motive in terminating Patrick. Defendants’ evidence that Patrick was terminated for unsatisfactory work performance— an evaluation form dated July 15, 1988, which in essence declares that “[Patrick’s] demonstrated management style has not been consistent with what is expected of the management team” — is insufficient for this court to conclude, as a matter of law, that Patrick would have been terminated in the absence of any racial motive.
Second, Patrick alleges that Defendants Miller and Bloomberg denied him his right under § 1981 to make and enforce an employment contract. This court, relying on the language and reasoning of the United States Supreme Court in Patterson v. McLean Credit Union, 491 U.S. 164, 109 S.Ct. 2363, 105 L.Ed.2d 132 (1989), has held that a discriminatory discharge claim is not actionable under § 1981. Trujillo v. Grand Junction Regional Center, 928 F.2d 973, 975-76 (10th Cir.1991). However, a racially discriminatory failure to promote is actionable under § 1981 if “the promotion rises to the level of an opportunity for a new and distinct relation between the employee and the employer.” Patterson, 491 U.S. at 185, 109 S.Ct. at 2377. Patrick’s employment status is therefore crucial to the legitimacy of his § 1981 claim.
The record indicates that Patrick may have been denied a “promotion.” Defendants, relying on the City Charter, the Norman Personnel Handbook and references by Patrick himself in a letter dated August 16, 1988, contend Patrick was an “at will” and probationary employee who was denied “permanent employee status.” The Personnel Handbook makes clear that permanent employees have rights, privileges and benefits not availablé to probationary employees. Therefore, by Defendants’ own evidence, the change from probation
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.
VANCE, Circuit Judge:
In this diversity case, the defendant appeals the district court’s denial of judgment notwithstanding the verdict for plaintiff on his breach of contract claim. On cross-appeal, the plaintiff challenges the court’s directed verdict for the defendant on the plaintiff’s fraud claim. We conclude that the court erred in both instances.
I. BACKGROUND
Plaintiff Larry Golden leased and operated a Sun Oil Company (“Sunoco”) service station located on South Orange Blossom Trail in Orlando, Florida. The station had three pumps at the full service island and two pumps at the self service island, all of which dispensed gasoline in liters. Two of the full service pumps and one of the self service pumps contained blenders, devices unique to Sunoco stations. The blenders allowed the pumps to dispense three types of unleaded gasoline from the same hose: regular unleaded, super unleaded, and a blend of regular and super unleaded. A customer could choose the desired type of unleaded gasoline by turning a switch on the pump. The configuration of the pumps at Golden’s Sunoco station was as follows:
Full Service Self Service
Pump 1 Super Unleaded Pump 2 Leaded
Pump 4 Regular Unleaded Pump 3 Super Unleaded
Pump 5 Leaded
Golden’s lease with Sunoco gave the company the right to terminate the agreement in the event the station was sold. In the spring of 1984, defendant Mobil Oil Corporation purchased Golden’s station and eighty-six other Sunoco stations in Florida. Mobil notified Golden of the purchase and gave him the option of buying the station for $200,000 or entering into a new lease as a Mobil dealer. Golden was interested in the possibility of purchasing the station, but was concerned that he would not be able to obtain financing. On July 11-12, 1984, therefore, he attended two meetings held by Mobil to promote the advantages of becoming a Mobil dealer. The first was held on July 11 in Orlando and the second on July 12 in Tampa. Golden testified that at the Orlando meeting a Mobil representative told him that it was the policy of the company to give customers a four cent per gallon discount for cash purchases. When Golden inquired as to the company’s cash discount policy for gasoline purchased in liters, the representative responded that “it’s not a problem because Mobil doesn’t have gas pumps that work in liters so you won’t have a problem with that.”
Golden also testified that between the Tampa meeting and the date he signed the lease, Mobil representatives Dennis O’Brien and J.J. Moore promised that he would receive new gallon pumps:
[O’Brien, Moore, and I] were talking about the transition period and they were kind of telling me what would occur and I asked well, you know, when are we going to get the [new Mobil sign], when are we going to get the pumps. That was important to me. And I was told that they were starting near the end of the county or end that I was up on to put on signs and nearer the ends of the county there I gathered north or northwest and working kind of toward one another and, you know, I would get the sign and then I would get the pumps, the regular type Mobil pumps.
The Tampa meeting, which Golden’s wife also attended, was entitled “Welcome Aboard.” All Sunoco dealers, their spouses, and key employees were invited. The agenda included a period for viewing exhibits, a presentation, cocktails, and dinner. Golden later testified that the Tampa meeting was a
[political rally kind of thing. At the very first going in it’s hey, how [sic] you doing? Everything is going to be great for you. [Dennis O’Brien, a Mobil representative,] was taking me and I believe part of the time my wife and introducing me to just various people were [sic] there. I guess other people at his level and other people from Mobil and say [sic] hey, have you signed yet? I said, no. Well, you should sign. And things along that line.
Golden also testified that a Mobil representative told the Sunoco dealers that if they agreed to become Mobil dealers their relationship with the company “would be just like a marriage that was just going to get stronger.”
On their way home from the Tampa meeting, Golden and his wife discussed their options and decided, based on Mobil’s presentations, that becoming a Mobil dealer would be a good career opportunity. The company thereafter provided Golden with a proposed lease agreement and Golden sent it to his attorney for review. The attorney informed Mobil that many of the provisions of the lease were unsatisfactory, including the following limitation of liability clause:
In no event shall Landlord be liable for prospective profits or special, indirect, or consequential damages.
The company replied that the proposed agreement was its standard service station lease contract and the terms were not negotiable. Golden decided to enter into the lease anyway and signed it on July 25, 1984. The lease became effective on August 1, 1984, with a term of three years.
Golden’s relationship with Mobil started to sour soon after he began operating as a Mobil dealer. Many of his requests to the company for the repair of the pumps, lighting, and pavement at his station went unheeded. The company replaced one of his liter pumps with a new gallon pump, but refused to replace others. This left Golden in the position of having to sell some gasoline in liters and some in gallons. The company also removed the blender from Pump 3 without Golden’s permission and replaced it with a regular nozzle. As a result, Golden could sell only two types of gasoline at the self service island. The configuration of the pumps after the removal of the blender was as follows:
Full Service Self Service
Pump 1 Regular Unleaded Pump 2 Leaded
Super Unleaded
Blend
Pump 4 Regular Unleaded Pump 3 Unleaded
Super Unleaded Super Unleaded
Blend Blend
Pump 5 Leaded
Mobil did not renew the lease at the end of its three-year term and Golden brought suit against the company in Florida state court. Mobil removed the case to federal court and Golden filed an amended complaint that alleged breach of contract and fraud. At the ensuing jury trial, Golden presented evidence of two types of damages, lost profits and lost rental rebates. Both were related to his inability to sell three types of gasoline at the self service island. The lost rental rebates were those that Golden would have received under a rental incentive program Mobil had offered to encourage dealers to sell more gasoline.
At the close of trial, the court granted Mobil’s motion for directed verdict on the fraud claim, but denied its motion for directed verdict on the breach of contract claim. The jury subsequently returned an $83,000 verdict for Golden on the breach of contract claim and the court denied Mobil’s motion for judgment notwithstanding the verdict. This appeal followed.
II. DISCUSSION
A. The Contract Claim
Mobil contends that the district court erred in denying judgment notwithstanding the verdict because the evidence was insufficient to support the jury’s verdict on the contract claim. In reviewing a district court’s ruling on a motion for directed verdict or judgment notwithstanding the verdict, we must consider all of the evidence in the light most favorable to the nonmoving party, with all reasonable inferences taken in favor of that party. If the facts and evidence point so strongly and overwhelmingly in favor of the moving party that no reasonable person could have reached a verdict for the nonmoving party, the motion should have been granted. On the other hand, if a reasonable and fair-minded person could have returned a verdict for the nonmoving party, the motion should have been denied. Boeing Co. v. Shipman, 411 F.2d 365, 374 (5th Cir.1969) (in banc).
Mobil argues that only evidence of consequential damages was admitted at trial and that the limitation of liability clause bars Golden from recovering consequential damages. Golden does not dispute that the lost profits and lost rental rebates he sought were consequential damages as contemplated under the limitation of liability clause, but argues that the clause itself is unenforceable on the ground of unconscion-ability. We disagree.
Under Florida law, a contractual provision is not unenforceable on the ground of unconscionability unless “no decent, fair-minded person would view the ensuing result without being possessed of a profound sense of injustice_” Steinhardt v. Rudolf, 422 So.2d 884, 890 (Fla.Dist.Ct.App.1982), review denied, 434 So.2d 889 (Fla.1983). Both procedural unconscionability and substantive unconscionability must exist before the provision is unenforceable. Fotomat Corp. of Fla. v. Chanda, 464 So.2d 626, 629-30 (Fla.Dist.Ct.App.1985); Kohl v. Bay Colony Club Condominium, Inc., 398 So.2d 865 (Fla.Dist.Ct.App.), review denied, 408 So.2d 1094 (Fla.1981); see Steinhardt, 422 So.2d at 889-90 (rejecting procedural-substantive analysis as a rule of law but noting that it is “generally helpful”). Procedural unconscionability exists when the individualized circumstances surrounding the transaction reveal that there was no “ ‘real and voluntary meeting of the minds’ ” of the contracting parties. Kohl, 398 So.2d at 868 (quoting Johnson v. Mobil Oil Corp., 415 F.Supp. 264, 268 (E.D.Mich.1976)). Substantive unconscionability exists when the terms of the contractual provision are unreasonable and unfair. Id.
We need not decide whether the transaction between Golden and Mobil was procedurally unconscionable because we hold that the limitation of liability clause was not substantively unconscionable. The Florida courts consistently have upheld the right to limit the remedies available in the event of a breach of a commercial lease agreement. E.g., Linens of Paris, Inc. v. Cymet, 510 So.2d 1021, 1022 (Fla.Dist.Ct. App.1987); Rodeway Inns of Am. v. Alpaugh, 390 So.2d 370 (Fla.Dist.Ct.App.1980) (commercial lease that provided lessee with two alternative remedies in event of breach by lessor not contrary to Florida law or public policy). The requirements of mutuality of obligation and mutuality of remedy, of course, render exculpatory language unenforceable if it would prevent all recovery of damages for the breach of a contractual undertaking in a lease. See Sniffen v. Century Nat’l Bank, 375 So.2d 892, 893-94 (Fla.Dist.Ct.App.1979) (citing Ivey Plants, Inc. v. FMC Corp., 282 So.2d 205, 208 (Fla.Dist.Ct.App.1973), cert. denied, 289 So.2d 731 (Fla.1974)). The clause at issue, however, did not prevent Golden from recovering damages for a breach of the lease by Mobil. Golden could have recovered, but did not seek, the standard measure of damages for breach of lease: “the difference between the stipulated rent and the value of the use of the premises.” Moses v. Autuono, 56 Fla. 499, 47 So. 925, 927 (Fla.1908). Consequently, the district court erred in denying Mobil’s motion for judgment notwithstanding the verdict.
B. The Cross Appeal for Fraud
On cross-appeal, Golden contends that the district court erred in directing a verdict for Mobil on the fraud claim. The elements of fraud under Florida law are:
(1) a false statement concerning a material fact;
(2) the representor’s knowledge that the representation is false;
(3) an intention that the representation induce another to act on it; and[]
(4) consequent injury by the party acting in reliance on the representation.
Johnson v. Davis, 480 So.2d 625, 627 (Fla. 1985) (citation omitted). We conclude that the evidence was sufficient to establish these elements based on (1) Mobil’s promise to Golden that he had a “tremendous future” with the company and (2) Mobil’s promises to replace all of his liter pumps with gallon pumps.
We begin by addressing the first two elements of fraud as they relate to each of these promises. Golden testified that Mobil promised him that if he signed a lease he would have a “tremendous future with Mobil” and his relationship with the company “would be just like a marriage that was just going to get stronger.” This testimony was corroborated by Mobil’s script of the Tampa program:
[W]e decided from the very beginning to offer every Sun dealer a three year lease. As you know, under PMPA, we could have gone the one year trial franchise route; i.e., taking a year to get acquainted. Obviously, we felt there were advantages in demonstrating our good faith and genuine confidence in you by offering leases on terms consistent with long-term existing Mobil dealers. In other words, we think the marriage is a good one. It’s only going to get stronger, and it is going to be mutually beneficial.
“PMPA” refers to the Petroleum Marketing Practices Act, 15 U.S.C. §§ 2801-2841. Under the Act, a motor fuel franchise agreement is considered a trial franchise agreement if, among other things, its initial term is for one year or less. Id. § 2803(b)(1)(C). If a franchisor decides not to renew a trial franchise agreement at the end of its initial term, the franchisor need only comply with statutory notification procedures. Id. § 2803(c)(1). On the other hand, if the term of the lease agreement is three years or longer, a franchisor cannot terminate or fail to renew a franchise unless the termination or nonrenewal is based upon grounds listed in the Act and the franchisor complies with statutory notification procedures. Id. § 2802(b). One of these grounds is a determination by the franchisor, made in good faith and in the normal course of business, to sell the premises. Id. § 2802(b)(3) (D)(i)(II I).
Mobil’s offer of a three year lease instead of a trial franchise, its promise that Golden would have a “tremendous future” with the company, and its referral to the proposed relationship as a “marriage” could support a finding that Mobil induced Golden to enter into the lease by representing that the company intended to establish a long-term relationship with Golden. There also was evidence that the company misrepresented this intention — that when it induced Golden to enter into the lease, the company knew that there was a strong probability that it would terminate the lease and sell the station at the expiration of the initial term of the lease. An internal Mobil memorandum dated August 31,1983, stated that the company intended to sell any service station that sold less than 400,-000 gallons of gasoline annually unless the station had the clear potential of selling 600,000 gallons annually. A lease work sheet prepared by Mobil for Golden’s station on June 14, 1984, however, listed the maximum annual volume potential for Golden’s station as 300,000 gallons. Another Mobil memorandum stated the following:
Please place the subject location on the R.E.A.D.S. list and establish recommended selling price based on M.A.I. approval (approximately $120,000).
This location was acquired with the Suno-co takeover in August 1984. The location was identified to be divested prior to August 1984; however, the existing dealer, Larry Golden, rejected the $180,-000 [sic] offering price presented by Ed Goett during July 1984.
(emphasis added).
Evidence that Mobil spent as little as possible on repairs to the station also could support a finding that Mobil knew at the time it induced Golden to sign the lease that there was a substantial probability that it would sell Golden’s station at the end of the initial lease term. Mobil’s South Atlantic district manager, J.J. Costello, wrote the following memorandum in response to Golden’s request that the company install a new pump at his station:
JAB
Determine what we are absolutely required to do. This is READS and I want to get out ASAP. No work unless required.
JJC
James A. Blesson, the Mobil employee to whom the Costello memorandum was directed, testified that Costello’s reference to “READS” meant that the station had been designated for divestment.
There was evidence that, despite Golden’s repeated requests, Mobil refused to make needed repairs to the lighting, pavement, and pumps at his station. The company refused to repair pumps that would not reset after pumping, pumps that would dispense gasoline without registering the amount, pumps that would work only after being beaten with a hammer, and pumps that spewed gasoline without being turned on. The company ignored Golden’s repeated requests for the repair of deficient lighting and pavement at his station. Mobil’s own employee testified that when he reported Golden’s maintenance problems to company management, the company’s only response was to send Golden a letter informing him that his lease would be terminated if he did not stay open after dark. Mobil also refused to replace all of Golden’s Sunoco liter pumps with new Mobil gallon pumps, despite evidence that many customers reacted negatively to pumps that dispensed gasoline in liters.
The second element of fraud requires that the promisor had the positive intent not to perform the promise or made the promise with the present intent not to perform it. Bissett v. Ply-Gem Indus., Inc., 533 F.2d 142, 145 (5th Cir.1976) (interpreting Florida law). The present case not only concerns the misrepresentation of a person’s “future potential” with a company, but also concerns the company’s misrepresentation of its present intent concerning that future potential. The misrepresentation therefore is actionable as fraud under Florida law. In Telesphere Int’l, Inc. v. Scollin, 489 So.2d 1152 (Fla.Dist.Ct.App.1986), the court held that although a company had the absolute right to terminate an employee under the terms of an employment agreement, the company nonetheless could be liable for fraudulently inducing the employee to enter into the employment agreement if the employee could prove that the company deliberately concealed the known possibility that a discharge would in fact occur. Id. at 1155. The plaintiff in that case had quit his job to become the defendant’s “Director of International Operations” of a hotel call accounting system that the defendant was trying to develop. There was evidence that the defendant had induced the plaintiff to join the company by deliberately failing to inform him, before the employment agreement was signed, that the company was aware of the real potentiality that the hotel accounting system would fail and the plaintiff would be discharged. Id. at 1153. In holding that a directed verdict for the defendant was improper, the court compared the facts before it to those in Elizaga v. Kaiser Found. Hospitals, Inc., 259 Or. 542, 487 P.2d 870 (1971) (hospital could be liable for fraud for offering surgical preceptorship position to plaintiff even though defendant knew that position would be terminated shortly), and Wildes v. Pens Unlimited Co., 389 A.2d 837 (Me.1978) (company could be liable for fraud for persuading plaintiff to resign existing job to become full time salesman without informing plaintiff of defendant’s knowledge that corporate reorganization was likely and plaintiff’s loss of sales terri-' tory could result). The Scollin court held that both Elizaga and Wildes were in accordance with the law of Florida. Scollin, 489 So.2d at 1154.
Mobil’s second misrepresentation, its promises to replace all of Golden’s liter pumps with gallon pumps, also satisfies the first two elements of a cause of action for fraud. Golden’s testimony created a jury issue as to whether the promises to replace his pumps were made. Their materiality is clear. The promised new pumps would have enabled Golden to dispense regular unleaded gasoline at the self service island and would have eliminated the features of his old pumps to which his customers had objected. The evidence was undisputed that Mobil did not replace all of Golden’s old pumps with the new gallon pumps as promised. There also was evidence from which a jury could find that at the time Mobil made the promises it did not intend to fulfil them. D.L. Fuller, Mobil’s project leader for the conversion of Sunoco stations to Mobil stations, acknowledged that at the Tampa meeting he told potential Mobil dealers that:
[a]s for the pumps, if your station is in a high volume category, we will evaluate it as soon as possible in terms of changing over to the Mobil round pumps. In lower volume operations the pump face will be covered in white plastic and Mobil decals will be installed.
Fuller testified that Mobil had classified Golden’s station as a low volume station and that the company had two alternative plans for the old Sunoco pumps: “One was [to] replace[] some of the dispensers with Mobil dispensers and the other was the retention of the squared off Sunoco pumps.” Fuller described in detail Mobil’s planned method for modifying the old Su-noco pumps. A reasonable jury therefore could have found that Mobil never intended to replace all of Golden’s liter pumps with gallon pumps. Mobil’s decision from the outset to divest Golden’s station and its refusal to make needed repairs to the station also could support such a finding.
The sufficiency of the evidence concerning the final two elements of fraud warrants little discussion. From the context in which the claimed misrepresentations were made the intent that Golden should rely on them is implicit. The evidence also was sufficient to satisfy the last element of fraud, injury resulting from reliance on the misrepresentations. A defrauded plaintiff may recover compensatory damages under either the “out-of-pocket” rule or the “benefit of the bargain” rule. DuPuis v. 79th Street Hotel, Inc., 231 So.2d 532, 536-37 (Fla.Dist.Ct.App.), cert. denied, 238 So.2d 105 (Fla.1970). The record supports a finding that Golden lost both profits and rental rebates because he did not receive the benefit of the bargain Mobil had promised. A reasonable jury could find that if Mobil actually had fulfilled its promise of a long-term relationship with Golden or its promises to replace all of his liter pumps with gallon pumps, the profits and rental rebates would not have been lost. Accordingly, the district court erred in directing a verdict for Mobil.
III. CONCLUSION
The judgment of the district court is reversed and the case remanded for further proceedings consistent with this opinion.
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.
FRANK, Circuit Judge.
1. The Hungarian publisher, the proprietor at the time of the copyright registration on September 14, 1936, was a citizen of a foreign country with which the United States has a treaty extending copyright protection to Hungarian citizens in accord with § 8(b). As publication in Hungary occurred on November 11, 1935, the registration followed publication, and therefore § 9, not § 11, applied. As on the date of publication the author was a citizen of Hungary, and the song had then been published solely in a foreign state, there was compliance with § 12, as amended in 1914, by the deposit of one complete copy. The trial judge correctly found that “no printed copies * * * were ever distributed, offered for sale, sold or disposed of in the United States.” The letter of November 4, 1940, from Cummins to Pasternak, enclosing a copy of the song, was not a publication or offering for sale in the United States. Nor were the playings of the song here, nor was the filing of the copy in the copyright office. The sales of imported copies in this country were not shown to have been authorized by the then proprietor. It follows that the mistake of date in the notice of copyright was not, on any theory, a violation of §§ 9 and 18; for § 9 merely requires that the notice be affixed to each copy “published or offered for sale in the United States by authority of the copyright proprietor.” We construe the statute, as to a publication in a foreign country by a foreign author (i.e., as to a publication described in the 1914 amendment), not to require, as a condition of obtaining or maintaining a valid American copyright, that any notice be affixed to any copies whatever published in such foreign country, regardless of whether publication first occurred in that country or here, or whether it occurred before or after registration here.
It seems to be suggested by some text-writers that, under the 1914 amendment, where publication abroad precedes publication here, the first copy published abroad must have affixed to it the notice described in § 18. Such a requirement would achieve no practical purpose, for a notice given by a single copy would obviously give notice to virtually no one. There is no doubt textual difficulty in reconciling all the sections, as has been often observed; the most practicable and, as we think, the correct interpretation, is that publication abroad will be in all cases enough, provided that, under the laws of the country where it takes place, it does not result in putting the work into the public domain. Assuming, arguendo, that plaintiffs publication in Hungary did not do so, it could not affect the American copyright that copies of his song were at any time sold there without any notice of the kind required by our statute, and it would therefore be of no significance, in its effect on the American copyright, if copies sold in Hungary bore a notice containing the wrong publication date. On that assumption, there would be no need to consider whether, had the notice with the mistaken date been affixed to copies published or offered for sate in the United States by authority of the proprietor, that mistake would have invalidated the copyright, especially in the light of § 20. We do not know whether the publication in Hungary was such as to amount to dedication in that country, but, as we are affirming the dismissal of the complaint for other reasons, it is not necessary to decide that question.
2. In a suit like this, plaintiff, to make out his case, must establish two separate facts: (a) that the alleged infringer copied from plaintiff’s work, and (b) that, if copying is proved, it was so “material” or “substantial” as to constitute unlawful appropriation. Plaintiff here must lose for failure to establish the first of these facts.
The evidence by no means compels the conclusion that there was access; on the other hand, it does not compel the conclusion that there was not. Consequently, copying might still be proved by showing striking similarity. Here similarity exists; indeed, a passage in Franchelti’s “verse” is identical with one in plaintiff’s “chorus.” Mere similarity is not enough; but here one finds more; both to the eye and ear, the identity is unmistakable, as defendants virtually concede. But defendants explain this fact by saying that, quite independently, both composers utilized a common source — either Dvorak’s composition or the older commonplace theme which Dvorak had adopted and adapted.
As, however, both optically and aurally, plaintiff’s treatment is distinguishable from Dvorak’s and also from the older commonplace theme, that explanation would not wash, were plaintiff’s -contribution highly original. In an appropriate case, copying might be demonstrated, with no proof or weak proof of access, by showing that a single brief phrase, contained in both pieces, was so idiosyncratic- in its treatment as to preclude coincidence. In such circumstances, stimulation by the same stimulus would not serve as a defense: Buchanan tells us that Kekulé’s “idea of the carbon-ring came out of the lurid imagery of a morning after a party”; many a chemist had had a like experience without such a fruitful result. Hamilton reported of his great mathematical discovery that “the Quaternions started into life, or. light, full grown, on the 16th day of October, as I was walking with Lady Hamilton to Dublin, and came up to Brougham Bridge”; no other mathematician who had observed a bridge when strolling with his wife in mid-October had made the same discovery. Nor would it be alone enough that the passage in question is brief or that the identical matter in plaintiff’s song is found in the “chorus,” and, in Franchetti’s, in the “verse.” Nor would Franchetti’s musical reputation and achievements answer, for Handel ruthlessly plagiarized; we do not accept the aphorism, “When a great composer steals, he is ‘influenced’; when an unknown steals, he is ‘infringing.’ ”
On the issue of copying, it was proper for the trial judge to avail himself of (although not to be bound by) expert testimony. He heard the experts of both sides. In effect, he found that plaintiff’s method of dealing with the common trite note sequence did not possess enough originality, raising it above the level of the banal, to preclude coincidence as an adequate explanation of the identity. We cannot say that the judge erred. Whether, had he reached a contrary conclusion, we would have affirmed, we do not consider. Affirmed.
See 17 U.S.C.A. § 8(b) and note, 37 Stat., pt. 2,1631.
Tbe 1914 amendment inserted the ■words “or if the work is by an author who is a citizen or subject of a foreign State or nation and has been published in a foreign country, one complete copy of the best edition then published in such foreign country.”
Allen v. Walt Disney Productions, Ltd., D.C., 41 F.Supp. 134, 136; cf. Gerlach-Barklow Co. v. Morris & Bendien, 2 Cir., 23 F.2d 159, 162, 163; Falk v. Gast Lithograph & Engraving Co., 2 Cir., 54 F. 890; cf. Patterson v. Century-Productions, 2 Cir., 93 F.2d 489, 492.
See McCarthy & Fischer, Inc. v. White, D.C., 259 F. 364; Shafter, Musical Copyright (2d ed. 1939), 130-431.
Cf. Osgood v. A. S. Aloe Co., C.C., 69 F. 291, 294; Patterson v. Century Productions, supra, 93 F.2d at page 493.
In United Dictionary Co. v. G. & C. Merriam Co., 1908, 208 U.S. 260, 28 S.Ct. 290, 52 L.Ed. 478, it was held that if a work were copyrighted here, the omission of notice of the American copyright from an edition subsequently published in England did not invalidate the copyright.
We do not read the 1914 Amendment as a mere codification of the ruling in that case, i. o., as limited t.o eases where the foreign publication occurs after an American copyright has been obtained or after publication in this country.
Universal Film Mfg. Co. v. Copperman, D.C., 212 F. 301, 303, 304, related to a copyright which ante-dated the 1914 amendment to § 12. Basevi v. Edward O’Toole Co., D.C., 26 F.Supp. 41, 46, wo think was wrongly decided on this pojnt
. Ladas, The International Protection of Literary and Artistic Property (1938) 688, says, in speaking of the 1914 amendment to § 12: “It would seem difficult to give a safe interpretation of the Act in this respect. However-, if tho role established in the first part of § 9 is to be given effect to, i. e., the rule that a person ‘may secure copyright for his work by publication thereof with the notice of copyright required by the Act;’ it would seem that no person is entitled to claim statutory copyright under the Act, unless, when first publishing tho work abroad or in the United States, he has affixed tho statutory notice. Thereafter, the notice need not appear on each copy of the work published outside the United States, since tho second part of § 9 requires this only of ‘each copy thereof published or offered for sale in the United States.’ ” See also 13 C.J. 1063, note 33.
Were that question here, we should have to consider whether the statement in Baker v. Taylor, Fed.Cas.No.782, and subsequent cases which cite it apply under the present liberalized Copyright Act; see Washingtonian Publishing Co. v. Pearson, 306 U.S. 30, 59 S.Ct. 397, 83 L.Ed. 470; United States v. Backer, 2 Cir., 131 F.2d 533; Shafter, loc. cit., 98.
See Arnstein v. Porter, 2 Cir., 1940, 154 F.2d 464.
Thus, e. g., the alleged plagiarist might openly admit that he copied, but lie could defend by showing that his copying was too insubstantial to be wrongful.
There may be wrongful copying, though small quantitatively; so if someone were to copy tho words, “Euclid alone has looked on Beauty bare,” or “Twas brillig and the slithy toves.”
On the issue of copying — as distinguished from the issue of illicit copying —“dissection” and optical analysis are proper aids to the trier of the facts. See Arnstein v. Porter, supra.
“Beethoven’s Fifth Symphony is a marvellous structure on a commonplace theme;” Shafter, loe. cit., 197.
As to the way in which Coleridge creatively employed phrases he found in tales of sea voyages, see Lowes, The Road to Xanadu, 2d Ed., 1930, 59, 434, quoted in Picard v. United Aircraft Corp., 2 Cir., 128 F.2d 632, 638 note 1.
Buchanan, Possibility (1927) 189.
Graves, Life of Sir William Rowan Hamilton (1882) H, 434-436, quoted in Porterfield, Creative Factors in Scientific Research (1941) 97.
Helmholz said that “his most important thoughts” came to him “during the slow ascent of hills on a sunny day” ; see Graham Wallas, The Art of Thought (1926) 80; no other hill-climbing physicist anticipated Helmholz’s works.
See Boosey v. Empire Music Co., D. C., 224 F. 646; Farmer v. Elstner, C.C., 33 F. 494, 496. Quantity, in some cases, where copying and misappropriation have been proved, may affect the measure of damages. Witmark & Sons v. Pastime Amusement Co., D.C., 298 F. 470, 477, affirmed 2 Cir., 2 F.2d 1020.
Of. Macaulay’s Essay on Robert Montgomery.
For a defense of Handel, by way of confession and avoidance, see Tovey’s article on Handel in 12 Encyc. Britannica, 910, 914, 915. Handel's ruthlessness in general is illustrated in the story of “his holding the great prima donna Cuzzoni at arms-length out of a window and threatening to drop her unless she consented to sing a song which she had declared unsuitable to her style”; see Tovey, loe. cit., 911. -I
Shafter, loe. cit., 189.
We do not mean that such originality is essential to the validity of a copyright. See Bleistein v. Donaldson Lithographing Co., 188 U.S. 239, 249, 250, 23 S.Ct. 298, 47 L.Ed. 460; Sheldon v. Metro-Goldwyn Pictures Corp., 2 Cir., 81 F.2d 49, 53, 54; Fred Fisher, Inc. v. Dillingham, D. C., 298 F. 145, 149; cf. Hein v. Harris, C.C., 175 F. 875.
As to the needed quantum of originality, see Chamberlin v. Uris Sales Corp., 2 Cir., 150 F.2d 512, 513; Shafter, loc. cit., 223, 224.
Accordingly, we never reach the question whether, assuming that Francnetti copied, his copying went beyond permissible bounds.
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.
KOELSCH, Circuit Judge.
These appeals concern the liability of Buffalo Coal Mining Company, and two of its shareholders, on a promissory note executed by Buffalo to Reconstruction Finance Corporation, an agency of the United States.
During World War II the United States Army seized Buffalo’s coal mine near Palmer, Alaska and commenced making substantial physical changes in the property for the purpose of increasing production. Before the project was finished, the war ended and the army returned the property to Buffalo, but in an inoperable condition. Buffalo lacked money to complete the work and was unable to borrow it. All activity ceased and the mine became flooded.
Some years later Buell A. Nesbett, together with several other individuals, became interested in the mine. Upon investigating, they concluded that, with production of not less than 400 tons of coal per day, the mine could be profitably operated; that the cost of completing the Army’s unfinished work and rendering the mine capable of such production would be about $400,000, and that a loan in that amount could be secured from RFC. They acquired control of Buffalo and made Nesbett president. After considerable negotiating he succeeded in securing RFC’s commitment to loan Buffalo $425,775. To evidence the loan and secure payment, Buffalo executed its note in that amount and a chattel mortgage to RFC. As further security Nesbett and W. T. Malcolm, another of Buffalo’s shareholders, each “unconditionally” guaranteed payment of the note. The guarantees were in writing and limited the amount of Nesbett’s liability to $30,-000 and that of Malcolm to $20,000.
Buffalo immediately began construction, paying expenses with moneys advanced by RFC from time to time against the loan. When the work was well under way and a large portion of the loan was spent, Buffalo encountered an unexpected ground condition that necessitated a major revision of its plans, and indicated a considerably greater outlay of money than Buffalo had expected or anticipated. Buffalo then applied to RFC for an additional loan of $208,329.-33. The application contained a detailed progress report, together with an itemized statement of expenditures to date; it described the difficulties recently encountered and the nature of the required changes in plan, and it set out Buffalo’s estimate that the remainder of the present loan, plus the additional $208,329.33, would cover the cost of making the mine operable. RFC rejected the application. Moreover, RFC refused to disburse all remaining portions of the loan except for $60,000 to keep the mine “unwatered.” Afterward, Buffalo failed to meet several installment payments on the note. RFC declared a default and, invoking the acceleration clause in the note, declared the full amount of the loan immediately due. Payment was refused. The United States then commenced this suit in the district court to recover judgment against Buffalo and foreclose the mortgage. It also sought judgment against Nesbett and Malcolm in the amount of their respective guarantees. Buffalo filed a counterclaim for breach of contract based upon RFC s refusal to perform its loan agreement. The district court had jurisdiction of the controversy under 28 U.S.C. § 1345.
Following a trial, the district judge, sitting without a jury, decided that the United States was entitled to recover on its claim against Buffalo, but not on its claims against Nesbett and Malcolm. It further decided that Buffalo’s counterclaim should be dismissed. Both Buffalo and the United States have appealed from the ensuing judgment.
We conclude that the judgment was right, with respect to Buffalo and the latter’s counterclaim, but wrong to the extent that it awarded the United States nothing on its claim against Nesbett and Malcolm, and that the United States is entitled to recover the full amount of its claims against the latter two defendants.
It is clear from this record that Buffalo and RFC (as well as Nesbett and Malcolm) understood that RFC would not pay the entire amount of the loan to Buffalo in a lump sum, but rather agreed that RFC would make partial disbursements from time to time until the entire amount was paid. And the district court found, on substantial evidence, that major revisions in the original plans, entailing considerably greater costs than had been originally estimated, were necessitated ; that the project could not be carried out within the limits of the present loan and that more money would be required if the mine was to be made operative.
We agree with the district court that these facts fully justified RFC’s action. It is familiar contract law that prospective inability of one party’s performance will excuse a condition precedent of the other’s performance, unless the disability is removed before the other relies thereon. This rule is well stated in RESTATEMENT, CONTRACTS § 306 (1932):
“Where failure of a party to a contract to perform a condition or a promise is induced by a manifestation to him by the other party that he cannot or will not substantially perform his own promise or that he doubts whether though able he will do so, the duty of such other party becomes independent of performance of the condition or promise. He has power to nullify his manifestation of unwillingness or inability by retracting it, so long as the former party, in reliance thereon, has not changed his position.”
We reject Buffalo’s contention that RFC’s decision was arbitrary. Before making the loan RFC had insisted that Buffalo attempt to secure the money from some bank or other source. Buffalo made diligent efforts to do so but was uniformly turned down because the risk was too great. Moreover, the loan was not haphazardly made; naturally enough it was based upon Buffalo’s representation of what would be required and the cost of the work, and the amount of the loan was directly geared to Buffalo’s considered cost estimates. Thus when RFC was suddenly confronted with Buffalo’s application for an additional loan and learned that Buffalo had miscalculated; that its plans required major revision, and that a considerable additional sum of money beyond the amount previously committed would be required to finance the changes, we think RFC acted prudently in refusing to become more deeply involved in the venture and that its action was fully in accord with Federal policy, which the district court observed in its findings that “requires the protection of the security of Federal investments to the extent that the government need not, as expressed by the witness Plein, send good money after bad.”
Nesbett and Malcolm argue that their liability was conditioned on RFC’s full performance of its loan agreement. Their written guarantees contain no such express condition, but simply provide that: “[T]he undersigned hereby unconditionally guarantees to Reconstruction Finance Corporation * * * the due and punctual payment when due, whether by acceleration or otherwise * * * of the principal and interest on * * * the note of the debtor * * ”
But it is clear that Nesbett and Malcolm knew that the total amount of the loan was needed to put the mine into production and that they expected that this in turn would provide Buffalo with the means to repay RFC. As the district court found “[A] 11 parties realized that the project would be a total loss- unless the mine was placed on a production basis and it was understood that the guarantors would be liable only if the venture failed after the full amount of the loan had been disbursed.”
When, however, it became apparent that Buffalo could not put the mine into production within the limits of the amount RFC had agreed to loan, the principle of prospective inability, applicable to excuse RFC from performing its promise to Buffalo to disburse the entire loan also applied to this condition precedent to the guarantors’ liability on their guarantees. The reason is plain: In the light of the circumstances, it would have gained Buffalo nothing to have received the remainder of the loan proceeds. Even if those moneys were disbursed and spent, the mine could not have been made productive; Buffalo would have defaulted on its note and the guarantors would be called upon to pay. The law does not require a useless act, particularly where, as here, it would only enhance the actor’s loss. 6
The judgment is modified in accordance with the conclusions stated in this opinion and, as modified, is affirmed.
. The guarantees were unconditional and constituted guarantees of payment rather than collection. 24 Am.Jur. Guaranty, § 17. Accordingly, the guarantees could be enforced separately from Buffalo’s primary obligation and bence it was not necessary for RFC to first proceed against Buffalo and the security before seeking recovery for Nesbett and Malcolm. Ludington Lumber Co. v. Metropolitan National Bank, 55 F.2d 169, 84 A.L.R. 287 (6th Cir. 1932); Joe Heaston Tractor & Implement Co. v. Securities Acceptance Corporation, 243 F.2d 196 (10th Cir. 1957). See Terry v. Tubman, 92 U.S. 156, 160, 23 L.Ed. 537 (1875).
. The following was one of the court’s findings:
“The disclosures of fact in the application for the additional loan constituted sufficient evidence of ‘adverse change’ to justify the Agency Manager of RFC to refuse to advance further funds on the loan by reason of the inability of Buffalo to reach the projected production total of 400 tons per day and by reason of the fact that Buffalo would not have been able to pay back the original loan according to the terms of said note unless additional funds were made available to it by RFC.”
. The guarantees are properly construed to be bilateral in nature with a condition precedent of full disbursement of the loan, rather than unilateral and hence dependent upon RFC’s full disbursement of the loan. As shareholders in Buffalo, Nesbett and Malcolm were personally interested in the success of the business. It would seem reasonable to conclude that they wanted RFC’s present assurance that it would disburse the full amount Buffalo needed and that RFC likewise intended to secure immediate protection and, since Buffalo’s note, which they were guaranteeing, indicated that the proceeds of the loan would be disbursed in partial payments rather than a lump sum, it is unlikely that RFC and the guarantors did not intend to be under obligations to one another until after the full amount was disbursed. “In case of doubt,” says the Restatement of Contracts, § 31, “it is presumed that an offer invites the formation of a bilateral contract by and acceptance amounting in effect to a promise by the offeree to perform what the of-feree requests, rather than the formation of one or more unilateral contracts by actual performance on the part of the offense.” See also Hammond v. C. I. T., 203 F.2d 705 (2d Cir. 1953) ; Friedman v. Decatur, 77 U.S.App.D.C. 326,135 F.2d 812 (1943); Davis v. Jacoby, 34 P.2d 1026 (Cal.1934).
. The district court excused RFO from full performance of its agreement with Buffalo on the basis of an “adverse change” clause in the written loan authorization which RFC issued in connection with the loan. This clause stated in substance that RFC could discontinue making disbursements whenever it appeared there was an “adverse change” in Buffalo’s financial prospects. Although the court found Buffalo was not “a party” to this instrument, it concluded Buffalo was bound because of its knowledge of the contents. However, the court held that the authorization was not binding on the guarantors because they were not “parties” to it.
That parties may by private agreement excuse performance due one to the other may be freely conceded. The mere fact that they have done so, however, does not preclude a like result from arising by operation of law. Thus where, as here, the adverse change became tantamount to prospective inability, Buffalo was excused from full performance by operation of law.
. Had the guarantees been of the entire amount of the loan, we entertain no doubt that the guarantors would have objected, and properly so, to any further advances when it became apparent Buffalo could not repay them.
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 petition for review of an order of the National Labor Relations Board involves the discharge of six of petitioner’s employees for successive partial strikes in violation of Section 8(a)(1) of the National Labor Relations Act and the discharge of one employee for an alleged violation of petitioner’s “no solicitation” rule in violation of Section 8(a)(1) as well as Section 8(a)(3) of the Act. The issue rests upon determination of facts made by the Board in its findings.
The Facts
The petitioner, Crenlo, Division of GF Business Equipment, Inc. (Crenlo), operates two plants in Rochester, Minnesota, where it manufactures sheet metal products, including metal cabinets and tractor cabs. On July 23, 1973, Local 161 of the General Drivers and Warehousemen and Helpers, International Brotherhood of Teamsters, petitioned the Board for an election at the Crenlo plants, and by stipulation an election was scheduled for September 12, 1973.
On August 15, 1973, Crenlo announced that its annual wage increase would be 25 cents per hour, effective August 18, for all production employees. There was some dissatisfaction at the increase, and some of the dissidents at the plant located at 1600 Fourth Avenue, N.W., Rochester, requested an immediate meeting with Crenlo management to discuss it. A meeting with Jerry Wollenburg, Cren-lo’s foreman, was arranged by the pressmen. At this meeting the pressmen indicated that the increase should have been 50 cents because of the increased cost of living. Wollenburg promised to present the employee position to the Crenlo management and then get back to the pressmen. About 1:30 p. m., Wol-lenburg was told by a pressman that work would stop at 2 p. m. if management did not “come down.” Wollenburg, who had reported his previous noon meeting to Crenlo’s top management, also reported this second conversation. He was instructed to tell any employee who stopped work to either return or punch out, leave the plant, and report to the personnel office the next morning for disciplinary action.
At 2 p. m. the pressroom employees stopped work and demanded an answer from Wollenburg. He followed his instructions and told them to return to work or punch out, leave the plant, and report to Personnel subject to disciplinary action. Some of the employees reported back to work. Some 26, however, were upset and angry that top management would not appear and chose to remain idle and repeatedly demand that top management come down to explain its position. Subsequently, they asked Wollenburg why no response was forthcoming and again requested that top management come down to talk over the controversy. Wollenburg explained that top management was not in the plant and that the plant manager, McKibben, could not act in their absence, although he was much concerned over the employees’ demands. The controversy continued with the employees debating among themselves whether to return to work and finally, at about 2:55 p. m., they decided “to go back to work and give [management] more time to think about it and see what would happen in the morning.” By 3 p. m. all of the employees had returned to work, but some indicated that another work stoppage would occur at 9:30 a. m. the following day.
The night or second shift of employees came on at 3:30 p. m. Shortly before that time, a first shift employee, Archie Asleson, who had played a leadership role in the first shift activity, told Wol-lenburg: “Today it was just the press-room. Tomorrow the welders are with us.” After the first shift went off work, they held a meeting and voted to stop work again at 9:30 a. m. the next morning to wait for top management to come down and discuss their wage demands. Some second shift employees attended the meeting. Wollenburg met with Plant Manager McKibben to determine if there were any ringleaders behind the action of the employees and if there were, who they might be. At this meeting they agreed as to the identity of the instigators of the trouble. Those agreed upon were the same ones who were subsequently terminated. The night or second shift workers discussed the day’s activity during their dinner break at 6 p. m. and coffee time at 9 p. m. They voted to come in the next morning and give their support to the first shift in an effort to get top management to respond to their wage demands.
A check of the plant by management at 7 p. m. indicated that some of the welders were angry or worried about their jobs. Their work might be curtailed if the pressroom went out and production of parts ceased. One welder reputedly waived a sledge hammer and said, “If those bastards come down here, I’ll cave their heads in.”
On Friday, August 17, the first shift returned on schedule and began to work. Since rumors continued that there would be a work stoppage at 9:30 a. m., the top management met about 9 a. m. in General Manager Bouffard’s office. Those present included Bouffard (General Manager, Guidenger (Personnel Manager), McKibben (Plant Manager), Stevens (General Foreman) and Wollenburg (Foreman). They discussed the previous day’s activity, and Wollenburg furnished the group the names of the ringleaders in both shifts. Bouffard told Wollen-burg to tell the employees to go back to work and if they did not do so, they were to punch out and report to Personnel on Monday morning, subject to disciplinary action.
The first shift employees gathered together at 9:30 a. m. in the pressroom. At about the same time, about 20 second shift employees, contrary to orders, entered the plant and began talking with the first shift employees in the work area. When Wollenburg ordered all of the first and second shift employees (about 60) to either return to work or punch out and leave, only 7 or 8 first shift employees returned to work. At 9:45 a. m., top management notified 6 of the employees that they were being terminated because of their leadership roles in the work stoppages. The following Monday, a night or second shift employee, Adrian Brakke, was terminated because of his activity on the 17th and also because he had violated a Company rule by soliciting an employee to join the Union during working hours.
The Regional Director, after investigation, refused to issue a complaint against Orenlo. The General Counsel of the Board reversed, however, and the two complaints were filed. After being consolidated, the cases were heard before an Administrative Law Judge, and he found violations of Sections 8(a)(1) and 8(a)(3) of the Act. The Board affirmed. We have examined the record and find that, with one exception, substantial evidence on the whole supports the findings of the Board and that the applicable law is with the Board. Accordingly, we direct enforcement of its order, except as to Adrian Brakke.
The Applicable Law
We start with the proposition that Section 7 of the Act guarantees employees the right to join together to seek better terms, tenure, or conditions of employment. NLRB v. Washington Aluminum Company, 370 U.S. 9, 82 S.Ct. 1099, 8 L.Ed.2d 298 (1962). Here the employees remained on company property in a sincere effort to meet with the management concerning a protest over wages. This they were entitled to do without being deprived of the protection of the Act. NLRB v. Case, J. I., Co., 198 F.2d 919, 922 (8th Cir. 1952); NLRB v. Kennametal, Inc., 182 F.2d 817, 819 (3d Cir. 1950). Under the circumstances here, the Board reasonably and correctly held that the employees did not forfeit the protection of the Act by engaging in two successive in-plant protests of brief duration. Foreman Wollenburg led the employees to believe what he said, that “Somehow I’ll get somebody down here I’ll do what I can.” When nothing happened, the employees went back to work. However, on the next morning, instead of the top management coming down, Wollenburg issued the same old orders to go back to \york or suffer punishment. In only a quarter of an hour, the three top officials came down, but, having already decided to terminate six of the employee leaders, did not discuss the issue. Instead the termination orders were announced.
It appears clear to us that the first shift" employees — unorganized as they were — had banded themselves together in a legitimate effort to present their grievances about wages to the management. Their action had no appreciable impact on company production and none was shown. There was no defiance, no violence, no unlawful conduct; nor were there other sporadic in-plant work stoppages or refusals to work, either in the regular shifts or overtime. All that the employees asked was that management meet and discuss wages. The employees were entitled to have their protest heard and to hear the reaction of management. On the morning of the 17th, they were but reacting individually to the Company’s misrepresentations, its dilatory tactics, and its threats to take disciplinary action rather than engage in frank discussion.
The first shift employees who participated in the brief work stoppage should not have been discharged. Accordingly, we affirm the Board’s findings and order the enforcement of the Board’s order with respect to the discharge of the five first shift employees.
We have more difficulty in finding substantial evidence on the record as a whole to support the Board’s finding that Adrian Brakke was discriminatorily discharged in violation of Sections 8(a)(1) and 8(a)(3) of the Act. This is especially true in light of the Board’s determination that Terry Rich, another second shift employee, could be discharged under the Act. Both Rich and Brakke were active union organizers. Both were singled out by management as leaders of the second shift meetings on August 16. Both violated the Company’s plant rule by coming into the work areas during the first shift. The Board determined that Rich should not have gone into the pressroom and that to do so was unprotected activity. Although Brakke also had wrongfully gone into the working areas on the morning of the 17th, the Board refused to uphold his discharge, apparently because of a number of facts differing from Rich’s case. Brakke was not discharged until the next working day. In the meanwhile, the Company received a report that he had violated its “no solicitation” rule by asking another employee to sign a union card on company time. When the management realized that Brakke had been “into this as much as the other fellows” and that he had also broken both the rule that forbade his coming into work areas during the first shift and the rule that forbade soliciting on company time, Brakke was discharged. The Board found the discharge discriminatory because it involved in part both a valid and invalid ground. The Board reached this decision by determining that the “no solicitation” rule was overbroad and vague.
In support of its position on appeal, the Board recites the long-recognized principle that it is no defense to a claim of discriminatory discharge that the discharge may have had another valid ground. The Board directs our attention to three cases: Reliance Insurance Companies v. NLRB, 415 F.2d 1, 7 (8th Cir. 1969); Mead and Mount Construction Co. v. NLRB, 411 F.2d 1154, 1155-1157 (8th Cir. 1969); and Cupples Co., Manufacturers v. NLRB, 106 F.2d 100, 117 (8th Cir. 1939). In Cupples, the court upheld the Board’s determination that, in a dispute between an affiliated and an independent union the company’s business reasons for shutting down its match department could not overcome the discrimination evident in its failure to rehire members of the affiliated union. In Reliance, the court refused to uphold the Board’s determination that a failure to hire was based upon both sound business reasons and discrimination for past union activity. It held that the business reasons were the significant motive for the failure to hire and that no union animus had been substantially proved on the record as a whole. In Mead, the court refused to uphold a Board determination that the discharge of a steward had been partly for discriminatory reasons in violation of the Act. The court there determined that no evidence of union animus had been shown.
Unfortunately, none of these cases seem apposite here where the discharge rests upon two entirely separate and independent grounds, one of which the Board has independently used and approved. The first ground, discharge for going into the work areas during the first shift, is the same conduct upon which the discharge of the only other discharged second shift employee, Terry Rich, was predicated. The second ground, violation of the “no solicitation” rule, was on its own an illegal basis for discharge, according to the Board’s interpretation of the case law. Here, however, the Board by upholding Rich’s discharge, has acted despite whatever union animus the rule’s enforcement may have demonstrated. Both Rich and Brakke were active union organizers among the second shift employees, and both had wrongfully entered the press room along with other second shift employees on the morning of the work stoppage. Yet only Rich’s discharge was approved by the Board. The sole difference between the two was the intervening passage of a weekend in the receipt of the evidence of solicitation by Brakke on company time. By approving Rich’s discharge, the Board made the law of the case, i. e., union animus does not invalidate a discharge for engaging in unprotected activity. The irrelevance of the general rule, that a discharge based partially upon valid grounds and partially upon invalid grounds must be reversed as discriminatory, is apparent. Here the Board’s own findings and determination fixed the independence of the first ground for Brakke’s discharge. The validity of the Company’s “no solicitation” rule is, therefore, not involved and we do not reach it.
When the record in a Board determination presents facts that propose conflicting inferences, it is not for us to disagree with the findings of the Board. NLRB v. Whitin Machine Works, 204 F.2d 883, 887-88 (1st Cir. 1953). However, when the Board’s determination presents- conflicting results unsupported by substantial evidence on the record as a whole, the decision is suspect. By allowing Rich’s discharge to stand, the Board determined that, at least in this case, the second shift’s intrusion during first shift working hours was an adequate, independent basis for discharge. Consistency requires that Brakke’s discharge too must be upheld.
Accordingly, we affirm so much of the Board’s order as pertains to the five first shift employees and order its enforcement. As to Brakke, we grant the petition for review and reverse the determination made by the Board that he must be reemployed.
It is so ordered.
. 29 U.S.C. § 158:
(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
. Among the six terminated that morning was Terry Rich, a second shift employee who had been active at the first shift meeting the previous day. The Board upheld his termination because he had violated a plant rule by coming on the premises during the first shift.
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.
MACK, Circuit Judge.
Error and cross-error from a judgment for plaintiff in the sum of $6,519.36, with interest, part of an additional assessment collected from him as income tax for the year 1919.
The New York Life Insurance Company, a mutual company, issued to plaintiff, then aged 24, two policies, effective May 19, 1899, in the aggregate face amount of $100,000 called “insurance bond, with guaranteed interest.” The annual premium was $7,810. In ease of death within the first 10 years, only the face amount $100,000 was to be paid; if death occurred within the second 10 years, the amount payable would be, in excess of $100,000, a guaranteed sum, increasing year by year, and reaching a maximum of $144,300 in the twentieth year. In case of death during the year which included March 1, 1913 — that is, the year ending May 19,1913 — $114,000 would thus have been payable. If the insured was alive at the end of the twentieth year — that is, on May 19,1919 — the face of the policy became payable, and in addition thereto a cash dividend then to be apportioned by the company. Certain optional rights were given at the end of the twentieth year, hut they are not important for the purposes of this case. The policy was payable to the estate of the insured; he had the right to change the beneficiary.
The guaranteed loan or cash surrender value, which began in the third year, amounted to $79,400, in the year ending May 19, 1913. In order fairly to determine the dividend apportionable at the end of 20 years, the company kept a record, called “Funds provisionally ascertained and held awaiting apportionment,” for each policy. This provisional fund increased yearly; to it were allocated the dividends that would otherwise have been paid annually, with the interest earned thereon, and the pro’ rata share of the similarly provisionally accumulated dividends of those policy holders in the same class who died before the end of the 20-year period. On March 1,1913, the company had thus provisionally set aside on its books $13,600 for plaintiff’s policies. As of that day, its accountants would have estimated that on the assumption of surplus increase during the ensuing 6 years at the same rate as during the past 14 years, the dividend payable to plaintiff if alive on May 19,1919, would be $19,428.57. The actual course of events was that the rate of increase of the surplus was accelerated during the next 6 years, so that the amount actually paid to plaintiff in 1919 was $20,797, in addition to the $100,000 face amount of the policies.
Of the amount plaintiff received, he reported $17,238.35 as income for the year 1919, claiming that the remaining $103,560.-65 represented the March 1, 1913, value of his policy. The Commissioner of Internal Revenue, reauditing his return, found the taxable gain to have been $42,697, the difference between the amount received, $120,-797, and the amount paid out in premiums during the 20 years, $78,100. Yalue as of March 1, 1913, was disregarded. Pursuant to demand, plaintiff paid an additional assessment of $8,750.91 and brought this action for its return.
The District Court found the taxable gain $27,209.19 over the March 1, 1913, valuation of $93,587.81, on this reasoning: As plaintiff on March 1, 1913, was normally healthy and 38 years old, the chances of his living out the full 20 years and then receiving $119,-428.57 in the policies were very good. Discounting that sum at the rate of 4 per cent, annually for the 6 years, 2 months, and 19 days, gave $93,587.81, the value on March 1, 1913, as found by the court.
The applicable statutory provisions are sections 202 and 213 of the Revenue Act of 1918, 40 Stat. 1060, 1065, as follows:
“Sec. 202. (a) That for the purpose of ascertaining the gain derived or loss sustained from the sale or other disposition of property, real, personal, or mixed, the basis shall be—
“(1) In the case of property acquired before March 1, 1913, the fair market price or value of such property as of that date. * * *” Comp. St. § 6336ysbb.
“See. 213. That for the purpose of this title (except as otherwise provided in section 233) the term ‘gross income’—
“(a) Includes gains, profits, and income derived from * * * sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever. The amount of all such items shall be included in the gross income for the taxable year in which received by the taxpayer, unless, under methods of accounting permitted under subdivision (b) of section 212, any such amounts are to be properly accounted for as of a different period; but
“(b) Does not include the following items, which shall be exempt from taxation under this title:
“(1) The proceeds of life insurance policies paid upon the death of the insured to individual beneficiaries or to the estate of the insured;
“(2) The amount received by the insured as a return of premium or premiums paid by him under life insurance, endowment, or annuity contracts, either during the term or at the maturity of the term mentioned in the contract or upon surrender of the contract. * * * ” Comp. St. § 63361/gff-
Regulations 45 (1920 Edition) provide in article 72b: “During his life only so much of the amount received by an insured under life, endowment, or annuity contracts as represents a return, without interest, of premiums paid by him therefor is excluded from his gross income.”
It is contended by plaintiff that the proceeds of life insurance policies are not constitutionally taxable as income, but that, if they are, then the correct method of determining the taxable gain in the present ease is to subtract from the amount received a sum equal to the face of the policy plus the dividends which had been provisionally determined by March 1, 1913. Defendant contends that the policies are taxable, at the difference between the amount received and either the amount of premiums paid or the cash surrender value on March 1, 1913.
Plaintiff contends that the proceeds of life insurance policies do not constitute income within the Sixteenth Amendment. In United States v. Supplee-Biddle Hardware Co., 265 U. S. 189, 44 S. Ct. 546, 68 L. Ed. 970, the Supreme Court expressly refrained from deciding whether life insurance paid on the death of a corporate officer could constitutionally be taxed as income to the corporation which had insured him. The instant policy is an endowment; payment thereof was made in the lifetime of Alexander, to himself. The policy, like all endowment policies, was a combination of life insurance and investment. When paid, there inured a clear profit to the insured, a profit that is as much income, within the constitutional amendment, as any profit gained in a business transaction. The provisions of the 1918 act above quoted are clearly broad enough to include gains from insurance transactions other than the two specific exemptions.
The second question is as to the applicability of Treasury Regulation 45, article 72b, under which the Commissioner proceeded. Attempts to support it on the ground of settled administrative practice must fail, not only because the government relies for proof of the continuity of the practice upon later regulations promulgated after the assessment in dispute and under different statutes, but also because the regulation is contrary to l.aw in so far as it attempts to regulate income tax on proceeds of insurance policies having a fair market price or value on March 1, 1913. The act which it interprets says that to ascertain gain from the disposition of property, the excess over the March 1, 1913, fair market price or value of that property should be taken. ,An insurance policy is of course property within the statute. Its value as property is not necessarily equal to its cost; it may as well be more or less.
We come, then, to the question of the March 1,1913, value of the policies. Defendant contends for surrender value, on the ground that the only way the insured could have realized on his policies in 1913 was by surrendering them. Plaintiff contends for the then value to the insured because of the lack of a market price, due to their non-assignability to a stranger. That value, plaintiff further contends, was $113,600, the face of the policies plus $13,600 of surplus then provisionally credited to him on the company’s books, since it was reasonably certain that plaintiff would get at least that sum. He argues that the probability of further additions to surplus during the time plaintiff had to wait for the money neutralized the six years’ postponement of enjoyment, so that no discounting was necessary to find present value.
The only reported litigation involving the valuation of an insurance policy for federal income tax purposes which has been found is Appeal of Kline, 3 B. T. A. 1138. There, the taxpayer held a policy of the New York Life Insurance Company, in the amount of $10,000, issued in 1902 and fully paid up in 1912 by ten annual premiums of $965.20, on which policy no dividends or other distribution was to be made until 1922, when the insured exercised the option to receive $14,-830.10 in cash. The surrender value March 1, 1913, was $9,070. The Commissioner based the tax for 1922 upon the difference between the surrender value on March 1, 1913, and the total paid in 1922. He was sustained by the Board of Tax Appeals. However, the sole ground of the taxpayer's appeal was that the amount of premiums paid should have been subtracted rather than the surrender value. A method similar to that employed by the District Judge in the present ease was not urged, and would have been still more unfavorable to the taxpayer.
Kentucky Tobacco Products Co. v. Lucas (D. C.) 5 F.(2d) 723, involved the valuation as of March 1, 1913, for the purpose of measuring depreciation under the income tax, of a contract right to make future purchases of raw materials at highly advantageous prices. The method of valuation employed was to find how much profit would be received by the taxpayer under the contract during the years it had to run, and then to take the present value in 1913 of this amount by discounting on a 5 per cent, interest basis.
Plaintiff’s situation on March 1,1913, was as follows: If he lived until 1919, he could reasonably expect then to realize about $120,-000 on the policies. The present value of that sum we may take as $93,587.81, since the details of the trial judge’s calculations are unimpeaehed. The amount payable to the estate in case of death between March 1, 1913, and May 19, 1919, would have ranged from a minimum of $114,000 to a maximum of $144,0P0.
It follows, therefore, if the policy had been salable, its market value on March 1, 1913, would clearly have been nó less than $93,587.81, the then discounted value of the amount in all probability payable at maturity, inasmuch as the purchaser would have had an excellent investment, with the chance of a very heavy increase in ease the insured died before maturity.
If an assignable policy were worth this amount in the market, then the nonassignable policy was worth the same amount to the insured.
It is true that plaintiff could have realized only $79,400 from the policies by surrendering them. But he was under no obligation to make . this less advantageous disposition of his property. The statement in In re Newland, 18 Fed. Cas. 92, No. 10,171, approved in Hiscock v. Mertens, 205 U. S. 202, 212, 27 S. Ct. 488, 51 L. Ed. 771, that the present value of an insurance policy is its surrender value, was a dictum with reference to valuation for bankruptcy purposes. It involves wholly different considerations. The loan or surrender value of plaintiff’s policies was not a “market price.” Moreover, section 202 does not make market price the sole criteriorf; it permits deduction of fair market price or value, and since the latter phrase is set in opposition to the former value to the owner may be taken as the alternative to market price.
Plaintiff Alexander’s assignments of error in No. 4974 are without merit. The attempt is made, by reasoning not entirely clear, to take the face of the policy plus the provisionally apportioned dividends as the value in 1913. If the theory of this is that plaintiff was sure to get at least that amount in 1919, there is the obvious objection that plaintiff has lost sight of the fact that a future-accruing sum must be discounted to find its present value. If, on the other hand, plaintiff’s theory is that the provisionally credited dividends in 1913 represented in part the intrinsic value of the policy, this runs counter to New York Life Insurance Co. v. Edwards, 271 U. S. 109, 46 S. Ct. 436, 70 L. Ed. 859, affirming 8 F.(2d) 851, which made clear that holders of policies such as the one here in question have absolutely no interest in such dividends until the maturities of their policies.
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:
|
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 Commissioner of Internal Revenue assessed interest on certain alleged tax deficiencies for the years 1948 and 1949 against Hastings & Co., Inc. (taxpayer). The Commissioner notified the taxpayer of the assessment, whereupon the taxpayer brought suit in the district court for the Eastern District of Pennsylvania, asking that the Collector for the First Collection District of Pennsylvania be enjoined from collecting the assessed interest. The government, in turn, brought suit in the same court for collection.
The cases were consolidated for trial. Two orders were entered by the district court. One granted taxpayer’s motion for summary judgment and granted the prayer for injunctive relief. The other dismissed the government’s action to collect and granted judgment for the taxpayer. These appeals followed. •
The following facts are not disputed. In the years 1948 and 1949, the taxpayer filed tax returns which showed approximately $372 due for 1948 and $13,-000 due for 1949. The 1948 tax as shown was paid, as was part of the 1949 tax. The taxpayer did not pay the balance of the 1949 tax shown on its return because it had filed an application for extension of time in order to stay payment since a net operating loss in 1950 was anticipated which would, under carry-back provisions of the Internal Revenue Code, 26 U.S.C. § 122, reduce or eliminate its tax liability for 1948 and 1949.
After the close of its 1950 fiscal year, the taxpayer filed timely application for benefits under the carry-back provisions of the Code, due to the 1950 net operating loss and claimed refunds for the 1948 tax and that portion of the 1949 tax which it had paid. The claims were granted and in due course paid.
The Commissioner then caused an audit of taxpayer’s returns for 1948, 1949, and 1950 to be made. The audit (according to the agent’s report) showed that the taxpayer’s 1948 and 1949 taxable income was substantially greater than had been shown by taxpayer’s figures in the original 1948 and 1949 returns. The audit also showed a greater net operating loss for 1950 than had been originally claimed by the taxpayer.
Because of the increased taxable income for 1948 and 1949, the net operating loss of 1950 (even though increased, according to the agent’s report) was not sufficient to completely offset the taxable income for both 1948 and 1949, as was the case according to the original returns filed by the taxpayer for the three years. The 1948 taxable income was completely offset, but the 1949 taxable income was only partially offset.
The agent’s figures for 1948 and 1950 were submitted to taxpayer and approved through its President in an agreement dated May 7, 1951.
Since the agent’s report showed taxable income in 1949 upon which a tax was due, the taxpayer executed a “Waiver of Restrictions on Assessment and Collection of Deficiency in Tax” for the year 1949. The waiver extended to the .1949 tax due and proper interest thereon.
On or about June 26, 1951, the Commissioner adopted the agent’s report as his own determination, and on August 3, 1951, assessed against the taxpayer the deficiency in income tax for the year 1949 with interest to which the taxpayer had agreed. This tax and interest was paid and is not in issue.
The Commissioner also assessed against taxpayer interest on the deficiencies in taxes for 1948 and 1949, which deficiencies had already been “paid” by the taxpayer, in that they had been wiped out by the carry-back loss from 1950. It is the assessment of this interest which is in dispute.
We are first presented with the question of whether the interest was owing to the government. In Manning v. Seeley Tube and Box Co., 1950, 338 U. S. 561, 70 S.Ct. 386, 94 L.Ed. 346, the Supreme Court decided that interest on a validly assessed deficiency is not abated when the deficiency itself is abated by the carry-back of a net operating loss. The government claims that the Manning decision governs this case, but taxpayer contends that there is a significant difference between the facts in Manning and this case. In the Manning case, the deficiency was assessed prior to the application for carry-back of a net operating loss, whereas in this case the application for carry-back was made prior to the determination of deficiency.
Taxpayer contends that the Manning opinion expressly reserved decision on whether interest would be owing when the loss is claimed prior to the attempted assessment of a deficiency. But there is no indication in the opinion that the Supreme Court would have reached a different result had the facts been as here. Application of the principles announced in the Manning ease to our case compels the conclusion that the taxpayer owed interest to the government. “We hold that the interest was properly withheld by the Collector. The subsequent cancellation of the duty to pay this assessed deficiency does not cancel in like manner the duty to pay the interest on that deficiency. From the date the original return was to be filed until the date the deficiency was actually assessed, the taxpayer had a positive obligation to the United States: a duty to pay its tax. See Rodgers v. United States, 1947, 332 U.S. 371, 374, 68 S.Ct. 57, 92 L.Ed. 3; United States v. Childs, 1924, 266 U.S. 304, 309-310, 45 S.Ct. 110, 111, 69 L.Ed. 299; Billings v. United States, 1914, 232 U.S. 261, 285-287, 34 S.Ct. 421, 425-426, 58 L.Ed. 596. For that period the taxpayer, by its failure to pay the taxes owed, had the use of funds which rightfully should have been in the possession of the United States. The fact that the statute permits the taxpayer subsequently to avoid the payment of that debt in no way indicates that the taxpayer is to derive the benefits of the funds for the intervening period. In the absence of a clear legislative expression to the contrary, the question of who properly should possess the right of use of the money owed the Government for the period it is owed must be answered in favor of the Government.” Manning v. Seeley Tube & Box Co., 1950, 338 U.S. 561, 565-566, 70 S.Ct. 386, 389.
We see no reason why a taxpayer who claims a carry-back before the government discovers his prior deficiencies should have any advantage over one who does not claim a carry-back until after the deficiency is determined. See Rodgers v. United States, 1952, 108 F.Supp. 727, 123 Ct.Cl. 779.
But even if the taxpayer owed the interest, there remains the question of whether it is collectible under the circumstances presented.
Section 272(a) of the Internal Revenue Code provides:
“§ 272. Procedure in general “(a) (1) Petition to Tax Court of the United States. If in the case of any taxpayer, the Commissioner determines that there is a deficiency in respect of the tax imposed by this chapter, the Commissioner is authorized to send notice of such deficiency to the taxpayer by registered mail. Within ninety days after such notice is mailed * * * the taxpayer may file a petition with the Tax Court of the United States for a redetermination of the deficiency. No assessment of a deficiency in respect of the tax imposed by this chapter and no distraint or proceeding in court for its collection shall be made, begun, or prosecuted until such notice has been mailed to the taxpayer, nor until the expiration of such ninety-day period, nor, if a petition has been filed with the Tax Court, until the decision of the Tax Court has become final. Notwithstanding the provisions of section 3653(a) the making of such assessment or the beginning of such proceeding or distraint during the time such prohibition is in force may be enjoined by a proceeding in the proper court. * * *” 26 U.S.C. § 272(a) (1),
and Section 292(a) provides:
“§ 292. Interest on deficiencies “(a) General rule. Interest upon the amount determined as a deficiency shall be assessed at the same time as the deficiency, shall be paid upon notice and demand from the collector, and shall be collected as a part of the tax, at the rate of 6 per cen-tum per annum from the date prescribed for the payment of the tax * * * to the date the deficiency is assessed, or, in the ease of a waiver under section 272(d), to the thirtieth day after the filing of such waiver or to the date the deficiency is assessed whichever is the earlier. If any portion of the deficiency assessed is not to be collected by reason of a prior satisfaction, in whole or in part, of the tax, proper adjustment shall be made with respect to the interest on such portion.” 26 U. S.C. § 292(a).
The taxpayer contends that here there was never any determination of a deficiency and, even if there was, no ninety-day letter as provided in Section 272(a) was ever sent, and that the Commissioner’s failure in those two respects precludes him from assessing and collecting interest.
The argument that no determination of a deficiency was ever made by the Commissioner is without merit. The Commissioner adopted the agent’s report, which clearly showed a greater tax liability for 1948 and 1949 than had been originally reported by the taxpayer. If anything, only elementary mathematics was necessary in arriving at the amounts of the deficiencies. The taxpayer attempts to draw some distinction between computation of a deficiency and determination of a deficiency. The effect of such a distinction, if there is one, eludes us. There can be no doubt that deficiencies were determined and that taxpayer was so notified when he was notified that interest on the deficiencies had been assessed. Once the deficiency was determined, there was no need to comply with the notice provisions of Section 272(a). That section clearly imposes the notice limitations only if the Commissioner is attempting to collect and assess a deficiency. Here the Commissioner was not attempting to assess nr collect any deficiency. The taxpayer had already consented to the increased tax liability for 1948 and 1949. This is evidenced by both the May 7, 1951, .agreement which it signed and the waiver signed for 1949. The 1949 tax result to which the taxpayer agreed necessarily depended upon the 1948 and 1949 taxable income. So far as the Commissioner was concerned, the deficiency was cleared ;up — but interest was still owing. Section 292(a) says that interest shall be .assessed at the same time as the deficiency. But where, as here, there is absolutely no reason to assess the deficiencies, we think that the notice provisions of Section 272(a) are not applicable, and interest can be assessed and collected independently. See Rodgers v. United States, 1952, 108 F.Supp. 727, 123 Ct.Cl. 779; United States v. Koppers Co., 1955, 348 U.S. 254, 270-271, 75 S. Ct. 268. All parties seem to agree that Rodgers v. United States, supra, is in all essential respects identical with the present case, except that there the taxpayer paid the interest and was suing for a refund. We think that the reasoning and discussion enunciated in Rodgers are applicable here, even though collection, rather than refund, is sought.
In No. 11,471, the injunction against the Collector will be dissolved and the judgment reversed; in No. 11,472, the judgment entered will be reversed and the cause remanded with instructions that the government’s suit be reinstated.
. Taxpayer’s fiscal year ended on March 31, in the years in question, 1948, 1949, and 1950.
. The agreement read:
“The undersigned taxpayer has examined the report of the Internal Itevenue Agent in Charge, Philadelphia, Pennsylvania, covering the examination of income tax returns for the years ended 4/30/48 and 4/31/50*, and agrees to the findings of the Examining Officer. It mil not therefore be necessary to withhold action on same pending expiration of period of notice to taxpayer as no protest to the findings will be made. * Both parties agree above dates should bo 3/31/48 and 3/31/50.”
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.
BARRETT, Circuit Judge.
This appeal is taken by Brooks Towers Corporation, hereinafter called the Owner, and its co-plaintiffs, Central Bank and Trust Company and the First National Bank of Denver, lending institutions, from the $786,386.24 judgment awarded the Hunkin-Conkey Construction Company and Federal Insurance Company, hereinafter called the Contractor, upon its counterclaim for damages representing the balance due under a contract for the construction of Brooks Towers, a 42-story commercial and apartment building in Denver. The Contractor has filed a cross-appeal.
This diversity suit involved a two-week trial to the Court without jury.
The Contract — Contentions—Court Findings
The original construction contract price was $7,600,000.00. Pertinent provisions, for purposes of this opinion, became operative on June 8, 1966, when work commenced. They are:
“Within fifteen months after acceptance (June 8, 1966) of said notice to proceed
“(a) commercial and office space is to be substantially completed as a shell area and be ready for customization by others in accordance with plans and specifications,
“(b) garage floor areas shall be substantially completed with 20% of said garage area being reserved for Contractor storage and usage,
“(c) approximately 175 apartment suites on a contiguous block of lower floors shall be substantially completed and ready for final decoration by others,
“Substantial completion of the entire Work shall be accomplished in eighteen (18) months after acceptance of said notice to proceed.”
Substantial completion was defined as meaning “when the Work is ready for occupancy for its intended purposes, except for customization for tenants and ‘punch list’ items to be completed by Contractor.” By its terms, unless relieved by excusable delays, substantial completion should have been accomplished by December 8, 1967. The Contract provided further that:
“If the Contractor is delayed at any time in the progress of the Work by any act or neglect of the Owner, the Architect, or any employee, agent or contractor of either, or by deletions, alterations, or additions ordered in the Work, or by labor disputes, fire, accidents, severe weather conditions, unusual delay in transportation or any other causes beyond the Contractor’s control, then the times herein fixed for the completion of the Work shall be extended for a period equivalent to the time lost by reason of any one of the causes aforesaid. The Contractor shall promptly notify the Owner in writing of the facts relating to any of the above described causes of delay and Contractor’s estimate of the revised dates of completion of the Work.” (Emphasis ours.)
The Owner contends that it is entitled to damages by reason of failure of the Contractor to meet either the partial completion or substantial completion dates in the contract schedule. It contends that the building was not completed until November of 1968. The Owner seeks damages for lost rentals, additional interest payments charged, defective work, temporary housing of tenants and other losses.
The Contractor counterclaimed, alleging that by reason of excusable delays the building was substantially completed on June 1, 1968. The Contractor sought a total judgment of $1,029,947.93.
The trial court found that: (1) the Owner, at pretrial, asserted that the Contractor was required to complete the building in December, 1967, and that it was not completed until November, 1968; (2) the parties agreed upon a procedure with respect to changes in the work (deletions, alterations, or additions) which involved, in each instance, a “Quotation” from the Contractor setting forth the number of additional calendar days to be extended beyond the original Contract period for completion of the work, directed to the Owner’s Architect, who approved extensions of time total-ling 185 calendar days; (3) in addition to the extensions of time approved by the Owner’s Architect, the Contractor was entitled to 30 calendar days by reason of labor disputes and severe weather conditions; and (4) that substantial completion of the work occurred on June 8, 1968, except for noncustomized apartment units on floors 40 and 41 which were not completed until October 11, 1968, but that the Owner did not 'offer evidence of any loss of rental damage thereby. The Court had previously ruled that the Owner was entitled to a set-off of $28,170.00 representing the measure of damages for failure of the Contractor to comply with Bulletin 15 relating to work to be performed on concrete balconies.
Partial and Substantial Completion
The Owner complains that the trial court erred in failing to make any findings relating to “partial completion”, i. e., the occupancy aimed for within the 15 month period. The parties understood that both the “partial” and “substantial” completion schedules were extremely tight and that the construction schedule required clockwork precision in order to accomplish these objectives. These schedules were strictly tied to the original plans and specifications.
Max Ratner, the Owner’s Architect, acknowledged that major changes were made from the original plans and specifications, with particular reference to the third floor and the upper floors. These changes affected both structural and mechanical engineering changes. Ratner acknowledged that many of the changes affected the sequence of the work, thus creating delays. The Contractor had undertaken a “critical path scheduling” study before submitting its bid on this project. This involves breaking a construction job down into its smallest working components and scheduling the work in proper sequences. The importance of meeting a “critical path schedule” is evident. Chat Paterson, Vice-President of the Owner, testified that the Owner, too, relied upon its own critical path schedule.
There is substantial evidence in this voluminous record that: (a) “partial completion” was accomplished through the 20th floor by December 11, 1967, some three months behind the contract schedule; (b) the major change relating to the third floor had occurred during this time; and (c) the Contractor had requested some 78 days extension of time, relating entirely to changes in the scope of the work which, together with delays during the first 15 months resulting from strikes and weather conditions, are justified in this record.
The trial court properly treated and considered damages only in relation to the “substantial completion” covenants of the Contract. The Court found that substantial completion was not required of the Contractor until July 1, 1968. We hold that this finding is supported by substantial evidence.
Extensions of Time
The overriding dispute in this case involves the extensions of time which the Contractor was entitled to. The trial court found that the Owner’s Architect, Ratner, had approved extensions of 185 days, exclusive of 30 days delay resulting from labor disputes and severe weather conditions — or a total of some 215 days extension.
The Owner contends that the Contractor was not entitled to any extensions of time beyond some 30 days resulting from labor disputes and severe weather conditions. In justification, the Owner argues that: (a) the extensions requested were for customization work, the accomplishment of which was not germane to substantial completion; (b) this customization work, for the most part, was not performed until after the date on which the Court found that substantial completion had occurred; and (c) the extensions of time were understood by the parties to be concurrent and not tacked onto one another.
We first observe that all references in the Contract referred to as “customization” work were those in the original plans and specifications, not customization work resulting from changes effected after the Contract was executed.
There is a most damaging vacuum in this record reflecting upon the Owner. The Owner contends that its Architect, Max Ratner, had no authority to grant extensions of time. Pointing to the Contract language designating the Architect as the Owner’s agent to “review and act” in an advisory capacity for the Owner relating to construction changes, the Owner disavows the Architect’s authority to grant extensions of time. Thus, the Owner argues that the Contractor did not notify the Owner of claims for additional time except for some 30 days delay resulting from strikes and severe weather conditions.
Extension of Time Procedure
The parties effected a specific procedure for Change Orders from the original plans and specifications. The Owner’s Architect issued a “Bulletin” detailing a change directed to the Contractor requesting a “Quotation” from the Contractor. This was, in legal effect, a call for a bid. The Contractor would then issue a “Quotation” setting forth a change in Contract price, if any, together with a specific request for additional days to complete the Contract as a result of the changes. The record reflects that the Contractor requested extensions of some 300 days involving about 80 formal “Quotations” and some 30 Field Order Changes. The “Quotations” were, in legal effect, offers on the part of the Contractor to undertake the requested changes, subject to specific price changes, if any, and additional days to complete the work. These “Quotations” were submitted direcly to Ratner, the Architect, and reviewed by Chat Paterson, Vice-President of the Owner, and one Kromer, an on-the-job architect employed by Ratner. Kromer testified that he and Ratner jointly agreed on each Quotation. He and Ratner both testified that they were in a position only to recommend extensions to the Owner, but that the ultimate determination was between the Owner and the Contractor. But Ratner also said that the decisions on the Quotations would be made by the Owner and “ratified” by him. Herbert Wasserman, an officer of the Owner, testified that he was in “constant” contact with Ratner and Paterson concerning contract price changes and that he did review some Quotations. The Quotation forms were prepared by the Contractor. Each contained a portion for approval or disapproval for execution by the Owner, as follows:
APPROVAL
The undersigned hereby approves the above proposal for Item(s)_ above for a total net increase/decrease/no change in the contract price of - Dollars ($--). Item(s) (of calendar days) above are not approved. You are requested to prepare an amendment of the Agreement dated May 5, 1966 in accordance with the foregoing.
MAX RATNER, ARCHITECT
By -
Dated _
In every instance Ratner completed that portion of the Approval dealing with the change in contract price. In a few instances Ratner expressly allowed or disallowed extensions of time. In the great majority of the Quotations Ratner did not make any entries relating to extensions. He testified that by not acting, he indicated his disapproval, or, perhaps more accurately, that the extensions were matters to be determined by the Owner and the Contractor. The Contractor relied upon the lack of express disapproval as a grant of the requests for extensions. After Ratner returned the “Quotation” forms to the Contractor, an amendment or “Change Order” reflecting .the deletions, alterations or additions was prepared by the Contractor and thereafter executed by the Contractor. Paterson then executed on behalf of the Owner. The two interim Denver lending banks also executed them. The “Change Orders” did not refer to extensions of time.
The trial court found that Ratner was authorized by the Owner to act as its architect and agent in supervising the work, in issuing the Bulletins for changes, and in approving or disapproving the Quotations including the extensions of time. The trial court found that the extensions of time approved by Ratner totalled 185 calendar days. We agree.
Lacking express disapproval as contemplated on the face of the form, the Contractor relied upon Ratner’s inaction as approval. Here the silence can be attributed to both Ratner and Paterson, the Owner’s representatives on the job. When the relations between the parties justify the offeror’s expectation of a reply or where a duty exists to communicate either an acceptance or rejection, silence will be regarded as an acceptance. Laredo Nat. Bank v. Gordon, 61 F.2d 906 (5th Cir. 1932); Suitter v. Thompson, 225 Or. 614, 358 P.2d 267 (1960); Tanenbaum Textile Co. v. Schlanger, 287 N.Y. 400, 40 N.E.2d 225 (1942); and Lechler v. Montana Life Ins. Co. of Helena, Mont., 48 N.D. 644, 186 N.W. 271 (1921).
We do not find any inconsistency on the part of the Contractor in directing requests for extensions of time resulting from labor disputes and severe weather conditions to the Owner’s Denver office rather than to the Architect. These requests did not relate to deletions, alterations or additions in the building plans and specifications.
The procedure established by the parties constituted confirmation by the Owner of the authority exercised by Ratner and Paterson. Rogers v. Beiderwell, 175 Kan. 223, 262 P.2d 814 (1953); Davis v. Bush & Lane Piano Co., 124 Or. 585, 265 P. 417 (1928); Sando v. Kalberg, 138 Wash. 247, 244 P. 576 (1926); Blackwell v. Kercheval, 27 Idaho 537, 149 P. 1060 (1915).
Customization
The Owner insists that of the 185 days of extensions allowed by the Court based upon Change Orders, all but 43 days dealt with “customization” work only. Applying Article 2 of the Contract, the Owner thus argues that substantial completion of the work should have been accomplished on or about February 24, 1968.
It is true that a great deal of the work changes related to “customization”. It is also true that many of the Change Orders bore dates as late as June of 1968. There is substantial evidence, however, that most of the work reflected by these Change Orders had been completed pri- or to date of their execution. Kromer, who was employed by Ratner, issued Construction Progress Estimates. He testified that the building was 97.3 percent completed on May 31, 1968, and 98.3 percent completed on June 30, 1968. There is a great deal of evidence of delay in execution of the Change Orders by the Owner and the interim lending institutions.
The Owner’s argument that the Contractor was not entitled to extensions of time resulting from “customization” Change Orders is without merit. The contract reference to “customization” related only to that type of work reflected in the original plans and specifications. The parties were aware that changes could affect the program work schedule.
The testimony of Richard N. Green, a Construction Consultant, is corroborative of Ratner’s grant of some 185 days extensions and significant in relation to the “clockwork” scheduling of work components required to accomplish the original contract completion schedules. Green’s study took into consideration the plans and specifications, the computerized Critical Path Scheduling program, all Bulletins, formal Change Orders, Field Change Orders, related correspondence, Daily Progress Reports and Monthly Pay Requests. He computed some 394 days involving requests for extensions. He eliminated those of an “overlapping” nature and those which were not critical. He did not consider delays resulting from labor disputes or severe weather conditions. He arrived at a total of 180 days extension of time to which the Contractor was entitled.
There were unexplained delays on the part of the Owner relating to approval of Change Orders, selections of customization items such as ceramic tile, fixtures and accessories, color selections, etc. These delays did in fact change the scope of the work. Indecision on the part of the Owner with respect to tenant paint color selections was such, as early as July or August of 1967, that painters were moving from one floor to another in the building, completely out of program sequence. Some important work had to be re-done because the original plans and specifications did not comply with city codes.
The Cross Appeal
The Contractor appeals from the trial court’s allowance of a $28,170.00 set-off against the Contractor for non-compliance with the standard required under Bulletin #15 relating to balcony finishes on apartments above the 17th floor. There is substantial evidence to support the Court’s finding in this regard. The Contractor contends that there was no admissible evidence of damages.
At the time of trial the defects in the concrete finish had not been rectified. The Owner sought bids covering the claimed defects, a schedule of which was submitted to the Contractor. The record reflects that the lowest bid received was predicated upon an inspection and submittal by a Mr. R. W. Graves, who was not available to testify at trial. However, a Mr. McHenry of the same firm did testify. He updated the Graves bid by 7%. He testified at some length concerning the bids. The Contractor did not offer any evidence regarding the costs of repairs. We hold that although the bids admitted in evidence were hearsay, they were admissible under the Business Records Act, 28 U.S.C. § 1732(a). Hearsay may have affected the weight of these documents, but not their admissibility. The Court’s set-off was predicated upon the lowest bid.
We affirm the trial court’s judgment against the Owner. We deny the Contractor’s cross-appeal from the trial coui't’s allowance of a set-off of $28,170.-00 to the Owner representing repairs to the concrete balconies.
Each party shall bear its own costs in this 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:
|
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
HAMILTON, Circuit Judge:
Joan Crosby (Joan) appeals the district court’s summary judgment decision holding that Margaret Crosby (Margaret), rather than Joan, should receive the remaining insurance proceeds from the group life insurance plan on the life of Leonard Crosby (Leonard). Margaret cross-appeals the district court’s summary judgment decision holding that she could not recover from Metropolitan Life Insurance Company (Met Life) or General Motors Corporation (GM) the proceeds previously paid to Joan under the same group life insurance plan.
We conclude that the district court properly determined that Margaret should receive all future life insurance proceeds and that neither Met Life nor GM should have to pay Margaret the amount already paid to Joan under this plan. We, therefore, affirm.
I
Margaret married the decedent Leonard on December 10, 1961. Six months later they separated without obtaining a legal divorce. Thereafter, Margaret began living with Lee Andrew Williams and had three children by him. Margaret also changed the name on her social security card and her checking account to Williams, and titled her house in the name of Williams. Meanwhile, Leonard married Joan in January 1969. Leonard and Joan lived together until Leonard’s death on January 29, 1990.
As an employee of GM, Leonard participated in a group life insurance plan underwritten by Met Life. The plan provided that, upon the employee’s death, Survivor Income Benefit Insurance (SIBI) benefits would be paid to the “widow of a deceased male employee, but only if she was legally married to him at the time of his death and had been legally married to him for at least one year.” Joint Appendix (J.A.) at 104. Leonard designated Joan as his wife and beneficiary under this group life insurance plan.
Upon Leonard’s death, Joan submitted a “Statement of Claim for Life Insurance Proceeds Under the General Motors Life and Disability Benefits Program,” requesting that Met Life/GM pay the SIBI benefits to her. As part of her claim, Joan submitted her marriage certificate acknowledging her marriage to Leonard. On the application for his license to marry Joan, Leonard had indicated he was single. Because Met Life/GM had no evidence to dispute Joan’s legal status as Leonard’s widow, Met Life/GM began paying SIBI benefits to Joan on March 13, 1990. Met Life/GM paid approximately $3,600 to Joan before receiving notice of Margaret’s claim as Leonard’s legal widow. Met Life/GM then escrowed all subsequent payments, taking the position of a stakeholder ready to pay whomever the court directed.
In September 1990, Margaret filed this action against Joan and Met Life/GM in the Circuit Court for Baltimore County, Maryland. Margaret sought a declaration that she was the legal widow of Leonard, thereby entitling her to all future SIBI benefits. In addition, Margaret claimed unjust enrichment against Joan, seeking to recover the SIBI payments already received by Joan. Joan responded that Margaret should be estopped from claiming both the prior and future benefits, alleging that Margaret knew of Joan’s marriage years before Leonard’s death, but did nothing to notify Joan of Margaret’s existing marriage to Leonard.
Met Life/GM removed the case to the United States District Court for the District of Maryland on September 26, 1990. On August 1, 1991, the district court held that Margaret was the legal widow of Leonard Crosby and thereby awarded her all future SIBI benefits, 769 F.Supp. 197. However, the district court refused to hold Joan liable under an unjust enrichment theory for the SIBI benefits already received, reasoning that it was “[ ]equitable for [Joan] to retain the [$3,600].” J.A. at 209. The district court relied on the fact that Joan had lived with Leonard for twenty-two years, honestly believing that they were legally married, while Margaret had no contact whatsoever with Leonard for fifteen years before coming forward to claim the SIBI benefits.
After this ruling, Margaret amended her complaint against Met Life/GM in a second effort to recover the $3,600 in benefits paid to Joan. In her amended complaint, Margaret alleged unlawful payments against Met Life/GM because the policy required payments to be made to the legal widow of Leonard. On March 18, 1992, the district court awarded summary judgment in favor of Met Life/GM, concluding that Margaret had “superior knowledge” to Met Life/GM and was equitably estopped from asserting any claim against Met Life/GM for the SIBI benefits erroneously paid to Joan. J.A. at 293-94. The district court reasoned that, as early as January 1990, Margaret knew of Joan’s purported marriage to Leonard and thus the potential for a competing claim to Leonard’s estate assets. Nevertheless, the district court opined, Margaret waited eight months before filing this action to assert her marital rights to Leonard’s estate, 785 F.Supp. 1227.
II
On appeal, Joan contends that Margaret should be estopped from asserting any rights to future SIBI benefits. The district court rejected Joan’s estoppel claim on two grounds. First, the district court reasoned that estoppel requires either a misrepresentation or silence despite a duty to speak and concluded that nothing in the present case required Margaret to inform Joan of her existing marriage to Leonard. Second, the district court observed that estoppel requires reliance by the injured party and concluded that in the present case Joan did not change her position to her detriment in reliance on Margaret’s silence.
Joan challenges each of the district court’s conclusions regarding her estoppel claim. First, she claims that a duty to speak arises whenever a party has greater knowledge of the relevant facts. Second, Joan claims that estoppel should apply whenever a party’s silence precludes another from taking steps to protect herself from a loss. We disagree with both arguments. Maryland law imposes a duty to speak “only where the silence or inaction constitutes a fraud____” Beesley v. Hanish, 70 Md.App. 482, 521 A.2d 1235, 1243 (1987). See also, Ganley v. G & W Limited Partnership, 44 Md.App. 568, 409 A.2d 761, 766 (1980); Jordan v. Morgan, 252 Md. 122, 249 A.2d 124, 129 (1969). Because the record contains no evidence of fraud by Margaret, she had no duty to inform Joan of her existing marriage to Leonard. Thus, Margaret’s silence does not estop her from asserting her right to the SIBI benefits even though she had greater knowledge than Joan and her silence may have prevented Joan from protecting herself.
Joan also contends that Margaret waived her marital rights in Leonard’s estate. In support, Joan points to the fact that Margaret cohabitated with Lee Andrew Williams, had three children by him, changed the name on her social security card and her checking account to Williams, and titled her house in the name of Williams. This claim likewise fails. Although the facts might suggest that Margaret intended to waive her marital rights in Leonard’s estate, this does not entitle Joan to the SIBI benefits. The group life insurance plan requires Met Life/GM to pay the benefits to Leonard’s legal widow. Because Margaret is Leonard’s legal widow, Joan has no entitlement to the proceeds under the plan, notwithstanding Joan’s claim that Margaret waived these rights.
III
In Margaret’s cross-appeal, she claims that Met Life/GM should be liable to her for the $3,600 in SIBI benefits erroneously paid to Joan. Margaret bases her claim on two grounds. We disagree with both arguments and discuss our reasons for rejecting each argument separately.
A
Margaret first argues that 29 U.S.C. § 1055(a) of the Employee Retirement Income Security Act (ERISA) requires Met Life/GM to pay the SIBI benefits to a “qualified beneficiary.” Because the district court found Joan not to be the legal widow, any payments to her were not payments to a “qualified beneficiary” and therefore did not satisfy Met Life/GM’s obligations under ERISA. We disagree.
Although ERISA requires benefits to be paid to a “qualified beneficiary,” we do not think this principle requires Met Life/GM to pay Margaret the $3,600 already paid to Joan. When an administrator of an ERISA plan has discretion to determine eligibility for plan benefits, a court should review the determination of benefits eligibility under the abuse of discretion standard. Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956, 103 L.Ed.2d 80 (1989). This lenient standard applies when the administrator has “the ‘power to construe disputed or doubtful terms’ or to resolve disputes over benefits eligibility.” De Sobel v. Vitro Corp., 885 F.2d 1180, 1187 (4th Cir. 1989) (quoting Bruch, 489 U.S. at 115, 109 S.Ct. at 956). Under this standard of review, a court should not disturb the administrator’s decision if reasonable. De Sobel, 885 F.2d at 1187.
In the present case, Met Life/GM had the power to determine Joan’s eligibility to receive benefits by determining whether she was Leonard’s legal widow. We believe that Met Life/GM’s determination was reasonable in light of the documentation relied upon in making this determination—the marriage certificate and Leonard’s designation of Joan as his wife and beneficiary. Therefore, we conclude that Met Life/GM did not abuse its discretion in determining Joan’s entitlement to the SIBI benefits and that any payments to Joan satisfied Met Life/GM’s obligations under ERISA up to the amount of those payments.
We also note an alternative ground for rejecting Margaret’s claim. Under ERISA, federal courts may develop common law to grant “appropriate equitable relief.” U.S. Steel Mining Co. v. District 17, United Mine Workers, 897 F.2d 149, 152 (4th Cir.1990). See also, Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 156, 105 S.Ct. 3085, 3097, 87 L.Ed.2d 96 (1985) (Brennan, J., concurring). This power to grant equitable relief compels us to adopt the widespread principle that an insurer is discharged from all subsequent liability when it makes good faith payments to a purported beneficiary without notice of any competing claims. Rogers v. Unionmutual Stock Life Insurance Co., 782 F.2d 1214 (4th Cir.1986); Weed v. Equitable Life Assurance Society of U.S., 288 F.2d 463, 464 (5th Cir.1961); Commire v. Automobile Club of Michigan Ins. Group, 454 N.W.2d 248, 249 (1990); Kelly Health Care Inc. v. Prudential Ins. Co. of America, Inc., 226 Va. 376, 309 S.E.2d 305, 306 n. 1 (1983); Harper v. Prudential Ins. Co. of America, 233 Kan. 358, 662 P.2d 1264, 1273 (1983); In re Estate of Thompson, 99 Ill.App.3d 303, 55 Ill.Dec. 217, 426 N.E.2d 1 (1981). Such a rule minimizes the chances for imposing double liability for mistaken, but good faith payments to a purported beneficiary.
Applied to the present case, this principle dictates that Margaret’s claim must fail. Met Life/GM exercised good faith in determining Joan’s status as Leonard’s legal widow and had no notice of Margaret’s competing claim until after paying the $3,600 in SIBI benefits. At the time Met Life/GM made this determination, the only evidence available was Joan’s presumptively valid marriage certificate and Leonard’s designation of Joan as his wife and beneficiary. In light of these facts, Met Life/GM’s acts were unquestionably in good faith, and thus the imposition of double liability on Met Life/GM is unwarranted.
B
Margaret also contends that the district court’s decision that Margaret was Leonard’s legal widow indicates that any payments to Joan did not discharge Met Life/ GM’s obligations under the group life insurance plan. Margaret reasons that this plan required payments to go only to Leonard’s legal widow. To support this argument, Margaret relies on Union Labor Life Insurance Co. v. Parmely, 270 Md. 146, 311 A.2d 24 (1973).
We conclude that these payments to Joan discharged Met Life/GM’s obligations under the group life insurance plan and that the Parmely case is not controlling. In Parmely, the insurance policy in question required the insurance company to pay life insurance benefits to the decedent’s “widow.” Unfortunately, as in the instant matter, the decedent had married two women without obtaining a legal divorce. Neither the insurance company nor the two wives knew of the decedent’s bigamy. After the decedent’s death, the second wife submitted a claim for the life insurance proceeds together with her certificate of marriage. In good faith, the insurance company made several payments to the second wife. Then, the first wife filed suit against the insurance company, seeking to recover the amount erroneously paid to the second wife.
The Maryland Court of Special Appeals concluded that because the second wife was not the legal “widow,” payments to her did not discharge the insurer’s contractual obligations. In reaching this conclusion, the court distinguished policies requiring payment to beneficiaries designated by class, e.g., the decedent’s “widow,” as opposed to beneficiaries designated by name. The court reasoned that only good faith payments under policies designating the beneficiaries by name could discharge an insurer’s obligations. Thus, in Parmely the good faith payments to the second wife under the mistaken determination that she constituted the beneficiary class of “widow” did not discharge the insurer’s contractual obligations.
However, Parmely was decided in 1973. One year later Congress enacted ERISA, intending to “supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.” 29 U.S.C. § 1144(a). Thus, ERISA preempts any inconsistent state law. Makar v. Health Care Corp., 872 F.2d 80, 82 (4th Cir.1989). Since ERISA applies to the group life insurance plan in the present case, Parmely does not control because it conflicts with the ERISA principles discussed above. Specifically, the Parmely court’s imposition of double liability on the insurer directly conflicts with the ERISA principles that: (1) a court should not disturb a plan administrator’s discretionary determination of benefit eligibility when such a determination involved construing “disputed or doubtful terms,” De Sobel, 885 F.2d at 1187; and (2) an insurer discharges its liability under an insurance policy by making good faith payments to a purported beneficiary without notice of any competing claims. See, e.g., Rogers, 782 F.2d at 1216. These principles developed under ERISA preempt the inconsistent result reached in Parmely. Accordingly, Margaret is not entitled to recover the $3,600 paid to Joan by Met Life/GM under the group life insurance plan.
IV
For the reasons mentioned herein, we affirm the decision of the district court that Margaret should receive all future SIBI benefits, but that Margaret cannot recover from Met Life/GM the SIBI benefits already paid to Joan.
AFFIRMED.
. The claims against Met Life and GM are identical, and we shall, therefore, refer to both companies jointly.
. Margaret originally indicated in her docketing statement that she intended to appeal the district court’s conclusion that Joan was not liable to Margaret under an unjust enrichment theory for the $3,600 which Met Life/GM paid to Joan. J.A. at 303. However, we believe Margaret abandoned this claim on appeal because her brief contains no argument on this issue and she did not raise this issue at oral argument.
. See, 29 U.S.C. § 1003(a)(1) ("this subchapter shall apply to any employee benefit plan if it is established or maintained by any employer engaged in commerce____”).
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.
MERRILL, Circuit Judge.
Appellant was a witness to a homicide committed in Humboldt County, Nevada, by four persons with whom he was then travel-ling. He was taken into custody by the sheriff of that county as a material witness on July 4, 1980. Bail was set by a magistrate and, unable to provide bail, Appellant was, on the magistrate’s order, confined in the county jail. The magistrate acted pursuant to Nevada law, Nev.Rev.Stat. § 178.-494, which provides, in part:
Bail for witnesses. If it appears by affidavit that the testimony of a person is material in any criminal proceeding and if it is shown that it may become impracticable to secure his presence by subpena, the magistrate may require him to give bail for his appearance as a witness, in an amount fixed by the magistrate. If the person fails to give bail the magistrate may:
1. Commit him to the custody of a peace officer pending final disposition of the proceeding in which the testimony is needed;
2. Order his release if he has been detained for an unreasonable length of time; and
3. Modify at any time the requirement as to bail.
Appellant remained in jail from July 4, 1980 until August 17, 1981, during which period he gave testimony in the trial of one of the accused murderers. On two occasions the deputy district attorney sought to have Appellant’s status as a material witness reviewed and requested an order from the court allowing Appellant’s deposition to be taken so that he could be released. The first motion was denied. The second motion had not been acted upon when Appellant’s release was obtained pursuant to a writ of habeas corpus issued by the United States District Court, 561 F.Supp. 1124, for the District of Nevada. In this action Appellant alleges that his detention was in violation of his civil rights under 42 U.S.C. §§ 1981, 1983, 1985(3), 1986 and 1988.
The defendants were composed of two groups: (1) the county defendants, consisting of the county, the district attorney, the deputy district attorney, the sheriff, the deputy sheriff, and Brian Hutchins, a deputy attorney general who had been appointed as special deputy district attorney for prosecution of the murder charges; (2) the state defendants, consisting of the attorney general, the chief deputy attorney general, the chief criminal deputy attorney general, and Hutchins in his capacity as state officer.
After commencement of this action it was settled and dismissed with prejudice as to the county defendants. Summary judgment was then rendered in favor of the state defendants, and this appeal from that judgment followed.
The complaint charged that the state defendants were responsible for the official conduct of Hutchins and “for supervising, training and overseeing defendant Hutchins in the performance of his office;” also, “for establishing, implementing and enforcing standards, procedures and practices for the exercise of their own official functions and duties and those of their subordinates.” It was alleged that the state defendants (other than Hutchins himself) “failed adequately and properly to carry out and discharge these responsibilities which resulted in and caused the injuries suffered by plaintiff as alleged herein.”
Appellant initially argues that the District Court committed reversible error when it failed to grant his request for oral argument on Appellee’s motion for summary judgment. Appellant relies on Rule 16(g) of the Rules of Practice for the United States District Court for the District of Nevada, which provides:
All motions may, in the court’s discretion, be considered and decided with or without a hearing, unless a hearing is requested and is required to be held by the decision in Dredge Corporation v. Penny, 338 F.2d 456 (9th Cir.1964).
Appellant argues that a District Court may never deny a request for oral argument when made by a party opposing a motion for summary judgment unless the motion is denied. See Dredge Corp. v. Penny, 338 F.2d 456, 462 (9th Cir.1964). It is well settled, however, that the scope of Dredge Corporation —a case in which the local rule precluded a party from requesting oral argument — is not absolute. See Price v. Johnston, 334 U.S. 266, 285-86, 68 S.Ct. 1049, 1059-60, 92 L.Ed. 1356 (1948); Holt v. Pitts, 619 F.2d 558 (6th Cir.1980). In Jasinski v. Showboat Operating Co., 644 F.2d 1277 (9th Cir.1981), this Court explicitly left undecided the question of whether noncompliance with local or federal rules governing summary judgment requires reversal without regard to prejudice. 644 F.2d at 1280. The Court, however, did note that it had previously ruled that nonprejudicial noncompliance with local rules “ ‘is not of itself sufficient reason to reverse.’ ” 644 F.2d at 1280 n. 5, quoting Matter of Telemart Enterprises, Inc. v. Holzman, 524 F.2d 761, 766 (9th Cir.1975), cert. denied, 424 U.S. 969, 96 S.Ct. 1466, 47 L.Ed.2d 736 (1976). We find the reasoning of those cases persuasive and hold that noncompliance with local and federal rules pertaining to a hearing on a motion for summary judgment is not, by itself, reversible error absent a showing of prejudice. While we admonish trial courts to grant oral argument on nonfrivolous summary judgment motions, in the instant case we find no prejudice. There are no arguments on this appeal that the District Court was not apprised of.
The District Court correctly concluded that, in order to state a claim for relief against the state defendants for unlawful confinement, Appellant must show, among other things, that the wrongful conduct of those defendants was the proximate cause of his detention. See Arnold v. International Business Machines Corp., 637 F.2d 1350 (9th Cir.1981). In granting summary judgment the Court held that under Hoffman v. Halden, 268 F.2d 280 (9th Cir.1959) (overruled on other issues, Cohen v. Norris, 300 F.2d 24 (9th Cir.1962)), any acts or omissions charged against the state defendants as matter of law could not be said to have been the proximate cause of appellant’s detention. The Hoffman opinion was quoted in part to the following effect:
With these cases in mind we would reason as follows: In a Civil Rights conspiracy case, the injury and damage must flow from the overt acts. Where the gravamen of the injury complained of is commitment to an institution by court order, this order of the court, right or wrong, is ordinarily the proximate cause of the injury. Various preliminary steps occur before the order is made. * * * In the usual case, the order of the court would be the proximate cause and the various preliminary steps would be re-móte causes of any injury from imprisonment or restraint under the court order.
We are not saying that there could not be situations where a judge was so deceived and hoodwinked by proceedings brought before him that certain of these preliminary acts might not raise themselves to the status of a proximate cause of an injury, notwithstanding the intervening order of the court. There might be situations where the action of the court became in substance, merely a conduit for the wrongful action which preceded.
268 F.2d at 296-97 (footnote omitted).
The District Court cited Flores v. Pierce, 617 F.2d 1386 (9th Cir.), cert. denied, 449 U.S. 875, 101 S.Ct. 218, 66 L.Ed.2d 96 (1980), on which Appellant relies, as an example of a case in which preliminary facts might “raise themselves to the status of proximate cause of an injury.” The District Court stated, however: “Nothing of such consequence has been alleged respecting the state defendants.”
With reference to those allegations, as we have heretofore quoted them, the court took note of Nevada statutory law having to do with the functions and duties of the officials. The court noted that under Nevada law, the direct responsibility as public prosecutor lies with the district attorney, an elected official of each county. Nev.Rev. Stat. § 252.080. As to the attorney general, the court noted that he was limited to a supervisory role, pursuant to Nev.Rev.Stat. § 228.120, which provides in part:
The attorney general may
* * *
2. Exercise supervisory powers over all district attorneys of the state in all matters pertaining to the duties of their offices, and from time to time require of them reports as to the condition of public business entrusted to their charge.
The District Court determined that the Nevada attorney general has no duty to intervene in prosecutions carried on by the various district attorneys of Nevada. The District Court concluded:
The tenor of these statutory provisions is that with respect to the general run of prosecutions in the various counties of Nevada the attorney general of Nevada has no duties and responsibilities. His authority concerning supervision of district attorneys is permissive and discretionary. These statutes cannot be a predicate for imposing civil rights responsibility and liability upon the attorney general and his deputies for actionable misconduct of local officials in relation to criminal prosecutions.
We find this construction by the District Judge of the law of his state to be reasonable and tenable and entitled to be received with deference. We conclude that under Nevada law failure of the attorney general and his deputies to prevent local officials from securing a court order that a material witness be retained in custody, or failure by them to secure a court order for the witness’s release, cannot be said to constitute proximate cause of the confinement.
JUDGMENT AFFIRMED.
. The District Court also took note of the formal procedures to be followed if a district attorney elects to request assistance from the attorney general, pursuant to Nev.Rev.Stat. § 228.130. That section provides, however, that even if such a request is made, action by the attorney general remains discretionary:
3. This section shall not be construed as directing or requiring the attorney general to appear in any proceedings mentioned in subsection 2, but in acting upon any such request the attorney general may exercise his discretion, and his judgment in such matters shall be final.
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.
CASTLE, Senior Circuit Judge.
The National Labor Relations Board petitions this Court to enforce its order against Hi-Temp, Inc., Tru Temp, Inc., and Steel Treating, Inc. (“the Company”), and against the Production Workers Union, Local 10, AFL-CIO (“the Production Workers” or “the Union”) for violations of the National Labor Relations Act, 29 U.S.C. § 151 et seq. (1970).
The Company is composed of three affiliated corporations comprising an integrated business enterprise. In December 1971, the Production Workers instituted a campaign to organize the Company’s employees. Two of its organizers visited employees’ homes and secured signatures on Production Workers authorization cards. The United Steelworkers of America, AFL-CIO (“the Steelworkers”), who previously had attempted to organize the Company’s employees and failed, protested this encroachment on its “territory,” and began another drive for employee support.
Subsequently, the Production Workers demanded recognition, and the Company agreed to a card check to determine if a majority of the Company’s employees had signed Production Workers authorization cards. The card count established that forty-six of the eighty-six employees signed cards for the Production Workers. Although during the card count the Company received and read a letter from the Steelworkers expressing their continuing organizational interest in the Company’s employees, the Company, on the basis of the card check, recognized the Production Workers on January 19, 1972, and on February 25, 1972, agreed to a collective bargaining contract containing union-security and check-off clauses.
The NLRB determined, however, that the forty-six cards accepted as a basis for the Production Workers’ majority status included cards signed by eight employees who had also signed authorization cards for the 'Steelworkers. The Board, therefore, excluded these eight “dual” cards from the Production Workers’ total, and the remaining thirty-eight valid cards were insufficient to establish majority status. Accordingly, the Board found that the Company, by recognizing and contracting with a minority union, had violated Sections 8(a)(2) and 8(a) (3) of the Act, and that the Union had correspondingly violated Sections 8(b)(1)(A) and 8(b)(2).
The Company and the Production Workers contest the Board’s conclusion that the Union was a minority union at the time of recognition on January 19. They argue that the evidence demonstrates that six of the eight employees who signed both Production Workers and Steelworkers cards signed their Steelworkers cards after the date of the recognition agreement. If those cards were in fact signed after January 19, then the Union had majority status at the time of recognition and the Act would not be violated. We are satisfied, however, that there is substantial evidence on the record considered as a whole to support the Board’s conclusion. Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951).
The Company and Union rely on testimony that Luis Torres, one of the eight signers of dual cards, signed his Steelworkers card at a Sunday meeting with Steelworkers’ organizer Alicea, and that he signed his Production Workers card (dated January 17, a Monday) several days before the Steelworkers card. The Company and Union, therefore, assert that Torres actually signed his Steelworkers card on Sunday, January 23, four days after the recognition agreement was signed, and that his card and the cards which he subsequently passed out to his fellow employees were backdated.
It is true that Torres and Alicea testified that the signing took place on a Sunday, and it is apparently uneontested that Torres signed his Production Workers card on January 17. Torres also testified, however, that he signed both the Steelworkers card and the Production Workers card on the same day — Monday, January 17. In addition, employees Portillo, Samano, Marquina, and Castrejon, who also signed dual cards, testified that Torres gave them Steelworkers cards at work on Monday evening, January 17. Portillo, Samano, and Marquina also testified that they signed their cards that same night, while Castrejon stated that he took his home and signed it the following day. Since it is undisputed that Torres did not distribute the other Steelworkers cards until after he had signed his own, the testimony of Torres and his fellow employees amply supports the Board’s finding that Torres and his co-workers signed their Steelworkers cards prior to January 19, and that on that date the Production Workers were a minority union.
The Company and the Union next claim that even if the eight employees executed both authorization cards prior to recognition, the Board erred in excluding the dual cards in determining the majority status of the Production Workers. They argue that the cards should be counted because the Company acted in good faith and had no knowledge of the Steelworkers’ organizational activities. We cannot agree.
In NLRB v. Fishermen’s & Allied Workers’ Union, Local 33, 483 F.2d 952 (9th Cir. 1973) and Intaleo Aluminum Corp. v. NLRB, 417 F.2d 36 (9th Cir. 1969), authorization cards of employees who had signed cards both for the union seeking recognition and for a competing union were excluded in ascertaining majority status, the underlying rationale being that such cards do not reflect a clear and unambiguous selection of a collective bargaining representative. In Playskool, Inc. v. NLRB, 477 F.2d 66, 71 (7th Cir. 1973), we did not question the applicability of that procedure.
Although in those cases there may have been knowledge of organizational activities which would cast doubt on the employer’s good faith recognition of the union asserting a card majority, we find an employer’s good faith to have no effect on the exclusion of the dual cards, because it is employer support of a minority union that the Act condemns. International Ladies’ Garment Workers’ Union, AFL-CIO v. NLRB, 366 U.S. 731, 81 S.Ct. 1603, 6 L.Ed.2d 762 (1961). The Supreme Court held in International Ladies’ Garment Workers’ Union, supra, at 738-739, 81 S.Ct. at 1608, that:
To countenance such an excuse [of good faith] would place in permissibly •careless employer and union hands the power to completely frustrate employee realization of the premise of the Act — that its prohibitions will go far to assure freedom of choice and majority rule in employee selection of representatives. We find nothing in the statutory language prescribing scienter as an element of the unfair labor practices here involved. The act made unlawful by § 8(a)(2) is employer support of a minority union. Here that support is an accomplished fact. More need not be shown, for, even if mistakenly, the employees’ rights have been invaded. It follows that prohibited conduct cannot be excused by a showing of good faith. [Footnotes omitted.]
The Board, therefore, properly excluded the eight dual cards regardless of the Company’s good faith, and correctly found that the Company and Union violated the Act.
Finally, the Company and the Union, relying on Intaleo Aluminum Corp., supra, challenge that portion of the Board’s order requiring them jointly and severally to reimburse the Company’s employees for all dues or fees paid to the Union pursuant to the union-security and check-off clauses of the February 25 collective bargaining agreement. We find the Board’s order to be proper.
Pursuant to Section 10(c), the Board has been accorded broad authority to fashion remedies to effectuate the policies of the Act. NLRB v. District 50, UMW, 355 U.S. 453, 468, 78 S.Ct. 386, 2 L.Ed.2d 401 (1958); NLRB v. Link-Belt Co., 311 U.S. 584, 600, 61 S.Ct. 358, 85 L.Ed. 368 (1941). One policy as declared in Sections 1, 7, and 9 is that employees have complete and unfettered freedom to select by majority rule their collective bargaining representative. Virginia Electric & Power Co. v. NLRB, 319 U.S. 533, 589, 63 S.Ct. 1214, 87 L.Ed. 1568 (1943); NLRB v. Link-Belt Co., supra, 311 U.S. at 588, 61 S.Ct. 358. Thus, in Virginia Electric & Power Co. v. NLRB, supra, the Court upheld a reimbursement order of the Board where a company-dominated union received funds pursuant to a union security agreement on the ground that the employees were supporting a union not of their own free choice. The Court stated :
The result [of the union-security and check-off clauses] was that the employees . . . had to authorize wage deductions for dues to remain members . . ., and they had to remain members to retain their jobs. Thus, as a price of employment they were required by the Company to support an illegal organization which foreclosed their rights to freedom of organization and collective bargaining. To hold that the Board is without power here to order reimbursement of the amounts so exacted is to hold that an employer is free to fasten firmly upon his employees the cost of maintaining an organization by which he effectively defeats the free exercise of their rights to self-organization and collective bargaining. That this may pervert the purpose of the Act is clear. [Footnote omitted.]
Id. 319 U.S. at 540, 63 S.Ct. at 1219.
Here there is no company-dominated union. Nonetheless, when a minority union is recognized in violation of § 8(a)(2) of the Act, and in accordance with union-security and check-off provisions employees are forced to support and contribute to that union to retain their jobs, we believe the employees’ freedom to select and support a collective bargaining representative of their own choosing is similarly defeated, regardless of the employer’s intentions. The Board’s remedial order effectuates the policy of the Act because it fully restores the employees’ freedom to select and support only that union which has achieved majority status. Virginia Electric & Power Co. v. NLRB, supra; Sheraton-Kauai Corp. v. NLRB, 429 F.2d 1352, 1357-1358 (9th Cir. 1970).
The Company and the Union rely on statements by the Court in International Ladies’ Garment Workers’ Union, supra, 366 U.S. at 740, 81 S.Ct. at 1608, that when an employer violates § 8(a),(2), the employer is subject only to a “remedial order requiring him to conform his conduct to the norms set out in the Act. No further penalty results.” That reliance is misplaced because there the contract did not contain union-seeu-rity clauses, and the Court did not have before it a dues reimbursement remedy.
The petition for enforcement is granted.
Enforced.
. 29 U.S.C. §§ 158(a)(2), (a)(3) (1970) provide in part:
(a) It shall be an unfair labor practice for-an employer—
(2) to dominate or interfere with the formation or administration of any labor organization or contribute financial or other support to it. .
(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. §§ 158(b)(1)(A), (b)(2) (1970) provide in part:
(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 157 of this title. .
(2) to cause or attempt to cause an employer to discriminate against an employee in violation of subsection (a) (3) of this section.
. Of the six employees whose dual card signings are contested, only Marquez was unavailable to testify. Steelworkers’ organizer Alicea testified, however, that Marquez signed the Steelworkers card in his presence on Monday, January 17, and the card bears that date.
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:
In this appeal we find oral argument unnecessary and affirm the order of the district court dismissing the appellants’ complaint for failure to allege any basis for federal jurisdiction. Clearly there is no diversity jurisdiction, and to the extent that the complaint attempts to invoke subject matter jurisdiction, it is insufficient to state a claim on which relief can be granted.
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.
CLARK, Chief Judge:
In this habeas corpus proceeding under 28 U.S.C. § 2254, James Ellis Marks seeks reconsideration of the life sentence he received pursuant to a 1976 state court conviction for aggravated robbery. He contends that the jury’s consideration in the sentencing stage of that trial of two prior uncounselled misdemeanor convictions violated his sixth amendment rights.
The state filed two motions in district court in an effort to pretermit consideration of the merits of Marks’s claim. First, noting that the two challenged convictions occurred in 1964 and 1965, the state urged the court to dismiss Marks’s petition for delay under Rule 9(a) of the rules governing § 2254 cases. Alternatively, the state contended that Marks’s failure to object at trial to admission of the two convictions as required by the Texas contemporaneous objection rule precludes federal habeas review. The district court embraced the state’s Rule 9(a) position and dismissed the petition. We affirm that result, but our journey is along a different path.
On November 24, 1964, Marks was convicted of unlawfully carrying a prohibited weapon and was sentenced to 120 days in the Dallas County jail. On February 5, 1965, he was convicted of aggravated assault and sentenced to 180 days. Marks claims, and the district court found, that he did not have a lawyer at either of these proceedings.
Marks managed to avoid further entanglements with the law until 1976, when he was convicted of aggravated robbery. At the sentencing stage of his trial, Marks stipulated to the two prior convictions. He had told his attorney about the convictions but not that they were uncounselled. The attorney conducted no independent investigation concerning them. Marks was sentenced to prison for life.
I. Rule 9(a)
Application of Rule 9(a) to the facts of this case poses several interesting questions. We begin with an analysis of the rule itself.
Rule 9(a) provides:
A [habeas corpus] petition may be dismissed if it appears that the state of which the respondent is an officer has been prejudiced in its ability to respond to the petition by delay in its filing unless the petitioner shows that it is based on grounds of which he could not have had knowledge by the exercise of reasonable diligence before the circumstances prejudicial to the state occurred.
From this language it is clear that no matter how long after conviction a petition is filed it may not be dismissed absent a particularized showing of prejudice. E.g., Paprskar v. Estelle, 612 F.2d 1003, 1008 (5th Cir.), cert. denied, 449 U.S. 885, 101 S.Ct. 239, 66 L.Ed.2d 111 (1980); Jackson v. Estelle, 570 F.2d 546, 547 (5th Cir. 1978); Neal v. Wainwright, 512 F.Supp. 92, 94-95 n.3 (M.D.Fla.1981). Prejudice will not be presumed.
The “unless” clause of the rule is consistent with its equitable nature. In effect, delay is excused if the petition is based on a change in the law or newly discovered evidence. In such a case the state may not rely in its 9(a) motion on prejudice suffered during the period of “reasonable” delay.
With this background in mind, we address the specific questions raised by this appeal.
A. Delay
Marks devotes his argument to the proposition that delay should be measured from his 1976 conviction because it is the sentence he received in that proceeding that he seeks to overturn. The state’s position is that because the petition in effect challenges the validity of the ’64 and ’65 convictions delay should be measured from them.
As a general matter, the state is correct. We addressed this issue in Baxter v. Estelle, 614 F.2d 1030 (5th Cir. 1980), cert. denied, 449 U.S. 1085, 101 S.Ct. 873, 66 L.Ed.2d 810 (1981). There the petitioner challenged sentences imposed under two convictions occurring in the seventies by alleging that a 1962 conviction used to enhance those sentences was invalid. We held that because the alleged defect in the later proceedings depended entirely on the propriety of the earlier one delay should be measured from 1962. Id. at 1034.
This logic is sound. It is an “obvious fact of life that most criminal convictions do in fact entail adverse collateral legal consequences.” Sibron v. New York, 392 U.S. 40, 55, 88 S.Ct. 1889, 1899, 20 L.Ed.2d 917 (1968). It stands reason on its head to allow challenges to ancient convictions, foreclosed for years by prejudice-causing delay, to receive new life from the occurrence of one such consequence. Yet this would be the result if we adopted the view espoused by Marks. We refuse to do so.
The district court’s analysis and the principal arguments of the parties end here. But we must consider the effect of the second clause of Rule 9(a), which contemplates that a prisoner will not be charged with the delay in bringing a petition based on a change in the law until that change occurs. Marks’s petition, which alleges that he was without counsel in two misdemeanor prosecutions in the mid-sixties, asserts a right that did not exist until 1972. In that year the Supreme Court, in Argersinger v. Hamlin, 407 U.S. 25, 92 S.Ct. 2006, 32 L.Ed.2d 530 (1972), extended the right to counsel to misdemeanor defendants for the first time. Before then Marks had no right to counsel, and his convictions were not constitutionally invalid.
We faced a situation similar to this one in McDonnell v. Estelle, 666 F.2d 246 (5th Cir. 1982). McDonnell sought to overturn a 1947 felony conviction that he claimed was uncounselled. The State of Texas conceded, and we found, that McDonnell’s delay in seeking the Great Writ was excused from 1947 until 1963, when the Supreme Court handed down Gideon v. Wainwright, 372 U.S. 335, 83 S.Ct. 792, 9 L.Ed.2d 799 (1963). 666 F.2d at 253.
Texas refuses to make a similar concession here, instead clinging to the precarious position that delay should be measured from the dates of the earlier convictions. In effect, the state argues that Marks should have brought Argersinger before Argersinger was brought — that he was bound to assert a constitutional right he didn’t have. This would require a degree of diligence much higher than reasonable. Because the right to counsel for misdemeanor defendants did not exist until 1972, the reasonable diligence provision of Rule 9(a) excuses Marks’s delay until then.
B. Prejudice
Evidence of prejudice suffered by the state is manifest. The district attorney’s records of the misdemeanor prosecutions were destroyed long ago. Court records of the proceedings have been lost or misplaced. An attorney who may have represented Marks in one or both of the trials has lost his files, and his memory has grown hazy. In short, the passage of time has made it impossible for the state to respond to Marks’s claim that he had no lawyer.
But whether the state was prejudiced is not the issue here. Rather, the crucial question is when that prejudice occurred. Because Marks’s delay was excused until Argersinger, the state’s Rule 9(a) motion is meritorious only if it suffered some prejudice after the lapse of a reasonable amount of time for Marks to learn of that decision and act. See McDonnell v. Estelle, 666 F.2d at 253.
The state has not pinpointed any post-1972 instance of prejudice, arguing instead that Marks has the burden of proving that all prejudice occurred before 1972. This contention is based on the language of Rule 9(a), which permits dismissal “if it appears that the state ... has been prejudiced ... unless the petitioner shows that [his petition] is based on grounds of which he could not have had knowledge .. . before the circumstances prejudicial to the state occurred.” The state’s position is that a necessary ingredient of such a showing is a demonstration of when the prejudice occurred.
This is not a proper construction of Rule 9(a). The state, which normally has far greater access to the facts, already must shoulder the burden of demonstrating that it has suffered actual prejudice from the petitioner’s delay. When pertinent, the state should also be required to show when that prejudice occurred.
This interpretation not only is consistent with the notion that burdens of proof normally should be allocated to the party with the more intimate knowledge of the facts, but it also comports with the intent of Congress. In 1976 a provision creating a presumption of prejudice in cases of petitions filed more than five years after conviction was deleted from Rule 9(a). The legislative history makes clear the reason for the change.
Those facts which make it difficult for the State to respond to an old claim (such as the death of the prosecutor) can readily be discovered by the State. It is not easy, in some cases not possible, for a prisoner to discover those facts that he would have to show in order to rebut the presumption of prejudice.
H.R.Rep.No.1471, 94th Cong., 2d Sess. 5, reprinted in 1976 U.S.Code Cong. & Ad. News 2478, 2482 n.8.
In sum, the state has the initial burden of showing delay and prejudice. The burden then shifts to the petitioner to prove that for some period of the time between his conviction and seeking the writ he could not have had knowledge of the grounds his petition asserts. If such proof is made the state may then demonstrate that it has suffered some prejudice after that period. The state has failed to carry this latter burden here.
II. Failure to Object
We turn now to the state’s contention that Marks’s failure to object to the introduction of the two misdemeanor convictions at his 1976 trial precludes federal habeas review. Marks admits that he failed to object; in fact, he stipulated to the two prior convictions. Such a failure constitutes a waiver under the Texas contemporaneous objection rule. See, e.g., Thomas v. Estelle, 587 F.2d 695, 698 (5th Cir. 1979); Heredia v. State, 508 S.W.2d 629, 630 (Tex. Cr.App.1974). And this waiver makes Marks’s claim unreviewable in a habeas proceeding unless he demonstrates “good cause” for the failure to object and “actual prejudice” resulting from introduction of the convictions. Wainwright v. Sykes, 433 U.S. 72, 97 S.Ct. 2497, 53 L.Ed.2d 594 (1977).
The focus here is on the “cause” prong of Sykes. The district judge found that Marks failed to inform his counsel in the 1976 prosecution that his two prior convictions were uncounselled. Marks nevertheless contends that his attorney’s failure to conduct an independent investigation of the convictions satisfies the “cause” requirement. In effect, Marks argues that his counsel was ineffective in failing to conduct an examination and that this ineffectiveness is his “good cause.”
In Lumpkin v. Ricketts, 551 F.2d 680 (5th Cir.), cert. denied, 434 U.S. 957, 98 S.Ct. 485, 54 L.Ed.2d 316 (1977), we rejected this argument, stating that “[t]his assertion .. . would effectively eliminate any requirement of showing cause at all. If a petitioner could not demonstrate any legitimate cause, he would only have to raise the spectre of ineffective assistance of counsel to get his challenge heard. This we refuse to sanction.” Id. at 683. Lumpkin was reaffirmed recently in Tyler v. Phelps, 643 F.2d 1095 (5th Cir. 1981), cert. denied, 456 U.S. 935, 102 S.Ct. 1992, 72 L.Ed.2d 455 (1982), and again in Washington v. Estelle, 648 F.2d 276 (5th Cir. 1981), where we held that an allegation of ineffectiveness of counsel will not suffice to show “cause.” Id. at 278.
The reasoning of these decisions is compelling. The sweeping interpretation of “cause” urged by Marks would render that prong of Sykes meaningless. We hold that Marks has failed to demonstrate “good cause” for his failure to object. The merits of his claim are thus unreviewable.
III. Ineffective Assistance
In addition to contending that his counsel’s failure to investigate the prior convictions constitutes “cause” under Sykes, Marks also alleges that his 1976 trial counsel was generally ineffective. But the district court found that the only credible support for this claim was the lack of an investigation. This singular failure, when viewed in light of the totality of the circumstances, see, e.g., Washington v. Estelle, 648 F.2d at 279, does not rise to the level of a sixth amendment violation. Although the assistance rendered by counsel may not have been perfect, it was “reasonably effective.” See, e.g., Hill v. Wainwright, 617 F.2d 375, 380 (5th Cir. 1980). This is all the sixth amendment requires.
IV. Conclusion
We emphasize in closing that Rule 9(a) is not a strict statute of limitations. Its standards are flexible; equity is the goal. But equity would not be served if we applied Rule 9(a) in the manner suggested by the state. It would be palpably unfair to require a habeas petitioner to assert a constitutional right before that right exists. We refuse to do so. Because Marks’s right to counsel was not established until 1972, his delay until then cannot be counted against him. Because the state has failed to show that some prejudice occurred after that date, its Rule 9(a) motion is without merit.
In spite of this holding, Marks’s habeas corpus petition must be denied. He did not object at trial to admission of his two prior convictions. He has failed to carry the burden imposed by Sykes of demonstrating “good cause” for that failure. Finally, Marks’s claim that he was denied effective assistance of counsel is without merit. The decision of the district court is
AFFIRMED.
. These rules are codified at 22 U.S.C. foil. § 2254.
. Rule 9(a) is not a statute of limitations. Rather, it is based on the equitable doctrine of laches, which requires the party seeking to set up the bar to demonstrate the injury he has suffered from the other party’s delay. See Rule 9 advisory committee note.
. Originally Rule 9(a) provided for a rebuttable presumption of prejudice if the delay was longer than five years. This provision was deleted in 1976. Act of September 28, 1976, Pub.L. No. 94-426, § 2(7), 90 Stat. 1334 (1976). See LaLande v. Spalding, 651 F.2d 643 (9th Cir.), cert. denied, 452 U.S. 965, 101 S.Ct. 3119, 69 L.Ed.2d 978 (1981).
. See note 2 supra.
. See Rule 9 advisory committee note.
. In McDonnell we stated: “The state is in a far better position than is McDonnell to pinpoint the actual date of the records’ destruction.” 666 F.2d at 253-54. Thus we held that “[t]he state must prove that had McDonnell filed for relief within a reasonable amount of time after 1963, the records would have been available.” Id. at 253.
. See note 3 supra.
. We have considered, but pretermit, an issue not raised by the parties — the standing of Marks to seek the writ after his misdemeanor convictions. We know in this case that Marks served two short jail sentences for his misdemeanor convictions. We do not know, however, whether he suffered any continuing legal disability, such as probation, after his release. Unless he did, he was not “in custody” and thus had no standing to seek the writ. See Carafas v. LaVallee, 391 U.S. 234, 237-240, 88
S.Ct. 1556, 1559-1560, 20 L.Ed.2d 554 (1968); Steinberg v. Police Court, 610 F.2d 449, 453 (6th Cir. 1979). It necessarily follows that if Marks had no standing to seek the writ he cannot be charged with delay for failing to do so. Because we have already disposed of the delay issue in Marks’s favor, it is unnecessary to pursue this subordinate issue of standing.
. The rationale of Sykes is that a procedural default such as that by Marks constitutes an independent and adequate state ground for the state court’s decision, precluding federal habeas review of the petitioner’s constitutional claim- To avoid operation of this general rule, the petitioner must demonstrate both “cause” and “prejudice.” Sykes was reaffirmed recently in Engle v. Isaac, 456 U.S. 107, 102 S.Ct. 1558, 71 L.Ed.2d 783 (1982).
. See note 2 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.
McKAY, Circuit Judge.
In accordance with 10th Cir.R. 9(e) and Fed.R.App.P. 34(a), these appeals came on for consideration on the briefs and record on appeal.
These two matters arise out of a complicated proceeding in the trial court involving multiple plaintiffs and defendants. The substantive allegations relate to state and federal securities violations, as well as common law fraud, in connection with the sale of working interest units in various oil and gas leases.
After several pretrial conferences and attempts by plaintiffs to secure discovery without judicial intervention, plaintiffs were forced to petition the court for assistance to obtain proper responses to their interrogatories, request for admissions and production of documents. Defendants were sanctioned once by the court for failure to comply with discovery orders, at which time defendants paid a portion of plaintiffs’ attorneys’ fees and costs. Both orally and in writing the judge warned counsel for the eight delinquent defendants that he would utilize whatever sanctions were statutorily available to him to keep the case progressing toward trial, absent good cause for delay. These eight defendants never did properly and fully respond to plaintiffs’ discovery requests. Pursuant to Federal Rule of Civil Procedure 37(b)(2)(C), the judge entered a default judgment as a sanction against the eight defendants for the amounts plaintiffs prayed for in their complaint. The default order did not adjudicate all the claims or rights and liabilities of all the parties. The order did not explicitly determine that there was no just reason for delay, or direct the entry of final judgment as required by Federal Rule of Civil Procedure 54(b) to effectuate an immediate appeal.
The affected defendants filed a notice of appeal from the trial court’s order for default judgment. Plaintiffs filed a notice of cross-appeal from the trial court’s refusal to enter an order for judgment awarding punitive damages against the involuntarily defaulted defendants.
These cases come to us at a time of widening concern in both trial and appellate courts about the fair and effective management of ever burgeoning dockets. There is a perceived growth in the use of sanctions at both levels to insure the performance of the recently heightened duties of attorneys and parties in the process of reasonable and expeditious disposition of cases. We are concerned that the trial court’s inherent powers, reinforced by the rules, including the employment of sanctions, to manage its docket be taken seriously. Thus, we consider this ease en banc to determine whether we have jurisdiction to review sanction orders having a substantially preclusive effect on claims of one party but not terminating the entire action. Our objective is to decide whether we can provide more immediate support to the trial court’s efforts by reviewing such sanctions on an interlocutory basis. Although these sanctions did not terminate the entire matter, we must consider whether they are reviewable under the Cohen exception to the general rule of finality imposed on our jurisdiction by 28 U.S.C. § 1291 (1982). Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). We recently applied the Cohen exception to a case involving preclusive sanctions imposed because of abusive conduct in discovery matters. Ohio v. Arthur Andersen & Co., 570 F.2d 1370 (10th Cir.1978).
Jurisdiction to consider an appeal is not discretionary but is circumscribed by 28 U.S.C. § 1291, which has consistently been held to require the termination of all matters as to all parties and causes of action before an appeal may be taken. Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 373, 101 S.Ct. 669, 673, 66 L.Ed.2d 571 (1981). If we find “that the order from which a party seeks to appeal does not fall within the statute, [our] inquiry is over.” Id. at 379, 101 S.Ct. at 676. The only exception to that rule, known as the “collateral order” exception, was originally set out in the Cohen decision. The Supreme Court has recently emphasized that this exception only applies to a “small class” of orders. Id. at 374, 101 S.Ct. at 673. Since the case below has not been finally terminated, the only question before us is whether the imposition of preclusive sanctions in this case falls within the narrow Cohen exception. That exception requires the congruence of three distinct components before an order can be considered “collateral” and thereby appealable. “[T]he order must conclusively determine the disputed question, resolve an important issue completely separate from the merits of the action, and be effectively unreviewable on appeal from a final judgment.” Coopers & Lybrand v. Livesay, 437 U.S. 463, 468, 98 S.Ct. 2454, 2458, 57 L.Ed.2d 351 (1978) (footnote omitted).
The Supreme Court has emphasized the limited circumstances which satisfy the stringent requirements of the Cohen exception. This is particularly evident in the narrowing view of the exception’s applicability in criminal cases, even where important constitutional considerations are involved. The Court has applied the.exception in only three instances: refusal to dismiss an indictment for violation of the double jeopardy clause, Abney v. United States, 431 U.S. 651, 97 S.Ct. 2034, 52 L.Ed.2d 651 (1977), the speech or debate clause, Helstoski v. Meanor, 442 U.S. 500, 99 S.Ct. 2445, 61 L.Ed.2d 30 (1979), and orders denying a motion to reduce bail, Stack v. Boyle, 342 U.S. 1, 72 S.Ct. 1, 96 L.Ed. 1 (1951). The Court has refused to apply the exception to such important interests as a claim that a defendant’s sixth amendment right to a speedy trial has been violated, United States v. MacDonald, 435 U.S. 850, 98 S.Ct. 1547, 56 L.Ed.2d 18 (1978). The Court recently reaffirmed the narrowness of the exception by holding that a district court’s pretrial disqualification of defense counsel in a criminal prosecution was not immediately appealable. Flanagan v. United States, — U.S.-, 104 S.Ct. 1051, 79 L.Ed.2d 288 (1984).
Although the order entered by the trial court in this case is subject, pursuant to Federal Rule of Civil Procedure 54(b), to revision at any time before the entry of judgment adjudicating the balance of the claims, for present purposes we can assume that the first element of the Cohen test, as refined in Coopers & Lybrand, is met. The trial court has effectively terminated the case as to these defendants. Likewise, we can assume without deciding that the orders appealed from conclusively resolve an important issue completely separate from the merits of the action, thus satisfying the second element of the test.
Whether the third element of the test is met is a more difficult question and is determinative of our jurisdiction in this case. In Firestone, the Court emphasized that the order must also be effectively unreviewable, on appeal from a final judgment. 449 U.S. at 376-77, 101 S.Ct. at 674-75. There, the Court held unreviewable on an interlocutory basis, the trial court’s refusal to disqualify counsel, even though, if erroneous, the trial court’s order could result in a complete retrial. The Court indicated that even though the order may be wrong, the remedy would be for the appellate court to wait until the trial is completed, vacate the judgment and order a new trial. Id. at 378, 101 S.Ct. at 675. Mere error in the order does not satisfy the requirement that the order be effectively unreviewable on appeal. Indeed, as a practical matter, the effect of the order in this case is no different from the typical case in which the trial court has either adjudicated the merits or granted summary judgment as to some, but not all claims and parties. The effect of the order is merely to direct entry of default judgment which is, like other circumstances in which default judgment is entered as to some but not all claims, not enforceable by the prevailing party until the entire case is terminated and the usual protections of appeal and potential for a new trial are available. The dangers of duplicating the trial court’s efforts are no different here than in cases where the trial court adjudicates some, but not all, of the claims by way of summary judgment, decision on the merits, or evidentiary ruling which in effect prevents a party from going forward. If the trial court is concerned about duplication in the event of error, in appropriate eases it has available the ameliorating provisions of Federal Rule of Civil Procedure 54(b), which would permit the court to make express findings and explicitly enter a final judgment as to some of the claims, thus creating appellate jurisdiction in this court. That rule permits the trial court to be its own best judge of the potential for wasteful effort by proceeding with the balance of the case after having partially terminated the case.
The potential for wasting the trial court’s time by not permitting an appeal until the balance of the claims are adjudicated is more than offset in sanction cases by the potential for wasting the appeal court’s time even if we had jurisdiction to consider these sanction cases by way of immediate appeal. In complicated multiple party cases, the potential exists for repeated sanctions over an extended period of time, each one of which could result in an immediate appeal to this court. The potential also exists that, even though preclusive in effect, some sanctions could be revised pursuant to Rule 54(b) if, as the trial develops, the trial court becomes more fully informed and revises its judgment about the entry of the sanction. Thus, appeal time would be wasted in such cases.
In addition, strict adherence to the requirements of 28 U.S.C. § 1291 will have the collateral effect of reinforcing the necessary deference to the trial court’s broad discretion in managing cases, including the imposition of sanctions. Attorneys and parties will be fully aware that they must bear the burden of sanctions to the conclusion of the case and appeal on the merits of the fully adjudicated case with no more hope of reversing the sanction order on appeal than normally attends an appeal asserting abuse of a broad trial court discretion.
Our decision in Ohio v. Arthur Andersen & Co., 570 F.2d 1370 (10th Cir.1978), is not contrary to the result reached here. We did not there, nor in light of the Supreme Court decisions concerning the applicability of the Cohen rule could we, establish a broad rule permitting interlocutory appeal of sanction orders which have a preclusive effect as to some issues, claims, or parties without the final termination of the entire matter. In that case we were concerned with an order which if complied with would have arguably put the complaining party in violation of foreign law. If such an injury were erroneously imposed and left until the end of the entire case, we would be unable to ameliorate the consequences on the delayed appeal. The decision implicated principles of comity and attendant problems of denial of effective review on later appeal. This distinguishes the facts of that case from the run-of-the-mill preclusive sanction decision which we have before us in the present case.
We do not mean to imply that there would never be any circumstance in which a sanction order would be appealable under the Cohen exception. However, we are compelled by Congress’ decision defining the scope of our appellate jurisdiction, as interpreted by the Supreme Court, to strictly enforce the requirement that such cases meet all three prongs of the test for exception from the rule that the entire matter must be concluded before appeal may be taken on a collateral matter. As important as the need to reinforce efforts to manage dockets may be, 28 U.S.C. § 1291 does not grant us jurisdiction to review these orders piecemeal even in light of the Cohen exception. In the absence of jurisdiction, we have no choice but to dismiss the appeal.
DISMISSED.
. Of particular note are the recent amendments to Rules 7, 11, 16 and 26, Federal Rules of Civil Procedure. These amendments not only enhance and clarify the duties of attorneys and parties but substantially revise and expand the court’s control over pending litigation, including the reemphasis of the court’s inherent power to impose sanctions where necessary.
. Simultaneously we have considered on the merits In the Matter of the Sanction of Jay C. Baker and Michael Carson, 744 F.2d 1438 (10th Cir.1984), 83-1246, filed on the same date as 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.
BRATTON, Circuit Judge.
This appeal and cross-appeal grow out of an action instituted by the City of Sulphur, Oklahoma, against The Hartford Accident and Indemnity Company to recover upon the bonds of certain former officers of the city on which the company was surety. The complaint contained six causes of action. The first was on the bond of G. Leslie Horsman, city clerk from May 2, 1936, to June 1, 1937. It was alleged that the clerk failed to charge against the appropriations made by the excise board of the county certain accounts for labor, material and supplies in the aggregate sum of $6,293.92; that such accounts were allowed by the board of city commissioners but that no warrants were issued for them; that instead of issuing warrants the accounts were offset with accounts due the city for water furnished the claimants; that warrants were issued for other claims than those offset for the entire amount of the appropriations for the respective fiscal years in question; and that all of the claims offset in the manner outlined were in excess of the appropriations. The second cause of action was on the bond of Newton Rice, clerk from June 9, 1937, to July 6, 1937. It was alleged that like accounts aggregating $486.65 were similarly offset. The third cause of action was on the bond of Charles F. Smith, clerk from August 1, 1937, to May 31, 1938. It was alleged that accounts of the same kind aggregating $3,-793.49 were offset in like manner. And it was further alleged that Smith and Glenn Ray, mayor and manager of the city, failed to account for $7,429.39 which they had received in payment of water bills due the city. The fourth cause of action was on the bond of R. E. Mudd, commissioner from May 7, 1935, to May 7, 1937. It was alleged that Mudd voted to allow and pay the claims described in the first cause of action up to and including those allowed on April 6, 1937; and that with knowledge that such claims had been so allowed and not charged against the appropriation, he and other commissioners allowed claims far in excess of 'the appropriations made- for that purpose. The fifth cause of action was on the bond of Jphn M. Townsley, commissioner from May 3, 1935, to May 3, 1937. It was alleged that Townsley voted to allow and pay the claims described ■ in the first cause of action, up to and including those allowed April 6, 1937; and that with knowledge that such claims had been allowed in that manner and not charged against the appropriation, he and other commissioners allowed claims far in excess of the'appropriations. And the sixth cause, of action was on the bond of Ray, mayor and manager from May 4, 1936, to May 4, 1938. It was- alleged that Ray, as mayor, approved and voted for each of the claims described in the first, second and third causes of action; that he failed to account for funds of the city, as set forth in the third cause of action,; and further, that he was authorized to purchase sewerpipe for use of the city in extending its sewer system, that he failed to accept the lowest laid but accepted a higher one, that only 6,500 feet of pipe were needed, that the city received only that amount but that he approved and allowed a claim for 9,200 feet at the price fixed in the higher bid. The city subsequently filed an amendment to its complaint in which it pleaded that since the institution of the suit, it had collected from the surety on the bond of George B. Carr, a commissioner, the sum of $562.50 which had been applied, $174.65 to the claims allowed on May 5, 1936, and $387.85 to those allowed on June 2, 1936; that it had collected from the surety on the bond of Hugh Cushenberry, another commissioner, the sum of $562.50 which had been applied, $104.20 to the claims allowed on June 2, 1936, and $458.30 to those allowed on July 8, 1936; that it had collected from the surety on the bond of Ernest Ball, a third commissioner, the sum of $562.50 which had been applied, $544.64 to the claims allowed on May 4, 1937, and $17.86 to those allowed on June 1, 1937; and that the prayer of plaintiff should be therefore reduced in the sum of $1,687.50, or to the sxim of $20,745.95, together with interest thereon from May 4, 1938.
The company filed its answer and third party complaint, bringing in the respective principals on the bonds in suit, except Horsman. The execution of the bonds was admitted. In respect to the causes of action on the bonds of the clerks, the company pleaded that the acts of the clerks were merely clerical or ministerial and created no liability, and that the causes were barred by limitation. In respect to the causes of action on the bonds of the commissioners, it joined issue, denied liability or the existencé of any cause of action, denied that the commissioners had voted for the allowance of the claims, and pleaded limitation. In respect to the cause of action on the bond of the mayor and manager, it joined issue, denied that the principal had voted for the allowance of the claims, pleaded limitation as to recovery for the allowance of such claims, denied that funds belonging to the city had been withheld, denied any irregularity in the purchase of sewer pipe, and pleaded that the city received and used all pipe purchased. In addition, the pleading contained appropriate allegations as a third party complaint for recovery against the third party defendants.
On the day of the trial plaintiff dismissed the second cause of action, and the company dismissed its third party complaint against Rice. The court determined that the offsetting of water bills with claims for labor against the city was not authorized by law, and that the company was liable on the bonds of the mayor and manager and the two commissioners; that the causes of action on such bonds were not barred by limitation; that the causes of action on the bonds of the clerks were barred by limitation; that the city was not entitled to recover for the alleged withholding of city funds or for the alleged irregularities in respect of the purchase and use of the sewer pipe; and that the company was entitled to credit on the amount due for the entire sum which the city received from the sureties on the bonds of the other commissioners. Judgment was entered accordingly. By appeal the company challenges on several grounds the judgment rendered against it, and by cross-appeal the city urges that the court erred in holding that the causes of action on the bonds of the clerks were barred by limitation, in failing to render judgment in its favor for the alleged withholding of city funds and for the alleged wrongful acts of the mayor and manager in connection with the purchase and use of the sewer pipe, and in allowing the company credit for the full sum received from the sureties on other bonds.
As already indicated, the city sought in the first and third causes of action to recover upon the respective bonds of two clerks for their acts in connection with the offsetting of water bills due the city with claims against the city for labor performed. The last offsetting pleaded in the first cause of action occurred on June 1, 1937, the last alleged in the third cause took place on April 1, 1938, and the suit was filed on October 4, 1939. The fourth subdivision of section 101, Oklahoma Statutes 1931, 12 Okl.St.Ann. § 95, subd. 4, provides that an action upon a statute for penalty or forfeiture shall be filed within one year after the cause of action shall have accrued and not afterwards, except where the statute imposing the liability prescribes a different limitation. That provision has application here, and since the suit was not filed until after the expiration of the prescribed period, the first and third causes of action (except that part of the latter which sought recovery for the withholding of city funds) were barred. Battles v. Conner, 182 Okl. 613, 79 P.2d 232.
We come next to the fourth and fifth causes of action in which recovery was sought on the respective bonds of two commissioners for the offsetting of water bills with claims for labor, and to that part of the sixth cause in which like recovery was sought on the bond of the mayor and manager. The city had a charter form of government. Section 12674, Oklahoma Statutes 1931, 68 Okl.St.Ann. § 286, requires the mayor and council of each city, or the officers exercising like power in a city having a charter form of government, to prepare and furnish the excise board of the county an itemized statement of estimated needs and probable income from sources other than ad valorem tax for current expenses for the current fiscal year; section 12677, 68 Okl.St.Ann. § 289, authorizes the excise board to revise and correct the estimate, and provides that when the board has examined, revised and adjusted the items it shall approve such items and appropriate the respective amounts thereof for the purposes specified, and that the appropriations for a city shall be itemized so as to show among other things the amount of funds appropriated for water; section 12678, 68 Okl.St.Ann. § 290, authorizes the excise board to make levies of ad valorem taxes upon property in each municipal subdivision with which to meet the appropriations, and provides that the several items of the estimate made by the board shall be an appropriation of funds for the several and specific purposes named in the estimate, that the appropriations made shall not be used for any other fiscal year or purpose whatever, that each clerk or issuing officer shall open and keep an account with the amount of each item of appropriation showing the purpose for which the appropriation was made, that no warrant shall be issued, approved, signed or registered against an appropriation for a purpose other than that for which it was made, or in excess of the amount of such appropriation; section 12681, 68 Okl.St. Ann. § 293, provides that the term “appropriation” shall be synonymous with that of “estimate made and approved,” as defined in section 3, chapter 80, Laws of 1911, 62 Okl.St.Ann. § 473; section 12682, 62 Okl. St.Ann. § 474, provides that every warrant must be drawn against a specific appropriation, and that as soon as it is issued it shall be signed, attested and delivered to the treasurer of the county or subdivision thereof issuing it for registration; section 5948, 62 Okl. St.Ann. § 471, provides that all public funds of a county or subdivision thereof shall be disbursed only in payment of legal warrants, bonds and interest coupons; section 5953, 62 Okl.St.Ann. § 477, provides that it shall be unlawful for any officer to issue, approve, sign, attest or register a warrant or certificate of indebtedness in any form in excess of the estimate of expenses made and approved for such year' or authorized for such purpose, and that any warrant issued, approved, attested or registered in excess of the estimate made and approved shall not be a charge against the municipality, but may be collected by civil action from the offending officer, or from the surety or sureties on his bond; and section 5955, 62 Okl.St.Ann. § 479, provides that it shall be unlawful for the commissioners of any city to make any contract for, incur, acknowledge, approve, allow or authorize any indebtedness against the municipality, or authorize it to be done by others, in excess of the estimate made and approved by the excise board for such purpose for the current fiscal year, that any such indebtedness contracted, incurred, acknowledged, approved, allowed or authorized in excess of the appropriation shall not be a charge against the municipality but may be recovered by civil action from the officer whose acts offend the statute, or from his bondsmen.
The policy of offsetting water bills with claims for labor extended over many months. Several hundred transactions of that kind took place, aggregating thousands of dollars. Each instance of offsetting was tantamount to the water bill being paid in money, the money being covered into the city treasury, and the claim for labor being allowed and paid out of city funds. But other claims for all or substantially all of the appropriations made by the excise board for the current fiscal year were allowed and paid by warrant in the manner authorized by law. It therefore is readily apparent that the essence and effect of the action of the mayor and manager and the commissioners in offsetting claims against claims in the manner and under the circumstances outlined was to incur, acknowledge, approve, allow and authorize an indebtedness against the city in excess of the estimate made and approved by the excise board for such purpose, in contravention of laws of the state, particularly section 5955, supra, for which such section expressly makes the surety on their official bonds liable. It amounted to the unauthorized expenditure of city funds in excess of the appropriation made for that purpose. Regardless of the actuating motive, it constituted a wrongful misapplication of funds for which the company is liable. Cf. Dowler v. State, 179 Okl. 532, 66 P.2d 1081.
But the company contends that such causes of action were penal in nature and therefore barred by limitation in like manner to the causes on the bonds of the clerks. In State v. Ingram, 164 Okl. 244, 23 P.2d 648, an informing taxpayer sued the county assessor, the deputy assessor who was also county treasurer during part of the time in question, the county commissioners, a tax ferret, and the sureties on their official bonds. It was alleged that pursuant to a fraudulent scheme which the deputy assessor and the tax ferret entered into, properties listed for taxes were omitted from the rolls, the schedules were delivered to the tax ferret, he pretended to discover the properties and placed them on the rolls and received fifteen per cent of the amount paid as taxes which was divided among the assessor, the deputy assessor and the tax ferret. Recovery was sought against the three officers and the sureties on their official bonds for the amount of the money misappropriated, and in addition double recovery was sought against such officers under sections 5964 and 5965 of the statutes, 62 Okl.St.Ann. §§ 372, 373, supra. The court held that in respect to seeking recovery for the funds misappropriated the action was not one for a penalty, but that in respect to seeking double recovery it was for penalty. The city sought in these causes of action to recover for funds wrongfully expended. No additional recovery was sought. No double recovery was involved. The liability was therefore not penal in nature. The fifth subdivision of section 101, supra, provides that an action upon the official bonds or undertaking of an executor, administrator, guardian, sheriff, or any other officer can be brought only within five years after the cause of action shall have accrued, and not afterwards. In respect to limitation, that provision has application to a suit upon the official bonds of a mayor and manager and city commissioners, except where a penalty is sought. National Surety Co. v. State, 111 Okl. 185, 239 P. 262; Arnold v. Board of Commissioners, 124 Okl. 42, 254 P. 31; James v. State, 160 Okl. 99, 15 P.2d 591. It may be that as an original proposition the applicable statutes relating to the liability of clerks in one instance and to that of mayor and manager and commissioners in the other fail to indicate a clear basis for the conclusion that the liability is penal in one and therefore barred by the one-year provision but not in the other. But the question does not come to us as an original proposition. The supreme court of the state has charted our course, and we must follow.
It is further contended that the city failed to make out a case for recovery upon the bonds of the two commissioners in that no evidence was offered to show that they voted for the allowance of the claims used in offset against water bills. The minutes of the meetings were offered in evidence. They disclosed the presence of the mayor at all meetings; in most instances they recited the presence of all commissioners; in two instances the presence of Mudd was expressly noted but not that of Townsley; after Mudd’s term expired, the presence of Townsley was noted in virtually all instances ; and in some cases they were not entirely clear. They recited the approval of the claims, and in one or two instances recited that such claims were unanimously approved but were otherwise silent in respect to the manner in which any particular commissioner voted; and they failed to recite in any instance a vote against approval. No other evidence was offered touching the question. The argument is that although the commissioners were present at the opening of each meeting, still they may have departed or absented themselves when the particular action in question was taken. The case of Pickton v. City of Fargo, 10 N.D. 469, 88 N.W. 90, is relied upon to sustain the contention. There a statute of the state required that the yeas and nays be taken upon the passage of all ordinances and be entered upon the journal of the proceedings. An entry in the minutes showed by name eight members of the council present at the beginning of the meeting, and a subsequent entry recited that on the final passage of the ordinance in question eight members voted in the affirmative but did not record the yeas and nays by name. The court held that there was a failure of compliance with the requirements of the statute. Section 6385, Oklahoma Statutes, 11 Okl. St.Ann. § 647, supra, provides that no ordinance for the borrowing or appropriation of money shall be valid unless a majority of all councilmen elected shall vote for it, and that the vote shall be taken by yeas and nays and entered upon the records. But no other statute has been called to our attention requiring that the vote of city commissioners be by yeas and nays. In the absence of a controlling statute or rule, all members of a legislative body present and not recorded as voting otherwise or as refusing to vote are presumed to have voted in the affirmative. United States v. Ballin, 144 U.S. 1, 12 S.Ct. 507, 36 L.Ed. 321; Abels v. McKeen, 18 N.J.Eq. 462. The minutes were sufficient to constitute a prima facie showing that the two commissioners voted for the action taken and to shift to the company the burden of showing otherwise. No effort was made to carry that burden.
The court allowed interest upon the amount of the misappropriated funds from the end of the respective fiscal years during which the misappropriations occurred. That action is challenged. Section 9959 of the statutes, 23 Okl.St.Ann. § 6, supra, provides in substance that where damages are susceptible of calculation with reasonable certainty both as to amount and time when due, interest shall be allowed from that day, except during such time as the debtor may have been prevented by law or by act of the creditor from making payment. Here the misappropriated public funds were susceptible of calculation with reasonable certainty both in respect to amount and time, and the allowance of interest in such circumstances was proper. Cf. Blackwell Oil & Gas Co. v. Mid-Continent Petroleum Corporation, 182 Okl. 588, 79 P.2d 227; Hartford Accident & Indemnity Co. v. Collins-Dietz-Morris Co., 10 Cir., 80 F.2d 441.
The city sought in the third cause of action to recover on the bond of Smith for money which he received in payment of water bills and appropriated to his own use. Like recovery was sought in the sixth cause on the bond of the mayor and manager. Evidence was adduced which tended to show that the mayor and manager and the clerk frequently gambled in the city building, that they sometimes took money from the cash till with which to engage in such pastime, and that the cash deposited in the bank during the period in question was much less than that deposited during the preceding and the following year. But Smith testified that he accounted for all city funds coming into his, hands, and that he replaced in the till all funds withdrawn for the purpose of gambling. The mayor and manager testified that he took some cash from the till from time to time but always put in his personal check which was paid, or otherwise accounted for the amount. And there was other testimony which tended to corroborate them. • The court found in general language that the evidence failed to sustain the allegations of the complaint in respect to the charged misappropriations. The evidence presented an issue of fact for the trial court, and it was resolved against the city. It cannot be said that the finding was clearly erroneous, due regard being had for the opportunity of the trial court to see and observe the witnesses as well as their demeanor while testifying. The finding must, therefore stand on appeal. Rules of Civil Procedure, 52(a), 28 U.S. C.A. following section 723c.
The city also sought in the sixth cause of action to recover on the bond of the mayor and manager for alleged wrongful acts in connection with the purchase and use of sewer pipe. The court found that after inspecting samples of the material offered at eighty cents per foot and that offered at ninety-five cents per foot, the commissioners accepted the bid for the latter; that the company submitting the bid delivered to the city 9,476 feet of pipe, for which the city paid ninety-five cents per foot; that employees of the city receipted for the pipe and delivered it to the Works Progress Administration for use in the completion of a project for the city; that the commissioners had nothing to do with the handling of the project, except to furnish the pipe; that the evidence failed to disclose that the mayor and manager personally had anything to do with the handling of the pipe; that while the circumstances surrounding the transaction were suspicious and the evidence failed to show that the city received any beneficial use of about 2,000 feet of such pipe, still there was no basis for a finding that the mayor and manager either conspired with the contractor to file a false claim or that he disposed of any of such pipe after it was delivered; and that the most which could be said was that the matter had been handled negligently. Again, the evidence presented an issue of fact for the .court; again, it cannot be said that the finding was clearly erroneous, due regard being had for the opportunity of the trial court to observe the witnesses and judge of their credibility; and again, the finding cannot be overturned on appeal. Rule 52(a), supra.
The remaining question is whether the full amount which the city received frm the sureties on the official bonds of other commissioners should have been treated as a credit on the amount for which the company was liable in this case. Where a creditor holds more than one debt or claim against his debtor, or where a single debt or claim consists of several items, the debtor has the right to direct the debt or item on which a payment shall be credited, and it is the duty of the creditor to make application as directed. Wheeler v. American Investment Co., 167 Okl. 558, 31 P.2d 117; Sipes v. John, 177 Okl. 299, 58 P.2d 854. But where the debtor fails to direct 'how a payment shall be applied, and in the absence of equities of third persons, the creditor is ordinarily free to make the application in the manner of his choice. Sipes v. John, supra. There was no showing that any specific directions were given in respect of the manner in which the payments in question should be applied. Neither was there any indication that any part of the money was applied to a liability which had become barred by the five-year statute of limitation to which reference has been made. In the absence of direction, the city was free to apply the amount as it saw fit. Other than a payment expressly or impliedly made on the offset claims pleaded in the complaint in this cause, this company, as surety on the bonds of the mayor and manager and the two commissioners whose bonds are involved here, had no equity in the payments which those sureties made. And since it had no such equity, the city was not required to make application in a manner most beneficial to it. Southwestern Surety Insurance Co. v. Neal, 81 Okl. 194, 197 P. 439; Sipes v. John, supra.
For the error in allowing the company credit for the full amount paid by the sureties on the bonds of other commissioners, the' judgment is reversed and the cause 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.
HENLEY, Senior Circuit Judge.
The State of Missouri appeals and petitioner George C. Gilmore cross-appeals from the district court’s order granting Gilmore’s 28 U.S.C. § 2254 petition for writ of habeas corpus upon the basis of two of the nine grounds set forth therein, and ordering a new trial in the punishment phase of Gilmore’s state capital murder trial, or in the alternative, alleviation of the death sentence imposed. For reasons to be stated, we conclude that Gilmore’s challenges to his conviction and sentence do not warrant habeas corpus relief. Accordingly, we reverse the district court’s order and reinstate the original sentence.
I.
Gilmore is a state prisoner currently incarcerated at the Missouri State Penitentiary in Jefferson City, Missouri. In March, 1982 he was convicted by jury of capital murder and sentenced to death in connection with the slaying of an elderly woman, Mary Luella Watters. Gilmore’s conviction and sentence were affirmed by the Missouri Supreme Court on direct appeal. State v. Gilmore, 661 S.W.2d 519 (Mo.1983) (en banc), cert. denied, 466 U.S. 945, 104 S.Ct. 1931, 80 L.Ed.2d 476 (1984). Gilmore then filed a motion for state post-conviction relief pursuant to Missouri Supreme Court Rule 27.26, which was denied after an evidentiary hearing. The denial of the motion was affirmed by the Missouri Court of Appeals. Gilmore v. State, 712 S.W.2d 438 (Mo.Ct.App.1986).
Thereafter, Gilmore commenced the present action for federal habeas corpus relief. In an amended petition filed June 1, 1987, after the appointment of counsel, Gilmore advanced the claims that: (1) his conviction was obtained in violation of the sixth amendment because he was not represented by counsel at his arraignment and plea; (2) he was forced to wear leg irons in the presence of the jury, in violation of the fifth amendment; (3) his trial attorney rendered ineffective assistance; (4) the state trial court’s action of unilaterally striking a juror denied Gilmore a trial by a jury chosen from a cross-section of the population, in violation of the sixth amendment; (5) the prosecuting attorney made improper remarks during his closing argument in the punishment phase of the trial; (6) during the punishment phase of the trial, the jury was improperly permitted to view Gilmore’s videotaped confession in two unrelated crimes; (7) the imposition of the death penalty constitutes cruel and unusual punishment, in violation of the eighth amendment; and (8) the imposition of the death penalty is arbitrary and excessive, and disproportionate to the sentence imposed in other similar cases. Finally, in a second amended petition filed July 23,1987, Gilmore advanced the additional claim that during the guilt phase of the trial, the jury was improperly permitted to consider evidence concerning the impact of the crime upon the victim’s relatives.
After supplemental briefing by both parties, the district court entered an order dated February 26, 1988, directing that Gilmore be given a new trial in the penalty phase of the proceedings or, in the event that the State elected not to give Gilmore a new trial, that he be relieved of the sentence of death and confined for fifty years without parole. Gilmore v. Armontrout, 681 F.Supp. 632, 641 (W.D.Mo.1988).
The district court concluded that the challenged portion of the prosecuting attorney’s closing statement was improper and “blatantly prejudicial,” depriving Gilmore of a fair trial. The court determined that its consideration of this claim was not pre-eluded despite Gilmore’s attorney’s failure to object at trial because the prosecutor’s statements constituted plain error under Missouri Supreme Court Rule 30.20 and Gilmore’s attorney’s failure to object was “so grossly negligent that it falls completely outside the standards of Wainwright v. Sykes [433 U.S. 72, 97 S.Ct. 2497, 53 L.Ed. 2d 594 (1977)]....” 681 F.Supp. at 637. Similarly, although acknowledging that Gilmore presented the claim in his Rule 27.26 motion but did not include it on appeal from the denial thereof, the court concluded that the claim had been exhausted and was not subject to a state procedural default barring review because Gilmore no longer had an available state remedy, and should not be held to the Wainwright standard as a result of his attorney’s failure to advance the claim on appeal from the denial of the Rule 27.26 motion, or the trial court’s failure to prohibit the argument sua sponte. Using the same analysis, the court determined that Gilmore’s claim concerning the jury’s allegedly improper consideration of evidence of the impact of the crime upon the victim’s relatives was not procedurally barred. The court then concluded that this claim stated a basis for relief pursuant to the principles enunciated in Booth v. Maryland, 482 U.S. 496, 107 S.Ct. 2529, 96 L.Ed.2d 440 (1987). 681 F.Supp. at 641. The court dismissed Gilmore’s remaining claims on the merits, and both parties appealed.
For reversal, the State of Missouri argues that the district court erred in granting Gilmore’s petition because the claim concerning the prosecuting attorney’s closing argument is subject to a procedural default barring review and does not rise to the level of a constitutional violation. Similarly, the State contends that Gilmore’s claim concerning the allegedly improper admission of evidence is barred by Gilmore’s default, does not rise to the level of a constitutional violation, and in any event constitutes harmless error. In his cross-appeal, Gilmore argues that the district court erred in dismissing his claims that his sixth amendment rights were violated because he did not have counsel at arraignment; his fifth amendment rights were violated when he was forced to wear leg irons during the trial; the trial court’s dismissal of a prospective juror resulted in the violation of his sixth amendment rights; and that during the sentencing phase, the jury was improperly permitted to view his videotaped confession to two unrelated crimes. We consider each of these arguments in turn.
II.
A. Prosecuting Attorney’s Closing Argument in Punishment Phase.
As indicated, the State first contends that the district court erred in granting Gilmore habeas corpus relief upon the basis of his claim concerning the prosecuting attorney’s closing argument because the claim is barred by a procedural default and does not rise to the level of a constitutional violation. A brief discussion of the procedural history of Gilmore’s claim must precede our consideration of the State’s contention that the claim suffers from a procedural default barring federal review.
As noted by the district court, despite the applicability of Missouri’s contemporaneous objection rule, see State v. Hayes, 624 S.W.2d 16, 20 (Mo.1981), Gilmore’s trial attorney did not object to the prosecutor’s closing argument, nor did he raise the issue of the propriety of the closing argument on direct appeal. In his Rule 27.26 motion Gilmore did present the claims that the prosecutor’s closing argument was impermissible under Caldwell v. Mississippi, 472 U.S. 320, 105 S.Ct. 2633, 86 L.Ed.2d 231 (1985), and that his trial attorney rendered ineffective assistance in failing to lodge an objection. Neither of these claims, however, was advanced on appeal from the denial of the motion.
Ordinarily, a federal court reviewing a state conviction in a 28 U.S.C. § 2254 proceeding may consider only those claims which the petitioner has presented to the state court in accordance with state procedural rules. See Engle v. Isaac, 456 U.S. 107, 125, 135, 102 S.Ct. 1558, 1570, 1575, 71 L.Ed.2d 783 (1982). This requirement implicates consideration of both the question whether the petitioner has exhausted all remedies available in the courts of the state at the time the federal habeas corpus petition is filed, see Humphrey v. Cady, 405 U.S. 504, 516, 92 S.Ct. 1048, 1055, 31 L.Ed.2d 394 (1972), and whether he has preserved his claims for federal habeas corpus review by complying with state procedural rules governing their presentation. Engle v. Isaac, 456 U.S. at 125, 126 n. 28, 102 S.Ct. at 1570, 1571 n. 28.
In the instant case, the State does not contest the district court’s conclusion that Gilmore has exhausted available state remedies with respect to his claim concerning the propriety of the prosecutor’s closing argument. See Gilmore v. Armontrout, 681 F.Supp. at 637 (“Because [Gilmore] no longer has any remedy available to exhaust this claim, the requirement of exhaustion should not be applied inflexibly to bar this Court’s consideration of [the] claim.”). This court has previously observed that Missouri courts strictly construe the provision in Missouri Supreme Court Rule 27.26 that a successive motion to vacate a sentence shall not be entertained when the grounds presented therein could have been raised in the original Rule 27.26 motion. Lindner v. Wyrick, 644 F.2d 724, 726-27 (8th Cir.), cert. denied, 454 U.S. 872, 102 S.Ct. 345, 70 L.Ed.2d 178 (1981). Because Gilmore advanced his claim concerning the prosecuting attorney’s closing argument in his original Rule 27.26 motion, the record clearly indicates that the claim was available to him when the motion was filed. In these circumstances, we agree with the district court that the filing of a successive Rule 27.26 motion advancing this claim would be futile, and that Gilmore has exhausted state remedies with respect to this claim. Employing this same rationale, we also conclude that Gilmore has exhausted state remedies with regard to his claim that his trial attorney rendered ineffective assistance by failing to object to the prosecutor’s closing argument.
Gilmore did not comply with Missouri procedural rules, however, when he failed to advance these claims on appeal from the denial of his Rule 27.26 motion. See Stokes v. Armontrout, 851 F.2d 1085, 1092 (8th Cir.1988) (Missouri petitioner’s failure to raise claim on appeal from the denial of his state post-conviction motion erected a procedural bar to federal habeas review); see also Benson v. State, 611 S.W.2d 538, 541 (Mo.Ct.App.1980) (Missouri procedure requires presentation of a claim “at each step of the judicial process” in order to avoid default). Hence, federal habeas review of these claims is precluded unless Gilmore can demonstrate cause for his default and actual prejudice resulting from the alleged constitutional violation. Wainwright v. Sykes, 433 U.S. at 84, 97 S.Ct. at 2505.
The district court declined to undertake the cause and prejudice analysis in light of its determination that Wainwright was inapplicable. With due respect, we find the district court’s reasoning in this regard contrary to existing Supreme Court precedent. In particular, we note that in Murray v. Carrier, 477 U.S. 478, 496, 106 S.Ct. 2639, 2650, 91 L.Ed.2d 397 (1986), the Court indicated that the cause and prejudice showing must be made in order to surmount a procedural default except “in an extraordinary case, where a constitutional violation has probably resulted in the conviction of one who is actually innocent....” See also Engle v. Isaac, 456 U.S. at 135, 102 S.Ct. at 1576 (in appropriate cases, the requirement of a showing of cause and ¡prejudice “must yield to the imperative of correcting a fundamentally unjust incarceration”). To date, no extraordinary case of this nature has been found, 17A C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 4266.1 (1988), nor does Gilmore urge that this is such a case. In addition, in Engle v. Isaac, the Supreme Court explicitly declined to adopt a plain error inquiry in federal habeas review of state convictions, reasoning, “[w]e remain convinced that the burden of justifying federal habeas relief for state prisoners is ‘greater than the showing required to establish plain error on direct appeal.’ ” 456 U.S. at 134-35, 102 S.Ct. at 1575 (quoting Henderson v. Kibbe, 431 U.S. 145, 154, 97 S.Ct. 1730, 1736, 52 L.Ed.2d 203 (1977)). Finally, in Smith v. Murray, 477 U.S. 527, 538, 106 S.Ct. 2661, 2668, 91 L.Ed.2d 434 (1986), the Court rejected any “suggestion that the principles of Wainwright v. Sykes apply differently depending on the nature of the penalty a State imposes for the violation of its criminal laws.”
Turning now to a determination of whether Gilmore has met his burden of demonstrating cause and prejudice, we conclude after a careful review of the record that nothing therein purports to suggest a cause for Gilmore’s failure to present, on appeal from the denial of his Rule 27.26 motion, either of the claims at issue. Although Gilmore argues that the alleged ineffective assistance of the attorney representing him at trial and on direct appeal constitutes cause, we reiterate our earlier conclusion that Gilmore’s failure to advance the claims in question in his post-conviction appeal functions as an adequate and independent procedural default.
Although our inquiry need continue no further, we note that Gilmore’s underlying claims are without merit. Gilmore’s reliance upon Caldwell v. Mississippi, 472 U.S. 320, 105 S.Ct. 2633, 86 L.Ed.2d 231 (1985), in support of his assertion that the prosecutor’s remarks warrant habeas relief, is misplaced. Caldwell condemns state-induced comments that “mislead the jury as to its role in the sentencing process in a way that allows the jury to feel less responsible than it should for the sentencing decision.” Darden v. Wainwright, 477 U.S. 168, 184 n. 15, 106 S.Ct. 2464, 2473 n. 15, 91 L.Ed.2d 144 (1986). The comments in the case at hand, supra n. 4, did not mislead the jury; rather, they accurately apprised it of the potential consequences of its sentencing alternatives. Moreover, the comments in no way tended to diminish the jury’s role in the sentencing determination; on the contrary, a fair reading of the prosecutor’s closing argument leads one to conclude that the remarks at issue underscored the importance of the jury’s decision.
Furthermore, in California v. Ramos, 463 U.S. 992, 103 S.Ct. 3446, 77 L.Ed.2d 1171 (1983), the Supreme Court held that a California law which required a trial judge to inform the jury that a sentence to life imprisonment without parole may be commuted to a sentence including the possibility of parole, when given in the penalty phase of a capital murder trial, did not violate the eighth and fourteenth amendments. Id. at 1013, 103 S.Ct. at 3459. In so holding, the Court expressly rejected the arguments that such an instruction invited an unacceptable level of speculation and unreliability, that the instruction deflected the jury from its task of basing its sentencing decision upon the specific facts of the case, and that the instruction misled the jury by failing to inform it that a sentence of death may also be commuted. Id. at 1001-1012, 103 S.Ct. at 3453-3459. Although we recognize that Ramos concerned the constitutionality of a state statute, and we are aware of the Supreme Court’s statement in Ramos that states remain free to prohibit a capital sentencing jury from considering the governor’s power to commute, id. at 1013, 103 S.Ct. at 3459, we believe the Court’s conclusion that the commutation instruction did not violate the federal Constitution is apropos and instructive in this federal habeas corpus proceeding.
Finally, an important component of the Court’s decision in Caldwell was the fact that the trial judge “not only failed to correct the prosecutor’s remarks, but in fact openly agreed with them; he stated to the jury that the remarks were proper and necessary, strongly implying that the prosecutor’s portrayal of the jury’s role was correct.” Caldwell, 472 U.S. at 339, 105 S.Ct. at 2644. By contrast here, the trial court submitted an instruction informing the jury that the arguments of counsel are not evidence, thus reducing any likelihood that the jury was substantially influenced by counsel’s comments. While we make no comment as to whether the submission of such an instruction would have been sufficiently curative if a Caldwell violation had in fact occurred, we believe the instruction underscores our conclusion that no impropriety was committed in the matter sub judice.
In light of the foregoing, it is clear that Gilmore’s ineffective assistance claim lacks merit. Gilmore has not established either that his trial attorney’s failure to object or to raise the issue on direct appeal “fell below an objective standard of reasonableness,” nor has he demonstrated a reasonable probability that but for counsel’s alleged error “the result of the proceeding would have been different.” Strickland v. Washington, 466 U.S. 668, 688, 694, 104 S.Ct. 2052, 2064, 2068, 80 L.Ed.2d 674 (1984).
B. Victim-impact Evidence.
The State next challenges the district court’s conclusion that the admission of victim-impact evidence violated Gilmore’s eighth amendment rights as established by the Supreme Court’s decision in Booth v. Maryland, 482 U.S. 496, 107 S.Ct. 2529, 96 L.Ed.2d 440 (1987). As a preliminary matter, the State contends that (1) Gilmore has waived his Booth claim by failing to address, in his traverse, the State’s argument that the claim is proeedurally barred; and (2)Gilmore committed certain state procedural defaults which erect an adequate and independent bar to consideration of the Booth claim.
The State correctly observes that pursuant to 28 U.S.C. § 2248, “[t]he allegations... of an answer to an order to show cause in a habeas corpus proceeding, if not traversed, shall be accepted as true except to the extent that the judge finds from the evidence that they are not true.” Gilmore did not respond to the State’s procedural default argument in his traverse, nor did he allege in his habeas petition that his Booth claim was not proeedurally barred. Nevertheless, because it is apparent that the State’s waiver argument was not presented to, nor considered by, the district court, we believe it improvident to conclude that the State’s contentions must be accepted as true.
Moreover, a review of the record discloses that Gilmore may not have defaulted with respect to all of the transcript references cited in support of his Booth claim. Gilmore objected to the questions propounded at page 357 of the transcript on the grounds of relevancy and prejudice, and requested that the questions be stricken or that a mistrial be declared. Furthermore, Gilmore advanced a claim on direct appeal challenging these questions. Thus, we are reluctant to say that default has occurred. Gilmore did, however, clearly default with respect to the testimony on pages 354 and 361 of the transcript. He did not object to the testimony on either of these pages on the grounds of relevancy or prejudice; rather, the stated bases for his objections were merely that the witness’s answers were nonresponsive. Missouri law requires that during trial the complaining party make a specific objection upon the grounds advanced on appeal. See Lawson v. Cooper, 475 S.W.2d 442, 447 (Mo.Ct.App.1972). Furthermore, on direct appeal, Gilmore did not raise a claim challenging the testimony on page 354 of the transcript, nor did he request additional relief after his objections to the testimony on both pages were sustained. Under Missouri procedure, “where, as here, a litigant objects to a trial event, invokes specific relief and is granted the full request, he cannot complain that the trial court did not do more.” State v. Johnson, 663 S.W.2d 265, 266 (Mo. Ct.App.1983).
In summary, then, we will review the merits of Gilmore’s claim challenging the questions propounded on page 357 of the transcript. Since Gilmore clearly has not demonstrated cause for his procedural default with respect to the other transcript references, nor has he shown prejudice as defined under Wainwright, our consideration of these items is proeedurally barred.
On the merits, we conclude that a considerable extension of Booth would be required to render the challenged transcript references to be considered in the case at hand violative of the Booth decision. In Booth, the Supreme Court invalidated a Maryland statute which required a capital sentencer to consider information contained in a victim-impact statement (VIS) prepared by the Maryland State Director of Parole and Probation. The VIS in Booth described the personal characteristics of the victims, an elderly couple; contained a detailed recitation of the emotional impact of the crime upon the victims’ family members; and set forth the family members’ opinions as to the crime and the characteristics of the defendants. The Supreme Court held that such information is irrelevant to the capital sentencing decision and creates a constitutionally impermissible risk that the jury may impose a sentence of death in an arbitrary and capricious manner. Booth, 107 S.Ct. at 2533.
The transcript references in the present case are not of the same nature as the evidence condemned in Booth. Here, the prosecutor asked Audrey Watters how Mary Luella Watters occupied herself and what her spirits were like. Both questions were objected to before the witness’s answers. One need only peruse the VIS appended to the Booth decision to appreciate the qualitative difference of the evidence presented in that case and its indelible impact upon a jury. The same risk of inflaming the jury and diverting it from its responsibility of making a sentencing determination based upon the individual characteristics of the defendant and the particular circumstances of the crime did not exist in the present case. Accordingly, we conclude that the district court erred in holding that Gilmore is entitled to habeas corpus relief upon the basis of his Booth claim.
C. Failure to Provide Counsel at Arraignment.
Cross-appealing, Gilmore first argues that the district court erred in rejecting his claim that the failure to provide counsel at arraignment renders his conviction violative of the sixth amendment. Gilmore alleges that without the presence or advice of counsel, he entered a plea of not guilty at his August 11, 1981 arraignment. It is undisputed that Gilmore had not waived the presence of counsel. Counsel was not appointed until fifteen days later. In March of 1982, when Gilmore’s appointed attorney attempted to assert a defense of mental disease or defect pursuant to Mo.Rev.Stat. § 552.030, the State objected on the ground that the defense was barred by the ten-day limitation provided in Mo.Rev.Stat. § 552.030(2). The trial court disallowed formal assertion of the defense. Gilmore contends that the absence of counsel at arraignment and his subsequent inability to assert a Chapter 552 defense resulted in a violation of his sixth amendment rights.
The sixth amendment right to counsel applies to those “critical stages” of a criminal prosecution “where the results might well settle the accused’s fate and reduce the trial itself to a mere formality.” United States v. Wade, 388 U.S. 218, 224, 87 S.Ct. 1926, 1930, 18 L.Ed.2d 1149 (1967). Hence, the sixth amendment has been held applicable to certain pretrial proceedings including interrogation activities conducted “at or after the initiation of adversary criminal proceedings — whether by way of formal charge, preliminary hearing, indictment, information or arraignment,” Kirby v. Illinois, 406 U.S. 682, 689, 92 S.Ct. 1877, 1882, 32 L.Ed.2d 411 (1972), and to that type of arraignment or preliminary hearing itself at which rights of the accused may be lost or sacrificed. Hamilton v. Alabama, 368 U.S. 52, 54, 82 S.Ct. 157, 158, 7 L.Ed.2d 114 (1961); see also Coleman v. Alabama, 399 U.S. 1, 9, 90 S.Ct. 1999, 2003, 26 L.Ed. 2d 387 (1970).
Significantly, “[t]he question whether arraignment signals the initiation of adversary proceedings... is distinct from whether the arraignment itself is a critical stage requiring the presence of coun-sel_” Michigan v. Jackson, 475 U.S. 625, 630 n. 3, 106 S.Ct. 1404, 1407 n. 3, 89 L.Ed.2d 631 (1986). The test for determining whether a particular proceeding is itself a critical stage is “whether the presence of... counsel is necessary to preserve the defendant’s basic right to a fair trial....” United States v. Wade, 388 U.S. at 227, 87 S.Ct. at 1932. In undertaking this inquiry, a reviewing court must “analyze whether potential substantial prejudice to [the] defendant’s rights inheres in the particular confrontation and the ability of counsel to help avoid that prejudice.” Coleman v. Alabama, 399 U.S. at 7, 90 S.Ct. at 2002; United States v. Wade, 388 U.S. at 227, 87 S.Ct. at 1932. Resolution of this question turns principally upon the State’s treatment of the defendant’s actions at the proceeding in issue. See Hamilton v. Alabama, 368 U.S. at 53, 54 & n. 4, 82 S.Ct. at 158 & n. 4. Thus, a defendant has been held entitled to counsel at an arraignment where, under state law, defenses not then raised are considered abandoned, id. at 53, 82 S.Ct. at 156, but not at an arraignment proceeding governed by a state law which provided that any uncounselled plea or waiver of rights was subject to withdrawal after the appointment of counsel. Vitoratos v. Maxwell, 351 F.2d 217, 221 (6th Cir.1965), cert. denied, 383 U.S. 105, 86 S.Ct. 718, 15 L.Ed.2d 618 (1966).
Applying these principles, this court held in McClain v. Swenson, 435 F.2d 327, 330 (8th Cir.1970), that in Missouri, the absence of counsel at arraignment is not per se a violation of the sixth amendment unless there is a showing that “by reason of the absence of counsel the appellant lost [a] right or privilege or the [S]tate gained some advantage.” See also Collins v. Swenson, 443 F.2d 329, 332 (8th Cir.1971) (“under Missouri law the arraignment proceeding is not a critical phase of the state criminal procedure when no prejudice arises from it”); Parks v. State, 518 S.W. 2d 181, 184 (Mo.Ct.App.1974) (same).
Our review of the record in the case at hand persuades us that Gilmore did not lose any right or privilege, nor did the State gain any advantage, as a result of the fact that Gilmore was not represented by counsel at his arraignment. Gilmore’s failure to raise a Chapter 552 defense within the ten-day period set forth in Mo.Rev. Stat. § 552.030(2) did not foreclose assertion of the defense, but required only that Gilmore demonstrate good cause for his untimeliness. Moreover, unlike the arraignment procedure in Hamilton v. Alabama, under the Missouri scheme, a trial court’s refusal to accept an untimely request to raise the defense is reviewable. Thus, available defenses are not “irretrievably lost” if not raised at a Missouri arraignment. Cf. Hamilton, 368 U.S. at 54, 82 S.Ct. at 158. Finally, the Missouri Court of Appeals’ decision in Parks v. State, 518 S.W.2d at 184, indicates that where there is no evidence of a mental disease or defect, no prejudice can be demonstrated as the result of the absence of counsel at arraignment and the subsequent inability to assert a Chapter 552 defense. In Gilmore’s direct appeal, the Missouri Supreme Court not only found that no good cause had been shown for Gilmore’s failure to timely assert a Chapter 552 defense, but additionally stated that the trial court “with the evidence of [Gilmore’s] mental condition before it... did not abuse its discretion in disallowing formal assertion of such defense.” State v. Gilmore, 661 S.W.2d at 524. Gilmore has never challenged this conclusion, nor has he set forth any evidence in opposition to the Missouri Supreme Court’s finding that the state trial court considered evidence of his mental condition before denying his request to formally assert a Chapter 552 defense. See id. In these circumstances, we conclude that the absence of counsel at Gilmore’s arraignment did not violate his sixth amendment rights, and we affirm the district court’s dismissal of this claim.
D. Leg Irons.
Gilmore next contends that the district court erred in rejecting his claim that his fifth amendment rights were violated when he was forced to wear leg irons at trial. Both the district court and the Missouri Supreme Court dismissed Gilmore’s claim on the dual grounds that (1) the trial court did not abuse its discretion in restraining Gilmore for security purposes; and (2) the jurors were unable to observe the restraints. Gilmore v. Armontrout, 681 F.Supp. at 636; State v. Gilmore, 661 S.W.2d at 525. We agree that in these circumstances, the presumption of innocence afforded to Gilmore, as a criminal defendant, was not abridged, and that no constitutional violation occurred.
The Supreme Court has characterized the use of shackles as “inherently prejudicial,” Holbrook v. Flynn, 475 U.S. 560, 568, 106 S.Ct. 1340, 1345, 89 L.Ed.2d 525 (1986), noting both that “the sight of shackles and gags might have a significant effect on the jury’s feelings about the defendant,” and that “the use of [shackles] is itself something of an affront to the very dignity and decorum of judicial proceedings.” Id. (quoting Illinois v. Allen, 397 U.S. 337, 344, 90 S.Ct. 1057, 1061, 25 L.Ed.2d 353 (1970)). See also People v. Roman, 35 N.Y.2d 978, 979, 324 N.E.2d 885, 886, 365 N.Y.S.2d 527, 528 (1975) (per curiam) (“A defendant is presumed innocent and he is entitled to appear in court with the dignity and the self-respect of a free and innocent man.”). Consequently, shackling is subject to close judicial scrutiny in order to ascertain whether it was necessary for the furtherance of an essential state interest. See Holbrook v. Flynn, 475 U.S. at 568, 106 S.Ct. at 1345.
In ordering Gilmore to wear leg irons, the trial court expressly found that Gilmore presented a security threat because he had been charged with several other capital murders and, in one instance, had been tried and convicted. Clearly, the safety of a state’s courtrooms is an essential state interest justifying the use of restraints. See id. Furthermore, federal courts have repeatedly recognized that a trial court’s decision concerning courtroom security is accorded broad discretion and will not be reversed absent a showing of abuse. See, e.g., Wilson v. McCarthy, 770 F.2d 1482, 1484 (9th Cir.1985); Harrell v. Israel, 672 F.2d 632, 636 (7th Cir.1982); Payne v. Smith, 667 F.2d 541, 544 (6th Cir.1981), cert. denied, 456 U.S. 932, 102 S.Ct. 1983, 72 L.Ed.2d 449 (1982). There is no evidence that the trial court abused its discretion in the present case.
Of equal importance, we reiterate the findings of both the district court and the Missouri Supreme Court that Gilmore’s legs were under the counsel table and that the jury at no time was able to observe the restraints. In this connection, the record further reflects that the trial court ordered that Gilmore not be moved in the presence of the jury. Relatedly, the record discloses that the court recessed prior to Gilmore’s testimony, permitting Gilmore to approach the witness stand outside the presence of the jury. In these circumstances, we have little difficulty concluding that the jury did not observe anything “so prejudicial as to pose an unacceptable threat to [Gilmore’s] right to a fair trial.” Holbrook v. Flynn, 475 U.S. at 572, 106 S.Ct. at 1347. Furthermore, we note that Gilmore never objected to the use of restraints. See Estelle v. Williams, 425 U.S. 501, 512-18, 96 S.Ct. 1691, 1696-97, 48 L.Ed.2d 126 (1976) (failure to object to being tried in prison attire is sufficient to negate a constitutional violation). Accordingly, we conclude that the district court committed no error in rejecting this claim.
E. Dismissal of Prospective Juror.
Next, Gilmore argues that the district court erred in dismissing his claim that the trial court’s sua sponte dismissal of a prospective juror deprived him of his sixth amendment right to a jury chosen from a cross-section of the population. The basic facts underlying this claim are undisputed. Prior to the trial, the presiding judge excused Robert Knoll, an individual scheduled as a venireman, because Knoll, a former police officer, indicated that he wanted to bring a gun to the trial.
Thereafter, Gilmore moved for a mistrial On the ground that the prospective panel included fifty-eight rather than sixty persons. Gilmore challenged the sua sponte excusal of Knoll, and a hearing was held. At that proceeding, the county sheriff and an associate circuit judge testified to the effect that Knoll had stated that he was frightened, that in their opinion Knoll was biased against the defense, and that they feared Knoll would poison the jury by discussing his personal knowledge of the case. The trial court concluded that Knoll had been excused for a reasonable purpose, and denied Gilmore’s mistrial motion.
On direct appeal, the Missouri Supreme Court held that the trial court did not abuse its discretion in excusing Knoll, noting in particular that Gilmore had not demonstrated that he was prejudiced or his interests adversely affected by the trial court’s action. State v. Gilmore, 661 S.W. 2d at 523. The district court agreed, see Gilmore v. Armontrout, 681 F.Supp. at 639-40, as do we.
In Missouri, a “trial court has the authority to strike prospective jurors on its own motion.” State v. Marshall, 571 S.W.2d 768, 772 (Mo.Ct.App.1978). Although the trial court’s reason for excusing Knoll is not listed among the statutory justifications for excuse, see Mo.Rev.Stat. § 494.031, it is well settled in Missouri that “the statute is merely discretionary and [a defendant] must show that he has been prejudiced or that his interests have been adversely affected by failure to strictly observe these statutory provisions in alleging error on the part of the [trial] judge.” State v. Holt, 592 S.W.2d 759, 767 (Mo.1980) (en banc) (citation and internal quotation omitted). It is beyond peradventure that the excusal of Knoll did not prejudice Gilmore, and in fact was to his advantage.
Although Gilmore attempts to liken this case to Anderson v. Frey, 715 F.2d 1304 (8th Cir.1983), cert. denied, 464 U.S. 1057, 104 S.Ct. 739, 79 L.Ed.2d 198 (1984), Gilmore’s reliance upon Anderson is inappo-site and warrants little discussion. In Anderson, this court condemned the practice of a sheriff supervising the selection of bystander jurors. Pivotal to the Anderson decision was the concern that the participation of an interested official in the juror selection process is fundamentally unfair. Id. at 1309. There is no evidence in the instant case that the sheriff was involved in the selection process; moreover, the trial court, not the sheriff, excused Knoll. Thus, the same concerns are not implicated here.
F. Introduction of Videotaped Confession.
Lastly, Gilmore contends that the district court erred in rejecting his claim that he is entitled to habeas
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.
MAGRUDER, Circuit Judge.
This is a habeas corpus case. It started as a criminal charge of murder lodged against appellant in the Eighth Judicial District Court in and for the County of Clark, State of Nevada. At the time of the hearing the applicable statute read that “ * * * if such person shall be convicted on confession in open court, the court shall proceed, by examination of witnesses, to determine the degree of the crime and give sentence accordingly.” N.R.S. 200.030, subsection 2. Notwithstanding the burden which this law placed upon the district judge, appellant having pleaded guilty to the charge of murder, after the hearing the judge determined that appellant was guilty of murder in the first degree and sentenced him to death in the gas chamber.
The district judge remonstrated with the legislature that no judge should by himself have the responsibility of sentencing a man to death. The legislature obliged him by amending the relevant statute so as to read: “ * * * If any person is convicted of murder on his confession in open court without a jury, or upon a plea of guilty without specification of a degree, the supreme court shall appoint two district judges from judicial districts other than the district in which the confession or plea is-madg^who shall, with the district judge before whom such confession or plea was made, or his successor in office, by examination of witnesses, determine the degree of the crime and give sentence accordingly. Such determination shall' be by unanimous vote of the three district judges.” N.R.S. 200.030, subsection 3.
Having a death sentence staring him in the face, appellant appealed to the Supreme Court of Nevada on a point of evidence. That court reversed the judgment of the district court of Clark County, Nevada, and sent the ease back for a hearing before a court of three judges “to determine the degree of the crime and give sentence accordingly.” ‘ Rainsberger v. Nevada, 76 Nev. 158, 350 P.2d 995, 998 (1960).
When the case was again in the Eighth Judicial District Court for Clark County pursuant to the mandate, appellant insisted that the amended law was an ex post facto law, contrary to his constitutional rights. Without waiting for a determination by the three-judge court, appellant rushed in with a petition for a writ of habeas corpus filed in the district court of Clark County contending that the new statute had repealed the old one, and that whereas three judges were now to determine the degree of his guilt and sentence him accordingly, the single judge is thus relieved from the burden which had previously rested upon him, and hence that the amendment changed to his detriment the position of appellant. See Kring v. Missouri, 107 U.S. 221, 2 S.Ct. 443, 27 L.Ed. 506 (1882).
The petition was denied by the district court of Clark County, Nevada. On appeal to the Supreme Court of Nevada, this denial was affirmed. Application of Rainsberger, 77 Nev. 399, 365 P.2d 489 (1961). The court pointed out that the writ of habeas corpus was not available under the local procedure to attack the present respondent, namely, the sheriff of Clark County, who lawfully held respondent under a warrant of arrest for a nonbailable offense. If the three-judge court should determine in the future that the crime was murder in the first degree and sentence appellant to death, habeas corpus no doubt would be the appropriate remedy to test the ex post facto nature of the amended statute, as against the warden of the state penitentiary, who then would be holding the accused. See Eureka County Bank Habeas Corpus Cases, 35 Nev. 80, 126 P. 655 (1912).
Appellant thereafter applied to the United States Supreme Court for a writ of certiorari, which was denied without opinion. Rainsberger v. Leypoldt, Sheriff, 368 U.S. 516, 82 S.Ct. 530, 7 L.Ed.2d 522 (1962), rehearing denied 369 U.S. 832, 82 S.Ct. 849, 7 L.Ed.2d 797 (1962). Appellant then filed in the federal district court below the present writ of habeas corpus, alleging that he had exhausted his state remedies.
We think that the district court properly denied the petition on the ground that appellant had failed to exhaust his remedies under state law as required by 28 U.S.C. § 2254. Brown v. Allen, 344 U.S. 443, 73 S.Ct. 397, 97 L.Ed. 469 (1953), has no application to this case. The Nevada Supreme Court has never passed upon the federal ex post facto question. That court has merely decided that habeas corpus as a matter of local law would not lie under these circumstances. If and when the Supreme Court of Nevada has before it an appeal from the determination of murder in the first degree by a three-judge court, at that time, and not before, the Supreme Court of Nevada will have to pass upon the federal question raised here.
Personally I would be.willing to assume without deciding that appellant has exhausted his remedies under the state law, but see Woods v. Nierstheimer, 328 U.S. 211, 66 S.Ct. 996, 90 L.Ed. 1177 (1946), after which I would decide the case on the merits, since it seems clear to me that no constitutional rights have been violated. But my two colleagues do not agree to this disposition of this appeal, and not being in disagreement with them I have written the opinion their way.
A judgment will be entered affirming the judgment of the District 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:
|
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.
HAMILTON, Circuit Judge.
These are appeals from a judgment of unfair competition growing out of the use of conflicting trademarks. The questions presented are: First, whether the second user of one of various trademarks and composites of such trademarks sporadically used by the first user may be enjoined from competing with the latter; second, whether the court applied an erroneous conception of pertinent law in finding as a fact that the Oil City Refiners, Inc., appellee in No. 9335, changed the coloring and design of its trademark knowingly and in bad faith, thereby seeking' to profit by inducing the public to purchase its wares under the belief they were the goods of the SoconyVacuum Oil Company, appellant in No.-9335; third,' assuming that the court correctly applied the law, was its remedy adequate ?
The court referred, the whole case to a Special Master to take testimony and report findings of fact and conclusions of law. On exceptions, the Master’s findings of fact were approved, but the court rejected his conclusions of law in one particular. We shall refer to appellant in No. 9335, plaintiff below, as “Socony” and appellee in No. 9335, defendant below, as “Oil City.”
The Patent Office issued a certificate of trademark registration No. 83,100 to the Standard Oil Company of New York, predecessor of Socony, exemplified in the symbol of a flying horse in combination with the words “Pegasus Brand.” In the original registration statement, dated August 15, 1911, the applicant declared it theretofore had used the mark in the sale of naphtha and gasoline, oils and greases. Certificate of renewal was issued July. 28, 1931. On August 6, 1931, an additional certificate of registration, No. 287,746, was duly issued to Socony’s predecessor, extending the original mark to all of its petroleum products with or without admixture of other materials.
The Socony and its predecessor used the registered mark from 1911 to 1932 only in the sale of products in foreign commerce. In April of 1932, Socony planned to use the mark wherever it sold its products in the United States and during that year had shield signs manufactured for display at gasoline stations bearing the mark of the flying red horse. These signs were first used in Cleveland, Ohio, in March 1933. Beginning in August 1932, Socony’s products were widely advertised under this trademark.
The first advertisement appeared in Cleveland, Ohio, October 4, 1932, and from that time to the trial of this case, Socony extensively advertised and sold its products under its trademark by the use of various media, including the radio, newspapers and magazines.
The Master found that Oil City used-as a trademark the symbol of a flying horse in the Cleveland, Ohio, trade territory as early as 1930, which use it continued until October 1934, when it commenced marketing the products of the American Oil Company and continued to use that Company’s trademarks and symbols, until September 1935, during which period it made but slight use of the flying horse. The horse on the Oil City’s mark was usually white imposed on a dark background, although occasionally it used other colors, among them, red. Prior to December 1931, there was little use by Oil City of a single horse but the symbol sometimes had two horses facing in opposite directions. Prior to October 1932, and subsequent thereto Oil City- intermittently used the figures of airplanes, a herd of running horses without wings, a quartet of singers and a series of flying horses in varying colors ascending in an arc. The use of a red horse during this-period was sporadic. From April 1934, to-September 1935, Oil City operated twenty-two gasoline stations, most of which were devoted to the sale of the American Oil" Company’s products under that Company’s-'trademark. Between September and the-latter part of 1935, Oil City distributed the-products of the Columbia Refining Company through twelve of Oil City’s stations-using, in connection therewith, Columbia trademarks. Prior to 1940, Oil City sporadically used the sign of a white horse on billboards and cut-out signs, one of' 'which had on it a gray horse with red' outlined wings and it used a red horse on some of its pump globes. During 1940 and' since that time the Oil City has used exclusively, a red horse strikingly similar toSocony’s. Socony was familiar with Oil' City’s trade symbols -as early as January-1933 and since that time has known the-uses to which they have been put. Oil City first knew of Socony’s use of its trade symbol in October 1932.
On March 19, 1940, after this action was begun, Oil City registered the flying red horse as a trademark in Ohio under the provisions of the Ohio General Code, Section 6240, subsections 1-4.
On January 19, 1933, Oil City notified Socony that it was the sole owner of the winged horse trademark and insisted that Socony discontinue its use. Socony instituted this action claiming it was the owner of the mark and had used it continuously since October 22, 1932, in marketing its products in Ohio and elsewhere. It charged that Oil City was using Socony’s mark in northeastern Ohio and in western Pennsylvania. Oil City, in its answer, admitted the sale of petroleum products in northeastern Ohio under the trademark of a flying red horse, but denied it had sold any products in western Pennsylvania. It charged Socony had sold products throughout the State of Ohio and counterclaimed, alleging it was the sole owner of the mark and sought an injunction and an accounting from Socony.
The Master concluded as a matter of law that Socony acquired no rights in the use of its trademark in the Cleveland trade territory until 1932 and that Oil City had made sufficient use of the mark of a flying horse to acquire a prior right therein before Socony entered the territory. The Master also concluded that the difference in color between a flying red horse and a flying white horse was not sufficient to avoid confusion in the public mind, but he concluded that because Oil City had in 1940 discontinued the use of all trademarks except a flying red horse, confusingly similar to the trademark of Socony, it was guilty of an unfair trade practice and should be permanently enjoined from the use of said mark. The Master recommended that there be no accounting, and that Oil City’s counterclaim be dismissed and Socony’s action be dismissed as to John Roski, appellee in No. 9335.
The court accepted the Master’s findings and conclusions with the exception that he refuses to enjoin the Oil City from the use of a flying white horse as a symbol in the State of Ohio.
Oil City, appellant in No. 9336, insists that the court erred in dismissing its counterclaim. Socony in No. 9335 insists that the court should have enjoined the Oil City from using the trademark in any form and further that in any event, the use of the mark by Oil City should have been restricted to Cleveland, Ohio, and its vicinity.
The Master found that Oil City was the first user of the flying horse as a trade symbol in the Cleveland territory and the court adopted this finding.
Under Rule 53(e) (2), Rules of Civil Procedure, Title 28 U.S.C.A. following section 723c, the court should accept the Master’s findings of fact unless clearly erroneous. Socony filed no exceptions to the Master’s report and since the findings of the Master in this particular are supported by substantial evidence, we accept them.
If nothing else appeared in the case, this finding would be sufficient to support Oil City’s counterclaim and it would be entitled to an injunction against Socony, but even though Oil City was the first user of the trademark, it is not thereby relieved of the charge of unfair competition and if this charge is supported by the findings of the Master, the court was correct in dismissing its counterclaim. Drake Medicine Co. v. Glessner, 68 Ohio St. 337, 67 N.E. 722; Globe-Wernicke Co. v. Safe-Cabinet Co., 92 Ohio St. 532, 112 N.E. 478; Safe-Cabinet Co. v. Globe Wernicke Co., 3 Ohio App. 24; Pillsbury-Washburn Flour Mills Co. v. Eagle, 7 Cir., 86 F. 608, 41 L.R.A. 162; Samson Cordage Works v. Puritan Cordage Mills, 6 Cir., 211 F. 603, L.R.A., 1915F, 1107. According to the findings of the Master the confusion which Oil City seeks to abate was of its own creation and it caused the unfair competition in trade for which it asks relief. There was no finding by the Master of unfair competition by Socony and Oil City makes no claim of unfair dealing by Socony, aside from technical trademark infringement.
Rule 53(e) (2) does not operate to relieve this court of the burden of reviewing inferences or conclusions drawn by the Master and the trial court that the use by Oil City of the flying horse symbol to identify its trade and products constituted unfair competition. While accepting the facts competently found by the Master as correct, an appellate court remains free to draw the ultimate inferences and conclusions which, in its opinion, the findings reasonably induce. Kycoga Land Co. v. Kentucky River Coal Corporation, 6 Cir., 110 F.2d 894.
The possessor of a trademark has no more right than other property owners to use it for the purpose of passing off, or attempting to pass off, on the public the goods or business of one person as and for the goods and business of another. The facts found by the Master show that long before Socony entered the State of Ohio, Oil City was using the symbol of a flying horse, but it did not confine itself to any particular color, nor to a single horse. It used horses in groups facing in opposite directions with or without wings and in some instances moving in an arc and for long periods of time, it made but little use of a horse or horses as trade emblems. Socony commenced business in Ohio in 1932 and expended large sums in advertising its products under the trademark of the flying red horse and it operated many oil stations using this trade emblem as identification of its products and the places where they were sold.
After eight years of Socony’s business activities in this territory, Oil City commenced to use exclusively a trade emblem which is indistinguishable by the ordinary observer from Socony’s which emblem Oil City registered in the,State of Ohio after this action was begun. Color is frequently an important factor in determining the question' of unfair competition. Hugo Stein Cloak Co. v. S. B. Stein & Son, Inc., 58 Ohio App. 377, 16 N.E.2d 609; Black & White Taxicab Company v. Goldstein, 20 Ohio N.P.,N.S., 599, 29 Ohio Dec. 82.
There is no finding of fact by the Master that any customer of either of the parties was misled into believing he was acquiring the products of the other, nor is there any direct evidence that Oil City by its conduct deliberately intended to appropriate the business of .Socony. The conclusion of the Master that Oil City appropriated the business of Socony rests on an inference.
Presumptions of fact which the law recognizes must be immediate inferences from the facts proved and must be such as sensible men influenced by observation, experience, and reason, would draw from clearly established facts. As we view it, the facts found by the Master give rise to a strong presumption that Oil City refined its trademark and chose its color to resemble more closely the Socony’s and resumed its use for the purpose of appropriating a part of the business of Socony. Under such circumstances, we do not feel justified in substituting our judgment for that of the Master and the trial court. Elgin Nat. Watch Co. v. Illinois Watch Case Co., 179 U.S. 665, 674, 21 S.Ct. 270, 45 L.Ed. 365.
In considering this issue, it is well to keep in mind the important distinction to be observed between the law of trademarks and that of unfair competition. Unlike the infringement of technical trademarks, unfair competition does not necessarily involve the violation of any exclusive right in the complainant to use the names and symbols employed by defendant. There may be unfair competition resulting from an unauthorized and improper use of such names and symbols although the complainant has no property right in them as a trademark. Any conduct designed and having a natural tendency to deceive the public and enable one man to dispose of his goods for those of another, may be unfair competition and may be enjoined, although it is not expressly shown that any particular person was thereby deceived. In cases involving technical trademarks, the fraudulent intent to deceive is presumed, while in cases of unfair competition complainant must prove this intent or show facts and circumstances from which it may reasonably be inferred. In its effort to prevent unfair competition the court should not lend its aid to the furtherance of perpetual monopolies. Shredded Wheat Co. v. Humphrey Cornell Co., 2 Cir. 250 F. 960.
Oil City, over the course of the years, has used various trade symbols. To permit it to select out of this group a single symbol and remodel it to resemble the mark of each new competitor entering the territory where Oil City is doing business, would broaden the scope of legitimate monopoly into the field of unfair trade.
The case of United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 39 S.Ct. 48, 63 L.Ed. 141, on which Oil City relies, has no application to the facts in the casé at bar. In the cited case, the court decided that the junior of a trademark upon entering the business territory of the senior had no right to enjoin the latter, but was estopped to question the right of the first user. The court said in that case there was nothing to sustain the allegation of unfair competition, aside from the question of trademark infringement. The case of Hanover Star Mill. Co. v. Metcalf, 240 U.S. 403, 36 S.Ct. 357, 60 L.Ed. 713, also cited by Oil City, lays down in part the same rule as the Rectanus case, but one branch of the Hanover case is authority for the application of the doctrine of unfair competition to the conduct of Oil City in the case at bar.
Socony urges that under the findings of the Master, the trial court was compelled to enjoin Oil City from the use of a flying horse in any form or color as a trademark. As we view the case, this contention is untenable. The court and Master found that Oil City had a prior right in the Cleveland territory to the use of the flying horse as a trade symbol and Socony accepts this finding. To adopt Socony’s claim would result in forfeiting property belonging to Oil City.
The substantive scope of an injunction in an unfair competition case is not subject to cut and dried rules. The extent of the relief depends entirely on the circumstances of each individual case. The rule is fundamental that the injunction should not be so broad as to operate oppressively or contrary to real justice. The great office of the writ is to protect and preserve rights and never to destroy contravening rights unless necessary.
Had Oil City been content to let its products make their own way under its trademark in the field of open and fair competition, that would have been the end of it, but it availed itself of unfair means, either expressly or tacitly, to sell its products to the ultimate purchaser as and for those of Socony. Nevertheless, Socony is entitled to such relief only as will tend reasonably to protect it against future unfair competition from Oil City. Socony is not entitled to the aid of a decree to create or support or assist in creating or supporting an unlawful monopoly in its behalf.
Socony also urges that the Master having found as a fact that Oil City had not extended the sale of its products under the trademark of a flying white horse beyond the trade territory of Cleveland, Ohio, that the court erred in decreeing that it could use throughout the State the trademark as described in the decree. This contention must be denied. It is true generally speaking that the proprietor of a trademark, good in the markets where the owners employed it cannot monopolize markets that its trade has not reached. In other words, the mark of itself cannot travel to markets where there is no article to wear the badge and no trader to offer the identified article for sale. However, in light of the well-settled rule that property in trademarks and the right to their exclusive use rests upon the law of the several states and depends upon them for security and protection, the use of the mark extends to the whole state unless the state has, by statutory or common law declaration reduced the territorial limits of the mark to a smaller area. Hanover Star Milling Co. v. Metcalf, supra (concurring opinion of Justice Holmes, 240 U.S. at pages 424, 426, 36 S.Ct. at pages 364, 365, 60 L.Ed. 713). The General Code of the State of Ohio, Section 6240-1 to 4 inclusive, provides for the registration of trademarks of statewide application. Under the laws of Ohio a valid trademark territorially extends to the entire state. Independently of the statute, the trademark of Oil City extended to the entire state under the rule laid down in the case of Western Oil Refining Co. v. Jones, 6 Cir., 27 F.2d 205. There this court was dealing with the trademark “Silver Flash” used in selling gasoline in the trade territories of Wellsville and East Liverpool, Ohio. We decided that the seller of the gasoline under the trademark in the two communities was entitled to the exclusive use of the name within the entire state as territory which may reasonably be anticipated to be within normal business expansion in view of modern transportation methods and that many persons came from a distance to purchase. See also White Tower System v. White Castle System, 6 Cir., 90 F.2d 67; Grocers Baking Co. v. Sigler, 6 Cir., 132 F.2d 498 and Hemmeter Cigar Co. v. Congress Cigar Co., 6 Cir., 118 F.2d 64.
The Master recommended that John Roski, appellee in No. 9335, be dismissed from the proceedings for failure of evidence, and the court confirmed him. Socony neither excepted to the Master’s finding nor objected to the court’s decree on this issue, but now urges that we reverse the judgment. We find it unnecessary to consider this point. The findings of fact by a Master cannot be reviewed upon appeal where there are no exceptions to his report and this is especially true where there are no objections to the court’s approval of the Master’s findings. Rule 53 (e) (2), Rules of Civil Procedure, Title 28, U.S.C.A. following section 723c; Coghlan v. South Carolina R. Co., 142 U.S. 101, 115, 12 S.Ct. 150, 35 L.Ed. 951; City of Cleveland v. Walsh Const. Co., 6 Cir., 279 F. 57; Hutchinson v. Fidelity Inv. Ass’n, 4 Cir., 106 F.2d 431,. 133 A.L.R. 1061. Judgment affirmed on both appeals.
Socony and Oil City will each pay its own costs on these appeals and neither will recover any cost from the other. Appellee John Roski may recover his cost from appellant, Socony-Vacuum Oil Company.
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.
FOX, District Judge.
Appellant Robert Barker Wilkins and his co-defendant, Charles Edsel Gidcomb, were convicted on their plea of guilty to a count of bank robbery, Title 18 U.S.C. § 2113(d), which occurred on December 12, 1960, in the Planters Bank at Trenton, Kentucky.
The case is before this court on an appeal from a District Court order denying defendant’s “motion to vacate and set aside the sentence pursuant to Rule 35 of the Federal Rules of Criminal Procedure and Title 28 USC 2255.” The motion was filed on July 1, 1963.
Appellant contended that at the time of the arraignment his attorney raised the question of his sanity and specifically requested a psychiatric examination. He also alleged that his counsel informed the court that' appellant was hospitalized at Chattanooga, Tennessee, and that the court was aware of an attempted suicide by the appellant.
The motion incorrectly states what occurred on May 15 and May 17, 1961, the dates of arraignment. Defendant’s attorney did not move the court for a psychiatric examination under § 4244. The only pre-trial motion before the court was one for a continuance.
The colloquy between the appellant Wilkins’ attorney, Mr. Leland H. Logan, the District Judge and Mr. William B. Jones, United States Attorney, and this court’s comments are set forth in footnote one.
The defendants were arraigned and entered a plea of not guilty. The court asked each of the defendants whether he understood the charge against him, and each answered “Yes.” The Court entered a plea of not guilty for each defendant, and both the District Attorney, Mr. Jones, and defense counsel, Mr. Logan, announced that they were ready for trial.
The case went to trial on the following day, May 18, 1961.
The case commenced at ten o’clock in the morning; the jury was impaneled, the Government made its opening statement, the defense reserving its opening statement, and two witnesses testified for the Government, Mallie C. Taylor and Sue Payne Bransford.
The case continued until noon and was recessed until 1:15, when defense counsel, Mr. Logan, moved to withdraw the plea of not guilty and enter a plea of guilty to the charges for each of the defendants. The court then questioned the defendants as to whether they desired to withdraw their plea of not guilty and enter a plea of guilty. Both of the defendants responded “Yes,” and both stating that they had read the indictment, specifically entered a plea of guilty.
The Court then asked the attorneys-if they had anything to say before sentence was pronounced. A pre-sentence report on each of the defendants was given to the Court by the probation officer.
Mr. Logan made a plea for leniency for each of the defendants. As to Mr. Wilkins, he stated in particular that he had a good record, was regularly employed, and had served in the Navy in the South Pacific. Mr. Logan stated that on the morning of the day of the robbery, however, Wilkins, together with his co-defendant, had consumed about two and a half to three and a half pints of liquor. Each of the defendants was asked if he desired to make a statement. Defendant Wilkins’ statement was as follows:
“I understand the graveness of this mistake I made and I have made in this 46 years and I am sure if and when given an opportunity to society again that it will never happen again and what I have done will follow me the rest of my life in my knowledge.”
The Court sentenced each of the men to twenty years on the second count and the first count was nolle prossed.
At no time between the appearance before the Commissioner and the sentence did defendant Wilkins or his attorney make a motion for psychiatric examination. Mr. Logan, appellant’s counsel, in presenting his motion for a continuance, did state that he felt that by some form of psychiatric examination the sudden deviation from a normal course of good conduct could be cleared up.
Later, on June 20, 1961, Robert Barker Wilkins, through his attorney, Leland H. Logan, filed a motion for reduction of sentence, pursuant to Rule 35 of the Federal Rules of Criminal Procedure, stating in part that prior to the sentencing by the court, the defendant’s attorney had submitted a statement from Dr. William R. McCormick, of Bowling Green, Kentucky, which showed that appellant was suffering from Reynauds’ Disease, the effect of which can and often does bring about the death of the patient. There was no mention made in the motion, either about mental incompetency, or that the appellant did not understand the nature of the charge against him, or could not assist counsel in preparation and defense in the case.
This motion was heard on July 10, and testimony was taken as to the physical condition of Robert Barker Wilkins. The court denied this motion by an order made on July 10, 1961 and entered July 11, 1961.
Thereafter, on May 25, 1962, defendant filed his first motion under Section 2255, Title 28 U.S.C. for leave to file a petition to vacate sentence and leave to file and to proceed in forma pauperis.
This motion raised three questions: (1) whether or not the sentence should be vacated since he was insane before, during and after the sentence; (2) whether or not the sentencing court improperly denied petitioner’s request for a psychiatric examination, and if so, whether nunc pro tunc determination of his mental competency should be made; and (3) whether or not the petitioner was entitled to a hearing conducted in open court, and opportunity to submit testimony and other evidence upon his averments of facts.
The court in a two and a half page memorandum dated October 10,1962, and entered October 11, 1962, denied the defendant’s motion. The court found that a period of five months elapsed from the commission of the crime until the charge was made by the grand jury, and that the defendants appeared with their counsel and to all appearances were normal and fully aware of the proceedings. They were represented by experienced and competent counsel, who announced he was ready for trial, and after the trial had progressed, defendants moved to withdraw their plea of not guilty and enter a plea of guilty. The significance and import of this step were fully discussed, and before sentence was imposed they were given an opportunity, and their counsel was given an opportunity, to make statements to the court. The court further found that defendant’s motion filed June 20, 1961, made no representation or suggestion that Robert Barker Wilkins was suffering from any mental disorder, and the court concluded that this was approximately seven weeks after the trial, and after the defendant had been committed to a Federal Penitentiary, where observation would naturally be made by the prison personnel.
The Court denied the motion.
On July 1, 1963, appellant Robert Barker Wilkins filed his second motion under Section 2255, Title 28 U.S.C., and Rule 35 of the Federal Rules of Criminal Procedure, to vacate and set aside the sentence. Among other things, he alleged that on Page 4 of the Transcript of Plea, Arraignment and Disposition, counsel for the defendant raised the question of sanity, and specifically requested a psychiatric examination of defendant Wilkins; that at Page 6 of the record, counsel informed the Court that defendant Wilkins was hospitalized at Chattanooga, Tennessee; that the court was aware of the attempted suicide by the defendant; and finally that the present report included both the fact of his irrational behavior, and medical reports stating the movant was an alco-liolic. A pyschiatric examination and hearing were requested.
The motion incorrectly states what occurred on May 15 and May 17,1961. Respondent’s attorney did not move the court for a psychiatric examination under § 4244. The only pre-trial motion before the court was for a continuance.
The District Judge in a memorandum dated July 11, and entered July 13, 1963, ■denied appellant’s second motion made on July 1,1963, pointing out that Section '2255, Title 28, “expressly provides that the sentencing court is not required to ■entertain a second or successive motion for similar relief on behalf of the same ^prisoner.” The court also pointed out that there was “no new theory for the second motion.”
On August 1, 1963, appellant petitioned for permission to file notice of appeal and leave to proceed in forma pauperis, which petition was granted by an order dated and entered on September 12, 1963.
The ease is presently before this Court on the petition of August 1, 1963.
Diligent, appointed counsel asserted many reasons for reversal of the District Court’s order of July 11, 1963.
Under Title 18 U.S.C. § 4244, the general rule is that in every case when a motion is filed which sets forth grounds that constitute reasonable cause to believe that the defendant “may be presently insane or otherwise so mentally incompetent as to be unable to understand the proceedings against- him or properly to assist in his own defense,” Lebron v. United States (1955), 97 U.S.App.D.C. 133, 229 F.2d 16, 18, it is then mandatory for the District Court to have the defendant examined as to his mental condition by a qualified psychiatrist who is to report back to the court. Krupnick v. United States (CCA 8, 1959) 264 F.2d 213; United States v. Walker (CCA 6, 1962) 301 F.2d 211; Kenner v. United States (CCA 8, 1960) 286 F.2d 208.
When, however, the motion does not set forth grounds for reasonable cause to believe that the defendant may be insane or mentally incompetent, or when the motion appears with reasonable certainty to be frivolous, or made in bad faith, see Shelton v. United States (CCA 5, 1953), 205 F.2d 806, 815; Lebron v. United States, supra; and Behrens v. United States (CCA 7, 1962), 312 F.2d 223, 225, the motion can be denied.
The present case is more in accord with Lebrón v. United States, supra, where four Puerto Ricans, members of an anti-American party on the Island of Puerto Rico, planned a visit to the Capitol in Washington, and demonstrated for Puerto Rican independence by shooting at members of Congress.
While two hundred forty-three Congressmen were engaged in voting on the floor of the House, they shot into the well of the House and five Congressmen were wounded. They were indicted and went to trial. The trial judge was charged with error in refusing to respond to associate defense counsel’s statement made at the close of defendant’s evidence, to appoint a psychiatrist and proceed under § 4244. The defense counsel’s statement was:
“If your Honor please, at this time it has occurred to us as counsel for these people, for these defendants, there is probably something mentally wrong with them.
“We are asking the Court at this time to have these people examined by psychiatrists other than those who Mr. Rover (the United States Attorney) had examine them. Because of the conversation, the testimony on the witness stand, and what the testimony was, their lack of remorse, their peculiar attitude towards this entire situation, that I am firmly convinced there is a strong probability that these people are mentally unstable.”
District Judge Alexander Holtzoff was affirmed, in an opinion by Judge Wilbur K. Miller. The Circuit Court held that the grounds stated by the movant were slight and of little weight or importance, and thus were frivolous.
“It set forth no particulars and can be characterized as a statement of vague impressions.”
Previously in the case the Circuit Judge stated:
“The motion in this ease, quoted above, fell short of meeting the statutory requirements as to the belief of the movant concerning the mental condition of the accused.”
Counsel did not say he had reason to-believe that petitioner “may be presently insane or otherwise so mentally incompetent as to be unable to understand the proceedings against him or assist in his own defense.” He merely stated that “it has occurred to us * * * there is strong probability there is something mentally wrong with them, and I am firmly convinced that there is a strong probability these people are mentally unstable.”
The Court held:
“We do not mean to say a motion under § 4244 must be couched in the exact language of the statute; but it is insufficient unless its recital approximates the meaning of the statutory language. Cf. Perry v. United States, 1952, 90 U.S.App.D.C. 186, 195 F.2d 37.”
In the instant case, defendant’s attorney, Mr. Logan, did not make a motion-under Section 4244; on the contrary, he moved for a continuance and his motion, sounded more in the nature of a request for a continuance to investigate as to whether or not the defendants, particularly appellant, would have a defense of' insanity in the trial itself.
The contents of Mr. Logan’s oral motion on May 17, 1961, fell short of the-statutory requirements, first, because it in fact was not a motion for appointment of a psychiatrist by the court, and’ secondly, because it did not state particulars upon which it could reasonably be concluded that Wilkins was presently insane, or otherwise so mentally incompetent as to be unable to understand the proceedings against him, or to assist in his own defense.
On the contrary, the record discloses that appellant and his co-defendant each stated that they knew the nature of the charge made against them, had read the indictment, and that the defendants themselves later desired to change the plea from not guilty to guilty, this decision having been made during the course of the trial.
After the plea of guilty and before sentencing, the attorney for defendant Wilkins and each defendant made a statement to the Court. Upon the record in this ease, the District Judge was not in error in denying the post-trial motions. Defendants’ guilt was clear, and defendant Wilkins’ conviction must stand.
Affirmed.
. The case was called for arraignment on the return date of the indictment, May 15, 1961. The defendants appeared with their counsel, Leland H. Logan, of Bowling Green, Kentucky. At that time Mr. Logan advised the court:
“ * * * why to my mind and what I can find, with regard to Mr. Wilkins here, there is some question in my mind as to whether or not they were legally responsible and knew the conse■quences of their acts at the time it is supposed to have happened. I say that for this reason, that he himself has never been in a courtroom in his life (sic) for any reason at all and I do fieel that by some form of psychiatric examination, that we could at least clear this matter up and, as Your Hon- or knows, a competent, first-class psychiatrist is hard to obtain, it cannot be done on one day’s notice, and in addition to that fact, the local physician here, Doctor William McCormick, has given me a short statement in which— well, I would rather your Honor just read it (handing document to the Court.)”
“THE COURT: I don’t think that statement, Mr. Logan — if you want to put it in the record you may — I don’t think it would have anything to do with this particular motion for continuance. “MR. LOGAN: X have no desire to place this in the record because that is another question on which I am not fully informed and—
“THE COURT: Well, it has nothing to do With his mental state nor does it have anything to do with — a condition of his feet there that should be given intensive treatment — but he does not say that he is not capable of being tried.
“MIt. LOGAN: Under the circumstances that is all I will offer in a formal motion for a continuance.
“MR. JONES: I might for the record, if the Court please, make one statement. These defendants have been at liberty since December 12th and have had sufficient time to prepare their defense. They knew it was coming and knew it was coming at this time.
“THE COURT: I am of the opinion that no showing has been made here to justify the Court to continue this case. It has been nearly six months. These matters are serious both to them and to the United States.
“MR. LOGAN: I agree with that.
“THE COURT: And it shouldn’t go over. While the indictment is only recently returned, it has been pending, they have been before the commissioner, and they know the nature of the-charge. There is nothing that they are not fully advised of and have been for many months. Now, the Court feels that on the present showing it would have to overrule your motion for a continuance.
“MR. LOGAN: May I say this one more word? I don’t like to take time of the Court.
“THE COURT: No, that is what the Court is for.
“MR LOGAN: Now, the Commissioner’s record in this case was before Clarksville, as I understand, in Tennessee. Those same papers were later sent to Louisville and there was some delay in getting them back here to-Bowling Green. Now, then, this mam has been in the hospital in Chattanooga, Tennessee, and those records have not been made available.
“THE COURT: Well, I suppose the only record there would be as far as; the Commissioner’s papers were concerned if they were brought before the Commissioner and either had a formal hearing or waived—
“MR LOGAN: It was waived.”
(Tr. 4-7)
. Tr. pages 36, 37.
. “THE BARONESS ERLANGER HOSPITAL
Chattanooga, Tennessee.
NAME OF PATIENT: Wilkins, Mr. Robert B. ADDRESS: 538 Belmont Drive, Bowling Green, Kentucky.
ADMISSION DATE: 3-29-61 DISCHARGE DATE: 3-31-61.
CHIEF COMPLAINT: Patient admitted with palpations (sic) and shortness of breath.
FINAL DIAGNOSIS: Auricular fibrillation. Possible right femoral embolus. Patient left against medical advice.
OPERATIONS: None. Date:
LABORATORY: 1. Auricular fibrillation, fine.
EKG Report: 2. No axis shift.
3-28-61 3. Definitely abnormal record.
PAST HISTORY: Admitted 4/1/61. Discharged 4/4/61. Diagnosis: Chronic alcoholism. Arteriosclerosis. Patient signed out.
TAKEN FROM RECORDS ON: July 3, 1961.
Signed by: Jean C. Lee
JEAN C. LEE, R.R.L.
MEDICAL RECORDS DEPARTMENT”
(Defendant’s Exhibit 1 in the hearing in the District Court: this record relates only to chronic alcoholism and arteriosclerosis.)
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.
CUMMINGS, Circuit Judge.
Tempco Electric Heater Corp. seeks review of an order of the National Labor Relations Board (“Board”) requiring it to bargain with Local 1031, International Brotherhood of Electrical Workers, AFL-CIO, as the collective bargaining representative of Tempco’s full-time and regular part-time production and maintenance employees at Tempco’s facility in Wood Dale, Illinois. In turn, the Board has applied for enforcement of its order.
Tempco manufactures heating elements for the package and plastic processing industry. In March 1991, the Union filed a petition with the Board seeking to represent Temp-co’s production and maintenance employees. An election with secret ballots was held on May 17, 1991; eighty-one workers voted for the Union and sixty-five against. Although seven ballots were challenged, that would have been an insufficient number to alter the outcome of the election even if the challenges were valid. Nevertheless, Tempco raised several objections to the way the election was conducted. The company complained that workers were intimidated, coerced and misled into voting for union representation.
The company took its objections to an NLRB hearing officer who sided with the Union after listening to testimony for four days. The hearing officer recommended to the Board that a Certificate of Representative issue, meaning that the Union would be approved to represent the employees in collective bargaining. On February 26, 1992, a three-member panel of the Board adopted the hearing officer’s findings and certified the Union, but Tempco still refused to bargain with it. This led the Board’s general counsel in April 1992 to issue a complaint against Tempco for engaging in unfair labor practices. The ease went before the Board again, which found that Tempco violated 29 U.S.C. §§ 158(a)(5) and (1) by refusing to bargain with the Union and by withholding critical information from the Union. The Board castigated Tempco because all of the evidence it claimed infected the election had been or should have been raised in the earlier proceedings before the hearing officer and the Board.
Tempco remains persistent. The company appealed the Board’s cease and desist order to this Court, and we conclude its claims that the election was unfair are no more compelling than did the NLRB hearing officer or the Board on two occasions. We have jurisdiction to entertain direct appeals of Board decisions under 29 U.S.C. §§ 160(e) and (f).
Tempco argues that at a mass meeting (eighty-six workers attended) held on the eve of the election at a local VFW hall, an agent of the Union threatened the job of one employee who challenged the Union’s promises about better wages and benefits. The company also claims that the Union conducted an improper poll to gauge its support among the workers present. The meeting was conducted by the Union’s assistant business manager and recording secretary, Roy Cortes. A number of other Union officials were there as well including the president of the local. Cortes spoke at some length about the Union’s representation of other companies including Zenith Electronics Corp. and A.R.I. Okasaki, a competitor of Tempco’s. Cortes promised that workers’ wages would go “higher and higher.” At one point Cortes’ assertions of better wages and benefits were challenged by an employee named Orlando Monte, who had been hired only the month before. Monte said that his father had worked at Zenith and that Cortes’ rosy picture of life in a Union was misleading. Monte also said that the Union representatives were liars and that he would rather leave the company than pay union dues. A number of employees starting yelling at Monte; they questioned his authority to speak since he had only been at Tempco for a few weeks. Cortes picked up the theme and claimed that Monte had been sent as an infiltrator by Fermín Adames, Tempco’s president, to disrupt the meeting. Then, according to the testimony of Monte and others before the hearing officer, Cortes said to Monte something like, “Yourself, the one next to you, and those others who are nonunion supporters, I will promise you that from a week to a month’s time you will not be employed; you will not be working” (Monte’s version); or “Once he performs his dirty work, he is going to go somewhere else and perform the same dirty work for another employer” (Cortes’ version); or “His job was finished, he wasn’t going to work anymore for Tempco” (another worker’s version) (plaintiffs app. at 18).
The question we must answer is whether the union representative’s statements to Monte were a threat which poisoned the election and coerced other workers into voting for the Union. Since the results of a Board-supervised and certified election are presumptively valid, NLRB v. Browning-Ferris Ind. of Louisville, Inc., 803 F.2d 345, 347 (7th Cir.1986), and the objecting party bears the burden of proof, NLRB v. Mattison Machine Works, 365 U.S. 123, 124, 81 S.Ct. 434, 435, 5 L.Ed.2d 455, Tempco must show that Cortes’ conduct “so influenced potential voters that free choice was impossible.” NLRB v. Chicago Marine Containers, Inc., 745 F.2d 493, 500 (7th Cir.1984), quoting NLRB v. Advanced Systems, Inc., 681 F.2d 570, 575 (9th Cir.1982). Tempco has not even come close to this showing. First, there is an innocent interpretation to Cortes’ remarks. If he genuinely believed that Monte was a company shill sent to break up the meeting, statements that his employment at Tempco would be short-lived might have merely been a prediction that Monte would move on to perform the same anti-union function at another company after the election. This interpretation of Cortes’ statements is hardly implausible since Monte, the most outspoken opponent of the Union, had been employed for just a month. More to the point, even if Cortes’ remarks were a threat to Monte, most of the workers would have thought it was an idle threat — i.e., that the Union would be unable actually to fire a worker who spoke against collective bargaining. If a reasonable employee would not think that a threat was within the Union’s power to achieve, it is not sufficiently coercive to taint an election. NLRB v. Sumter Plywood Corporation, 535 F.2d 917, 924 (5th Cir.1976), certiorari denied, 429 U.S. 1092, 97 S.Ct. 1105, 51 L.Ed.2d 538.
Tempco’s next argument is that the Union conducted an improper poll. The danger of a poll is that it forces undecided workers to express public support or opposition. We have held that employers may not conduct a poll under any circumstances, but that a Union may unless the polling “in fact was coercive and in fact influenced the result of the election.” Kusan Mfg. Co. v. NLRB, 749 F.2d 362, 365 (6th Cir.1984). Tempco cannot meet that test because there was no poll taken at the May 16 meeting. All that Cortes said was, “See you at the election, we will win. Show your pride,” to which a number of employees shouted “yes!” This was nothing more than a rallying cry to vote. Cortes did not even ask those present to express a preference — that undecided workers might have felt pressured to state an opinion in these circumstances is far-fetched.
The Board’s order will be enforced in full.
. The bargaining unit excludes office clericals, sales persons, employees of independent contractors, professional employees, temporary summer help, guards and supervisors.
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.
This case is before us for the second time. On the first appearance, National Packing Company v. National Labor Relations Board, 10 Cir., 352 F.2d 482, we held that the evidence sustained a finding that the Company had violated § 8(a) (1) of the National Labor Relations Act, 29 U.S.C. § 158(a) (1), by discharging a group of employees for participation in a protected concerted activity, an economic strike. We declined to enforce the usual order requiring reinstatement with backpay because the Board had not considered the Company’s defense that the strikers were not entitled to the protection of the Act because they had engaged in an activity proscribed by the Act, recognitional picketing within 12 months of a valid election. We remanded the case to the Board for determination of the applicability of the defense. Without taking additional evidence, the Board made a supplemental decision and order holding that no unlawful picketing had occurred. The Company petitions for review of that order and the Board has filed a cross-application for enforcement.
The Company is in the business of slaughtering cattle and processing meat at Kansas City, Kansas. During the pertinent period it had about 64 production and 10 maintenance employees. We are concerned with a group of 17 employees made up principally of those on the kill floor and referred to as the Charging Parties because they brought the unfair labor practice charges. In the fall of 1962, the United Packinghouse, Food and Allied Workers, AFL-CIO, petitioned for certification as the collective-bargaining representative of the employees. In these proceedings the Union acted through Felix Hayes, its organizer. At an election held November 1. 1962, the Union lost. No question is raised on the validity of the election.
After a 20-minute work stoppage on November 29, about 20 of the production employees walked out on November 30 to protest dangerous working conditions that had caused an injury to an employee. The Company then shut down the plant for several days. The employees set up a committee which met with the Company to discuss wages and working conditions. Nothing was accomplished and, at the suggestion of the Company, the committee was dissolved. A second committee was then formed. After several meetings, the president of the Company said there would be no more meetings. Although the record is not clear, the committee members thought the Company had promised a three-step wage increase with the first step to be reflected in the April 17 paychecks.
The April 17 paychecks did not include the increase. When complaint was made, the assistant general manager said that he had heard nothing of the promise. On the next day, a group composed mostly of men from the kill floor struck and began picketing. The strikers told a supervisor that the main reason for their action was that they did not get the promised raise. The next day the supervisor told them that they would have the raise if they went back to work. They refused and said that they “wanted a few things straightened up”; that they wanted Organizer Hayes of the Packinghouse Workers to “talk for them”; that they had been “having nothing but promises”; and that they desired “a better kill standard” and “something in writing.” Shortly thereafter the strikers were all discharged.
Hayes talked with the strikers and furnished banners, none of which bore the union name. The signs used by the picketers read “On Strike” and “National Packing Company pays substandard wages.” There was no distribution of leaflets or other materials. The strikers told Hayes that they wanted him to negotiate with the Company for them. He called a supervisor and asked permission to “come in and represent the men.” This request was denied. The conditions surrounding the picketing were of such a disturbing character that a Kansas state court entered an injunction against acts of violence in connection therewith.
The pertinent provisions on picketing are contained in the Labor-Management Reporting and Disclosure Act of 1959. The Supreme Court said with reference thereto [National Labor Relations Board v. Drivers, Chauffeurs, Helpers Local Union (Curtis Bros. Case), 362 U.S. 274, 291, 80 S.Ct. 706, 716, 4 L.Ed.2d 710] :
“That Act goes beyond the TaftHartley Act to legislate a comprehensive code governing organizational strikes and picketing and draws no distinction between ‘organizational’ and ‘recognitional’ picketing.”
Picketing becomes an unfair labor practice (1) when done by a labor organization (2) within 12 months after a valid election (3) for the purpose of “forcing or requiring an employer to recognize or bargain with a labor organization as the representative of his employees.”2 In the instant case, the picketing took place within 12 months-of a valid election. We are concerned only with the other two elements.
The Board assumed that the Charging1 Parties were a labor organization and confined its consideration to whether the picketing had an organizational or recognitional object. An assumption is not a finding. We must determine if the admitted facts establish the existence of a labor organization.
Section 2(5), 29 U.S.C. § 152(5), defines “labor organization” thus:
“ * * * any organization of any kind, or any agency or employee represtation committee or plan, in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work.”
Although the Charging Parties did not have the organic structure of a typical labor union, they were a group which acted in unison to obtain mutual objectives by combined efforts. They existed and acted to deal with the Company in regard to labor disputes, rates of pay, and working conditions. This brings them within the statutory definition of labor organization.
The controlling issue is whether the Charging Parties picketed to force the Company “to recognize or bargain” with them. Here it should be noted that in National Labor Relations Board v. Cabot Carbon Co., 360 U.S. 203, 211, 79 S.Ct. 1015, 3 L.Ed.2d 1175, the Supreme Court said that the term “dealing with” as used in the definition section was not synonymous with the more limited term “bargaining with.” Hence, the conclusion that the Charging Parties were a labor organization does not of itself establish a violation of § 8(b) (7) where the reference is to “recognize or bargain with.”
The Board found that the strike was not for organizational purposes; that the Packinghouse Workers’ business agent “was on the scene” because of “his experience in such matters”; and that the picketing was a “spontaneous protest against Respondent’s broken promises.” It also found that “while the strikers indicated a desire for ‘something in writing’ we do not view this as an attempt to establish a continuing relationship, but only as an attempt to bind the Respondent to its promises.” These findings are based on substantial evidence or reasonable references therefrom and, considering the record in its entirety, we must accept them. Although the Board made no specific finding on the point, the record conclusively shows that the picketers wanted “something in writing” to cover wages and conditions of employment. The examiner specifically found:
“It appears from the testimony of several of the witnesses that the strikers refused to return to work, even after the raise was offered, because they wanted other terms and conditions of employment changed and ‘something in writing’ setting forth the changes.”
The issue is thus narrowed to a determination of whether, as a matter of law, a violation of § 8(b) (7) occurs when the object of recognition and bargaining does not encompass an effort to establish a “continuing relationship”. The statute proscribes picketing with “an object” to force an employer “to recognize or bargain.” In our opinion this means that a violation occurs if any object of the picketing is to force recognition or bargaining. Indeed, the Board has so held.
The picketing here was not only to protest an employer’s unfair labor practices and broken promises but also to come to terms on wages and working conditions and to obtain the recognition of those terms in writing. Although the object may not have been to “negotiate an overall formal collective-bargaining agreement” as the Board found, the picketing had the purpose of forcing the Company to agree in writing on the matters in dispute. In our opinion, this is an effort to force bargaining within the purview of the statute.
This result may not be avoided by a finding of no attempt to establish a “continuing relationship.” The statute refers to bargaining- — -not to bargaining for any period of time. The Board would write into the statute a condition that is not included within its specific language. Such an effort to restrict the statute is not helped by the argument that the picketing provisions must be construed “broadly and concomitantly,” with the provisions of § 7 relating to collective bargaining and the provisions of § 13 assuring the right to strike. The point is that Congress has declared certain types of picketing to be unfair labor practices and we are concerned with the single issue of whether the picketing here is forbidden. The Charging Parties had the right to strike but they did not have the right to picket in violation of the Act. We are convinced that their actions were prohibited by § 8(b) (7) (B).
In our former opinion in this case, we held that if the Charging Parties violated the Act by forbidden picketing, they were not entitled to invoke the Act to compel reinstatement. We adhere to that decision. We now hold that unlawful picketing occurred. Accordingly, enforcement is denied and the order of the Board is set aside and held for naught.
. National Packing Co., Inc., 158 N.L.R.B. No. 142.
. Act of Sept. 14, 1959, Pub.L. 86-257, 73 Stat. 519, 542-543.
. The material provisions of § 8(b) (7) (B), 29 U.S.C. § 158(b) (7) (B), are:
“It shall be an unfair labor practice for a labor organization or its agents — (7) to picket * * * any employer where an object thereof is forcing or requiring an employer to recognize or bargain with a labor organization as the representative of his employees, * * * (B) where within the preceding twelve months a valid election under section § 9(c) of this title has been conducted * *
. See Centralia Building and Construction Trades Council v. National Labor Relations Board, 124 U.S.App.D.C. 212, 363 F.2d 699, 701.
. In Warehouse and Mail Order Employees Union, Local 743, 144 N.L.R.B. 888, 892, it was held: “Assuming arguendo that one purpose of the picketing was to protest alleged company unfair labor practices, this cannot serve as a defense since it need be established only that an object of the picketing be one proscribed by the Act.” The decision in Hoisting and Portable Engineers Local Union 101, 140 N.L.R.B. 1175, 1178, says: “ * * *• we nevertheless hold that forcing or requiring an employer to recognize and bargain with a labor organization as the representative of his employees is an object within the scope of Section 8(b) (7), even though exclusive recognition for all employees in an appropriate unit is not also being sought.”
. 352 F.2d 482, 485.
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.
NORTHCOTT, Circuit Judge.
This is an appeal from an interlocutory decree, fixing liability on appellant, entered in the District Court of the United States, for the Eastern District of Virginia, in a suit in admiralty in which the appellee was libelant.
On the night of October 7, 1931, libelant Rear Admiral U. S. N. (retired) Newton A. MeCully was navigating the motor yacht Chaika (110 feet long, 15 feet beam) in Chesapeake Bay some 3 or 4 miles below Cedar Point. The Chaika was owned by Admiral MeCully, and he was in command of the yacht. The admiral, accompanied by his five adopted children, ranging in .ages from thirteen to twenty-three years of age, who constituted his crew, had been on a cruise to Bermuda, had returned to the United States, and, after an extended cruise, was returning to Norfolk, down the bay.
Shortly after 10 o’clock at night, the admiral, who was in charge of the Chaika, with his daughter, sixteen years old, at the wheel, saw an overtaking steamer about 1,500 yards astern of the yacht. At the time there was no fixed stern light on the Chaika, the one usually used being out of order, and Admiral MeCully, who was on the stern of the yacht, was using a two-cell battery flash-light as a stem light. On seeing the steamer approaching astern, the admiral testified that he threw the switch of the flash-light and turned it on the approaching steamer and held it there for several (two or three) minutes. The overtaking vessel, the Verona, a Norwegian fruit steamer (220 feet long, 32 feet beam), was in charge of a state pilot out of Baltimore, bound down the bay. Admiral MeCully, thinking that his flash-light had been seen on board the Verona and that the steamer had changed her bearings so as to clear the Chai-ka, put out his light and evidently, from his own statement, ceased looking in the direction of the Verona. At the time the steamer was first sighted by Admiral MeCully, he estimated that she was about 1,500 yards behind the yacht, and when he put out 'his light he estimated that she was between eight and nine hundred yards away. The next thing noticed by the admiral, after a lapse of several minutes, was the Verona about 100 yards off, bearing down on the Chaika. He turned on his flash-light and threw it on the steamer, shouting at the same time. The steamer, almost instantly, struck the yacht, and the yacht sank in about forty-five minutes. All on board were saved. There is no evidence that anyone on board the Verona saw the Chaika until she was hit.
After hearing the evidence, partly by deposition and partly by witnesses in person, the judge below found the facts as above stated, and in addition found that the night of the aeeident was clear and dark, with visibility for seeing lights and objects on the water good; that the Chaika could have been seen without lights, in time to avoid the collision, had a vigilant lookout been kept on the Verona; that, while those on the Chaika • were at fault in not holding the flash-light on the Verona continuously from the time it was first exhibited until the collision, this fault did not cause, or contribute to cause, the collision, because there was no lookout forward on the Verona during that time to see a light had there been one; that there was an insufficient view forward from the bridge of the steamer; that a proper lookout was not kept on the Verona at the time of the collision; and that the flash-light used on the Chaika complied with the requirements of the law with respect to a stern light on vessels of her class. The judge then entered the decree complained of, fixing liability entirely on the appellant, the owner of the Verona.
We cannot agree with the judge below as to the absence of the light on the stem of the Chaika during the critical period not causing, or contributing to cause, the collision. It is just as logical to say that there was no need of a lookout on the stem of the Verona because there was no light to be seen on the stern of the yacht as it is to say that there was no need of a light on the stern of the yacht because there was no lookout on the stem of the steamer to see it. Had Admiral MeCully kept his flash-light lighted and on the steamer all the time, there is at least a strong probability that the light would have been observed, if not from the stem of the steamer, from her bridge, before she came too close to the yacht for the light to be observed from the bridge. There was no whistle blown from the yacht to attract the attention of the steamer and no noise made other than the shouting of Admiral MeCully almost at the instant of the collision. Again it is to be remembered that, so far as the evidence shows, of all the people on both the steamer and the yacht, Admiral MeCully was the only person who had knowledge of the possible danger of collision between the two vessels because of their proximity. This being true, it was the duty of the admiral to be especially vigilant to avert the danger. This vigilance, from his own statement, the admiral did not exercise, as he admits that he did not notice the steamer from the time she was eight to nine hundred yards away from his yacht until she was within one hundred yards, almost immediately preceding the collision.
We feel ourselves bound by the finding of the judge below, who heard the witnesses, that there was no lookout in the bow of the Verona during the critical period. The Corapeake (C. C. A.) 55 F.(2d) 228. This was a fault on the part of the steamer, especially in view of the fact that she was, at the time, sailing a much-used channel, down the Chesapeake Bay from Baltimore to Norfolk, and an especially eareful lookout should have been kept. On the other hand, we are equally clear in our opinion that the yacht was also at fault. It was a dark night, good for visibility as to light, but not good for visibility as to unlighted boats. Knowing that the steamer was overtaking his yacht, the admiral should, experienced as he unquestionably was in such matters, have kept his flash-light, even if it be admitted to be an adequate light under the statute, constantly lighted and on the steamer. Again, had he been watchful, he might have changed the course of the yacht, or blown a whistle, or rung a bell to warn the overtaking vessel. Both were undoubtedly at fault, and both were guilty of statutory faults. It has long been settled, and we know of no authority to the contrary, that in ease of a collision of vessels, where both are in fault, the maritime rule is to divide the entire damage equally between them. The Sagaporack (C. C. A.) 5 F.(2d) 178; Reynolds et al. v. Vanderbilt et al., 106 U. S. 17, 1 S. Ct. 41, 27 L. Ed. 91.
The decree of the court below will be modified in accordance with this opinion. Damages and costs to be equally divided between the owners of the two vessels.
Modified.
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.
LEWIS, Circuit Judge.
This is a petition for review of an order of the Federal Power Commission issued October 23, 1959, suspending a proposed change in petitioner’s rate schedule and ordering a hearing on the lawfulness of the proposed increase.
Pan American Petroleum Corporation, an independent producer of natural gas, sells gas in interstate commerce to Tennessee Gas Transmission Company from leases in Carthage Field, Texas, under a 1947 contract filed with the Commission as Pan American’s FPC Gas Rate Schedule No. 72. The rate as originally agreed upon by the parties and accepted by the Commission appears in paragraph 10 of the contract:
“10. The prices to be paid by Buyer to Seller for gas sold and delivered to Buyer hereunder shall be as follows:
“For all gas delivered prior to 8 o’clock A.M. on June 1, 1952 * * * 5%(í per MCF
“For all gas delivered during the five (5) years following 8 o’clock A.M. on June 1, 1952 * * * ey2^ per MCF
“For all gas delivered during the five (5) years following 8 o’clock A. M. on June 1, 1957 * * * 7/2fS per MCF
“For all gas delivered during the remainder of the term of this contract the price shall be determined by agreement between the parties to be made not less than six (6) months prior to June 1, 1962; and, in the event the parties are unable to so agree, the price shall be determined by arbitration under Section 15 hereof.
“If at any time and from time to time after the date of the initial delivery of gas hereunder, the cost per MCF of gas purchased by Buyer from any other gas producer in the Carthage Field shall be greater than the cost per MCF of gas purchased hereunder, Buyer will increase the price per MCF payable to Seller for gas delivered hereunder, currently as deliveries are made, and only during periods in which Buyer is paying such greater cost, to such other gas producer in said field, by an amount equal to the difference between the highest cost per MCF paid at the time by Buyer to any gas producer in said Field and the cost per MCF payable hereunder * * *
•X* 'X* *Jf if if -ifr
“Notwithstanding any provisions in this contract, it is distinctly understood and agreed that the net price to producer during the life of this contract shall never be less than the net price paid by Buyer to any other producer in the same field during this period.”
Another contract which the buyer, Tennessee Gas Transmission Company, had negotiated with another producer, Champlin Oil and Refining Company, provided that Champlin would be paid a price equal to the average of the three highest prices being paid for comparable oil deliveries. A redetermination of Champlin’s price under this provision allowed an increase to Champlin to 14.-4248^ per MCF effective November 1, 1959, and under the above-quoted escalation or “favored nation” clause, petitioner claimed the same rate. Negotiations resulted in the signing of a letter dated June 2,1959, by petitioner and Tennessee providing in pertinent part:
“Therefore, we are agreeable to your proposal that the total amount payable by Tennessee for gas purchased under the above described contract commencing as of November 1, 1959, shall be 14.4248CWMCF at a pressure base of 14.65 psia which price includes all allowances for dehydration by Pan American. and also all tax reimbursement for which Tennessee is liable under the subject contract as of May 1, 1959.
“This letter, when accepted and agreed to by you in the space provided herein below, shall constitute our agreement and determination of the price to be paid for gas sold and purchased pursuant to the terms of the aforesaid contract. After execution, please return one (1) copy of this letter to us for our files.”
Appending a copy of this letter, Pan American notified the Commission of the anticipated change in rates by letter received September 21, 1959, which stated inter alia:
“The change in price covered hereby is not attributable to a change to the contract involved herein, but is in accordance with the provisions of said contract as constituted on the date of the initial filing thereof.”
and further that:
“The provisions of the contract to which this filing relates has (sic) been effective since the execution of the contract and will be operative as to the increase involved herein on November 1, 1959. This notice shall be effective 30 days subsequent to the date of filing hereof.”
By order issued October 23, 1959, the Federal Power Commission suspended the rate and deferred its use “until a date five months from the date the favored-nations provision of the * * * rate schedule becomes activated, and thereafter until such further time as [it] is made effective in the manner prescribed by the Natural Gas Act.”
The reason for this action was stated by the Commission in its denial of application for rehearing to be that it had previously suspended until April 1, 1960, the proposed change in rate under the Champlin-Tennessee contract, which change would activate the petitioner’s change in rate.
Petitioner asserts that inasmuch as 32 days had expired from the date of its filing of notice, that the rate stated in that notice had become “effective” although it was not collectible under the contract until a later date. Therefore, it urges, the Commission was without power to enter its order of suspension subsequent to the- 30-day notice period under Section 4(d) of the Natural Gas Act, 15 U.S.C.A. § 717c(d). Further, petitioner claims that the effect of suspending its right to receive the increased rate to a time five months beyond the time Champlin may collect an increased price, presently April 1, 1960, is to suspend the new rate for ten months which is beyond the Commission’s power under Section 4(e) of the Act; and that the Commission may only determine the lawfulness of the rate payable under contract as of November 1, 1959, suspending the use of that rate for a period of five months pending such determination.
Pertinent to the first issue is the recognition by the Commission and the courts that the Commission may act to exercise its suspension power prior to the effective date of a changed rate or service and that a failure to act during that time gives tacit approval requiring, as an existing rate, a proceeding under Section 5 of the Act to upset it. And we have held that the effective date of a proposed change coincides with the expiration of the 30-day notice period in those instances where the notice of change sets forth the date of applicable collection change as one pri- or to the expiration of the period of notice. We find, however, no support in the cases nor in the wording of the Act warranting petitioner’s contention that the Commission’s power to suspend becomes barred thirty days after the date of filing of notice. Such interpretation ignores the wording of the Act which requires the notice to state “ * * * the time when the change or changes will go into effect.” The quoted words require the petitioner to indicate a specific date upon which the proposed change is to become effective, Mississippi River Fuel Corp. v. F. P. C., supra, and compel the conclusion that the 30-day notice is a minimum procedural requirement imposed upon petitioner rather than a limitation set upon the Commission powers. Indicative-of this view are the words of Mr. Justice Harlan interpreting Sec. 4 (d) in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332, 338, 76 S.Ct. 373, 377, 100 L.Ed. 373: “Changes in previously filed rates or contracts must be filed with the Commission at least SO days before they are to go into effect * * (Emphasis added.)
We hold therefore that the Commission’s order of suspension was not untimely. It follows that petitioner’s second contention is without merit.
The triggering event of petitioner’s increased price was the increase in price paid under another contract, Champlin, and the effect of suspending Champlin’s use of its contract in collection of amounts due under the contract was to defer as a matter of fact petitioner’s right to demand an increased rate. The lawful act of the Commission in deferring Champlin had, in law, the effect of changing petitioner’s effective date as contained in the notice and gave the Commission the discretionary power it chose to exercise.
It is urged that the interpretation of the Tennessee-Pan American Contract by the parties that the increased amount would become due November 1, 1959, determines the time from which the suspension power of the Commission must be computed. But under the familiar rules of contract law, this provision must be read in conjunction with other parts of the contract and cannot abrogate the triggering provision, especially when it is clear that the letter agreement was intended only as a notice and agreement of an anticipated change.
The order of the Commission is affirmed.
. Section 19(b) of the Natural Gas Act, 52 Stat. 831, 15 U.S.C.A. § 717r.
. Section. 4(d), 15 U.S.C.A. § 717c (d):
“Unless the Commission otherwise orders, no change shall be made by any natural-gas company in any such rate, charge, classification, or service, or in any rule, regulation, or contract relating thereto, except after thirty days’ notice to the Commission and to the public. Such notice shall be given by filing with the Commission and keeping open for public inspection new schedules stating plainly the change or changes to be made in the schedule or schedules then in force and the time when the change or changes will go into effect. The Commission for good cause shown, may allow changes to take effect without requiring the thirty days’ notice herein provided for by an order specifying the changes so to be made and the time when they shall take effect and the manner in which they shall be filed and published.” (Emphasis added.)
. Section 4(e), 15 U.S.C.A. § 717c(e):
“Whenever any such new schedule is filed the Commission shall have authority * * * to enter upon a hearing concerning the lawfulness of such rate, charge, classification, or service; and, pending such hearing and the decision thereon, the Commission * * * may suspend the operation of such schedule and defer the use of such rate, charge, classification, or service, but not for a longer period than five months beyond the time when it would otherwise go into effect: * * * If the proceeding has not be concluded and an order made at the expiration of the suspension period, on motion of the natural-gas company making the filing, the proposed change of rate, charge, classification, or service shall go into effect. Where increased rates or charges are thus made effective, the Commission may, by order, require the natural-gas company to furnish a bond, to be approved by the Commission, to refund any amounts ordered by the Commission * * * ”. (Emphasis added.)
. Commission Rules of Practice and Procedure § 2.4, 18 CFR 2.4; In re Virginia State Operation Commission, 8 P.U.R.3d 485, 486.
. Phillips Petroleum Co. v. F. P. C., 10 Cir., 227 F.2d 470, 474, certiorari denied Michigan Wisconsin Pipe Line Co. v. Phillips Petroleum Co., 350 U.S. 1005, 76 S.Ct. 649, 100 L.Ed. 868; Mississippi River Fuel Corp. v. F. P. C., 3 Cir., 202 F.2d 899, 902.
. 15 U.S.C.A. § 717d.
. Phillips Petroleum Co. v. F. P. C., supra. The notice was filed August 31 and the 30-day period expired October 1. The notice set September 1 as the date for increased collections.
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 is an appeal from the district court’s denial of plaintiff's Rule 60(b) motion for relief from a judgment of dismissal.
Plaintiff, a Massachusetts resident, filed this contract action in the United States District Court for the District of Massachusetts against Mast Road Grain and Building Materials Company, Inc., a New Hampshire corporation, and Harvey Dupuis, the president of the corporation and a New Hampshire resident. Defendants moved for dismissal under Fed.R.Civ.P. 12(b) for lack of personal jurisdiction. Plaintiff failed to respond within the ten days required by Local Rule 12 of the District Court for the District of Massachusetts. The district court therefore dismissed the suit. Plaintiff subsequently moved under Fed.R.Civ.P. 60(b) for relief from the judgment of dismissal on the ground of excusable neglect. The district court denied the motion and plaintiff appealed.
The standard of review in the present case is clear: the district court may only be reversed for an abuse of discretion. Pagan v. American Airlines, Inc., 534 F.2d 990, 993 (1st Cir.1976). We find no abuse of discretion here. Plaintiff’s conduct and his excuses for noncomplianee with the local rule did not compel a finding of excusable neglect. The district court was entitled to insist upon compliance with its local rule in these circumstances. See In re Harbour House Operating Corp., 724 F.2d 1, 2-3 (1st Cir.1983) (strictly applying Rule 3(b) of the First Circuit Rules governing bankruptcy appeals).
Plaintiff argues that the court based its denial of relief not upon noncompliance with the rule but upon an incorrect finding that it lacked personal jurisdiction. The court wrote, “Even if I overlook the untimeliness of the plaintiffs filings under Local Rule 12, I am not satisfied that his affidavits sufficiently establish personal jurisdiction over the defendants.” We do not read this, however, as waiving reliance upon the untimeliness of the filing, but only as stating an added alternative reason. It is well settled that when reviewing a district court’s order for abuse of discretion, “[i]f a single ground supports the ... order, it is not reversible.” Juneau Square Corp. v. First Wisconsin National Bank, 624 F.2d 798, 809 (7th Cir.1980); Nuttall v. Reading Co., 235 F.2d 546, 548 (3d Cir.1956). Since the court could properly decline to excuse plaintiff’s noncompliance with the local rule, we need not consider the court’s alternative proposition that it lacked personal jurisdiction.
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.
McALLISTER, Circuit Judge.
In these cases, brought to recover damages for the death of appellees’ decedents, resulting from the alleged negligence of appellant, jury verdicts were returned in favor of appellees, on which judgments were entered.
A review of the record discloses that the evidence presented a case for the jury on the question of appellant’s liability for negligence.
Appellant claims that the trial court erred in refusing to charge the jury, as requested by appellant, that “if contributory negligence appears during the plaintiffs’ evidence, then the burden of proof of contributory negligence remains on the plaintiffs.”
In Stewart v. Nashville, 96 Tenn. 50, 33 S.W. 613, 614 (1896) the court said that if, in proving the injury, and, in proving that defendant’s neglect is the proximate cause of it, “there is anything in the evidence from which concurring negligence on the plaintiff’s part may be inferred, then the burden would be on him to rebut or explain this. But, if the plaintiff can make out his case without such disclosure, and the defendant relies on contributory negligence, either to defeat or mitigate recovery, as to this defense, he becomes the actor, and his duty is to make it good by evidence, occupying with regard to it, the same attitude as does the party who relies on a release or payment when sued on a contract. * * *
“When to these considerations is added the force of the presumption, which is in accord with common experience * * *, that any man of sound mind will ordinarily avoid personal injuries, it seems to us that the rule which imposes upon the plaintiff the burden of showing care when there is nothing to suggest the want of it, in such a case as this, is unsound, and not in harmony with the general rules of evidence. And this is the view taken by a great number of courts. In these courts the rule obtains that the plaintiff has discharged his full duty when he has shown his injury and that the negligence of the defendants was its proximate cause. It then devolves upon the defendants to show contributory negligence as a matter of defense, the presumption being in favor of the plaintiff, that he was, at the time of the accident, in the exercise of due care, and that the injury was caused wholly by the defendant’s negligent conduct.” The court went on to say that the proper rule was that where the plaintiff’s contributory fault does not appear upon his own testimony, the burden of proof to establish it rests upon defendant; and that the plaintiff is not bound to prove affirmatively that he was himself free from negligence. However, the court did say that where the duty of showing contributory negligence rested upon defendant, plaintiff must make out his case in full; and, where the circumstances attending the injury were such as to raise a presumption against him in respect to the exercise of due care, the law requires him to establish affirmatively his freedom from contributory negligence.
There are certain expressions in the foregoing opinion that are susceptible of the construction placed upon them by appellant, notably, the statement that where contributory negligence may be inferred from the evidence adduced by plaintiff, the burden is on the plaintiff to rebut or explain this.
However, in Memphis Street Railway Company v. Aycock, 11 Tenn.App. 260-268 (cert. denied by Tennessee Supreme Court, 1930) the Tennessee Court of Appeals held that if plaintiff’s proof made out a case of contributory negligence, defendant might be relieved of the necessity of introducing any proof in order to carry the burden, but that nevertheless the burden of proof was upon the defendant. The court said:
“[The] whole contention of defendant * * * is set out as follows :
“ ‘The error herein committed is that the court did not properly charge the jury with reference to the burden of proof on the issue of contributory negligence, where the plaintiff’s own proof shows that he is guilty of such negligence. The court had charged the jury that the burden was on the defendant, and totally failed in any place to charge the jury that the burden was not on the defendant, if the plaintiff’s own proof showed that he was guilty of contributory negligence which proximately caused the accident.’ * * *
“This burden of proof may be made out from plaintiff’s own negligence or otherwise. If plaintiff’s proof makes out a case of contributory negligence, the defendant may be relieved of the necessity of introducing any proof in order to carry the burden, but this does not at all change the rule that the burden of proof is upon the defendant.”
From the foregoing, it appears that, in Tennessee, the burden of proving contributory negligence is upon the defendant, and that this burden does not shift.
Whatever may be said of the force of appellant’s argument as to the legal proposition it advances, the requested instruction was inapplicable, since it is our conclusion, from a review of the record, that there was nothing in plaintiffs’ proof, from which contributory negligence of the decedents might be inferred, and nothing in the evidence to raise a presumption against decedents’ exercise of due care. The trial court was therefore not in error in failing to give the instruction requested by appellant.
Appellant submits that the trial court erred in refusing to strike a paragraph in the complaint which alleged that appellant’s engine was not equipped as required by law in that it failed to furnish the fireman an emergency brake that was accessible to him, and failed to instruct him prior to the accident, on the use of such brake.
In its instructions to the jury, the court mentioned this allegation in the complaint and appellant’s denial that it was guilty of any negligence therein. From the appendices, constituting the record before us, there seems to have been little importance attached to this particular claim of negligence. The trial court merely mentioned the claim and appellant’s denial. At the conclusion of the instructions to the jury, after objections were made by appellant’s counsel to certain of them, the trial court asked counsel for all parties if there were any other objections to the charge, or any special requests for further instructions. None were mentioned or suggested with regard to the matter of the equipment of the engine, with which we are here concerned, and counsel for appellant stated that there were no objections, other than those previously addressed to the court.
We are, therefore, of the view that appellant’s claim that it was reversible error on the part of the trial court to refuse to strike the specified portion of the complaint is without merit.
In accordance with the foregoing, 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.
MERRITT, Circuit Judge.
These two appeals have been consolidated for opinion because they raise the same issue: the constitutionality of Tennessee’s law depriving convicted felons of the right to vote. Both appellants were convicted and sentenced prior to the passage of the laws which declared all felonies infamous and disenfranchised convicted felons. They challenge the law alleging that its retroactive application violates the ex post facto clause, Article I, Section 10 of the Federal Constitution and the due process clause of the fourteenth amendment.
Before 1972, certain felonies were designated by T.C.A. § 40-2712 as infamous crimes. An individual convicted of such an offense had to be adjudicated infamous and disenfranchised. The disenfranchisement provision of this section was removed in 1972. In 1981, the Tennessee Legislature enacted Public Chapters 342 and 345, now codified at T.C.A. §§ 2-2-102, 2-19-143, 40-20-112 and 40-20-113. These provisions designate all felonies as infamous crimes, and disenfranchise anyone convicted. The right of suffrage can only be restored by the governor’s pardon, or if the ex-felon’s “full rights of citizenship have otherwise been restored as prescribed by law.” T.C.A. § 2-19-143. The section also expressly provides that it applies retroactively. It applies to all those convicted of crimes prior to 1981, even though the crimes were declared infamous later.
Both appellants had voted by absentee ballot prior to 1981, but were denied ballots in a 1981 election. Appellant Wright brought suit in Federal Court for the Middle District of Tennessee, and sought class certification. Prior to certification the District Court dismissed Wright’s complaint, finding no violation of either the Federal or the Tennessee Constitution. Wright v. Collins, No. 81-3665 (M.D.Tenn. Dee. 14,1981). Appellant Tyler filed his suit pro se in the same court. His complaint was also dismissed, based on the reasoning of the Wright case. Tyler v. Collins, No. 81-3839 (M.D.Tenn. Dec. 14, 1981).
On appeal both contend that the retroactive application of the statute violates the ex post facto clause of the Federal Constitution because passage of the law increased the penalty for their crimes after conviction. Appellant Wright also argues that the Tennessee Constitution, Article I, Section 5 creates a liberty interest under the Federal Constitution which has been denied by retroactive application of the law. These are interesting and important questions of federal constitutional law, but because this case raises an important issue of state constitutional law, we believe the District Court should have abstained rather than deciding them and dismissing the complaints.
It has been the rule since 1941 that where, as here
... federal jurisdiction has been properly invoked and the constitutionality of a state statute or administrative order challenged, the federal court may, and in the exercise of a sound discretion normally should, stay the action in the federal forum if the construction of pertinent but unclear state law by the state courts may obviate the necessity for a decision of the federal constitutional question or substantially modify the constitutional issue.
1A Moore’s Federal Practice ¶ 0.203[1] (1982) citing Railroad Commission of Texas v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941). In the case at bar, both requirements for this so-called “Pullman abstention” are present: an unclear state law, in this case the state constitution, and the likelihood that a decision on the state constitutional issue would obviate our deciding the federal question.
Article I, Section 5 of the Tennessee Constitution provides:
The elections shall be free and equal, and the right of suffrage, as hereinafter declared, shall never be denied to any person entitled thereto, except upon conviction by a jury of some infamous crime, previously ascertained and declared by law, and judgment thereon by a court of competent jurisdiction. (Emphasis added.)
The meaning of the phrase “previously ascertained and declared by law” is central to this case and has not been authoritatively construed by the state’s highest court. In 1980, the Tennessee Court of Appeals, in dicta, interpreted Article I, Section 5 of the state constitution to mean that the state could not disenfranchise a felon unless it had declared in advance of the conviction that the crime was infamous and that disenfranchisement was part of the punishment for that crime. Crutchfield v. Collins, 607 S.W.2d 478, 482 (Tenn.App.1980), cert. denied Tenn.S.Ct. (October 31, 1980). The District Court below, on the other hand, interpreted the state constitution as not forbidding retroactive application of the disenfranchisement law. Wright v. Collins, supra at 6. Thus, the relevant language of the Tennessee Constitution is subject to conflicting interpretations.
The mere fact that a state constitutional challenge to a statute is possible is not always grounds for abstention. But, because the statute is part of an “integrated scheme of constitutional provisions, statutes and regulations” and the “scheme as a whole calls for clarifying interpretation by the state courts,” federal courts should abstain. Harris County Commissioners Court v. Moore, 420 U.S. 77, 84-85, 95 S.Ct. 870, 875-76, 43 L.Ed.2d 32 (1975). Abstention is particularly warranted where a state proceeding is pending that challenges the law under the state constitution. Askew v. Hargrave, 401 U.S. 476, 91 S.Ct. 856, 28 L.Ed.2d 196 (1971). At oral argument, the Attorney General’s office represented to this Court that such a case is currently on appeal to the Tennessee Supreme Court. Gaskin v. Collins, No. 2053 (Lewis Co. Ch. Ct. Mar. 16, 1983) appeal docketed, No. 83-23-I (Tenn.Sup.Ct. Mar. 18, 1983). The Chancery Court held the disenfranchisement law unconstitutional under the Tennessee Constitution, Article I, Section 5. The state Supreme Court will hear oral argument during the fall 1983 term.
The second requirement for abstention is also met. If the Tennessee Supreme Court holds that the retroactive disenfranchisement of felons violates the state constitution, then the need for decision on federal constitutional grounds is obviated. Even a decision upholding the provision would “substantially modify” the constitutional issue because appellants’ second argument, that the Tennessee Constitution’s provision creates a federal liberty interest, would be eliminated.
We realize that federal courts have sometimes hesitated to abstain where fun-as vote are involved, because of the delays which necessarily result from abstention. See Harmen v. Forssenius, 380 U.S. 528, 85 S.Ct. 1177, 14 L.Ed.2d 50 (1965). Here, however, any delay should be reduced by the fact that a case is already pending in the state Supreme Court. We believe that considerations of comity — “scrupulous regard for the rightful independence of the state governments and for the smooth working of the federal judiciary,” Railroad Commission v. Pullman Co., supra, 812 U.S. at 501, 61 S.Ct. at 645—require the federal courts to abstain so that Tennessee’s highest court can address this important issue of state constitutional law.
In accordance with the procedures set forth in England v. Louisiana State Board of Medical Examiners, 375 U.S. 411, 84 S.Ct. 461, 11 L.Ed.2d 440 (1964), the District Court should not dismiss these cases, but should stay the federal proceedings and retain jurisdiction over them. The appellants are still entitled to a federal forum for the adjudication of their federal claims, should the resolution of the state constitutional issue not obviate the need for such adjudication. If the parties wish to initiate proceedings in state court rather than simply await the disposition of the pending state court case, they can submit all of their claims to the state court and waive a federal court hearing, or expressly reserve their federal claims for consideration by the District Court. Id. at 415-19, 84 S.Ct. at 464-66.
We therefore vacate the District Court’s dismissal of these complaints, and remand with directions to retain jurisdiction of the cases pending a determination of the state law issues in the state courts of Tennessee.
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
STAPLETON, Circuit Judge:
I.
This is a negligence action brought by Conrad Peter against Hess Oil Virgin Islands Corporation (“Hess”) under Virgin Islands law. Peter alleged that Hess did not take the safety measures necessary to protect him from exposure to jet fuel while working with fuel hoses at Hess’ St. Croix refinery in 1984 and 1985, and that as a result of this exposure he suffered permanent lung injuries. A jury agreed and assessed his damages at $1.5 million. His recovery was reduced by $300,000, however, because of contributory negligence. These cross-appeals ensued. Jurisdiction below was based on 48 U.S.C. § 1612 and 4 V.I.C. § 32. We have jurisdiction over appeals from final decisions of the District Court of the Virgin Islands pursuant to 28 U.S.C. § 1291 and § 1294(3).
Several issues are presented on appeal. However, we address ourselves solely to Hess’ contention that the judgment below must be reversed because allowing Peter a tort recovery against Hess under Virgin Islands law conflicts with the Longshore and Harbor Workers’ Compensation Act (“LHWCA”), 33 U.S.C. § 901 et seq. Because we find that the common law negligence action Peter is pursuing obstructs the congressional policies advanced by LHWCA, we reverse.
II.
Hess argues that the Virgin Islands may not afford Peter a negligence action against Hess, his “borrowing employer”, since § 905(a) of LHWCA purports to make the remedies available under LHWCA the exclusive source of relief for an injured longshoreman against his employer. Our review of this question of law is plenary. This argument depends heavily on the answers to certain predicate questions. First, where was Peter working when he was exposed to jet fuel? Second, do his injuries fall within the scope of LHWCA? Third, does LHWCA recognize the borrowed servant doctrine? Fourth, was Peter Hess’ borrowed servant? We address these questions seriatim.
A.
At Hess, Peter tied ships up to the dock, swept the dock, ran errands, and performed other maintenance chores. He also performed two tasks which required him to work with fuel hoses. The jury found that Peter suffered permanent lung injuries as a result of exposure to kerosene-based jet fuel while working with fuel hoses at Hess’ refinery. These hoses were used to pump fuel aboard ships docked at Hess’ refinery, and were permanently connected at one end to equipment based on Hess’ pier. During this work Peter was not equipped with a face shield or other respiratory protection.
One of Peter’s jobs was to connect and disconnect these hoses to ships. He would stand on the deck of the ship and a hose would be lowered to him by a crane on the dock. To attach the hose to the ship, Peter removed the bolts from flanges which sealed the line and then secured the hose to the ship’s manifold. Before the unsealed hose could be connected to the ship Peter was often sprayed with jet fuel, causing him to inhale fumes from and ingest the jet fuel.
Hess does not dispute there is evidence that Peter was exposed to jet fuel while connecting hoses to ships docked at Hess. What it disputes is whether Peter was also so exposed while performing a second task, the “hose around”, on the adjacent dock. This procedure involved connecting two fuel lines to ensure they were clean before use in loading or unloading fuel from a ship. The hoses were lifted by a crane down to the dock where Peter would remove flanges from the lines so they could be connected and flushed out. Peter’s coworker Morton indicated that Peter was splashed and sprayed with jet fuel during the hose around because of releases occurring when gaskets blew, bolts were removed, line blockages gave way, or the crane operator tilted the hoses at too great an angle. Morton testified that Peter actually swallowed fuel during this process.
The district court, in the course of ruling on a motion to dismiss filed before and determined after trial, indicated that Peter’s “most substantial exposure to the offending fuel was when he was on land on the dock engaged in disconnecting hoses” and thus “to a large extent his injuries were land-based.” App. at 219. The trial record does not support this conclusion, since we find no rational basis in the record to determine which activity resulted in greater exposure. However, we do find evidence which supports a finding that Peter suffered substantial exposure to jet fuel both during the hose around and while working with fuel hoses aboard ships.
B.
We answer the second question by agreeing with Hess that Peter’s injuries fall within the scope of LHWCA, a federal workmen’s compensation statute which provides compensation to certain employees for:
disability or death... if the disability or death results from an injury occurring upon the navigable waters of the United States (including any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used by an employer in loading or unloading, repairing, or building a vessel)....
33 U.S.C. § 903. Under LHWCA, an employee “means any person engaged in maritime employment, including any longshoreman or other person engaged in longshor-ing operations_” 33 U.S.C. § 902(3). To be covered by LHWCA an employee must have been injured on a “situs” included in § 903’s definition of navigable waters and a satisfy a “status” test. Herb’s Welding, Inc. v. Gray, 470 U.S. 414, 416, 105 S.Ct. 1421, 1423, 84 L.Ed.2d 406 (1985). Since Peter was exposed to jet fuel on a ship and on a pier adjacent to the navigable waters, he satisfies the situs requirement. As both the hose around and connecting of fuel hoses were tasks necessary to the loading of vessels, Peter also satisfies the “status” requirement. Chesapeake and Ohio Railway Co. v. Schwalb, — U.S. -, 110 S.Ct. 381, 107 L.Ed.2d 278 (1989); P.C. Pfeiffer v. Ford, 444 U.S. 69, 80, 100 S.Ct. 328, 336, 62 L.Ed.2d 225 (1979); Northeast Marine Terminal Co. Inc. v. Caputo, 432 U.S. 249, 97 S.Ct. 2348, 53 L.Ed.2d 320 (1977).
C.
The third and fourth questions we have posed require us to determine: (a) whether LHWCA is properly construed in accordance with the borrowed servant doctrine, and, if so, (b) whether Peter was Hess’ borrowed employee at the time he worked at its refinery. If the answer to these questions is yes, this has important consequences for our analysis since LHWCA has contained, from its inception, a provision specifying that LHWCA benefits are the exclusive remedy against an employer who is responsible for them:
The liability of an employer prescribed in section 904 of this title shall be exclusive and in place of all other liability of such employer to the employee... except that if an employer fails to secure payment of compensation as required by this chapter, an injured employee... may elect to claim compensation under the chapter, or to maintain an action at law or in admiralty for damages on account of such injury or death....
33 U.S.C. § 905(a). Hess contends that as Peter’s borrowing employer, it is entitled to the immunity afforded by this provision, an immunity it believes bars the tort action Peter is pursuing against it.
The borrowed servant doctrine has commonly been applied in the context of workmen’s compensation statutes to hold borrowing employers liable for compensation for injuries suffered by their borrowed employees. See generally 1C A. Larson, Workmen’s Compensation Law § 48 (1989) (“Larson”) (discussing doctrine and citing cases). Concomitantly, it has been applied to afford the borrowing employer with the immunity provided by workmen’s compensation statutes that, as a general rule, make their statutory benefits the exclusive remedy against the employer of the injured party. Id. We have recently described this use of the doctrine:
Under the borrowed employee doctrine, if a special (borrowing) employer exercises a sufficient degree of control over a borrowed employee for a time sufficient to suggest that the employee has assessed the risks of his new employment and has acquiesced in his borrowing employer’s control, the borrowing employer may be deemed a statutory employer for purposes of workers’ compensation. See generally 1C A. Larson, Workmen’s Compensation Law § 48.10 (1982). The borrowed employee is then barred from suing his borrowing employer for injuries sustained during the course of his employment; instead, the borrowed employee is remitted to the exclusive remedy provided by the relevant workers’ compensation act.
Vanterpool v. Hess Oil V.I. Corp., 766 F.2d 117, 121 (3d Cir.1985).
In Vanterpool, we found the borrowed servant doctrine applied within the statutory scheme of the Virgin Islands Workmen’s Compensation Act, 24 V.I.C. § 251 et seq., as it existed at the time plaintiff Van-terpool was injured. Therefore, we held that the doctrine barred Vanterpool, an employee loaned from Litwin to Hess, from maintaining a tort action against Hess under Virgin Islands law to recover damages for an injury suffered at its refinery.
On October 19, 1984, a month before Peter came to work at Hess’ refinery, the legislature amended the Islands’ compensation act to add a section abrogating the borrowed employee doctrine:
It shall not be a defense to any action brought by or on behalf of an employee, that the employee at the time of his injury or death was the borrowed, loaned or rented employee of another employer. Any oral or written agreement between an employer and employee which makes the employee the borrowed, loaned or rented employee of another employer shall be null and void as being against the public policy of this Territory.
24 V.I.C. § 263a; see also 24 V.I.C. § 284(b). Since the Virgin Islands legislature has no legislative authority with respect to federal law, this statute abrogated the borrowed servant doctrine for purposes of the Virgin Islands workmen’s compensation statute but had no effect upon LHWCA.
Although this court has never faced the question of whether the borrowed servant doctrine is properly applied to LHWCA, two sister courts of appeals have held that that doctrine is a valid way to determine whether a particular business entity is liable for a worker’s LHWCA compensation and therefore eligible for protection under § 905(a). The Fifth Circuit first applied the borrowed servant doctrine for purposes of determining whether the defendant was shielded by the exclusivity provision of § 905(a) of LHWCA in Ruiz v. Shell Oil Company, 413 F.2d 310 (5th Cir.1969). In Huff v. Marine Testing Corp., 631 F.2d 1140 (4th Cir.1980) the Fourth Circuit also applied the doctrine to LHWCA.
The Benefits Review Board, the adjudicative agency for claims arising under the Act, has also applied the borrowed servant doctrine in determining who is an employer under the Act. Edwards v. Williamette Western Corporation, 13 BRBS 800 (1981) (approving use of the Fifth Circuit and Larson tests of borrowed employee status for use under LHWCA and indicating there can be two employers jointly liable for LHWCA compensation); see also Symanowicz v. Army & Airforce Exchange Service, 672 F.2d 638 (7th Cir.) (reviewing and affirming a Benefits Review Board case where the Board applied the borrowed servant test to determine whether claimant was employed by an entity he claimed was responsible for securing his benefits), cert. denied, 459 U.S. 1016, 103 S.Ct. 376, 74 L.Ed.2d 510 (1982).
We agree with the Fourth and Fifth Circuits and with the Benefits Review Board that the concept of an employer as used in LHWCA includes firms considered borrowing employers under the borrowed servant doctrine. Workmen’s compensation statutes have commonly been construed to make borrowing employers liable for the compensation of their borrowed servants, and thus borrowing employers have been considered “employers” for purposes of immunity from tort liability. See 1C Larson, supra, § 48. LHWCA follows the traditional pattern of workmen’s compensation statutes, and we are confident that LHWCA was intended by Congress to be construed in accordance with the borrowed servant doctrine. Thus, we believe that if Peter is Hess’ borrowed employee, he is Hess’ employee for purposes of LHWCA.
In reaching this conclusion we have not overlooked the 1984 amendments of LHWCA, which Peter contends foreclose application of the borrowed servant doctrine. Congress passed these amendments in response to the case of Washington Metropolitan Transit Authority v. Johnson, 467 U.S. 925, 104 S.Ct. 2827, 81 L.Ed.2d 768 (1984). In Washington Metro, the Supreme Court held that a contractor who purchased LHWCA coverage for the employees of its subcontractors could be considered the “employer” of those employees for purposes of the exclusivity provision of § 905(a) of LHWCA, despite the fact that the contractor had not been statutorily required to procure this coverage. The contractor was not a borrowing employer and no borrowed servant doctrine issue was raised.
Congress moved swiftly to statutorily overrule Washington Metro. Section § 904(a) was amended to provide that a “subcontractor shall not be deemed to have failed to secure the payment of compensation if the contractor has provided insurance for such compensation for the benefit of the subcontractor.” 33 U.S.C. § 904(a). Section 905(a) was amended to make clear that a “contractor shall be deemed the employer of a subcontractor’s employees only if the subcontractor fails to secure the payment of compensation as required by section [904].” 33 U.S.C. § 905(a).
In West v. Kerr-McGee Corp., 765 F.2d 526 (5th Cir.1985), the Court of Appeals for the Fifth Circuit held that the 1984 post-Washington Metro amendments did not preclude use of the borrowed employer doctrine under LHWCA. The court acknowledged that the “bare language of the amendment to § 905(a) could... be interpreted as foreclosing any designation of any contractor as the employer of its subcontractors’ employees — even if a borrowed employee relationship existed — unless the subcontractor failed to secure compensation payments.” 765 F.2d at 529. However, it noted that another possible reading was “that the ‘shall be deemed’ language of the § 905(a) amendment refers only to ‘deeming’ a contractor the employer of a subcontractor’s employee when the contractor is not the employee’s true employer as well,” that is, when the employer was not the employee’s borrowing employer. Id. at 530.
Since these contrary readings evidenced “latent ambiguities” in the statute, the court looked to the legislative history of the 1984 amendment. Finding that the only purpose of Congress was to overrule Washington Metro, and that there was no intent to overturn the borrowed servant cases decided under LHWCA, the West court held that the borrowed servant immunity defense was still available under LHWCA. Id. at 580. The Fifth Circuit has continued to adhere to West. See, e.g., Melancon v. Amoco Production Co., 834 F.2d 1238 (5th Cir.1988); Alexander v. Chevron, U.S.A., 806 F.2d 526 (5th Cir.1986), cert. denied, 483 U.S. 1005, 107 S.Ct. 3229, 97 L.Ed.2d 735 (1987); Capps v. N.L. Baroid-NL Industries, Inc., 784 F.2d 615 (5th Cir.1986), cert. denied, 479 U.S. 838, 107 S.Ct. 141, 93 L.Ed.2d 83 (1986); Doucet v. Gulf Oil Corp., 783 F.2d 518 (5th Cir. 1986), cert. denied, 479 U.S. 883, 107 S.Ct. 272, 93 L.Ed.2d 249 (1986); see also 1A E. Jhirad, Benedict on Admiralty, § 34, 2-73 (1989) (suggesting that the borrowed servant doctrine is still viable under LHWCA).
West’s reading of the legislative history is correct; there is nothing in the legislative history indicating that Congress intended to do anything other than overrule Washington Metro. H.R.Conf.Rep. No. 98-1027, 98th Cong., 2d Sess. 24, reprinted in 1984 U.S.Code Cong. & Admin.News 2734, 2774. That brief history does not support the proposition that Congress wished to upset the use of the borrowed servant doctrine as utilized by the Fourth and Fifth Circuit cases; this is an omission of some significance in light of the care taken in the legislative history to identify cases that Congress did intend to overturn. H.R.Rep. No. 98-570, 98th Cong., 2d Sess. 7, reprinted in 1984 U.S.Code Cong. & Admin.News 2740 (indicating rejection of McDermott v. Boudreaux, 679 F.2d 452 (5th Cir.1982)); 130 Cong.Rec. H2488 (daily ed. April 9, 1984) (Explanation of House Amendment to S. 38, The Longshoremen’s and Harbor Workers Act Amendments of 1983) (indicating intent to overrule Melson v. United Brands Corporation, 594 F.2d 1068 (5th Cir.1979)).
It is the language of the amendments that provides the strongest support for the argument that the borrowed servant doctrine is no longer viable under LHWCA. However, while this language clearly denies immunity to contractors except in circumstances where the contractor has been forced to fulfill its role as a back-up provider of compensation for the subcontractor’s employees, it does not provide a viable alternative to, nor does it clearly render inappropriate, use of the borrowed servant test to address a central question under the Act: who is the claimant’s employer for purposes of the Act? The borrowed servant test provides a way to answer the question that accords with the reality of the claimant’s employment circumstances; a way that we believe the Congress would not have eliminated without indicating what should take its place. When this test indicates that an entity other than the one that putatively employs the claimant is really the claimant’s employer, that borrowing employer has been found to be the claimant’s employer under the Act and has been held to be both subject to the burdens and entitled to the benefits that come with such status. We find that this continues to be the appropriate approach under LHWCA. Hence, if Hess is Peter’s borrowing employer, then it is entitled to whatever immunity is available under § 905(a) of the Act.
The district court made no determination of whether Peter was Hess’ borrowed servant since it concluded that Peter could recover in tort against Hess under Virgin Islands law regardless of whether Hess was Peter’s employer under LHWCA. However, the trial record before us on this issue is substantial, and we believe that no reasonable trier of fact could conclude from that record that Peter was not Hess’ borrowed servant. The Fifth Circuit, starting with Ruiz, has focused on nine relevant factors to determine whether a worker is a borrowed employee. But in Gaudet v. Exxon Corp., 562 F.2d 351 (5th Cir.1977), cert. denied, 436 U.S. 913, 98 S.Ct. 2253, 56 L.Ed.2d 414 (1978), the court considered only two of these factors to be essential in the workmen’s compensation context: (1) whether the borrowing employer was responsible for the borrowing employee’s working conditions and (2) whether the employment was of such duration that the borrowed employee could be presumed to have acquiesced in the risks of his new employment. 562 F.2d at 357. In Vanter-pool we placed heavy emphasis on these factors as well, and indicated that the borrowed servant doctrine is “neither unfair nor unreasonable [as a bar to tort recovery] when it is remembered that compensation liability cannot exist in the absence of some express or implied contract of hire between the borrowed employee and the borrowing employer.” 766 F.2d at 122.
In this case, Peter explicitly agreed to work under conditions controlled solely by Hess. While Peter was directly employed by the Litwin Panamerican Corporation (“Litwin”), Litwin and Hess had a contractual arrangement whereby Litwin agreed to provide personnel for general maintenance and turnaround work at Hess’ refinery. Defendant’s Exhibit Y, App. 1077-1095. This agreement divided loaned employees into two categories. The Type I category was comprised of employees who were furnished to work under Hess’ exclusive direction and control and for whose workmanship Litwin was not responsible to Hess. App. at 1077. Type II loanees, by contrast, were to be supervised and directed by Litwin. Id. Litwin was contractually bound to pay the salaries of and procure workmen’s compensation insurance for the Type I and II loanees. App. at 1084-85.
Peter came to work as a Type I loanee at Hess’ St. Croix refinery on November 19, 1984. At that time he executed a Litwin document acknowledging that he was aware: (1) his work would be controlled, directed and supervised by Hess; (2) he should not receive direction from anyone except Hess or a Hess loanee supervisor; and (3) that Hess would provide him with safety equipment and a safe working environment. App. at 1076. Peter worked at the Hess refinery until August 22, 1985, under conditions of control consistent with this contractual arrangement, and was injured while performing the work of Hess. He clearly acquiesced in working for Hess and Hess, via Litwin, was the provider of his salary and LHWCA coverage.
We find no evidence in the record that could reasonably lead us to deviate from the opinions we expressed in Vanterpool that: “any assigned Type-I employee would necessarily work under the direct supervision and control of [Hess],” that Litwin acts essentially as an employment broker with respect to Type I employees, and that “it is difficult to conceive how a Type I employee, who obtained employment through Litwin could be deemed to do anything other than consent to work for [Hess].” Id. at 120, 127; see also Nieves v. Hess Oil Virgin Islands Corp., 819 F.2d 1237 (3d Cir.1987) (following Vanterpool and holding summary judgment appropriately granted to Hess on defense that Type I loanees were borrowed servants). We therefore find that Hess is Peter’s employer for purposes of LHWCA.
III.
Having determined this, a literal reading of § 905(a) would indicate that this is a simple case and Peter is entitled only to the remedies available under LHWCA. We are not free, however, to give the usual weight to the statutory text here. LHWCA is a statute which can be understood only in light of its considerable history, and, as we shall see in the ensuing review of that history, this section of LHWCA has not been construed to bar all state remedies against the employer.
A.
To resolve this case we must consider a line of Supreme Court admiralty and LHWCA cases beginning with Southern Pacific Co. v. Jensen, 244 U.S. 205, 37 S.Ct. 524, 61 L.Ed. 1086 (1917). Jensen held that the State of New York could not constitutionally provide a workmen’s compensation remedy to the survivors of a worker killed on the gangway between a ship and shore while unloading lumber from the ship. As the decedent was working as a stevedore over navigable waters at the time he was killed, the Court indicated his claim fell “clearly within the admiralty jurisdiction.” Id. at 217, 37 S.Ct. at 529. The Court stated that there are limits to the extent a state could affect the general maritime law, and that state law violates Articles III, § 2 and I, § 8 of the Constitution “if it contravenes the essential purpose expressed by an act of Congress or works material prejudice to the characteristic features of the general maritime law or interferes with the proper harmony and uniformity of that law in its international and interstate relations.” Id. at 216, 37 S.Ct. at 529.
The Court held that the New York statute undermined the uniformity of the maritime law, reasoning that if New York were permitted to apply its law, then every other state would be permitted to impose similar obligations on maritime employers within their jurisdictions, subjecting them to a myriad of burdensome regulations. Id. at 217-18, 37 S.Ct. at 529-30. Moreover, the award could not be sustained as a common law remedy saved to the longshoreman by the savings to suitors clause, then 28 U.S.C. § 1333(a)(1), because the no-fault administrative remedy provided by New York’s compensation statute was unknown at common law and no court was competent to award such relief. Id. at 218, 37 S.Ct. at 530.
After Jensen, however, the Supreme Court made clear that its concern for the uniformity of the maritime law abruptly ended at the water’s edge. Because of the Supreme Court’s reliance on the locality of the tort as determining, in the first instance, whether a state could apply its workmen’s compensation scheme to an injury suffered by a longshoreman, it never inquired into the impact upon maritime commerce or the uniformity of the maritime law caused by state statutes requiring employers of workers who regularly traversed the shore line to obtain insurance under the state statute.
For example, in Industrial Comm. v. Nordenholt Co., 259 U.S. 263, 42 S.Ct. 473, 66 L.Ed. 933 (1922), a longshoreman had been killed on a dock while unloading a vessel lying in navigable waters. The state courts reversed a state compensation award to the decedent’s survivors, relying on Jensen. The Supreme Court held that Jensen did not preclude the state award:
When an employee, working on board a vessel in navigable waters, sustains personal injuries there, and seeks damages from the employer, the applicable legal principles are very different from those which would control if he had been injured on land while unloading the vessel. In the former situation the liability of the employer must be determined under the maritime law; in the latter, no general maritime law prescribes the liability, and the local law has always been applied. The liability of the employer for damages on account of injuries received on shipboard by an employee under a maritime contract is matter within the admiralty jurisdiction; but not so when the accident occurs on land.
Id. at 271-72, 42 S.Ct. at 473-74. Thus, no matter how directly related a longshoreman’s tasks were to maritime commerce, and no matter how burdensome the state insurance scheme was to his employer, a state could require that maritime employer to pay a compensation award for an injury suffered on land. Nordenholt and a consistent line of subsequent cases establish that the Jensen doctrine would not foreclose the Virgin Islands from providing a workman’s compensation remedy for the injury Peter suffered while performing the hose around task on the dock.
It was in the case of injuries occurring over the navigable waters that the court undertook an inquiry into the burden a state compensation statute would have on the uniformity of the maritime law and maritime commerce. Not every worker injured on the navigable waters was precluded from a state workmen's compensation recovery. Instead, “[i]f the employment of an injured worker was determined to have no ‘direct relation’ to the navigation or commerce, and ‘the application of local law [would] not materially affect’ the uniformity of maritime law, then the employment would be characterized as ‘maritime but local,’ and the State could provide a compensation remedy.” Director, OWCP v. Perini North River Assoc., 459 U.S. 297, 306, 103 S.Ct. 634, 641, 74 L.Ed.2d 465 (1983) (quoting Grant Smith-Porter Ship Co. v. Rohde, 257 U.S. 469, 477, 42 S.Ct. 157, 158, 66 L.Ed. 321 (1922)).
The “maritime but local” exception to Jensen became infamous several years after Congress enacted LHWCA in 1927. As enacted, LHWCA was a “gap-filler”, Caputo, 432 U.S. at 257, 97 S.Ct. at 2353, providing compensation to workers, excluding certain employees such as the crews of vessels, for injuries occurring upon the traditional navigable waters of the United States only “if recovery... through workmen’s compensation proceedings may not be validly provided by State law.” 44 Stat. (part 2) 1424 at 1426, quoted in Perini, 459 U.S. at 307, 103 S.Ct. at 642. This language was initially interpreted as excluding from LHWCA coverage employees falling within the “maritime but local” exception. G. Gilmore & B. Black, The Law of Admiralty 419-420 (2d ed.1975).
This interpretation led to a great deal of uncertainty among the courts and injured longshoremen as to the proper forum to file compensation claims based on injuries suffered over the water. As a result of this confusion, many injured longshoremen were effectively denied recovery, since if a worker chose a state compensation remedy and was found not to fall within the “maritime but local” exception he was often left without a remedy because he would be time-barred under LHWCA. Similarly, if a worker claimed under LHWCA and was found to fall within the “maritime but local” exception, he had no LHWCA remedy and might be time-barred at state law. This game was particularly treacherous for injured longshoremen because judicial determinations as to what was “maritime but local” were often fundamentally inconsistent with one another. See Calbeck v. Travelers Insurance Co., 370 U.S. 114, 119, 82 S.Ct. 1196, 1199, 8 L.Ed.2d 368 (1962) (“No dependable definition of the area — described as ‘maritime but local’, or ‘of local concern’ — where state laws could apply ever emerged from the many cases which dealt with the matter in this and the lower courts. The surest that could be said was that any particular injury might be within the area of ‘local concern,’ depending upon its peculiar facts.”).
The Supreme Court recognized the unfairness inherent in this state of affairs in Davis v. Department of Labor, 317 U.S. 249, 63 S.Ct. 225, 87 L.Ed. 246 (1942). The court in Davis sustained a state compensation award to the widow of a steel worker. The steel worker had drowned in navigable waters after falling off a barge while helping to load the barge with pieces of steel from a drawbridge that was being dismantled. The Washington statute at issue allowed compensation for employees if it could be made within the permissible limits of the state’s jurisdiction; the Washington Supreme Court had held that an award to the steel worker was constitutionally impermissible.
The Supreme Court reversed, not because the employment was of the maritime but local variety, but because of a new concept it articulated, the “twilight zone.” The Court acknowledged that the uncertainty engendered by the maritime but local doctrine “defeated] the purpose of the federal act, which seeks to give to these hard-working men, engaged in a somewhat hazardous employment, the justice involved in the modern principle of compensation, and the state Acts such as the one before us, which aims at sure and certain relief for workmen.” Id. at 254, 63 S.Ct. at 228 (quotations omitted).
Realizing that courts had often divided on questions of line-drawing in this area and that the case law was incoherent, the Court indicated that it would effectively abandon any pretense of categorizing workers whose injuries could not be easily identified as either compensable or not compensable by state law under the maritime but local doctrine. These injured employees occupied “that shadowy area within which, at some undefined and undefinable point, state laws can validly provide compensation.” Id. at 253, 63 S.Ct. at 227. In this twilight zone of uncertainty, it was impossible for employees or employers to determine in advance whether sanctioning the state remedy in the particular situation involved would sufficiently “interfere with the proper harmony and uniformity of maritime law” as to be unconstitutional. Id. at 254, 63 S.Ct. at 228. The Court then looked to commerce clause jurisprudence for a resolution to this dilemma:
We find here a state statute which purports to cover these persons, and which indeed does cover them if the doubtful and difficult factual questions to which we have referred are decided on the side of the constitutional power of the state. The problem here is comparable to that in another field of constitutional law in which courts are called upon to determine whether particular state acts unduly burden interstate commerce. In making the factual judgment there, we have relied heavily on the presumption of constitutionality in favor of the state statute.
Id. at 257, 63 S.Ct. at 229. Giving “full weight” to this presumption of constitutionality and resolving all doubts in favor of that presumption, the Court indicated that a finding of unconstitutionality could not be “rested on so hazardous a factual foundation” and reversed the judgment of the Oregon Supreme Court denying state compensation relief to the steel worker’s widow. Id. at 258, 63 S.Ct. at 230. As the Court noted many years later, by so holding the Davis court “effectively established a regime of concurrent jurisdiction” within the twilight zone. Sun Ship, Inc. v. Pennsylvania, 447 U.S. 715, 718, 100 S.Ct. 2432, 2435, 65 L.Ed.2d 458 (1980).
In Calbeck v. Travelers Ins. Co., 370 U.S. 114, 82 S.Ct. 1196, 8 L.Ed.2d 368 (1962), the Supreme Court further reduced the chances that an injured worker would fall between the cracks of the shifting jurisdictional line created by the maritime but local doctrine. Calbeck held that LHWCA, as it then stood,
emerge[d] from... a congressional desire for a statute which would provide federal compensation for all injuries to employees on navigable waters; in every case, that is, where Jensen might have seemed to preclude state compensation. The statute’s framers adopted this scheme in the Act because they meant to assure the existence of a compensation remedy for every such injury, without leaving employees at the mercy of the uncertainty, expense, and delay of fighting out in litigation whether their particular cases fell within or without state acts under the “local concern” doctrine.
Id. at 120-22, 82 S.Ct. at 1200-01 (emphasis added). Finding this to be Congress’ overriding purpose, the Court construed § 903(a) of LHWCA, which then provided for compensation under LHWCA only for injuries occurring on the navigable waters “and if recovery... through workmen’s compensation proceedings may not validly be provided by State law,” to mean that such compensation was available in any situation where the maritime but local cases “had rendered questionable the availability of a state compensation remedy.” Id. at 126, 82 S.Ct. at 1203. Thus, there were circumstances in which, contrary to what the text of section 903(a) might have indicated, a worker could obtain a LHWCA award even though his injury was constitutionally compensable under state law. Id. at 126-27, 82 S.Ct. at 1203-04. Indeed, the Court held that it was permissible for a claimant to obtain a LHWCA award subsequent to a state law award, where the first award was credited against the LHWCA award to prevent a double recovery. Id. at 131, 82 S.Ct. at 1205.
In Moores’ Case, 323 Mass. 162, 80 N.E.2d 478 (1948), the Supreme Judicial Court of Massachusetts applied Davis to a situation in which a worker had been injured while performing repair work upon a completed vessel in a dry dock upon navigable waters. Sustaining the state workmen’s compensation award he received, the court commented:
[O]ur proper course is... to regard the Davis case as intended to be a revolutionary decision deemed necessary to escape an intolerable situation and as designed to include within a wide circle of doubt all water front cases involving aspects pertaining both to the land and to the sea where a reasonable argument can be made either way, even though a careful examination of numerous previous decisions might disclose an apparent weight of authority one way or the other.
80 N.E.2d at 481. The Supreme Court of the United States affirmed the decision of the Massachusetts high court in a per cu-riam decision citing Davis. Bethlehem Steel Co. v. Moore, 335 U.S. 874, 69 S.Ct. 239, 93 L.Ed. 417 (1948). This affirmance is noteworthy because prior Supreme Court decisions had classified this type of work as falling outside of the maritime but local exception. See Baizley Iron Works v. Span, 281 U.S. 222, 50 S.Ct. 306, 74 L.Ed. 819 (1930); Robins Dry Dock
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 records and briefs and oral argument of counsel.
And it appearing that the petitioner created a trust under which she and her children were beneficiaries, the income of which, together with the corpus, might be distributed in amounts within the discretion of the trustee, when requested in writing by petitioner or any of her children, in case “any accident, sickness, calamity, misfortune, adversity, bereavement or loss, financially or otherwise,” should befall them;
And it appearing that the trustee, who is petitioner’s nephew and has been her trusted adviser since 1916, has no substantial adverse interest in the disposition of the income or corpus of the trust property (Sections 166 and 167, Revenue Act of 1934, 26 U.S.C.A. Int.Rev.Code, §§ 166, 167); Reinecke v. Smith, 289 U.S. 172, 53 S.Ct. 570, 77 L.Ed. 1109; Altmaier v. Commissioner, 6 Cir., 116 F.2d 162, 164, certiorari denied 312 U.S. 706, 61 S.Ct. 827, 85 L.Ed. 1138; and that the necessity for a written request for payment is not a substantial condition precedent to the exercise of the trustee’s power to distribute the income or corpus to the petitioner ; and that the power to effect the distribution is wholly within the control of the petitioner and the trustee; Cf. Helvering v. City Bank Farmers Trust Co., 296 U.S. 85, 91, 56 S.Ct. 70, 80 L.Ed. 62;
And it appearing that the Board correctly concluded that under the trust instrument' the petitioner is permitted, if she cares to. do so and secures the acquiescence of the trustee, to cause the expenditure of the income and if necessary of the corpus, for needs for which petitioner normally would' have used the property had no trust been created; and that the entire income of the trust is taxable to the petitioner under Sections 166 and 167 of the Revenue Act of' 1934;
And no reversible error appearing in the record:
It is ordered that the decision 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.
Opinion for the Court filed by Circuit Judge WALD.
WALD, Circuit Judge:
In this consolidated appeal, the Department of Justice (“DOJ”) contests two district court rulings that a federal statute, 28 U.S.C. § 1746, requires it to accept, in conjunction with Freedom of Information Act (“FOIA”), 5 U.S.C. § 552, requests, unnotar-ized, unsworn privacy waivers signed under penalty of perjury. We affirm the district court in one appeal and dismiss the other for lack of jurisdiction.
I.
In September 1990, Anthony Summers submitted a FOIA request to the Federal Bureau of Investigation (“FBI”) for documents pertaining to John F. Shaw, Sr. Accompanying Summers’ request was a privacy waiver, signed by an individual who identified himself as Shaw, authorizing the release of all such documents. The waiver included all data normally required for such a document, but was not notarized. Instead, it was signed beneath a specific notice that the signer was subjecting himself to penalties for perjury.
In response to Summers’ filing, the FBI requested additional information. Most notably, the agency — relying on 28 C.F.R. § 16.41(d)(1), which provides that “a requester must provide with his request an example of his signature, which shall be notarized”— asked Summers to provide Shaw’s notarized signature on the privacy waiver. Summers refused, however, on the ground that such a demand violated 28 U.S.C. § 1746, which allows “any matter” that must be established by a “sworn declaration” to be shown “with like force and effect” by an unsworn declaration subscribed to as true under penalty of perjury. Because Summers balked at providing the requested notarization, the FBI denied his FOIA request.
After pursuing administrative remedies, Summers filed suit in district court seeking a declaratory judgment that the DOJ rule requiring notarized signatures violated § 1746. In that forum, the DOJ argued that its regulation was not at odds with § 1746 because that statute allows the use of unsworn, unno-tarized declarations only where a federal law or rule requires a party to swear to the contents of the statement, not where, as here, the regulation at issue merely requires verification by a notary of the identity of the signer of the statement. Since the regulation did not contravene § 1746, the DOJ argued, it should be upheld as a reasonable means of implementing the Privacy Act, 5 U.S.C. § 552a, requirement that agencies guard against unauthorized disclosure of personal information to third parties.
The district court was unconvinced. Finding that § 1746 did apply because its “plain and unambiguous language” “does not admit of [the] distinction” between a statement’s content and the identity of its author, the court granted Summers’ summary judgment motion. Summers v. United States Department of Justice, 776 F.Supp. 575, 577 (D.D.C.1991). This appeal followed.
II.
Section 1746 provides:
Wherever, under any law of the United States or under any rule, regulation, order, or requirement made pursuant to law, any matter is required or permitted to be supported, evidenced, established, or proved by the sworn declaration, verification, certificate, statement, oath or affidavit, in writing of the person making the same (other than a deposition, or an oath of office, or an oath required to be taken before a specified official other than a notary public), such matter may, with like force and effect, be supported, evidenced, established, or proved by the unsworn declaration, certificate, verification, or statement, in writing of such person which is subscribed by him, as true under penalty of perjury, and dated, in substantially the following form:
(1) If executed without the United States:
“I declare (or certify, verify, or state) under penalty of perjury under the laws of the United States of America that the foregoing is true and correct.
Executed on (date).
(Signature).”
(2) If executed within the United States, its territories, possessions, or commonwealths:
“I declare (or certify, verify, or state) under penalty of perjury that the foregoing is true and correct.
Executed on (date).
(Signature).”
(Emphasis added.) In this court, as in the district court, the DOJ claims that the plain language of this provision supports its argument that Congress intended this statute to apply only where the content of a document is at issue, not where, as under the DOJ regulation, only the identity of a document’s author must be verified.
We disagree. Although we have found scant case law relevant to this problem, but cf. Duncan v. Foti, 828 F.2d 297, 297-98 (5th Cir.1987) (per curiam) (unavailability of notary in prison did not bar inmate from filing FOIA requests because § 1746 provided an alternative to notarization for such requests), the plain language of § 1746 indicates that it applies with full force when identity is in question. Congress has said unambiguously that whenever “any matter” must be “supported, evidenced, established, or proved” by a sworn declaration, an un-sworn declaration attested to under penalty of perjury must henceforth be equally acceptable — unless one of the three exceptions mentioned parenthetically in the statutory text is implicated. In common parlance, an individual’s identity — whether manifested by a direct statement {e.g., “I, Jane Doe, declare .... ”), a signature, or both — is certainly a “matter” that an individual may be called on to “support[], evidence[], establish[], or prove[]” in a declaration. Cf. Webster’s THIRD New International Dictionary 1394 (1976) (defining a “matter” first as “a subject (as a fact, an event or course of events, or a circumstance, situation, or question) of interest or relevance”). Indeed, identity is often among the most important “matters” disclosed in any statement — few, if any, statements are valuable without knowing who made them. (Perhaps for that reason, most declarations begin by fixing the identity of the declarant. See, e.g., Declaration of Linda L. Kloss (submitted by the DOJ with this appeal) (“I, Linda L. Kloss, declare as follows:....”)). Since an individual’s identity would seem to be a “matter” that FOIA requesters or third parties waiving privacy are asked to establish, the plain language of § 1746 instructs that a person may use an unsworn statement to establish that identity.
Any residual doubt on this question is dispelled when § 1746 is considered in conjunction with 18 U.S.C. § 1621, the general federal perjury statute. The latter provision, as amended to conform to § 1746, states that whenever a person, in a § 1746 declaration, “willfully subscribes as true any material matter which he does not believe to be true,” 18 U.S.C. § 1621(2) (emphasis added), he is guilty of perjury. As the government conceded at oral argument, a person would quite obviously violate this provision if he knowingly signed someone else’s name to a § 1746 declaration. That would only be true, of course, if the signature and, more generally, the identity of the declarant are “material matter[s]” within the meaning of § 1621. Thus, unless the word “matter” is to be given different meanings in these two closely related provisions — an improbable result since § 1621 was amended to include this language at the time Congress enacted § 1746, see 90 Stat. 2534, 2534-35 (1976) — a declarant’s identity as manifested by his signature must also be a “matter” within the meaning of § 1746.
Finally, we think that our interpretation of § 1746 is sensible because it prevents the creation of a gaping loophole in that provision’s effect. If, as the government suggests, § 1746 does not cover the authentication of signatures, an agency could routinely require notarization “merely” as a way of identifying the person making the statement. That course of action would render § 1746 essentially a dead letter and end-run Congress’ clear intent of sparing individuals the cost and hassle of notarizing routine submissions. See H.R.Rep. No. 1616, 94th Cong., 2d Sess. 1 (1976), U.S.Code Cong. & Admin.News 1976, p. 5644 (“The requirement that the person who signs an affidavit must appear before a notary and be sworn can be inconvenient.”); 122 Cong.Rec. 34447, 34448 (1976) (statement of Senator Tunney) (“The result of this bill is to do away with one of the remaining anachronisms of our law — the requirement that relatively routine documents bear the seal of a notary public.”).
In sum, we agree with the district court that § 1746 applies to verification of the identity of the signers of FOIA privacy waivers. We therefore affirm the decision of the district court in Summers. For the reasons discussed previously, see supra note 1, we dismiss the appeal in Campbell.
So ordered.
. The DOJ asserts that we have jurisdiction under 28 U.S.C. § 1291 to hear both appeals. We are doubtful, however, that there has been a final, appealable order in Campbell v. United States Department of Justice, No. 92-5102. The order the DOJ attempts to appeal only granted Campbell's motion to compel the government to accept unnotarized privacy waivers; by its own terms, it did not dispose of other issues remaining in the case. See Campbell v. United States Department of Justice, No. 89-3016 (D.D.C. Jan. 21, 1992), slip opinion at 5 (notarization issue "arises out of the larger [Freedom of Information Act] request which is under the jurisdiction of this Court”). Section 1291 grants no authority to review interlocutory orders. See, e.g., Kappel-mann v. Delta Air Lines, Inc., 539 F.2d 165, 167-68 (D.C.Cir.1976) (under § 1291, district court decisions are appealable only if they are final and end the litigation on the merits), cert. denied, 429 U.S. 1061, 97 S.Ct. 784, 50 L.Ed.2d 776 (1977); cf. Fed.R.Civ.P. 54(b) (allowing appeal from an entry of final judgment on some but not all joined claims only upon express certification of district court). Accordingly, we dismiss the Campbell appeal. As a practical matter, this course of action can be expected to have little effect on the parties to that case because our decision in Summers — which, all sides agree, presents an identical legal question — -will be binding precedent in Campbell.
. Because the DOJ regulation at issue, 28 C.F.R. § 16.41(d)(1), only requires a ''notarized" signature it might be argued that it does not require the "sworn declaration, verification, certificate, statement, oath or affidavit” necessary to trigger § 1746 (emphasis added to both quotations). Cf. Black’s Law Dictionary 1060 (6th ed. 1990) (defining a notary public as both "[o]ne who is authorized ... to administer oaths” and one who may "attest to the authenticity of signatures”). But the DOJ's sample "Certification of Identity” form makes clear that the agency contemplates that the person signing the form should attest to her identity under oath. Specifically, the form requires that an individual certify that she is the person named on the privacy waiver and sign her name under oath before a notary.
Additionally, although the language of § 16.41, see supra page 571, might suggest that it applies only when a "requester” seeks information about herself, both parties assume that it is applicable here, i.e., where the request includes a third party's authorization for the release of material to a requester. See DOJ Brief at 7 n. 4 (arguing that the fact that the FOIA request seeks records from a third party "does not alter the relevant analysis here”).
. In this regard, we find no significance in the fact that the approved formats for unsworn declarations included at the end of § 1746 require a declarant to state only that the "foregoing”— which would not include the signature' — is true and correct. Congress required only that statements be "substantially” in that format.
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.
VAN ORSDEL, Associate Justice.
This appeal is from the Commissioner of Patents rejecting appellant’s application for a patent for a car brake step described in the following claim: “1. A brake step adapted to be secured to a car body and having a shelf portion adapted to act as a rest for the foot and provided with an abutment portion comprising a plurality of continuous spaced pressed portions.”
The step is Z-shaped in cross section, and supported by V-shaped brackets. It is made of pressed sheet metal provided with corrugations on the upper surface to prevent the user from slipping.
In the opinions of the tribunals of the Patent Office, the construction upon which the patent is sought is clearly pointed out in three references relied upon, and from an examination of the prior art we agree with the Commissioner “that applicant has done no more than pick out one feature from one patent, another from another, and so on, and unite them in a single structure. The step possesses no new or improved function as a result of such assemblage of old features.”
The decision of the Commissioner 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.
HASTINGS, Chief Judge.
The Commissioner of Internal Revenue here petitions for review of a decision of the Tax Court of the United States which granted certain income tax deductions to respondents Michael Shapiro and his wife, Rae Shapiro. The deductions concerned legal expenses arising from the successful defense of a criminal tax evasion charge brought against Rae Shapiro. This appears to be a case of first impression in a court of appeals.
The facts pertinent to this review are not in dispute. As revealed by the record, they may be summarized as follows: Rae Shapiro filed federal income and victory tax returns for the years 1941 through 1944, including therein the income from the business she conducted under the name of “Shapiro’s.” An investigation of these returns resulted in the Commissioner’s determination in December, 1946, that the returns were incorrect; and he assessed a deficiency and an addition to the tax for fraud. Rae Shapiro filed a petition with the Tax Court for a redetermination of her liabilities ; and subsequently, a substantial jeopardy assessment was levied.
In 1950, a criminal indictment was returned against Michael and Rae Shapiro, charging that they attempted' to evade the applicable tax by Rae’s filing fraudulent returns in 1943 and 1944. Both defendants pleaded not guilty to this charge. In November, 1951, Michael entered a plea of nolo contendere to the charge relating to 1944 and was adjudged guilty and sentenced. The court dismissed the indictment as to Rae. Subsequently, the civil case before the Tax Court involving tax liabilities for the years 1941 to 1944 was settled by compromise in 1955.
From 1948 through 1952 Michael and Rae employed and paid large sums to several attorneys and accountants to adjust their tax liability in the civil case and also to defend them in the criminal actions. The Shapiros claimed deductions for most of these fees in their tax returns for those years. The Commissioner agreed that all fees expended in the civil case were deductible but disagreed as to the amount. Further, he contended that, as a matter of public policy, none of the expense in connection with the defense of the criminal cases was deductible.
The Tax Court allocated the claimed deductions of legal fees to the civil tax case, the defense of Michael, the defense of Rae, and to other unexplained deductions. It granted deductions for all legal expenses in the civil suit and for the successful defense of Rae and disallowed the unexplained expenses and those in the unsuccessful defense of Michael. A petition was filed by the Commissioner to review the granting of the deductions for expenses incurred in the defense of the criminal action against Rae, and that is the sole issue before us. Michael Shapiro is a party here only because he filed joint returns with Rae during the taxable years in question.
The Tax Court allowed a deduction for Rae’s legal expenses in the criminal action as a business expense. It found that the income reported on Rae’s tax returns for 1943 and 1944 came from a business operated by her as a sole proprietorship, income which had to be reported on individual or joint returns. The court said, “The litigation concerned business income and the costs of such litigation are business expenses and are deductible except where a conviction results and public policy denies the deduction.” The critical element in the Tax Court’s analysis is that the source of income reported is from taxpayer’s business.
The Commissioner’s position here is primarily that the expense of defending a criminal tax charge is “personal” in any case and therefore non-deductible; and, in the alternative, if certain legal expenses are deductible, only those expenses relating to cases which directly affect taxpayer’s business meet the test of “ordinary and necessary” expenses. The Commissioner argues that the Tax Court must find that the acts charged as criminal were business acts and that in this ease such requisite finding was not made.
We agree with the Tax Court’s result that the deduction in question should be granted, but we allow the deduction on more broad grounds than those of the Tax Court.
The disposition of this case is governed by Sections 23 and 24 of the Internal Revenue Code of 1939, 26 U.S.C.A., and the appropriate regulations relating thereto. Section 23, Deductions from Gross Income, states in part:
“(1) Trade or business expenses.
“(A) In general. All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including a reasonable allowance for salaries or other compensation for personal services actually rendered;
* * *
“(2) Non-trade or non-business expenses. In the case of an individual, all the ordinary and necessary expenses paid or incurred during the taxable year for the production or collection of income, or for the management, conservation, or maintenance of property held for the production of income.”
Section 24(a) (1), Items Not Deductible, disallows deductions for:
“(1) Personal, living, or family expenses, except extraordinary medical expenses deductible under section 23 (x); * * *"
The proper deduction of legal expenses has presented a continuing problem to the Commissioner and the courts for many years. An examination of relevant cases reveals the following decisional pattern. Generally, the legal expenses for which deductions are claimed fall into two categories — expenses arising from non-tax litigation and those arising from tax litigation. Deductions are claimed as business or non-business expenses.
In the first category, non-tax litigation, the test of deductibility as a business expense has been defined in terms of proximate cause. That is, whether the taxpayer brings an action or defends it, the analysis proceeds in terms of the relationship of the particular lawsuit to the business of the taxpayer. Kornhauser v. United States, 1928, 276 U.S. 145, 152-153, 48 S.Ct. 219, 72 L.Ed. 505. If the trier of fact finds that the litigation is not directly connected with the business of the taxpayer, then the expense is a non-deductible personal item. As ex-ampies, suits involving slander, criminal assault, conspiracy to obstruct justice and incompetency proceedings can all be rationalized in terms of proximate cause. Similar cases have arisen where deductions are claimed as non-business expenses for the production of income or maintenance and conservation of income producing property.
Additionally, on the grounds of “public policy,” courts have denied deductions in non-tax cases for legal expenses arising from unsuccessful defenses in criminal cases. The Supreme Court, however, allowed a deduction for legal expenses in an unsuccessful defense of a civil fraud order brought by the Post Office Department, where the effect of the order was to curtail the taxpayer’s mail order business. Commissioner of Internal Revenue v. Heininger, 1943, 320 U.S. 467, 64 S.Ct. 249, 88 L.Ed. 171.
In the category of legal expenses arising from tax litigation, the element of proximate cause is of less importance. A regulation promulgated under the 1939 Code stated that “[ejxpenses paid or incurred by an individual in the determination of liability for taxes upon his income are deductible.” The 1954 Code expanded this deduction to ordinary and necessary expenses in the determination of any tax. 26 U.S.C.A. § 212(3). In civil suits to determine taxpayer’s liability, deductions for legal expenses have been allowed, whether the civil case is a taxpayer’s suit for recovery of an overpayment, resisting a deficiency successfully or unsuccessfully, the compromise of charges giving rise to liability for criminal and civil fraud, or in attempts to determine and settle tax liability prior to an indictment and conviction for criminal fraud. Thus broad deductions are allowed for reasonable attorney’s fees in civil tax litigation.
Cases involving expenses arising from criminal tax charges complete the pattern. In three cases where taxpayer was convicted, deductions for legal expenses were denied, either on the basis of “public policy” or on the theory that the tax suit related directly to taxpayer’s personal misconduct. In one case in which the defendant was acquitted, the court granted a deduction, rejecting the argument that the legal expenses were personal, and holding that they were necessary and deductible because “a criminal quality was attributed to acts which were performed by the taxpayer in carrying on his trade or business.”
In surveying the pattern of cases, we conclude that there is no essential difference between legal expenses arising in civil and criminal tax cases. Noting that deductions are granted freely for legal expenses arising in contesting civil tax suits, it is proper that a deduction is allowable for similar expenses in criminal suits. Both instances basically involve the “determination” of tax liability referred to in the applicable regulation under the 1939 Code, supra. It logically follows that reasonable legal expenses incident to the determination of income tax liability — whether the litigation be civil or criminal — are deductible expenses under Section 23, subject to proper limitations of “public policy” in unsuccessful criminal defenses.
In the instant case, implicit in the Tax Court’s allowance of the deduction is the assumption that the expenses were ordinary and necessary. There was no need here explicitly to so find. Parenthetically, it is'difficult to conceive of a case in which it would not be ordinary and necessary for a taxpayer defending a criminal tax charge to employ counsel to assist him.
We hold that the legal expenses incurred by the taxpayer in the successful defense of the criminal charge against her were properly deductible in the tax years in question.
The decision of the Tax Court appealed from herein is
Affirmed.
. The Commissioner does not differentiate the issue before us (a successful criminal defense arising from the dismissal of the indictment) from an acquittal on the merits.
. See generally, Brooks, Litigation Expenses and the Income Tax, 12 Tax L. Rev. 241 (1956); McDonald, Deduction of Attorneys’ Fees, 103 U.Pa.L.Rev. 168 (1954). See text and cases collected in 4 Mertens, Law of Federal Income Taxation, § 25 A. 10, § 25.50, § 25.54, and § 25.57; CCH 1960 Stand.Fed.Tax Rep. ¶ 1348.4615 and ¶ 2006.384.
. Under the 1954 Code, deductions are allowed “in connection with the determination, collection, or refund of any tax.” 26 U.S.O.A. § 212(3). In 1952, the Supreme Oourt had held that expenses in contesting gift tax liability were not within the scope of Section 23(a) (2). Lykes v. United States, 1952, 343 U.S. 118, 72 S.Ct. 585, 96 L.Ed. 791.
. Lloyd v. Commissioner of Internal Revenue, 7 Cir., 1932, 55 E.2d 842. The taxpayer here brought and won a suit for a slander made at a trade association convention. This court denied his requested business deductions for attorney fees, holding that a slander action is a personal injury and that his corporation neither profited nor lost by the suit. But cf. Commissioner of Int. Rev. v. People’s-Pittsburgh Trust Co., 3 Cir., 1932, 60 F.2d .187.
. John W. Clark, 1958, 30 T.C. 1330 (prosecutor withdrew warrant in criminal case; business deduction allowed). Cf. Pantages Theatre Co. v. Welch, 9 Cir., 1934, 71 F.2d 68 (rape charge against president of corporation which paid for defense foes; corporate business deduction disallowed).
. Morgan S. Kaufman, 1949, 12 T.C. 1114 (successful defense to charge of conspiracy to obstruct justice, the charge directly resulting from taxpayer’s practice of law; deduction allowed).
. Lewis v. Commissioner of Internal Revenue, 2 Cir., 1958, 253 F.2d 821 (author defended himself against ineompeteney proceedings. Argued that such adjudication would harm sale of his books. Held that, distinguished from the direct attack on taxpayer’s business in Commissioner v. Heininger, 1943, 320 U.S. 467, 64 S.Ct. 249, here the charge was not directed at destroying his trade or business, but was directed at the totality of the individual. Denied business deduction.)
. Trust of Bingham v. Commissioner, 1945, 325 U.S. 365, 65 S.Ct. 1232, 89 L.Ed. 1670 (expenses incurred for legal advice as to the proper methods of distributing trust property; held a non-business deduction).
. Thomas A. Joseph, 1956, 26 T.C. 562 (attorney convicted of felony, jailed, then disbarred; legal expenses in defense not deductible). Cf. National Outdoor Advertising Bureau v. Ilelvering, 2 Cir., 1937, 89 E.2d 878 (consent decree in Sherman Act action; expenses not deductible) .
. Treas.Reg. Ill, § 29.23(a)-15 (1939), as amended, T.D. 5513, 1946-1 Cum.Bull. 61. See 4 Mertens, op. cit. supra note 2, § 25 A. 11, for a discussion of the history and scope of this regulation.
. In Commissioner of Internal Revenue v. Standing, 4 Cir., 1958, 259 E.2d 450, the issue was whether the admittedly deductible legal expense was a business or non-business expense, a determination which controlled whether the deduction could be taken from gross income in arriving at adjusted gross income or whether it must be taken from adjusted gross income in lieu of the standard deduction. Such an issue is not before the court here.
. Williams v. McGowan, 2 Cir., 1945, 152 F.2d 570, 162 A.L.R. 1036; Howard E. Cammack, 5 T.C. 467 (1945).
. Northern Trust Co. v. Campbell, 7 Cir., 1954, 211 F.2d 251 (deficiency
. See note 14 on page 560. charged on estate tax return); Norbert H. Wiesler, 1946, 6 T.C. 1148; Stoddard v. Commissioner of Internal Revenue, 2 Cir., 1945, 152 F.2d 445 (accountant fees).
14. Trust of Bingham v. Commissioner, 1945, 325 U.S. 365, 65 S.Ct. 1232, 89 L. Ed. 1670; James A. Connelly, 1946, 6 T.C. 744.
. Greene Motor Co., 1945, 5 T.C. 314 (compromise agreement).
. Commissioner of Internal Revenue v. Schwartz, 5 Cir., 1956, 232 F.2d 94. Cf. Cecil R. Hopkins, 1958, 30 T.C. 1015 (deduction disallowed where found that the primary purpose of legal expenditures was to avoid criminal prosecution in which taxpayer later pleaded guilty). The Court of Appeals has remanded Hopkins to the Tax Court to take additional evidence. CCH 1960 Stand.Fed.Tax Rep. H 9030.
. Acker v. Commissioner of Internal Revenue, 6 Cir., 1958, 258 F.2d 568 (citing Heininger as authority to deny the deduction) .
. Port v. United States, Ct.Cl.1958, 163 F.Supp. 645; In Richard F. Smith, 1958, 31 T.C. 1, the taxpayer was indicted for evading taxes in five separate years. He was adjudged guilty for two years, and acquitted for three. Taxpayer tried' to deduct all expenses or at least apportion for those years for which he was acquitted. The Tax Court allowed1 no deductions at all, stating that the acts charged (knowingly evading taxes) were-not directly connected with or normally incidental to the carrying on of taxpayer’s business of dentistry. Commissioner makes a similar argument here — that the-act of filing a tax return is a personal-act.
. Commissioner of Int. Rev. v. People’s-Pittsburgh Trust Co., 3 Cir., 1932, 60 F. 2d 187, 189. However, in that case, the-tax returns were not personal returns-hut those of a corporation which the defendant, as chairman of the board, was. required to file.
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.
HILL, Circuit Judge.
Petitioners, husband and wife,- by this petition for review seek to reverse a decision of the Tax Court sustaining a deficiency income tax assessment for the year 1959 in the amount of $9,081.00.
On March 25, 1957, petitioner Mason K. Knuckles entered into an employment contract, effective as of November 1, 1956, with the Perpetual Life Insurance Company (hereafter referred to as Perpetual) located in Denver, Colorado. The contract employed him in an executive capacity for a period of five years and he was to receive a salary of not less than $20,597.50 per year at the monthly rate of $1,716.45. In addition, he was to receive, or in event of his death his wife or estate would receive, the sum of $225.31 per month from the time he reaches age 65 until his death or the expiration of ten years whichever is longer. This pension or retirement payment by the company was funded with a $50,000 ten-pay life insurance policy on the life of petitioner which required the company to pay a $4,402.50 premium each year. Perpetual was the beneficiary of this policy and had all the incidents of ownership therein. So far as is here material, the contract of employment also provided that the petitioner’s employment may be terminated by a majority of Perpetual’s board of directors although the salary was to continue for the five year period. Furthermore, if his employment was terminated by the board of directors, Perpetual was to continue payments into the insurance fund and the policy was to be kept in effect until November, 1961.
In 1958, the board of directors of Perpetual reached the conclusion that Knuckles had mismanaged the affairs of the company to the extent that its continued existence was imperiled. Some of the directors attempted, without success, to procure Knuckles’ resignation. Finally, on December 1, 1958, the board, by formal resolution, terminated the contract of employment on the ground that Knuckles was incompetent to manage the affairs of the company. Knuckles denied his incompetency and refused to accede to the board’s resolution. On March 4, 1959, Knuckles commenced a suit upon his contract of employment against Perpetual with the summons stating in part that the action was brought to recover “the amount of $73,282.00 for Defendant’s breach of its March 25, 1957 employment contract with Plaintiff.” The filing of a complaint in the case was delayed by agreement between the parties pending the taking of depositions of several members of Perpetual’s board of directors. During this time settlement negotiations between the parties were in progress. At all times pertinent Knuckles was deeply concerned about the effect of the controversy upon his future ability to obtain employment and insisted that any settlement made vindicate him in the eyes of the public. On May 20, the board of directors of Perpetual, by formal motion, accepted Knuckles’ offer of settlement, which included a cash payment to Knuckles in the amount of $20,000 and an agreement by Perpetual to pay the eight remaining annual premiums on the life insurance policy included in the employment contract. The attorney for Perpetual was authorized to effectuate the settlement by proper legal instruments.
During the course of the settlement negotiations Knuckles became emotionally disturbed and believed that his health had been impaired because of the pending controversy. In May, counsel for Knuckles first suggested that Perpetual permit recovery on the basis of a tort claim for personal injury because of the tax advantage to his client. Perpetual, at this time and during all of the negotiations, refused to recognize any liability in tort on its part to Knuckles.
The settlement agreement, as outlined by Perpetual's board of directors’ motion of May 20, was finalized by formal agreement dated July 15. Between these dates negotiations between counsel were carried on in an effort to arrive at a solution of the problem posed by Knuckles insistence upon the settlement being based on his claimed personal injuries and Perpetual’s vehement denial of any liability because of personal injuries. Perpetual also refused to permit an allocation, by the settlement agreement, of the amount to be paid for Knuckles’ tax advantage. However, Knuckles was finally permitted to institute a suit based upon Perpetual’s liability for personal injury and then to dismiss the suit with prejudice. Perpetual also, by agreement with Knuckles, removed from its records the resolution of December 1, terminating Knuckles’ contract for the reasons stated and replaced it with a resolution merely terminating the contract but without stating the reasons.
The Tax Court, after making particular findings of fact, made the ultimate finding that the “Amounts paid to or in behalf of petitioner in pursuance of his settlement agreement with Perpetual represented in part compensation due him under a contract of employment and in part damages due him for injury to his business reputation.” In accord therewith the deficiency in income tax for 1959 in the amount of $9,081.00, as assessed by the Commissioner, was sustained.
The sole question is whether the amount of money received by taxpayer, Mason K. Knuckles, in settlement of a claim against his former employer was money received as damages for personal injuries and hence not includible in income under section 104(a) of the Internal Revenue Code (26 U.S.C.A. § 104(a).
Section 61(a) of the Internal Revenue Code provides: “Except as otherwise provided in this subtitle, gross income means all income from whatever source derived * * Section 104(a)
specifies that:
“Except in the case of amounts attributable to (and not .in excess of) deductions allowed'under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include—
(2) the amount of any damages received (whether by suit or agreement) on account of personal injuries or sickness; * *
We observe at the outset that this is purely a fact case and that we cannot overturn the findings of fact made by the Tax Court unless we are able to conclude that they are clearly erroneous. Commissioner of Internal Revenue v. Duberstein, 363 U.S. 278, 80 S.Ct. 1190, 4 L.Ed.2d 1218 (1960); Anson v. C. I. R., 10 Cir., 328 F.2d 703.
We agree with respondent that unless the payments made to the taxpayer were “received * * * on account of personal injuries” the amount paid is includible in his gross income. The most important fact in making that determination, in the absence of an express personal injury settlement agreement, is the intent of the payor as to the purpose in making the payment. Agar v. C. I. R., 2d Cir., 290 F.2d 283. In this connection, the evidence shows that Perpetual .did not, at any time, acknowledge any possible liability for personal injuries to Knuckles and in fact consistently denied any such liability. No proof was ever presented to Perpetual of the existence of any personal injuries from which it could evaluate a proper settlement. The Tax Court expressly found that the settlement payment was made by Perpetual because “the board felt settlement with petitioner had to be effectuated because the publicity incident to a trial of petitioner’s claims would * * * endanger the continued existence of Perpetual.” This important finding has full support in the testimony of the attorney for Perpetual as well as in the minutes of Perpetual’s board of directors.
Other important findings by the Tax Court that have ample supporting evidence are: “Petitioner’s primary purpose in instituting suit against Perpetual was to collect amounts due him under his employment contractthat Knuckles became “increasingly concerned with his inability to obtain employment in the insurance field and with the fact that he no longer enjoyed his former good reputation in his community;” that Knuckles consistently “refused to make any settlement except under such basis that he would be vindicated ‘in the eyes of the public and the insurance world; ’ ” that no mention of any claim for personal injuries was made by petitioner’s counsel until May, 1959, which was about the same time as a settlement figure had been agreed upon and was over two months after the suit on the employment contract was instituted; petitioner’s counsel, at that time, mentioned his client’s tax advantage, if the settlement was based on personal injuries; Perpetual, at the time of settlement, refused to make any allocation of the agreed settlement amount solely for petitioner’s tax advantage; and “that the amounts paid petitioner * * * were to release that company from any possible liability under its employment contract and that petitioner’s insistence upon settlement based on a tort claim for personal injury was an afterthought brought into being by the possible tax advantage which might result.”
After a careful consideration of the record before us, we must conclude that the Tax Court’s findings of fact are supported by the evidence. It is true that petitioner’s contention finds some support in his own testimony and the testimony of his two attorneys but the Tax Court also had the testimony of Perpetual’s attorney. His testimony together with the exhibits received in evidence .in the case constitutes sufficient evidence to support the findings.
The decision of the Tax Court is affirmed.
. Bernice Knuckles is a party here by virtue of having filed a joint return for the tax year 1959 with her spouse.
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:
Presently before the court is Trichilo’s motion for $10,037.96 in attorney’s fees and litigation expenses incurred on the government’s appeal of the district court’s award of attorney’s fees for counsel’s district court work. On that appeal, we ruled in favor of plaintiff in all respects. Trichilo v. Secretary of Health & Human Services, 823 F.2d 702 (2d Cir.1987). We now reaffirm the holding and rationale of our earlier opinion, and, in addition, grant Trichilo’s motion for attorney’s fees on the appeal.
We assume familiarity with our earlier opinion in which we held, in part, that a litigant is entitled to attorney’s fees under the Equal Access to Justice Act not only for the successful prosecution of a suit under the act, but also for the time spent preparing and litigating the fee issue itself. Id. at 707. As we noted:
Since the purpose of the EAJA is to remove counsel fees as an impediment to challenging unreasonable and unjustified governmental actions, where a governmental action has been shown to have been unjustified, there should be as little disincentive for plaintiffs to obtain attorney’s fees as there is for them to challenge the action itself
Id. (emphasis added). This reasoning applies equally to the time and effort expended by counsel on appeal. Indeed, this case provides a prime example of the reason why fees such as Trichilo’s must be recoverable. He incurred fees of over $10,000 on appeal, when the amount in controversy on the original appeal was under $1,000. Were there no possibility of recovering the fees on appeal, counsel might well simply forgo the relatively small amount at issue arid not contest the government’s position on issues such as those raised by the ap-p6al in this case, which, we note, the government lost.
The government contends that it is unfair to subject the government to attorney's fee liability when, as here, the position it advocated on appeal-as distinguished from the original, "substantially unjustified" position it adopted toward Tn-chilo that triggered this litigation-was reasonable, although not ultimately persuasive. However, as we noted in our original opinion, congress has made clear that it is inappropriate to examine separate parts of the litigation to determine whether the government's position in each phase was justified. Instead, as long as the government's underlying substantive position was not "substantially justified", the plaintiff is entitled to recover all reasonable attorney's fees incurred. Trichilo, 823 F.2d at 707-08. If the government wishes to avoid such liability, it need only refrain from taking positions that are not "substantially justified". Plaintiffs such as Triehilo, on the other hand, are unable to avoid these fees, which are forced upon them by the government's unreasonable positions.
We reject the government's position that the reasonability of its position on appeal amounts to a "special circumstance" that would "make an award unjust". 28 U.S.C. § 2412(d)(1)(A). Reading the "special circumstances" exception so broadly would, in effect, swallow the very rule we announced in our earlier opinion. This we decline to do.
We therefore reaffirm our earlier holding in this case, and extend it to include the reasonable attorney's fees incurred by plaintiff on the appeal. In case the law of this circuit is not now clear to the government, we hold that where the government's underlying position is not substantially justified, plaintiff is entitled under the EAJA to recover all attorney's fees and expenses reasonably incurred in connection with the vindication of his rights, including those related to any litigation over fees, and any appeal. Since the government challenges none of the particular amounts of fees and expenses claimed by plaintiff, there is no need to remand for an evidentiary hearing in the district court, and plaintiff's motion is granted in its entirety.
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.
THOMPSON, Circuit Judge.
This is an appeal from a judgment of the District Court for the Eastern District of Pennsylvania. The Pennroad Company, hereinafter referred to as the appel-lee, brought an action at law to recover $181,798.66 with interest representing transfer stamp taxes alleged to have been illegally assessed and collected by the Collector of Internal Revenue, appellant herein. The District Court entered judgment for the appellee. The following is a summary of the material facts found by the District Court and necessary to a determination of the controversy:
The appellee was incorporated April 24, 1929, with an authorized capital stock of 10,000,000 shares of common stock of no par value. On the day of incorporation the appellee’s Board of Directors resolved to issue 5,800,000 shares to be placed under a voting trust with three named trustees for a ten year period and to offer to the registered stockholders of the Pennsylvania Railroad Company at $15.00 per share voting trust certificates representing the common stock. The Pennsylvania Railroad stockholders who desired to exercise their option were instructed to return their warrants together with $15.00 per share to the appellee, whereupon certificates would be sent to the trustees. On May 22, 1929, the three trustees executed a voting trust agreement to which the appellee was a party. The trustees agreed to issue voting trust certificates to the subscribers for the Penn-road stock upon receipt of certificates of stock from the appellee. On the day of incorporation certificates for 67 shares of common stock were issued to the three original incorporators who paid therefor $15.00 per share. Original issue stamps were affixed and cancelled. On May 22, 1929 the original incorporators assigned their certificates for 67 shares of common stock to the voting trustees and a new certificate representing these shares was issued in their names to the voting trustees. Transfer stamps were affixed and cancelled. Thereafter the appellee received warrants from the Pennsylvania Railroad stockholders for 5,799,993 shares of Pennroad Corporation common stock together with $15.00 for each share; issued 46 certificates representing those shares to the voting trustees and directed the voting trustees to issue voting trust certificates to the former holders of the warrants. Practically the same procedure was followed in the case of two additional issues, making a total of 9,090,000 shares issued. The appellant assessed documentary stamp taxes in the sum of $181,798.-66 and collected this sum under protest. The appellee brought suit for the recovery of those taxes and recovered judgment. This appeal is from that judgment.
It will be noted that the subscribers sent checks for the stock to the appellee; the appellee issued stock to the trustees, who then issued trust certificates to the subscribers. The question is whether this transaction is subject to documentary tax. A voting trust is ordinarily created by stock being issued to stockholders who in turn deposit it with the trustees. Such a transaction automatically incurs the stamp tax. The fact that the stock in this case was delivered directly to the trustees does not, in our opinion, obviate the obligation to pay the stamp tax. A transfer of the right to receive stock is taxable within the meaning of the Revenue Act of 1926, Title, 8, § 800, Schedule A-3, 26 U.S.C.A. § 902 and note, and Articles 31 and 34 of Treasury Regulations 71, the pertinent portions of which are set out in the margin.
In Founders General Corp. v. Hoey, 300 U.S. 268, 275, 57 S.Ct. 457, 460, 81 L.Ed. 639, the Supreme Court said: “ * * * The legal title to the shares was received by the nominee from tlie newly formed corporation; but the authorization rendering his holding lawful was received from the taxpayer. The legality of the issuance of the stock in the names of the nominees rests on the fact that the taxpayers authorized such issuance and granted their nominees the right to receive the stocks entered in their names. The grant of that authority is a transfer of ‘the right to receive’ within the meaning of the act; and we are not to look beyond the act for further criteria of taxability.”
We think the taxing act should be broadly construed and that the uncontra-dicted facts establish the appellant’s contention that the right to receive the shares of stock was transferred from the subscribers to the trustees.
The judgment of the District Court is reversed.
BUFFINGTON, Circuit Judge, dissents.
Revenue Act of 1926
“Title VIII. — Stamp Taxes
“Sec. 800. On and after the expiration of thirty days after the enactment of this Act there shall be levied, collected, and paid, for and in respect of the several bonds, debentures, or certificates of stock and of indebtedness, and other documents, instruments, matters, and things mentioned and described in Schedule A of this title, or for or in respect of the vellum, parchment, or paper upon which such instruments, matters, or things, or any of them, are written or printed, by any person who makes, signs, issues, sells, removes, consigns, or ships the same, or for whose use or benefit the same are made, signed, issued, sold, removed, consigned, or shipped, the several taxes specified in such schedule. The taxes imposed by this section shall, in the case of any article upon which a corresponding stamp tax is now imposed by law, be in lieu of such tax.” 44 Stat. 99, 26 U.S.C.A. § 900 and note.
“Schedule A. — Stamp Taxes
“3. Capital stock, sales or transfers: On all sales, or agreements to sell or memoranda of sales or deliveries of, or transfers of legal title to shares or certificates of stock or of profits or of interest in property or accumulations in any corporation, or to rights to subscribe for or to receive such shares or certificates, whether made upon or shown by the books of the corporation, or by any assignment in blank, or by any delivery, or by any paper or agreement or memorandum or other evidence of transfer or sale, whether entitling the holder in any manner to the benefit of such stock, interest, or rights, or not, on each $100 of face value or fraction thereof, 2 cents, and where such shares are without par or face value, the tax shall be 2 cents on the transfer or sale or agreement to sell on each share: Provided, That it is not intended by this title to impose a tax upon an agreement evidencing a deposit of certificates as collateral security for money loaned thereon, which certificates are not actually sold, nor upon the delivery or transfer for such purpose of certificates so deposited, nor upon mere loans of stock nor upon the return of stock so loaned: Provided further, That the tax shall not be imposed upon deliveries or transfers to a broker for sale, nor upon deliveries or transfers by a broker to a customer for whom and upon whose order he has purchased same, but such deliveries or transfers shall be accompanied by a certificate setting forth the facts: Provided further, That in case of sale where the evidence of transfer is shown only by the books of the corporation the stamp shall be placed upon such books; and where the change of ownership is by transfer of the certificate the stamp shall be placed upon the certificate; and in cases of an agreement to sell or where the transfer is by delivery of the certificate assigned in blank there shall he made and delivered by the seller to the buyer a bill or memorandum of such sale, to which the stamp shall be affixed; and every bill or memorandum of sale or agreement to sell before mentioned shall show the date thereof, the name of the spller, the amount of the sale, and the matter or thing to which it refers. Any person liable to pay the tax as herein provided, or anyone who acts in the matter as agent or broker for such person, who makes any such sale, or who in pursuance of any such' sale delivers any certificate or evidence of the sale of any stock, interest or right, or bill or memorandum thereof, as herein required, without having the proper stamps affixed thereto, with intent to evade the foregoing provisions, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall pay a fine of not exceeding $1,000, or be imprisoned not more than six months, or both.” 26 U.S.C.A. § 902 and note.
Treasury Regulations, 71
Art. 31. Basis of tarn. — Every transfer or sale of stock, either before or after issuance of a certificate, is taxable. The tax accrues at time of making the sale or agreement to sell or memorandum of sale, or delivery of, or transter of the legal title to shares, or certificates of stock, or of profits, or of interest in property or accumulations in any corporation, joint-stock company, or association, or of the right to subscribe for or to receive such shares or certificates, regardless of the time or manner of the delivery of the certificate or agreement or memorandum of sale.
Art. 34. Sales and transfers subject to tax. — The following transactions are subject to the tax:
(a) The sale, or transfer, or change of ownership, of certificates of stock, or of profits, or of interest in property or accumulations in corporations, joint-stock companies, or associations.
(b) The sale or transfer of shares of stock, whether or not represented by certificates.
(c) The transfer of stock to or by trustees.
(d) The transter of voting trust certificates.
(e) The sale or transfer of temporary or interim certificates of stock.
(f) The sale or transfer of certificates or shares representing beneficial interests in an association.
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.
FEINBERG, Circuit Judge:
This is an appeal from an order of the United States District Court for the Southern District of New York, Harold R. Tyler, Jr., J., staying arbitration of a grievance brought by Local 49, International Union of United Brewery, Flour, Cereal, Soft Drink and Distillery Workers of America (the Union), under a collective bargaining agreement with the F & M Schaefer Brewing Co. (the Company) . The litigation began in the state courts when the Company sought to enjoin an arbitration proceeding instituted by the Union. The Union removed the action to the federal court and filed answering papers which sought to compel arbitration. Both parties moved for summary judgment on the basis of affidavits and exhibits. Thereafter, Judge Tyler granted the Company’s motion and stayed the arbitration; the Union’s cross-motion was denied. On the Union’s appeal, we hold that it w.as error to stay the arbitration.
The collective bargaining agreement, which runs from May 1, 1968 to April 30, 1971, covers drivers and helpers employed by the Company to distribute beer from the Company’s depot in Syracuse, New York. The controversy that led to this litigation arose in April 1969. Prior to that time, deliveries of beer to the Company’s customers in the Utica-Rome area of New York State had apparently been handled through a local distributor. In April, the Company began to use its own employees, which were represented by the Union, to make the deliveries formerly handled by the independent distributor. Shortly thereafter, the Union filed a grievance as follows:
Want to be paid a fair and just wage for traveling time on new route’s (sic) started April 10, 1969 which take in the cities of Utica and Rome and surrounding territories.
According to the slim record before us, the Union then submitted to the New York State Board of Mediation for arbitration the questions of “proper method of compensation and constitution of the runs.” In May, the Company brought its action to stay the arbitration.
The contract provides procedures for “GRIEVANCES AND ARBITRATION” in Section 21, which provides in subsection (b):
Other grievances, disputes, or differences relating to the interpretation or application of this agreement shall be taken up in the first instance by the appropriate Union agent and the Employer’s representatives.
If a mutually satisfactory adjustment is not arrived at by them within five (5) days, unless extended by mutual agreement, the matter shall be submitted for arbitration by an arbitrator designated by the New York State Board of Mediation, and the award of such arbitrator shall be final and binding on both sides.
The Company’s position — argued successfully before Judge Tyler — is that the grievance does not relate to “the interpretation or application” of any section of the agreement and is therefore not arbitrable. The Union retorts that this is not so and refers to various sections of the contract upon which it relies.
The teaching of the cases is plain. We are instructed in United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-583, 80 S. Ct. 1347, 1353, 4 L.Ed.2d 1409 (1960):
An order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage.
Indeed, in United Steelworkers of America v. American Manufacturing Co., 363 U.S. 564, 568, 80 S.Ct. 1343, 1346, 4 L. Ed.2d 1403 (1960), we are told:
The courts, therefore, have no business weighing the merits of the grievance, considering whether there is equity in a particular claim, or determining whether there is particular language in the written instrument which will support the claim. The agreement is to submit all grievances to arbitration, not merely those which the court will deem meritorious. The processing of even frivolous claims may have therapeutic values of which those who are not a part of the plant environment may be quite unaware. [Emphasis added; footnotes omitted.]
We turn from the applicable law to the specific grievance here involved. The Union’s basic claim is that the Company cannot apply the contract rates to work that is radically different (here presumably a long-distance run) and not in existence when the contract was negotiated. The Company argues that the agreement provides no geographical limit on the deliveries to which the contract rates apply. The Union’s position may not be a strong one but its claim is certainly not unusual; disputes over alleged changes in job content or creation of new jobs are common. The Union’s grievance here is a dispute about “application” of the agreement's pay rates to “new” work. Accordingly, it falls squarely within the terms of the arbitration provisions. Whether the Union’s position on the merits is weak or strong is irrelevant; that is to be determined by the arbitrator. While we have recognized that a grievance may be so outrageous as to pervert the grievance procedure, see International Union of Electrical Workers v. General Electric Co., 407 F.2d 253, 259 n. 12 (2d Cir. 1968), cert. denied, 395 U.S. 904, 89 S.Ct. 1742, 23 L.Ed.2d 217 (1969), this case is far short of that.
The district judge was evidently led astray by the phrasing of the initial grievance — “[w]ant to be paid a fair and just wage * * The judge held that since the arbitrator is not given the power to fix new rates, “submission of this grievance to him would require him to exceed his powers.” However, as the Union points out in this court, the primary issue before the arbitrator will be whether the existing rates do apply to the “new” work. If they do not, it does not automatically follow that the arbitrator will try to fix new ones, and we, of course, express no opinion on that. For example, the arbitrator may hold that the men may properly refuse to do the work until the parties agree on a new rate. However, that would go only to the remedy if the arbitrator agrees with the Union in its basic argument that the contract rates do not apply to the new Rome-Utica run.
The Company relies heavily on our decision in Torrington Co. v. Metal Products Workers, 362 F.2d 677 (2d Cir. 1966) (2-1). However, that ease is not controlling here. In Torrington, we were concerned with the court’s power to set aside an award when, according to the majority, the arbitrator had made clear that he did not rely on provisions of the contract. Indeed, in Torrington, we pointed out that the question of the arbitrator’s authority to make a particular award was best left to the arbitrator initially, so that the court could receive “the benefit of the arbitrator’s interpretative skills as to * * * his contractual authority.” 362 F.2d at 680 n. 6. Here, we are asked to prevent arbitration in the first place. To do so on the theory that we should not require a useless act misconceives the possibilities open to an arbitrator and ignores the explicit lesson of the Trilogy, quoted above, that “[t]he processing of even frivolous claims may have therapeutic values.”
Judgment reversed for proceedings consistent with this opinion.
. See, e. g., Schotts Bakery, Inc. v. Teamsters Local 949, 69-1 ARB ¶ 8118 (1968) (increase in duties of drivers); R & J Dick Co. v. Int’l Ass’n of Machinists, 65-2 ARB ¶ 8508 (1965). Such a grievanee may in fact be arbitrable even though the arbitrator is explicitly denied authority to make an award of increased wages, unlike the situation here. See United States Plywood Corp. v. Carpenters Local 1521, 68-1 ARB ¶ 8199 (1968).
. See Space Services of Mississippi, Inc. v. Int’l Ass’n of Machinists, 69-1 ARB ¶ 8141 (1968) (envisioning negotiation by union and company as to wage classification of new job).
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.
The appellant instituted a reparation proceeding pursuant to the Perishable Agricultural Commodities Act of 1930, as amended, Title 7 U.S.C.A. § 499a et seq. Following the decision of the administrative agency set up by that Act, appellant instituted an action in the United States District Court for the Middle District of Tennessee in which the District Judge concurred in the findings of fact of the designated officer of the Secretary of Agriculture, who filed findings of fact, conclusions and an order from which both the appellant and the appellee appealed to the District Court seasonably for a de novo trial of the issues.
The United States District Court approved and adopted as its own the findings of the administrative official of the Department of Agriculture. The court also adopted the conclusions of that agency, except in one particular, which was that the appellee should have been permitted to assert its counterclaim for affirmative relief. We think the District Court ruled correctly in this respect, in applying sections 8745, 8746 and 8749 of the Tennessee Code. See Harvey v. Campbell, 166 Tenn. 369, 61 S. W.2d 465. Compare Guaranty Trust Co. of New York v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079.
This court is of opinion that there was ample substantial evidence to support the findings of fact of the designated agent of the Secretary of Agriculture and the concurring findings of the District Court. It has been held that the Perishable Agricultural Commodities Act was not intended to repeal the law of sales or to destroy rights or liabilities of contracting parties. Ernest E. Fadler Co. v. Hesser, 10 Cir., 166 F.2d 904.
Appellee refused to accept from appellant 28 cars of fruit out of a total of 36 cars contracted to be purchased for the reason that six of the first eight carload shipments contained spoiled and unfit fruits. Flowever, appellee withdrew its objection to four of the 28 cars, when it ascertained that these four cars had already been delivered to the railroad company, f. o. b. cars in California for shipment to appellee at Nashville, Tennessee. The position of ap-pellee is, in our judgment, correct upon the proposition that, on account of the spoiled condition of the fruit in a substantial part of the first eight carloads received, the ap-pellee produce company was not required as a matter of law to accept delivery of the remaining 24 cars of fruit which had not been delivered f. o. b. cars at the shipping point in California for shipment to appellee at Nashville, Tennessee; and appellee had a right to rescind the contract as to the purchase of such cars.
The amount awarded appellee on its counterclaim was consistent with the proof adduced in the case. Likewise, the fee allowed appellee’s attorney to be paid by appellant was justifiably awarded.
Accordingly, 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:
|
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.
JAMESON, District Judge:
This is an appeal from an order denying a motion for a preliminary injunction and the appointment of a receiver ancillary thereto. The order of the district court entered January 26, 1971, 321 F.Supp. 965, contains detailed findings of fact which are not questioned on this appeal. Two issues are presented: (1) whether the district court erred in denying the motion, and (2) whether by reason of events intervening since the order was entered the case has become moot and should be dismissed.
Factual Background
The appellant Anna Masszonia, a disabled, low-income, welfare recipient, was tenant in a Washington, D. C. substandard apartment complex owned by ABC Realty Co., Inc. From 1961 through 1967 ABC Realty operated the complex under a license issued by the Department of Licenses and Inspections for the District of Columbia, without, however, applying for Certificate of Occupancy. Because of unabated housing regulation violations, applications for a renewal of the license for 1968 and subsequent years were denied on February 3, 1970, and the denials were sustained by the District of Columbia Board of Appeals and Review on May 20, 1970.
.On February 26, 1970 a tenant commenced a class action against ABC Realty seeking to recover rents from 1961. Some of the tenants began withholding their rent while others continued paying rent until their June, 1970 rent payment was returned to them. About the time the action was commenced ABC Realty ceased to pay water, gas and electricity bills for the complex, which resulted in termination of water service on May 19, 1970 and threatened termination of gas and electricity.
This class action was filed May 22, 1970 by appellant Masszonia on her own behalf and on the behalf of all tenants similarly situated against Walter E. Washington, Commissioner of the District; the Water Registrar of the District; and the president of ABC Realty, seeking equitable relief that the utilities be continued. In amended complaints ABC Realty and the two utilities were added as defendants.
By order entered July 29, 1970 (opinion at 315 F.Supp. 529) the Commissioner and his subordinates were enjoined from refusing to provide water and sewer service and from refusing to enter into contracts with the utilities to provide gas and electricity, pendente lite, so long as the tenants lawfully occupied the premises, the court holding that it was the duty of the District of Columbia under District of Columbia Code, Section 5-313 (1967) to provide these services on a temporary and emergency basis.
Between July 24 and July 27, 1970 the District served the tenants with orders to vacate the premises by August 3, 1970. On August 3 the district court enjoined the Commissioner and his subordinates from prosecuting any tenant for failure or refusal to vacate his apartment, and ordered the Commissioner to provide relocation services to the tenants within two weeks.
On August 14, 1970 the appellant Masszonia moved for a preliminary injunction under a supplemental complaint, seeking the appointment of a receiver and an order requiring the Commissioner to make necessary repairs and assess a tax on the property for the costs.
Order of January 26,1971
The order of January 26, 1971 enjoins appellees, pending appeal, from prosecuting or attempting to evict any tenant and requires appellees, pending appeal, to furnish utility services and provide the tenants with relocation services. The court refused to appoint a receiver and refused to order appellees to make the repairs sought by appellants.
The order of January 26, 1971 adhered to the court’s conclusion in the July 29, 1970 order that “where low-income tenants who cannot immediately relocate face the imminent failure of essential utility services which are the landlord’s responsibility, and the landlord is beyond the effective power of the Court, it is the duty of the District of Columbia under District of Columbia Code, Section 5-313 (1967) to provide these services on a temporary and emergency basis.”
The court held further that Section 5-313 “confers only a discretionary authority upon the Commissioner” to correct conditions existing in violation of law or regulation, and the court could not hold as a matter of law “that it would be an abuse of that discretion to fail to provide those utilities on a permanent, continuing basis or to fail to make the extensive repairs sought in this Motion for a Preliminary Injunction, the ultimate, permanent relief sought in the Supplemental Complaint.”
Events Subsequent to January 26, 1971 Order
On April 19, 1971 (after the record and appellants’ brief had been filed in this court) appellant Masszonia filed in the district court a “motion to modify the injunction pending appeal entered January 26, 1971” to order the defendant Washington to terminate the utility services and secure the buildings at 1401 and 1405 Girard Street, N.W., and to require proper securing of the buildings at 2804 Fourteenth St., N.W. in compliance with the January 26, 1971 order.
Pursuant to this motion, the district court on April 22, 1971 ordered the Commissioner “to immediately secure the premises at 2804 Fourteenth Street, N.W. to prevent further access thereto * * * ”, to terminate the utilities at 1401-1405 Girard Street, N.W., and to “proceed immediately to make said premises secure by boarding up basement and first floor doors and windows and blocking fire escapes.” The Commissioner was also authorized to proceed with normal condemnation procedures with respect to the premises at 2804 Fourteenth Street, N.W. He was “enjoined to take no other or further action in any way affecting the premises at 1401 and 1405 Girard Street, N.W., without further order” of the court.
On June 29, 1971 the district court, upon the motion of plaintiffs, vacated nunc pro tunc as of January 26, 1971 the paragraph of the January 26 order requiring the deposit of plaintiffs’ public assistance rent allotments into the Registry of the Court.
Issue of Mootness
Subsequent to oral argument, appellees filed a “Suggestion of Mootness”, with supporting affidavits, from which it appears that following the order of April 22, 1971 the premises at 2804 Fourteenth Street, N.W. were condemned and razed, and the premises at 1401-1405 Girard Street, N.W. were barricaded; that the Girard Street property has not since been inhabited, and is “uninhabitable by reason of its insanitary and structurally defective condition;” and that all tenants seeking assistance were relocated.
Appellees contend that “against this background”, the “appellants have effectively abandoned the plainly uninhabitable Girard Street property, without likelihood or right of return and that they currently have no possessory interest in that property.” Accordingly they argue that the case should be remanded to the district court with directions to vacate its order of January 26, 1971 and to dismiss the case as moot.
In her original and supplemental complaints and motion for a preliminary injunction, appellant Masszonia seeks an injunction which would require the Commissioner to (1) provide utilities on a permanent, continuing basis and (2) make whatever repairs might be necessary to bring the three buildings into compliance with the housing regulations. Ancillary thereto appellants seek the appointment of a receiver to take charge of the property and manage it, pendente lite. When the complaint was filed 66 units of the apartment complex were occupied. All were vacated prior to the district court’s order of April 22, 1971. Subsequent thereto the building at 2804 Fourteenth Street, N.W. was demolished, as authorized in the April 22 order. Under this order, however, the Commissioner was enjoined “to take no other or further action in any way affecting the premises at 1401 and 1405 Girard Street, N.W. without further order” of the court. If the district court finds, as stated in appellees’ affidavits, that these premises are now uninhabitable, barricaded, and scheduled for demolition, it would appear that the district court should revoke this provision of the April 22 order and dismiss the action as moot.
We conclude that the questions here on appeal have become moot and do not reach the merits of the controversy.
This appeal is dismissed as moot and the case is remanded to the district court for further proceedings consistent with this opinion.
. The complex consisted of three six-story apartments located at 2804 Fourteenth Street, N.W., and 1401 and 1405 Girard Street, N.W. Approximately 66 units were occupied at the outset of this litigation.
. The court found' that a “substantial number of housing regulation violations” had been noted from 1966 to July 21, 1970, when 1,053 unabated violations were noted in the three building complex, the violations consisting of “leaking ceilings, falling plaster, broken windows, inadequate locks, absence of shades and screens, backed-up and broken plumbing fixtures, insufficient heat and hot water, holes in walls, accumulations of trash, rats and roaches” which were “so numerous, extensive and substantial that the buildings constitute a danger to the health and safety of the occupants.” 321 F.Supp. at 968.
. Mitchell v. ABC Realty Co., Civil Action No. GS 3522-70 District of Columbia Court of General Sessions.
. The court found that ABO Realty had been served with all pleadings but had not entered an appearance. The court found further, however, that personal service had not been effected on its president and registered agent and that attempts to locate its officers had failed. 321 F.Supp. at 967.
. The action was dismissed as to the two utilities. 315 F.Supp. 529, 530-531. At 533, the court noted that “the District may recoup any money expended for providing utilities by assessing a tax against the property. It may of course, also recoup by levying fines against the owner.”
. Appellees are the Commissioner and the Water Registrar of the District of Columbia. As noted stipra (Note 4), ABC Realty, Inc. and Lyman C. Delle, its president, were not personally served and did not enter an appearance. Nor have they participated in this appeal. Their liability to the tenants and to the District of Columbia is not before this court. On the merits, this appeal concerns solely the duty of the District of Columbia to appellants to act upon the failure of ABC to correct conditions existing in violation of the law.
. 321 F.Supp: at 970.
. Section 5-313, D.C.Code 1967, provides that when the owner of real property fails or refuses after reasonable notice to correct conditions existing in violation of law or regulation, “the commissioners of the District of Columbia may, and they are authorized to, cause such conditions to be corrected; assess the cost of correcting such conditions and all expenses incident thereto * * * as a tax against the property on which such condition existed * * * and carry such tax on the regular tax rolls of the District, and collect such tax in the same manner as general taxes in said District are collected * *
. 321 F.Supp. at 971.
. Appellant also sought an order that ABC take no action, pendente lite, to interfere with the “continued assertion of plaintiff’s — and the class she represents — leasehold interest in the premises.” The motion alleges in part:
“It is asserted, therefore, to allow the buildings to be preserved, pendente lite, and in fear for their lives that plaintiff, and others in the class she represents, vacate involuntarily and without any relinquishment of their legal tenancies.
“Plaintiff represents, to the best of her knowledge, that temporary relocation services are being provided tenants of the complex by the Redevelopment Land Agency.”
As set forth in Note 6, we are not here concerned with any claim appellants may have against ABC Realty Co.
. Supporting affidavits indicate also that District authorities will recommend that the Girard Street property be condemned when the order of April 22, 1971 is vacated, and that in December, 1971 the area in which these buildings are located was added to the Neighborhood Development Program and designated for demolition.
. With respect to appellant Masszonia, the affidavit of the Assistant Executive Director, Office of Relocation and Administration, recites that Mrs. Masszonia “moved to an address unknown on May 17, 1971. Various efforts had been made to relocate Mrs. Masszonia to standard housing, but she expressed plans to move on her own.”
. In oral argument counsel for appellees relied heavily on the contention that the case is moot. Appellees were granted leave to file a motion to dismiss on that ground, and appellants were granted time for a reply. The motion and supporting memorandum and affidavits were filed by appellees. Appellants have not responded. In the absence of counter affidavits or other response, we accept as true the facts set forth in appellees’ affidavits.
. As noted supra, the order of April 22, 1970 was entered after the appeal was taken to this court. In view of our disposition of the appeal it is unnecessary to consider the effect of this order or whether the district court was authorized to enter the order after the appeal was taken from the prior order.
. Those provisions of the orders favorable to appellants, from which no appeal was taken, have been complied with or are no longer effective by reason of appellants’ abandonment of the property. All relief sought by appellants was based upon their occupancy of the property. If the affidavits filed by appellees are found by the district court to be true, nothing now remains to be litigated.
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.
HITZ, Associate Justice.
The applicable statutes are the Revenue Acts of 1921 and 1924 (42 Stat. 227, 255; 43 Stat. 253, 284, 26 USCA § 986 (a) (5). Section 234 (a) (5) of eaeh of those acts allows a corporation to deduct from its gross income “debts ascertained to be worthless and charged off within the taxable year (or in the discretion of the commissioner, a reasonable addition to a reserve for bad debts).”
This alternative method of return, by reserving for bad debts, was first permitted by the 1921 act and was covered by a subsequently issued regulation of the Department (article 151 of Treasury Regulation 62).
In this regulation the Commissioner provided that regardless of previous practice the taxpayer might thereafter elect between the two methods, but having elected for 1921 would be required to abide his election in later years, unless permission to change to the alternative method should be granted by the Commissioner.
The Revenue Act of 1921 was effective November 23, 1921, and the Commissioner’s regulation was published February 15, 1922.
This petitioner, as the Board found, filed its return March 2, 1922, for the year 1921, and at that time did not know of the regulation giving the option as to the two methods of return. • •
It therefore contends that in using the charge-off method it cannot be held to have made an election, since it would be unfair to say that it had made a choice between alternatives which it did not know existed, and in justification of its failure to know of the opportunity afforded by the new regulation, it points out that it is located in Texas and the time between the publishing of the regulation and the filing of its return was but two weeks.
In deciding against this claim of the petitioner the Board said:
“The fact that the petitioner had no actual knowledge of its right under the above statute and regulation at the time of making its return for 1921, if such be the fact, cannot excuse it from the consequences of its act.
“That act constituted an election of the method pursued in claiming its bad debt deduction, and that method so elected could not thereafter be changed without first obtaining permission of the Commissioner.
“One who purports to act under a law, and claims the benefits conferred, cannot plead ignorance of the law to avoid a burden imposed, and the same rule applies to regulations promulgated pursuant to and having the force and effect of law.”
We regard this statement of the Board as merely a recognition of the familiar maxim that ■ “ignorance of the law excuses no one.”
But there are cases enough in which equity will relieve against the harshness of this rule under proper circumstances.
Thus, a person who, though knowing his facts, has acted in misapprehension of his lights, will not be held to an election so made, in the absence of an estoppel. Watson v. Watson, 128 Mass. 152.
And in Standard Oil Co. v. Hawkins, 74 F. 395, 33 L. R. A. 739, the Circuit Court of Appeals for the Seventh Circuit held that where a choice of two rights or remedies is open and a party pursues one under the impression that the law affords him no other, a court of equity will ordinarily interfere to permit him to change his position.
This rule has been recognized and applied in tax cases both by the Board and by the courts.
As in Dexter Sulphite Co. v. Com’r, 23 B. T. A. 227, the Board, in speaking of the presumption of election from pursuing one ■of several remedies, held that no election is presumed where the alternative remedies were unknown.
And in Lucas v. Sterling, 62 F.(2d) 951, it was held l>y the Court of Appeals for the Sixth Circuit that there must be opportunity for free choice in order to constitute a binding election.
We would, therefore, in a proper’ ease be disposed to hold that a return filed by a distant taxpayer within two weeks of the promulgation of a lawful regulation presenting new provisions of a taxing statute, but in ignorance of its terms, ought not to hind the taxpayer, if thereafter, and as soon as he learns of its provisions, he takes steps to correct or revise his earlier return.
But this is not such a ease, first, because the statute of 1921 itself gave the new privilege, and petitioner does not contend that it did not know, or was not bound to know, of the new rights which the statute gave in respect of the matter in question when he filed his return for that year.
And moreover, even assuming he acted in ignorance of the terms of the statute, he at no time thereafter even when informed of the ehange effected both by the statute and the regulations, applied to the Commissioner for leave to correct or amend his return.
It is true that in subsequent years he did adopt the reserve-for-bad-debts method, but the right of using this method for 1921 was lost by the adoption of the charge-off method for that year, as under the terms of the regulations that was the test year.
The petitioner at no time either sought or obtained permission to ehange the method adopted in its return for 1921.
If it had done so within a reasonable time after the filing of that return, and had been denied that privilege by the Commissioner, its case would be stronger here, but whatever its rights might have been in that event it is obvious that it lost them when without notice, protest, or application to amend, it allowed its return for 1921 to remain on file as rendered.
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
|
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