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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.
BEAM, Circuit Judge.
John R. Fritsch appeals his three-month sentence imposed by the district court following his plea of guilty to theft of mail by a postal service employee in violation of 18 U.S.C. § 1709 (1982). Fritsch asserts for the first time in this appeal that the Sentencing Guidelines are invalid as applied to him because they do not provide statutorily mandated guidance regarding sentences of probation. Fritsch failed to raise this issue in the district court; therefore, we decline to review it here.
I. BACKGROUND
Fritsch was indicted on three counts of theft of mail and agreed to plead guilty to one count in exchange for dismissal of the remaining two counts. The plea agreement acknowledged the applicability of the Sentencing Guidelines and set forth that the maximum possible time of imprisonment was five months, based on the applicable range of 0-5 months. At the sentencing hearing, the judge stated that under the terms of the plea agreement he was “free to impose a sentence of anywhere from zero to five months of imprisonment” and asked counsel if this statement was correct. Both counsel responded that it was correct. Sentencing Transcript at 4. Fritsch stated that he had no comments to make before he was sentenced.
II. DISCUSSION
Fritsch contends that the Sentencing Commission failed to set forth guidelines that sufficiently guide the sentencing court in making the incarceration or probation decision. Specifically, he asserts that the Commission is required, under 28 U.S.C. § 994 (Supp. V 1987), to promulgate guidelines that set forth probation as the only available sentence for specific offenses. Because the Commission did not follow the statutory requirements, the guidelines promulgated, according to Fritsch, are invalid.
Fritsch did not assert his challenge to the validity of the probation guidelines in the district court. “Issues not properly preserved at the district court level and presented for the first time on appeal ordinarily will not be considered by this court as a basis for reversal unless there would be a plain error resulting in a miscarriage of justice.” United States v. Meeks, 857 F.2d 1201, 1203 (8th Cir.1988); United States v. Sanders, 834 F.2d 717, 719 (8th Cir.1987); see also United States v. Thornley, 733 F.2d 970, 971 (1st Cir.1984) (holding that a challenge to the constitutionality of a dangerous special offender sentence enhancement statute not raised in the district court would not be reviewed on appeal); Carpenter v. United States, 720 F.2d 546, 548 (8th Cir.1983) (holding that defendant’s failure to raise the voluntariness of his guilty plea in the district court barred review on appeal). “This rule is followed ‘in all but exceptional cases where the obvious result would be a plain miscarriage of justice or inconsistent with substantial justice.’ ” Edwards v. Hurtel, 724 F.2d 689, 690 (8th Cir.1984) (quoting Kelley v. Crunk, 713 F.2d 426, 427 (8th Cir.1983)). Cf. United States v. Corn, 836 F.2d 889, 893-95 (5th Cir.1988) (holding miscarriage of justice to impose $6,000,000 in restitution without warning defendant at time of plea of possibility of restitution).
We fail to see how enforcement of the plea agreement will result in a miscarriage of justice. Fritsch approved the proposal with full knowledge of the potential penalties. Furthermore, Fritsch, by accepting the benefits of the plea agreement (the dismissal of two counts of the indictment) and by agreeing that the guidelines should be applied (including a possible five-month sentence), waived any objection to the validity of the Sentencing Guidelines.
This court has held that a defendant who explicitly and voluntarily exposes himself to a specific sentence may not challenge that punishment on appeal. United States v. Pratt, 657 F.2d 218, 220 (8th Cir.1981). In Pratt, the defendant pleaded guilty to two counts of distributing a controlled substance in exchange for the dismissal of four other counts. He also acknowledged that he was subject to punishment for both offenses. On appeal, he challenged his sentences, which included two consecutive five-year terms, because he claimed the offenses actually involved only one transaction, thus creating a violation of the double jeopardy clause. The court recognized that a waiver of a constitutional right “is not lightly to be presumed” but held that the defendant had waived any double jeopardy claims. Id. at 221.
Fritsch’s challenge does not involve a factual issue and, therefore, is somewhat distinguishable from Pratt. However, we believe that it would be unjust to allow Fritsch to agree to the application of the Sentencing Guidelines and reap the benefits of his plea and then assert that they are invalid. See also United States v. Lemire, 720 F.2d 1327, 1352 & n. 37 (D.C.Cir.1983), cert. denied, 467 U.S. 1226, 104 S.Ct. 2678, 81 L.Ed.2d 874 (1984) (holding defendant’s statement that he was fully prepared to pay restitution was a waiver of challenge to the court’s power to impose restitution).
Even if we were inclined to address the validity of the probation guidelines, it is unlikely that we would reverse the district court. Congress did not require the Sentencing Commission to establish a mandatory sentence of probation for certain offenses. See 28 U.S.C. § 994. Section 994 sets forth the duties of the Commission and requires the Commission to establish guidelines “for use of a sentencing court in determining the sentence to be imposed in a criminal case, including ... a determination whether to impose a sentence to probation, a fine, or a term of imprisonment.” Id. § 994(a)(1)(A). This section further sets forth the appropriate factors the Commission should take into account when considering whether a sentence to probation, a fine, or imprisonment should be imposed. Id. § 994(b)(2)(c), (d).
Section 994 does not appear to require the Commission to establish probation as the only sentence for specific offenses. “[T]he Commission enjoys significant discretion in formulating guidelines.” Mistretta v. United States, — U.S. —, 109 S.Ct. 647, 657, 102 L.Ed.2d 714 (1989). In the absence of a clear statutory requirement of mandatory sentences to probation, we would find it difficult to hold that the probation guidelines promulgated under the broad delegation contained in section 994 are invalid.
III. CONCLUSION
Fritsch did not properly preserve his claim for review by this court; therefore, the district court’s judgment is affirmed.
. The Honorable Paul A. Magnuson, United States District Judge for the District of Minnesota.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
This is a trademark infringement and unfair competition action brought by plaintiff, Hot Shot Quality Products, Inc., as the manufacturer of an insecticide marketed under the registered trademark “Hot Shot.” Plaintiff sought injunctive relief against defendant as the manufacturer of a carpet stain remover marketed under the registered trademark “Spot Shot.” Plaintiff’s registration was obtained in 1956, defendant’s in 1967, and both products are now enjoying quite wide distribution and sales throughout the nation. After trial in the District Court for the District of Kansas, submitted in large part upon stipulated facts, that court entered judgment for defendant, supported by findings and conclusions contrary to plaintiff’s contentions on all determinative issues. This appeal followed, plaintiff-appellant contending that the court erred in finding
(a) the trademark Hot Shot was descriptive in nature and had acquired no secondary meaning, and
(b) the trademark Spot Shot for a carpet stain remover was not likely to cause confusion of source with the product Hot Shot brand of insecticide.
We do not think disposition of this case requires specific consideration of plaintiff’s contention that the trial court erred in finding the trademark Hot Shot to be descriptive of its product, an insecticide. Even assuming that this trademark is not weakened as being one of functional description, the judgment below is clearly sustained by the further finding that no likelihood of buyer confusion exists as to product or source. Likelihood of confusion in either regard is a question of ultimate fact to be determined, in this case, by allowable inference from undisputed evidence. This court will not disturb such a finding absent clear error. Drexel Enterprises, Inc. v. Richardson, 10 Cir., 312 E.2d 525, and cases cited.
The record contains no evidence of actual buyer confusion and plaintiff relies substantially upon the phoenetic similarity between the two trademarks and the fact that both products are packaged in aerosol cans and are retailed through similar outlets such as supermarkets. However many products are so packaged and so marketed and the subject products are distinctly labeled and in clearly distinguishable containers. Plaintiff makes no appellate claim concerning product confusion and thus is left with the burden of persuading us that the record establishes that the trademark Hot Shot brings to the mind of the consuming public not a product but a producer. We are not so persuaded, for as the trial court noted, and, contrary to plaintiff’s present argument, properly emphasized, thirteen other registrations for the trademark Hot Shot have been issued by the Patent Office to separate registrants for products varying greatly in nature.
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.
WEICK, Chief Judge.
The Tappan Company, holder of two design patents covering electric cooking ranges, sought injunctive relief and damages against General Motors Corporation and its wholly owned subsidiary, Frigidaire Sales Corporation, producers and marketers of a line of competing ranges, claiming both patent infringement and unfair competition. Before trial the District Court granted General Motors’ motion for summary judgment as to the claim of unfair competition. After trial the District Court, in a memorandum opinion, determined that the accused ranges did not infringe Tappan’s patents and dismissed the complaint without passing on the issue of validity of the patents. From these orders Tappan now appeals.
The design patents involved here, No. 174,240 (issued in 1955) and No. 180,069 (issued in 1957), cover the design for two similar electric cooking ranges generally referred to as free-standing high oven models, meaning that the oven units are arranged above the surface burners unlike the conventional range. They are meant to be installed on a separate cabinet base or on existing kitchen counter-tops so that the surface burners operate at a convenient level about waist-high, and the ovens are positioned approximately at eye level. These items were developed by Tappan in response to the rising popularity of built-in cooking units with similar configurations during the late 1950’s. The advantage of the new free-standing ranges was that they could easily be installed in existing kitchens without the need for structural changes, thus obtaining the functional and stylistic attraction of the built-in ranges.
While other differences will be developed below, it is important to note that only the design embodied in the ’069 patent was ever marketed as a consumer item by Tappan. This model became the Tappan “Fabulous 400” range and it enjoyed marked commercial success upon its introduction to the public in 1958. The two most important characteristics distinguishing the ’069 from the ’240, as revealed by a comparison of the patent applications, are (1) the use of glass doors on the ovens and (2) the presence of two separate oven compartments of unequal size, placed side by side above the surface level unit. The ’240 patent, never commercially developed by Tappan, shows only a single oven with a door made of a metal grille rather than glass.
Prior to its development of the Fabulous 400 range based on the ’069 patent, Tappan had been a relatively minor competitor in the electric range market, having devoted most of its long history to the manufacture of gas ranges. The introduction of the Fabulous 400, however, was an immediate success and Tappan electric range sales increased four times in the first year of sales. This initial prosperity, however, was cut short by the introduction of the accused ranges of General Motors, the “Flair” 30- and 40-inch units, in 1960. (While no evidence seems to have been introduced on the subject, it seems reasonable to believe that Tappan’s success may also have been affected by the later introduction of similar ranges by manufacturers other than General Motors.)
General Motors’ evidence showed that its interest in free-standing, high-oven ranges predated both the dates of the Tappan patents and the commercial introduction of the Fabulous 400. The appearance of the Fabulous 400 and its immediate acceptance by the public, did much, however, to hasten the final development of the defendants’ Flair line. Indeed, in the course of its research, the Styling Staff of General Motors acquired and studied some of the Tappan ranges, as well as ranges of at least one other competitor. The Flair ranges were introduced to the public in 1960 and gained much popularity, apparently at the expense of the Tappan products which had preceded them.
It is important to note that while many sketches, diagrams, and photographs of the ranges involved were introduced in the District Court, it is the patents themselves which must set the bounds of Tappan’s rights here. Since disclosure of the new design is one of the elements of our patent system, it is only that which is described and disclosed in the patent application which is subject to protection under the laws. Design patents issued under the authority of 35 U.S.C. §§ 171-173 (1954 ed.) protect only “new, original and ornamental design” disclosed therein and do not extend to modifications or improvements which may appear in the finished product finally manufactured.
In the present case, the District Court ruled after trial that the patents had not been infringed and therefore the Court did not reach the question of their validity as presumed under 35 U.S.C. § 282 (1965 ed.), despite the fact that such validity was squarely in dispute as a result of the pleadings in which the defendants asserted at least five separate reasons for holding the patents invalid.
While it should never be a strict rule that validity be tested in every case, see Felburn v. New York Central R. R. Co., 350 F.2d 416 (6th Cir. 1965) cert. denied 383 U.S. 935, 86 S.Ct. 1063, 15 L.Ed.2d 852 (1966); Anthony Co. v. Perfection Steel Body Co., 315 F.2d 138 (6th Cir. 1963), the protection of the public interest upon which the patent system is founded dictates that the better procedure in an infringement action is to inquire fully into the validity of the patents as a preliminary step to a consideration of the infringement issues. Sinclair & Carroll Co. v. Interchemical Corp., 325 U.S. 327, 65 S.Ct. 1143, 89 L.Ed. 1644 (1945). This procedure should have been followed in the present case, especially in view of substantial doubts on validity raised by the existence of prior art predating plaintiff’s patents by as much as forty years. However, it does not appear that Tappan has been prejudiced by the District Court’s present disposition of the case based on its careful evaluation of the infringement evidence.
In view of the large amount of prior art and sparse information contained in the patents themselves, the District Court correctly rejected plaintiff’s broad assertions as to the scope of its rights. Assuming for purposes of this appeal that the patents retain their statutory presumption of validity, they must be interpreted narrowly as pertaining only to those aesthetic elements which the design patents reveal, and not to the broad, functional aspects over which plaintiff claims rights.
Both parties agree that the test of infringement is that first established by the Supreme Court in Gorham Mfg. Co. v. White, 81 U.S. (14 Wall.) 511, 20 L.Ed. 731 (1871) and followed by this Court in Applied Arts Corp. v. Grand Rapids Metalcraft Corp., 67 F.2d 428 (6th Cir. 1933):
“If, in the eye of an ordinary observer, giving such attention as a purchaser usually gives, two designs are substantially the same, if the resemblance. is-such as to deceive such an observer, inducing him to purchase one supposing it to be the other, the first one patented is infringed by the other.” Gorham Co. v. White, supra, 14 Wall, at 528, 20 L.Ed. 731.
The essence of infringement is the likelihood of consumer deception and it must be determined from an evaluation of the overall appearance of the two ranges, and not from a partial comparison of individual elements. The issue of infringement was a question of fact and the District Court’s determination of it is not to be overturned in the absence of clear error. United States Plywood Corp. v. General Plywood Corp., 370 F.2d 500 (6th Cir. 1966); Maytag Co. v. Murray Corp., 318 F.2d 79 (6th Cir. 1963).
Appellant’s chief complaint about the District Judge’s findings seems to be that he did his job too well. That is, in his careful and complete scrutiny of the two ranges, the District Judge noted a large number of individual differences between the Flair 40-inch model and the Fabulous 400 (the ’069 patent), and between the single oven Flair 30-inch model and the undeveloped ’240 patent. The most important of these differences were the differing profiles of the ranges, the distinctive glass oven doors on the Flair models, the different arrangements of the control knobs above the ovens on each range, and the separate devices for covering the surface burners when not in use. Mindful of the legal test of overall appearance to the average observer, the District Court concluded that while any one of these differences alone might not be enough to differentiate the Flair from the Fabulous 400, their total effect resulted in an appearance different from the disclosures of the ’069 patent.
Despite this clear statement by the District Court, appellant urges that the District Court did not view the ranges’ overall appearances, but rather was overly impressed by so-called “minor details of construction” and thus failed to meet the standards of Gorham Mfg. Co. v. White, supra. We disagree. The careful study made by the Court below was in fulfillment of its duty to make subsidiary findings to support its ultimate conclusions and it might have been deficient if it had not so specified the underlying reasons for its appraisal of the two designs. Kelley v. Everglades Drainage District, 319 U.S. 415, 420, 63 S.Ct. 1141, 87 L.Ed. 1485 (1943); Deal v. Cincinnati Board of Education, 369 F.2d 55, 63-64 (6th Cir. 1966).
It should be noted that the District Court made a separate finding as to the comparison of the Flair single oven 30-inch model and the ’240 patent, and concluded in terms to which appellant’s first objection could not apply since it was stated in terms of the total visual impression of the two designs.
In our opinion, the findings of fact of the District Judge on the issue of infringement are supported by substantial evidence and are not clearly erroneous. Rule 52 Fed.R.Civ.P.
Unfair Competition
Tappan’s second cause of action, joined with the first by virtue of 28 U.S.C. § 1338(b), alleged unfair competition by General Motors under the familiar doctrine of distinctive, nonfunctional features. Presumably Tappan sought to apply the law of the forum state, Ohio, although no particular state’s law was cited. As noted above, the District Court granted General Motors’ motion for summary judgment on this second cause of action before trial commenced. In so doing it relied on the holding of the Supreme Court in Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 84 S.Ct. 784, 11 L.Ed.2d 661 (1964), its companion case Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234, 84 S.Ct. 779, 11 L.Ed.2d 669 (1964), and on the rules concerning product identification established in this Circuit in West Point Mfg. Co. v. Detroit Stamping Co., 222 F.2d 581 (6th Cir. 1955) and Estate Stove Co. v. Gray & Dudley Co., 41 F.2d 462 (6th Cir. 1930). It will be necessary to discuss only the first of these supporting grounds.
In the Sears, Roebuck and Compco cases the Supreme Court held that the patent provisions (Art. I, § 8, cl. 8) and the Supremacy Clause of the Constitution precluded the individual states from granting protection to articles unprotected by the federal patent laws. Those two cases involved design patents which had been held invalid by lower courts, which nevertheless granted relief on the basis of state unfair competition law. The Supreme Court reversed those determinations, reasoning that the force of the Supremacy Clause, as well as the need for uniform standards of protection, required that the federal decision on these matters remain the sole measure of the rights of the competitors.
In the present case the District Court based its judgment on the theory that Sears, Roebuck and Compco extended even to cases where the patent had not yet been invalidated and still retained its statutory presumption of validity. While we think it would have been better practice for the District Court to have deferred ruling on this count until after deciding the issues of validity and infringement of the patents, we find no prejudice has resulted to appellant from the Court’s premature disposition of this matter.
The question, as stated in the first sentence of the Sears, Roebuck case is whether state law may grant relief to the owner of a design or article which is not protected by a federal patent or copyright. For our purposes it is important to point out that a design or article may be deprived of such protection for one of two reasons * * * either it may not qualify for a patent or copyright at all (initially at the Patent Office, or upon later judicial determination) or, as happened here, it may be found that the specific infringement against which relief is sought, does not in fact impinge upon the plaintiff’s rights. Thus, in our case, the District Court found that the Fabulous 400 was not entitled to patent protection against the marketing of the Flair line produced by defendants. In this sense, the federal decision that no protection is warranted is the same whether it is based on a finding of patent invalidity, as in Sears, Roebuck, or on a finding of non-infringement as in our case.
To allow relief under state law in either situation would run counter to the paramount federal decision of non-protection. See Columbia Broadcasting System, Inc. v. DeCosta, 377 F.2d 315 (1st Cir. 1967).
Finally, in its brief, Tappan attempts to bring its case within the “exception” to the Sears, Roebuck rule, see 376 U.S. 225, 232, 239, 84 S.Ct. 784, by claiming that it seeks relief from intentional product confusion by General Motors. However, the affidavit submitted by Howard H. Bogue in support of the motion for summary judgment shows indisputably that the accused Flair ranges are conspicuously marked with General Motors, Frigidaire, and Flair names and trademarks before being offered to the public. Tappan never attempted to contradict this affidavit and no piece of evidence in the record would support even an inference that the ranges are not so marked when purchased by the consuming public at retail. Therefore, no buyer could be confused as to the source of the merchandise and no intent to deceive can be imputed to General Motors.^,
Affirmed.
. Halle Bros. Co., Inc., a large department store in Cleveland, was originally joined as a defendant and charged with selling the alleged infringing ranges which were manufactured and marketed by the other two defendants. However, after presentation of Tappan’s prima facie case, Halle Bros. Co. was dismissed.
. The difficulty in evaluating the scope and content of design patents generally has evoked authoritative suggestions for their abolition: “The Commission believes strongly that all inventions should meet the statutory provisions for novelty, utility and unobviousness and that [design patents] cannot readily be examined for adherence to these criteria.” Report of the President’s Commission on the Patent System (1966), p. 12.
. “The Court has the general impression from the ’240 patent of a rather gross structure of heavy line with a perforated metal door. On the other hand, the Flair 30-inch range presents a far more pleasing appearance of delicate line and clean modern design.”
. There was no claim that General Motors violated state statutory or decisional law relating to labeling. The state may regulate in this field. Compco v. Day-Brite Lighting, Inc., supra, 376 U.S. p. 238, 84 S.Ct. 779.
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.
THORNBERRY, Circuit Judge:
The United States appeals the district court’s judgment in favor of taxpayer Hans Rasmussen on Rasmussen’s claim for refund of overpaid federal income tax. We agree with the United States that Rasmussen did not satisfy the mitigation provisions of the Internal Revenue Code, and the statute of limitations therefore bars his claim.
On October 23, 1984, Hans Rasmussen, as sole shareholder and liquidator of Canal Marine Repairs, Inc. (“Canal”), filed this action to recover $84,235 in corporate income taxes paid by Canal for its taxable year ended April 30, 1978. Canal sold all its assets and adopted a plan of liquidation in May 1977, and received a certificate of liquidation from the State of Louisiana in December 1977. On July 10, 1978, Canal filed its federal income tax return for its taxable year ended April 30,1978. On that return, it reported the sale of the assets and paid $84,504 in tax.
Rasmussen did not report any gain or loss from the liquidation of Canal on his individual return. As the result of an audit, the Internal Revenue Service (“Service”) alleged that Rasmussen, individually, owed capital gains tax on Canal’s liquidation because he had actually or constructively received the proceeds of the liquidation. In November 1981, Rasmussen consented to the adjustments to his tax liability and paid the additional individual income tax due.
On October 13, 1982, Rasmussen filed a claim for refund on behalf of Canal seeking to recover the corporate income tax paid on the sale of Canal’s assets. Rasmussen argued that because the Service had determined that Canal had distributed the proceeds of the liquidation to him, I.R.C. § 337 applied to the liquidation. Under I.R.C. § 337, Canal did not owe tax on the liquidation and therefore, it overpaid its federal income tax for the taxable year ended April 30, 1978. The Service denied the claim because Rasmussen filed it more than three years after he had filed the return for Canal’s taxable year ended April 30, 1978. See I.R.C. § 6511(a)
On October 23, 1984, Rasmussen filed suit in the U.S. District Court to recover the tax that Canal paid on its liquidation. The complaint alleged that his claim for refund fell within the mitigation provisions of the Code. I.R.C. §§ 1311-1314. The complaint also alleged that I.R.C. § 337 applied to Canal’s liquidation and that as a result, Canal had overpaid its corporate income tax.
The government moved to dismiss the complaint because Rasmussen’s claim was not timely and therefore did not confer jurisdiction on the district court. The government contended that the mitigation provisions were inapplicable because Rasmussen did not satisfy the specific statutory requirements. The district court denied the government’s motion to dismiss and held that I.R.C. § 337 applied to the transaction.
No taxpayer may sue the United States for a refund of federal income taxes paid until “a claim for refund ... has been duly filed with the Secretary, according to the provisions of law in that regard____” I.R.C. § 7422(a). Generally a taxpayer must file a claim for refund within three years from the time the return was filed or two years from the time the tax was paid, whichever is later. I.R.C. § 6511(a). Rasmussen stipulated that he filed his claim for refund more than three years after he filed the return and paid the tax for Canal’s taxable year ended April 30, 1978.
In certain narrowly tailored situations the mitigation provisions of the Internal Revenue Code provide relief from the application of the general three-year statute of limitations:
(a) GENERAL RULE. — If a determination (as defined in section 1313) is described in one or more of the paragraphs of section 1312 and, on the date of the determination, correction of the effect of the error referred to in the applicable paragraph of section 1312 is prevented by the operation of any law or rule of law, other than this part and other than section 7122 (relating to compromises), then the effect of the error shall be corrected by an adjustment made in the amount and in the manner specified in section 1314.
I.R.C. § 1311. The government argues that § 1311 does not apply to Rasmussen’s claim for three reasons: (1) Rasmussen never received a “determination” within the meaning of I.R.C. § 1313; (2) Rasmussen’s claim satisfied none of the “circumstances of adjustment” as defined in I.R.C. § 1312; and (3) the Service did not maintain an inconsistent position within the meaning of I.R.C. § 1311(b). We agree with the government that Rasmussen never received a “determination” within the meaning of I.R.C. § 1313.
Section 1313 defines the word “determination” to include four things:
(1) a decision by the Tax Court or a judgment, decree, or other order by any court of competent jurisdiction, which has become final;
(2) a closing agreement made under section 7121;
(3) a final disposition by the Secretary of a claim for refund____
(4) under regulations prescribed by the Secretary, an agreement for purposes of this part, signed by the Secretary and by a person, relating to the liability of such person (or the person for whom he acts) in respect of a tax under this subtitle for any taxable period.
I.R.C. § 1313(a). Rasmussen argues that, “Form 870, evidencing [his] personal tax liability, and his subsequent payment of the deficiency, constituted a final determination by the Commissioner. In making this final determination as to Rasmussen’s personal tax liability based on the corporation’s liquidation status, the Government made a final determination respecting the corporation’s tax liability as well.” The district court accepted Rasmussen’s argument.
Both Rasmussen and the district court ignore the statutory definition of “determination” in I.R.C. § 1313. Rasmussen stipulated that there was neither a Tax Court decision, nor a judgment of any other court, nor a closing agreement, nor a final disposition of a refund claim, nor an agreement between Rasmussen and the Secretary as defined in § 1313(a)(4).
Rasmussen cites cases for the proposition that the mitigation provisions are remedial in nature and should be construed to do equity. The government cites cases for the proposition that the provisions should be strictly construed. In any case,
[t]his Circuit has held that when applying the mitigation statutes the facts of each case must fit “into the concrete, detailed requirements set out in the statute.” United States v. Rachal, 312 F.2d 376, 383 (5th Cir.1962). Moreover, taxpayer has the burden of proving that the mitigation statutes apply. United States v. Rushlight, 291 F.2d 508, 514 (9th Cir.1961).
Cocchiara v. United States, 779 F.2d 1108, 1112 (5th Cir.1986). Because neither the district court nor Rasmussen can fit the facts of this case into the statutory definition of “determination,” we reverse the district court’s judgment in favor of Rasmussen and remand the case with instructions to dismiss. We do not reach the government’s alternative arguments because the lack of a “determination” disposes of the case.
REVERSED AND REMANDED.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
OPINION OF THE COURT
NYGAARD, Circuit Judge.
In the case underlying these consolidated appeals, Alvaro Quiroga instituted an action against Hasbro and its subsidiary, Playskool Baby, Inc. (collectively, “Hasbro”) alleging violations of Title VII, 42 U.S.C. §§ 2000e-2000e-17, the Age Discrimination In Employment Act, 29 U.S.C. §§ 621-634, the New Jersey Law Against Discrimination (“NJLAD”), N.J.S.A. 10:5-1, et seq., and state claims for breach of contract and intentional infliction of emotional distress. Just before trial, the district court granted summary judgment for defendants on all but the Title VII and comparable NJLAD claims. These remaining claims alleged Quiroga, a vice-president of Hasbro, was wrongfully denied stock options in 1988, and was discharged in retaliation for asserting his rights to those options. Following trial, the district court entered judgment in favor of Hasbro. Upon post-trial motion by Hasbro, the district court also ordered Quiroga to pay Hasbro’s attorneys’ fees in the amount of $10,000 under Section 706(k) of Title VII. 42 U.S.C. § 2000e-5(k).
Quiroga claims in appeal No. 90-5284 that the district court’s trial findings are clearly erroneous and that the district court ignored issues of material fact in its summary judgment. In appeal No. 90-5748, Quiroga claims the district court abused its discretion by awarding Hasbro attorneys fees. We will affirm the district court’s orders appealed in No. 90-5284, and for the reasons following we will remand on appeal No. 90-5748. The case is quite simple and ordinarily we would not write, but it is necessary here to explain our decision on appellant’s challenge to the district court’s attorney fee award.
I.
APPEAL NO. 90-5284
A. SUMMARY JUDGMENT.
The district court summarily dismissed many of Quiroga’s claims, including the claim that Hasbro’s Personnel Policies Manual (“manual”) gave Quiroga contractual rights that Hasbro violated when it discharged him. Quiroga challenges only that portion of the summary judgment. He contends that whether the manual applies to him is an unresolved, material question of fact precluding summary judgment, and that the district court misapplied New Jersey law regarding contractual rights created by the manual when it dismissed his claim for breach of contract. Our review of a summary judgment is plenary.
Quiroga’s contentions are without support in the record because it does not show that the manual applied to Quiroga as vice-president and plant manager. The affidavit of William Daly, Hasbro’s vice president in charge of industrial relations, states that the guide is intended for use by supervisors and managers to assist them in managing personnel matters of the rank and file employees and does not create rights for supervisors or managers. Daly also stated that unless a specific written employment contract is in place, managers are employed at will. There is nothing in the record to dispute that evidence.
Daly’s affidavit carried Hasbro’s burden under Rule of Civil Procedure 56 because, in response to Daly’s affidavit, Quiroga says only that he was not informed the manual did not apply to him. This does not create a dispute of fact. Quiroga must “do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Electric Industrial Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). Quiroga must set forth specific facts showing a genuine issue for trial and may not rest upon mere allegations, general denials, or such vague statements that he was never informed that the manual did riot apply to him. He must offer some evidence that the manual does indeed apply to him. Soundship Building Company v. Bethlehem Steel, 533 F.2d 96, 99 (3d Cir.), cert. denied, 429 U.S. 860, 97 S.Ct. 161, 50 L.Ed.2d 137 (1976). Quiroga has simply offered no such evidence. Since Quiroga has not shown that the manual applies to him, we need not consider his contention that the district court misapplied New Jersey contract law. We hold that Quiroga’s objection to the summary judgment is without merit.
B. TRIAL FACTS.
Following a bench trial on the remaining claims the district court found the following facts which are germane to its decision and our review. Quiroga was a valued employee of Hasbro and its corporate predecessors from 1974 until he parted company with them in May, 1988. As vice president of operations in Hasbro’s Wayne, New Jersey plant, Quiroga was second-highest ranking employee in New Jersey.
Quiroga received a stock option award in 1986. In 1987 he committed the Wayne plant to production far beyond the company’s manufacturing plan. Because of the overproduction, Hasbro sustained losses and seriously considered closing the plant. It did not close the plant, but as a consequence of overproduction, management did not recommend Quiroga for a stock option award for 1987. When in early 1988 Quiro-ga learned he would not receive the award, he complained to his superiors. Because Hasbro considered Quiroga to be a key person, management reconsidered and added Quiroga’s name to the list of those recommended for stock options.
During 1987 there were rumblings between Quiroga and Hasbro’s management. Quiroga found himself in disagreement with management decisions. He was disappointed with their decision not to relocate the New Jersey plant to South Carolina, where Quiroga was to have been plant manager. Quiroga viewed Hasbro’s decision to scuttle the relocation as a failure to promote him. He was affronted by Hasbro’s relocation of his responsibilities to others. He also incorrectly believed he was to be denied a stock option award, and so early in 1988, he hired an attorney. What happened thereafter cost Quiroga his stock options and his job.
Quiroga’s attorney, Stephen R. Mills, wrote a letter to Hasbro that the district court found to be “heavy handed” and “extraordinary and outlandish.” Attorney Mills claimed that Quiroga had been “constructively discharged” and suggested a meeting to explore “specific proposals for an outplacement arrangement” for Quiroga and “a possible settlement of Mr. Quiroga’s claims.” App. 401. The district court found the letter to be Quiroga’s announcement that he was “depart[ing] from the company.” App. 402.
Nevertheless, and in spite of Attorney Mills’ letter, “Hasbro was anxious to retain [Quiroga] in its employ as he was still considered to be an important executive.” App. 402. Quiroga, Mills and representatives of Hasbro all met in response to Attorney Mills’ letter. At the meeting, Mills stated Hasbro had breached its “trust bridge” with plaintiff. App. 403. Mills issued a seven-point ultimatum to Hasbro:
1. Quiroga would remain at the plant during the “transition” period.
2. Quiroga’s package would be $112,-000, excluding the company automobile.
3. Quiroga would agree to a release, waiving any claims against Hasbro.
4. Quiroga would seek 3-1/2 years of salary and benefits, totalling $392,000 plus $50,000 in lost options. No attorney’s fees would be sought.
5. Quiroga would act as a consultant at half his annual salary, if desired by Hasbro.
6. Hasbro would continue Quiroga’s health, dental and life insurance benefits for 18 months.
7. Quiroga would make a statement to all employees.
App. 403-404, 607.
Because of the brash ultimatum issued by his attorney, Quiroga’s name was removed from the list of those to receive stock options, which were reserved to reward and encourage employees to stay with the company. Hasbro further informed Quiroga that it accepted his “wishes to resign.” App. 405.
C. RETALIATORY DISCHARGE.
Quiroga contends that Hasbro’s actions amounted to a retaliatory discharge. In order to recover on his retaliatory discharge claims, Quiroga must show, (1) he engaged in a protected activity; (2) he was discharged after or contemporaneous with the activity; and (3) a causal link existed between the protected activity and threats to sue, and the loss of his job. Jalil v. Avdel Corp., 873 F.2d 701, 708 (3d Cir. 1989), cert. denied, — U.S. -, 110 S.Ct. 725, 107 L.Ed.2d 745 (1990).
If a retaliatory discharge plaintiff makes a prima facie showing of all three Jalil factors, then the burden “shifts to the defendant ‘to articulate a legitimate, nondiscriminatory reason for its conduct.’ ” Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 253, 101 S.Ct. 1089, 1093, 67 L.Ed.2d 207 (1981) (citation omitted).
The district court found that Quiro-ga utterly failed to establish the third Jalil factor, namely causation, and therefor concluded it was unnecessary for the court to reach the second Jalil factor, that is whether Quiroga was in fact discharged by Hasbro. Quiroga challenges this conclusion. His argument is essentially that “the timing [of his discharge] would raise an inference of retaliation.” (Appellant’s Brief at 21) As a matter of fact it cannot. In Jalil the employee was discharged two days after filing his Equal Employment Opportunity Commission (“EEOC”) complaint. While we held there that the “timing of the discharge in relation to Jalil’s EEOC complaint may suggest discriminatory motives,” Jalil, 873 F.2d at 709, we stopped short of creating an inference based upon timing alone.
The district court specifically found that Hasbro’s decision to dismiss Quiroga (or accept his resignation) was not caused by Quiroga’s claims of discrimination or threats to sue. The district court found that Hasbro considered Quiroga to be an important and valued member of their management team. Indeed, Hasbro considered Quiroga’s Hispanic origin and Spanish language ability an asset in light of the heavily Hispanic work force at the Wayne, New Jersey plant. When Quiro-ga’s attorney voiced complaints of discrimination in the letter to Hasbro, Hasbro did not retaliate against Quiroga. Rather, the company (1) investigated the claims made in the attorney’s letter; (2) attempted unsuccessfully to discuss Quiroga’s concerns with him; (3) instructed Hasbro’s personnel department to tell Quiroga Hasbro understood his wish to leave, but that the company wanted to resolve the problems and keep him employed; and (4) met with Qui-roga and Attorney Mills. Yet, at that very meeting Mills and Quiroga slammed the door and made plain what they said in their letter — that Quiroga would not continue with the company. The district court found that the use of the expression “outplacement arrangement,” both in the letter and at the meeting, could only be interpreted as meaning that Quiroga was departing from Hasbro. App. 402.
Following the meeting, Hasbro’s management decided it was in the company’s best interest to respect Quiroga’s desire to quit. Hasbro concluded that any person holding the important position of plant manager should, unlike Quiroga, be willing to remain long-term.
The district court found that Quiroga failed to establish his claims, and his action was “utterly without basis in law or in fact.” App. 409. The district court determined that Quiroga’s losses of his stock options and ultimately his job were the result of Attorney Mills’ “outlandish” letter and not in retaliation for anything. App. 407.
We hold that the court’s findings are not erroneous. The district court had the unique opportunity to judge the credibility and demeanor of Quiroga and Hasbro’s witnesses. It chose to credit Hasbro’s account of why the company acted as it did. It took Quiroga’s statements in the letter and the meeting at face value. Additionally, Quiroga presented only his subjective belief, but absolutely no supporting evidence that Hasbro’s motives were improper. Hence, Quiroga simply has no basis to challenge the district court’s finding on causation. Accordingly, the belated assignments of error on appeal are without merit.
II.
APPEAL NO. 90-5478: ATTORNEYS’ FEE AWARD.
A.
Hasbro filed a post-verdict motion for attorneys’ fees under Section 706(k) of Title VII. The motion was supported by an affidavit of William F. Joy, Jr., a partner in the law firm of Morgan, Brown and Joy, counsel for Hasbro in this matter. Attorney Joy’s firm sought compensation in the total amount of $125,393.32 for 904 hours of attorney and paralegal time, as well as disbursements. The district court heard arguments on the motion but deferred its ruling and instead ordered that Quiroga provide certain financial information in answers to interrogatories submitted by Hasbro. After Hasbro completed discovery and the court heard arguments, it awarded Hasbro the sum of $10,000 in attorneys’ fees under Section 706(k) of Title VII.
Title VII, § 706(k) provides as follows: In any action or proceeding under this subchapter the court, in its discretion, may allow the prevailing party ... a reasonable attorney’s fee as part of the costs,....
42 U.S.C. § 2000e-5(k).
The standard used to determine whether a request for attorneys’ fees by a prevailing defendant should be approved is stated in Christiansburg Garment Company v. EEOC, 434 U.S. 412, 421, 98 S.Ct. 694, 700, 54 L.Ed.2d 648 (1978):
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.
Furthermore, the district court must “resist the understandable temptation to engage in post hoc reasoning by concluding that, because a plaintiff did not ultimately prevail, his action must have been unreasonable or without foundation.” Christiansburg, 434 U.S. at 421, 98 S.Ct. at 700. We must defer to the district court’s fee determination unless it has erred legally, see Hughes v. Repko, 578 F.2d 483, 486 (3d Cir.1978), holding modified, Inmates of Allegheny County Jail v. Pierce, 716 F.2d 177 (3d Cir.1983), or the facts on which the determination rests are clearly erroneous, see Baker Indus., Inc. v. Cerberus, Ltd., 764 F.2d 204, 209-10 (3d Cir.1985).
Under the Christiansburg standard, Hasbro is entitled to be awarded attorneys’ fees only if Quiroga’s action was frivolous, unreasonable, or without foundation. Christiansburg, 434 U.S. at 421, 98 S.Ct. at 700. Christiansburg qualified those terms by equating “meritless” with “groundless” or “without foundation,” and did not “impl[y] that the plaintiff’s subjective bad faith is a necessary prerequisite to a fee award against him.” Christians-burg, 434 U.S. at 421-22, 98 S.Ct. at 700-01. Hence, under Christiansburg, even if Quiroga’s action was not brought in subjective bad faith, since Hasbro prevailed, it is entitled to attorney’s fees upon a finding that the Quiroga’s action was meritless, frivolous, unreasonable, or without foundation.
Quiroga’s first argument on appeal is essentially that his claim had legal foundation and was not frivolous, and that the district court’s factfindings to the contrary are clearly erroneous. The district court found not only that Quiroga’s claims were without foundation or groundless, but also that his attorney “tried to force plaintiff’s various grievances into the framework of various state and federal causes of action.” App. 408. The court found that the “national origin” basis of Quiroga’s cause of action “appears to have been an attorney construct.” App. 408. The district court found Quiroga’s claims to be “utterly without basis.” App. 409. The district court concluded “[i]t was just a baseless case, the kind which should not be brought, and therefore [if] Mr. Quiroga can afford attorney’s fees he should pay them.” Supp. App. 65-66. These findings of the court are not clearly erroneous and, therefore, provide a basis for the Title VII attorney fee award.
Quiroga’s second argument is that our decision in No. 90-5284 is irrelevant to our decision in No. 90-5748 because “Hasbro cannot establish, on the record before the District Court, any evidence establishing bad faith and/or frivolity by Quiroga either at the time this action was filed or during the period from the filing of the complaint until trial.” Appellant’s Brief at 11. Qui-roga relies upon our decisions in Ford v. Temple University, 790 F.2d 342 (3d Cir. 1986) (Attorneys’ fees may be assessed against plaintiff’s attorney under an exception to the general rule that each party to a lawsuit bear its own attorney’s fees or 28 U.S.C. § 1927 only upon a finding of willful bad faith on the part of the offending attorney) and Williams v. Giant Eagle Markets, 883 F.2d 1184, 1190 (3d Cir.1989) (Attorneys’ fees may not be assessed against a party under 28 U.S.C. § 1927). But these cases do not control because the district court awarded fees under Title VII. As Quiroga’s own brief (page 8) acknowledges, Hasbro need not establish bad faith to win fees under Title VII. Christiansburg authorizes an award of attorney's fees to Hasbro in this Title VII case upon a finding that Quiroga’s action was frivolous, unreasonable, or without foundation.
The Court in Christiansburg did not quantify the evidence an unsuccessful plaintiff must produce to escape an adverse award of fees. There is no need for more precise line-drawing in this case. The district court found not only that Quiroga’s claims were “utterly without basis in law or in fact,” but that preliminary investigation would have shown this to Quiroga and his attorney as they prepared their action. App. 409. The district court also found that Quiroga’s discrimination claim “appears to [be] an attorney construct.” App. 408. These findings are more than sufficient to justify the award of fees to Hasbro.
It is clear from Christiansburg that attorney’s fees are not routine, but are to be only sparingly awarded. Nevertheless, here the same judge who presided over all proceedings also determined the fee award. Thus, that judge was “particularly well qualified to make the partially subjective findings necessary for [an] award of attorney’s fees.” P. Mastrippolito & Sons, Inc. v. Joseph, 692 F.2d 1384, 1387 (3d Cir.1982). Because the district court offered compelling reasons to conclude Quiroga’s action was frivolous, and to substantiate its decision on fees, we will affirm.
B.
In accordance with Hasbro’s motion, the district court assessed fees against only the plaintiff Quiroga. We believe that, notwithstanding the limitations of Hasbro’s motion, the district court should consider whether the fees should also be levied against Quiroga’s attorney.
We believe that in light of the district court’s findings in this case, the filing of Quiroga’s complaint without any foundation in law or fact was as much Attorney Mills’ fault as it was Quiroga’s. Mills, as a trained lawyer, should have known better. He proceeded with an obviously frivolous lawsuit, after having put his client’s job and future at great risk, and also subjected the parties and the court to unnecessary expense and inconvenience.
Title VII gives the district court considerable discretion to award fees, see 42 U.S.C. § 2000e-5(k), but the statute is silent as to who shall pay the fees. Nevertheless, we have said the statute does not authorize assessment of fees against the loser’s attorney. Brown v. Borough of Chambersburg, 903 F.2d 274, 276-277 & n. 1 (3d Cir.1990) (while noting that the standards for assessing attorney’s fees are identical under § 1988 and 42 U.S.C. § 2000e-5(k), “we concluded] that § 1988 does not authorize the award of attorneys’ fees against plaintiff’s attorney”). See also Roadway Express, Inc. v. Piper, 447 U.S. 752, 761 n. 9, 100 S.Ct. 2455, 2461 n. 9, 65 L.Ed.2d 488 (1980).
Although the district court may not assess attorney’s fees against Mills under Title VII, it may consider “alternative theories of liability.” Hamer v. Lake County, 819 F.2d 1362, 1370 (7th Cir.1987). These alternatives include Fed.R.Civ.P. 11 and the court’s “inherent power” to sanction an attorney who acts “ ‘in bad faith, vexatiously, wantonly, or for oppressive reasons.’ ” Hamer, 819 F.2d at 1370, n. 15 (quoting F.D. Rich Co. v. United States, 417 U.S. 116, 129, 94 S.Ct. 2157, 2165, 40 L.Ed.2d 703 (1974)) (other citations omitted). Accord Roadway Express, 447 U.S. at 766-768, 100 S.Ct. at 2464-2465 (court remanded for a determination whether the Alyeska Pipeline “bad faith exception” warranted attorney’s fees against counsel); Durrett v. Jenkins Brickyard, Inc., 678 F.2d 911, 918-919 (11th Cir.1982) (court held that 42 U.S.C. § 2000e-5(k) of Title VII of the Civil Rights Act of 1964 did not authorize fees against counsel but remanded to the district court to consider sanctions under its inherent power). Textor v. Board of Regents of N. Ill. Univ., 711 F.2d 1387 (7th Cir.1983) (“[The] power to punish ‘counsel who wilfully abused judicial processes’ [was] recently recognized as inherent in a court’s power to protect the orderly administration of justice.”, citing Roadway Express Inc. v. Piper, 447 U.S. at 766, 100 S.Ct. at 2464).
Fed.R.Civ.P. 11, for example, permits “[c]omplete or partial fee shifting [as] ... one form of disciplinary action which a court may invoke in appropriate circumstances.” Gaiardo v. Ethyl Corp., 835 F.2d 479, 483 (3d Cir.1987). In a situation where a complaint is signed and filed without a reasonable inquiry by the signers that it is well grounded in fact and is warranted by existing law, Rule 11 provides in pertinent part that the court upon motion “or upon its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay the other party ... the amount of the reasonable expenses incurred because of the filing of the pleading ..., including a reasonable attorney's fee.”
Acting on the basis of this rule, the court of appeals in Eastway Construction Corp. v. City of New York, 821 F.2d 121 (2d Cir.1987), {Eastway II) decided in the exercise of its appellate authority under 28 U.S.C. § 2106 (1982) to allocate the payment of an attorney’s fee between counsel and his client without even remanding to the district court. In the interest of judicial economy and the authority contained in 28 U.S.C. § 2106 that court of appeals held:
Having examined the parties’ contentions, the prior proceedings, and the observations of the District Judge, we have concluded that one half of the fee award should be imposed jointly and severally upon the plaintiffs and one half should be imposed upon plaintiffs’ counsel.
Eastway II, 821 F.2d at 124. Similarly, in Alyeska Pipeline Co. v. Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975) superseded by 42 U.S.C. § 1988 (1976), the Supreme Court said that, apart from Rule 11, a court has inherent power, even under the restrictive “American rule,” to allow attorneys’ fees against an attorney - in particular situations, unless forbidden by Congress. Alyeska, 421 U.S. at 259, 95 S.Ct. at 1622. See also 28 U.S.C. § 1927.
Hence, it is well-established that courts have the power to impose sanctions on both litigants and attorneys to regulate their docket, to promote judicial efficiency, and to deter abuse of judicial process. See Roadway Express, 447 U.S. at 764-67, 100 S.Ct. at 2463-64. In Roadway Express, the Court held that, apart from section 1927, federal courts have the inherent power to award attorney’s fees against counsel personally when the court has found that the attorney acted in bad faith. “Bad faith is a factual determination reviewable under the clearly erroneous standard. Once a finding of bad faith has been made, the appropriateness of sanctions is a matter entrusted to the discretion of the district court.” Hackman v. Valley Fair, 932 F.2d 239, 242 (3d Cir.1991) (This is a section 1927 case).
The court in Roadway Express did not uphold the trial court’s award of attorneys’s fees because the trial court did not make a specific finding that counsel’s conduct “constituted or was tantamount to bad faith, a finding that would have to precede any sanction under the court’s inherent powers.” Roadway, 447 U.S. at 767, 100 S.Ct. at 2465. Since the district court here did not make a finding as to whether Mills or Quiroga acted in bad faith, we will remand to the trial court to make that determination in the first instance, and to decide whether attorneys’ fees should be imposed as a sanction against Quiroga’s counsel on any of the above-discussed grounds.
III.
We will affirm the orders of the district court in appeal No. 90-5284. Although we approve the award of attorney’s fees in appeal No. 90-5748, we will remand to the district court with direction to reconsider whether its award should be levied solely upon the plaintiff, under authority of the Civil Rights Statute, 42 U.S.C. § 2000e-5(k) or also upon his attorney under alternative theories of liability.
. 28 U.S.C. § 2106 provides in pertinent part: "The Supreme Court or any other court of appellate jurisdiction may affirm, modify ... or direct the entry of such appropriate judgment ... as may be just under the circumstances."
. On September 12, 1980, and after the Supreme Court decided Roadway, Congress amended section 1927. See the Antitrust Procedural Improvements Act of 1980, pub. 1. No. 96-349 § 3, 94 Stat. 1154, 1156 (September 12, 1980). Therein, Congress amended section 1927 to expressly provide that any attorney who so multiplies proceedings "unreasonably and vexatious may be required by the court to satisfy personally the excess costs, expenses, and attorneys fees reasonably incurred because of such conduct.” 28 U.S.C. § 1927 (emphasis added). The legislative history of this section makes it clear that the September 12, 1980 amendment was intended to "expand [ ] the category of expenses the judges might require and attorney to satisfy personally to include ... attorneys fees.” Joint Explanatory Statement of the Committee of Conference, 96th Cong.2d Sess. 8, reprinted in 1980, U.S.Code Cong. & Ad.News 2716, 2781, 2782; see abo Lewb v. Brown and Root, Inc., 711 F.2d 1287, 1289, 1292 (5th Cir.1983) (upholding an award of attorneys fees under section 1927 against plaintiff and his attorney jointly and severally), cert. denied, 464 U.S. 1069, 104 S.Ct. 975, 79 L.Ed.2d 213 (1984), modified, 722 F.2d 209 (per curiam) (remanding for trial court to determine whether attorneys’ fees for entire proceeding or just a portion of it should be awarded), cert. denied, 467 U.S. 1231, 104 S.Ct. 2690, 81 L.Ed.2d 884 (1984).
. The district court may consider whether Attorney Mills will have a conflict of interest if he continues to represent Quiroga in the proceedings on remand.
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 an appeal in a war risk insurance ease in which verdict was directed for the government. Premiums paid on the policy of insurance continued it in force until October 31, 1919. The only question presented by the appeal is as to the sufficiency of the evidence to establish total and permanent disability at that time. When the evidence is viewed in the light most favorable to plaintiff, as under the well-settled rule it must be on motion to direct a verdict against him, we think that it was sufficient to carry the ease to the jury, and that the learned judge below erred in directing the verdict.
There is evidence tending to show that when plaintiff was discharged from the army he was suffering from tuberculosis, some affection of! the heart, and psychoneurasthenia resulting from shell shock. The evidence is that he was not physically able to do any sustained manual labor and that his mental condition was such that he was unable to do lighter forms of work requiring the exercise of his mental faculties. There is evidence, it istmo, that ho did some irregular work for a few months on a farm and around the store of his father-in-law, and that, after his marriage, ho stayed around a store which was run by his wife; but there is evidence which, if believed, shows that he was not able to do the farm work which he attempted, and that around the store he did practically nothing and was not mentally able to do any-tiling. There is no work record to contradict those who testify to his mental and physical incapacity; and two physicians who examined him, one as early as the fall of 1919,. testify positively to hisi total and permanent disability.
We do not think that the testimony as to the tuberculosis of plaintiff would have been sufficient of itself to- take the ease to the jury.. As has been pointed out in a number of- recent eases, the mere faeti that a man has tuberculosis does not necessarily mean that he is .totally and permanently disabled. The tuberculosis may not result in total disability, •and, even if it have this result temporarily, unless the condition is such as'to preclude the possibility of arresting the disease, it cannot be said that the disability is permanent. Eggen v. U. S. (C. C. A. 8th) 58 F.(2d) 616. But in this ease, there was the added element ' of psychoneurasthenia resulting from shell shock; and, if the testimony as. to this is be-i lieved and taken in the light most favorable to plaintiff, his mental condition resulting therefrom was such as to render it impossible for him to pursue any substantially gainful occupation. Disability may result as well from the condition of the mind and nerves as from other causes. Where a man is so inattentive or forgetful as a result of mental disorder that he cannot be trusted to carry on even simple forms of work, he is as truly disabled from earning a livelihood as one who must refrain from work on account of the condition of his vital organs. The case at bar in so far as it relates-to disability arising from mental condition is almost “on all fours” with U. S. v. Gower (C. C. A. 10th) 50 F.(2d) 370, where the question as to total and permanent-disability was held to be one for the jury. See, also, U. S. v. Scott (C. C. A. 6th) 50 F.(2d) 773.
There may be difficulty in distinguishing between genuine eases of disability resulting from mental and nervous disorders and cases which are feigned, for statements as to inability to work on account of mental and nervous condition are easy to make and hard to refute. On the other hand, juries as ;a rule are composed of sensible men who are .not easily imposed upon. They should be instructed, in eases such as this, that the testimony of an interested party and those related to him is to be carefully scrutinized, and that testimony as to mental condition based upon mere statements of the insured should be received with great caution, unless corroborated by evidence of physical condition which could give rise to mental disorder or by the testimony of competent and trustworthy physicians who are expert in the diagnosis and treatment of mental diseases. In addition to this, the trial judge should not hesitate to give the jury the benefit of his views as to the facts, leaving to them, however, the final determination of the issue. Then, if they return a verdict which in his opinion is clearly wrong, he should not hesitate to- set it aside and grant a new trial.
There seems to be some confusion on the part of counsel as to the difference between the duty to direct a verdict and the duty to grant a new trial after verdict; and the contention is frequently made that the judge should direct a verdict whenever the evidence is such that he would be justified in setting the verdict aside. The distinction, however, is clear. Where theye is substantial evidence in support of plaintiff's case, the judge may not direct a verdict against him, even though he may not believe his evidence or may think that the weight of the evidence "is on the other side; for, under the constitutional guaranty of trial by jury, it is for the jury to weigh the evidence and pass upon its credibility. He may, however, set aside a verdict supported by substantial evidence where in his opinion it is contrary to the clear weight of the evidence, or is based upon evidence which is false; for, even though the evidence be sufficient to preclude the direction of a verdict-, it is still his duty to exercise his power over the proceedings before him to prevent a miscarriage of justice. See Felton v. Spiro (C. C. A. 6th) 78 F. 576. Verdict can be directed only where there is no substantial evidence to support recovery by the party against whom it is directed or where the evidence is all against him or so overwhelmingly so as to leave no room to doubt what the fact is. Gunning v. Cooley, 281 U. S. 90, 50 S. Ct. 231, 74 L. Ed. 720. Verdict may be set aside and new trial granted, when the verdict is contrary to the clear weight of the evidence, or whenever in the exercise of a sound discretion the trial judge thinks this action necessary to prevent a miscarriage of justice. For a learned and exhaustive discussion of this subject, see the opinion of Judge Lurton in Mt. Adams & E. P. Inclined Ry. Co. v. Lowery (C. C. A. 6th) 74 F. 463.
For the reasons stated, we think that there was error in directing a verdict for the defendant. The judgment below wiE accordingly be reversed, and the case remanded for a new trial.
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.
ORDER
This order is entered pursuant to the mandate of the Supreme Court of the United States filed in the office of the clerk of this court on June 22,1978. In our decision reported at 552 F.2d 159 (1977), we held that the Debtor, Ike Slodov, was personally liable under 26 U.S.C. § 6672 for a tax liability of corporations which he controlled for unpaid taxes withheld from wages prior to his assumption of control. The Supreme Court granted the certiorari, 434 U.S. 817, 98 S.Ct. 54, 54 L.Ed.2d 72 (1977), and thereafter reversed that portion of the judgment of this court which held the Debtor liable for wage withholding and FICA taxes required to be collected from employees’ wages prior to January 31, 1969. Slodov, Petitioner v. United States,-U.S.-, 98 S.Ct. 1778, 56 L.Ed.2d 251 (1978).
This cause is remanded to the district court with directions to reinstate that portion of its previous judgment in favor of the Debtor Ike Slodov with respect to taxes required to be collected from employees’ wages prior to January 31, 1969.
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.
MINTON, Circuit Judge.
The defendant-appellant registered under and was subject to the Selective Training and Service Act of 1940. In the case at bar, he was charged in two counts with the violation of Section 311, 50 U.S.C.A. Appendix.
In the first count it was charged as follows : “ * * * did unlawfully, knowingly, wilfully, and feloniously fail and neglect to perform a certain duty which he then and there was required to perform by the provisions of the Selective Training and Service Act of 1940, as amended, and the rules and regulations thereunder, which said duty the said defendant did then and there unlawfully, knowingly, wil-fully, and feloniously fail and neglect to perform was the duty of making true and correct answers to the questions contained in the questionnaire executed by the said defendant on May 12, 1941 * * *”
The other count charged as follows: “ * * * did unlawfully, knowingly, wil-fully and feloniously evade and attempt to evade service in the land or naval forces by falsely assuming and pretending to become a minister of religion * * * ”
No motion to quash or for a bill of particulars or a demurrer was filed by the defendant. At the conclusion of the Government’s evidence, the defendant filed a motion for a directed verdict and also motions to strike each count of the indictment, but gave no reasons for the motions to strike. The District Court overruled all three motions, and the jury returned a verdict of guilty. From judgment upon such verdict, the defendant has appealed.
The first error urged is that each count of the indictment is bad. As to the first count, counsel for the defendant admits that it charges the offense in the terms of the statute and that such an indictment may be good unless an element of the offense is charged by the use of generic terms, such as the word “duty” in the first count, in which case the indictment must set forth what the “duty” was. We think the first count sufficiently charges the offense in the terms of the statute and sufficiently alleges what that duty was. The duty was to make true answers to the questions in a questionnaire executed by the defendant. If he had any doubt as to the matter, he should have asked for a bill of particulars. This is not a case where the indictment fails to set forth an essential element. It is a case where the element is not set forth with sufficient particularity. The defendant, without challenging the sufficiency of the indictment which charged all the elements of the offense and without requesting a bill of particulars if the charge in general, broad terms were not sufficient, and without any showing that he had been misled, surprised, or prejudiced by the form of the indictment, went to trial and had his chance with the jury. Under such circumstances, it is our duty to sustain the indictment. 18 U,S.C.A. § 556; Lamar v. United States, 241 U.S. 103, 116, 36 S.Ct. 535, 60 L.Ed. 912; Dunbar v. United States, 156 U.S. 185, 192, 15 S.Ct. 325, 39 L.Ed. 390; Rosen v. United States, 161 U.S. 29, 34, 16 S.Ct. 434, 480, 40 L.Ed. 606.
What we have said as to the sufficiency of the first count applies to the other count.
At the time the defendant was arrested, the arresting officers entered his home and searched the premises, and took certain envelopes and papers that had been furnished him for use in a correspondence course of study for the ministry. On the trial, these papers were offered in evidence, and objection was made that they were inadmissible because obtained by illegal search and seizure. It would be sufficient to answer this objection to say that the court will not at the trial form and pursue a collateral issue as to the legality of the possession of the defendant’s papers by the Government. If the papers were otherwise admissible, the court will not inquire at the trial for the first time into the legality of the possession by the Government. The validity of the seizure could have been tested in a motion made before the trial for the return of the papers. No such motion was made. The papers were otherwise admissible, and there was no legal basis to object to their introduction. Adams v. People of State of New York, 192 U.S. 585, 24 S.Ct. 372, 48 L.Ed. 575; Rice v. United States, 251 F. 778.
Furthermore, the papers alleged to have been illegally seized and introduced in evidence were introduced to prove the defendant had used only one set of the papers to report only one lesson completed and sent in; and the defendant testified to the facts sought to be proved by the evidence introduced and claimed to have been seized illegally. If the seizure had been originally improper, the defendant by his testimony made the seizure harmless. Libera v. United States, 9 Cir., 299 F. 300, 301; Temperani v. United States, 9 Cir., 299 F. 365; White v. United States, 9 Cir., 16 F.2d 870, 872.
The court instructed the jury as follows: “If you believe from the evidence that any witness in this case has knowingly and wilfully testified falsely on this trial to any matter material to the issues in this case, then you are at liberty to disregard the entire testimony of such witness, except in so far as it has been corroborated, if you find it has been corroborated, by other credible evidence, or by facts and circumstances proven on the trial.”
To give this instruction was error, the defendant says, because it left to the jury the question of determining for itself what evidence was material, citing People v. Wells, 380 Ill. 347, 44 N.E.2d 32, 142 A.L. R. 1262; and People v. Flynn, 378 Ill. 351, 38 N.E.2d 49. These cases do hold that such an instruction standing alone may constitute error. But the case cited of People v. Wells, supra, recognizes that if other instructions which define the material issues in the case are given as part of the same charge, the giving of the instruction herein complained of is not error. The trial court in the instant case instructed at length defining the material issues. The instruction complained of did not stand alone, but was supplemented by ample other instructions that clearly defined what the material issues in the case were. This supplied the fault pointed out by the defendant; and the giving of the instruction under the circumstances was not' error. Henry v. United States, 50 App.D.C. 366, 374, 273 F. 330, 338; Mason v. United States, 5 Cir., 95 F.2d 612.
As the judge was excusing the jury, he stated: “Ladies and gentlemen, counsel has made a motion here for a directed verdict for the defendant. I am going to deny the motion and refuse the instruction.”
We do not think this statement was prejudicial. Henry v. United States, 50 App.D.C. 366, 372, 273 F. 330, 336. Even if the statement were prejudicial standing alone, it was made harmless by the court’s instructions that fully advised the jury to disregard any expressions of opinion the court might have made, disclaiming any intention to give expression to any opinion, and further instructing the jury as to their province.
Furthermore, the defendant made no objection to the court’s statement at the time it was made and took no steps to correct any supposedly prejudicial conduct so as to give the court a chance to correct any mistake it might have made. The objection cannot be taken here for the first time. United States v. Bass, 7 Cir., 64 F. 2d 467, 469; Luccioni v. United States, 6 Cir., 41 F.2d 741, 742; Baldwin v. United States, 9 Cir., 72 F.2d 810, 812.
The District Attorney made the following statement in addressing the jury: “Now, do you believe that Mr. Wernecke is a disciple of Mr. Hitler? Do you believe that Mr. Wernecke belonged to the German-American Bund and that he was interested in disseminating propaganda in this country through the Aryan Book Store as was testified to from the witness stand ?”
To this statement, defendant’s counsel objected that it was unfair, inflammatory, and outside the issues in the case. The trial court overruled the objection. No motion was made to take the case from the jury. One of the counts upon which the defendant was being tried was for evasion of sérvice by falsely assuming and pretending to be a minister of the gospel. It was in evidence that the defendant had said: “We National Socialists in this country must do something because due to the war and the events in Europe we will not be able to call our meetings and have our gatherings under the old name. We must then find ways and means of preventing induction into the armed forces of this country of our brother national socialists.”
It was also in evidence that the defendant had worked in a book store in Chicago known as the Aryan Book Store and had distributed the books and other literature of the German Library of Information. We take judicial notice that the National Socialists are the followers of Hitler, and that the notorious German Library of Information was an agency for the dissemination of Hitler’s propaganda in this country. This was evidence quite persuasive that one who wished to keep National Socialists out of the draft would not be above pretending that he was a minister, as ministers are exempt from service under the Selective Training and Service Act. The statement was a fair comment upon the evidence and its applicability to the issues. Furthermore, it might have been considered proper rebuttal to the argument of the defendant’s counsel in his attempt to purge the defendant of his apparent devotion to the cause of Hitler. The defendant’s counsel argued quite extensively to persuade the jury that the defendant was free from the taint of Hitler Naziism. Such fair rebuttal argument cannot be considered error. United States v. Socony-Vacuum Oil Company, 310 U.S. 150, 241, 242, 60 S.Ct. 811, 84 L.Ed. 1129; United States v. Skidmore, 7 Cir., 123 F. 2d 604, 610; Baker v. United States, 8 Cir., 115 F.2d 533, 544; Comeriato v. United States, 4 Cir., 58 F.2d 557, 558; Rice v. United States, 2 Cir., 35 F.2d 689, 695.
The defendant contends that he was classified as a minister by the only body authorized by law to make such classification, namely, his local Draft Board; that on the record, he is classified as a minister, and as such minister, he is entitled to exemption from service; and that this prosecution was a collateral attack upon the proceedings of the Draft Board.
In our opinion, this is not a collateral attack upon the determination of the Draft Board. The Draft Board determined the status of the defendant. The District Court, which is a court with criminal jurisdiction, did not attempt to change that status. It attempted only to try the defendant for his allegedly fraudulent conduct in obtaining that status. That is an issue the Draft Board could not try and determine. The action of the District Court was not a collateral attack in an effort to change the defendant’s status, but a trial of the defendant for the allegedly fraudulent method by which he obtained that status, which enabled him to evade service.
The same act which makes it obligatory upon the local Draft ■ Board to exempt theological students and ministers, and makes that local Board’s decision final on that issue, also makes it obligatory upon a District Attorney to prosecute a fraudulent registrant who effects evasion of service thereby.
Some other minor points were mentioned in the brief of the defendant, but, after consideration, we find no substance in them.
We find no error in the record, and the judgment of the District Court is affirmed.
Ҥ 311. Offenses and punishment.
“Any person charged as herein provided with the duty of carrying out any of the provisions of this Act, or the rules or regulations made or directions given thereunder, who shall knowingly fail or neglect to perform such duty, and any person charged with such duty, or having and exercising any authority under said Act, rules, regulations, or directions who shall knowingly make, or be a party to the making, of any false, improper, or incorrect registration, classification, physical or mental examination, deferment, induction, enrollment, or muster, and any person who shall knowingly make, or be a party to the making of, any false statement or certificate as to the fitness or unfitness or liability or nonliability of himself or any other person for service under the provisions of this Act, or rules, regulations, or directions made pursuant thereto, or who otherwise evades registration or service in the land or naval forces or any of the requirements of this Act, or who knowingly counsels, aids, or abets another to evade registration or service in the land or naval forces or any of the requirements of this Act, or of said rules, regulations, or directions, or who in any manner shall knowingly fail or neglect to perform any duty required of him under or in the execution of this Act, or rules or regulations made pursuant to this Act, or any person or persons who shall knowingly hinder or interfere in any way by force or violence with the administration of this Act or the rules or regulations made pursuant thereto, or conspire to do so, shall, upon conviction in the district court of the United States having jurisdiction thereof, be punished by imprisonment for not more than five years or a fine of not more than $10,000, or by both such fine and imprisonment, or if subject to military or naval law may be tried by court martial, and, on conviction, shall suffer such punishment as a court martial may direct. No person shall be tried by any military or naval court martial in any case arising under this Act unless such person has been actually inducted for the training and service prescribed under this Act or unless he is subject to trial by court martial under laws in force prior to the enactment of this Act. Precedence shall be given by courts to the trial of cases arising under this Act.”
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.
YOUMANS, District Judge.
This is an appeal under section 129 of the Judicial Code (section 227, title 28, U. S. C. [28 USCA § 227]) by drainage district No. 17 of Mississippi county, and R. C. Rose, B. A. Lynch, and 0. W. Afflick, as directors of said district, from an order of the District Court appointing a receiver for said district. The case had been removed from the chancery court of Mississippi county to the United States District Court. Prior to the removal, a receiver had been appointed by the chancery court. A motion to remand was filed in the District Court, which was overruled. In the same order overruling the motion to remand, the District Court appointed a receiver other than the one appointed by the state court. The receiver appointed by the state court had taken possession of certain moneys, records, books, and other property belonging to the district. Upon those facts counsel for appellants in their reply brief make the following statements:
“Notwithstanding the fact that the property and affairs of the district were in the custody of the state chancery court, the district court appointed a receiver of the same property and affairs, and directed him to apply to the state chancery court for an order to turn them over to the federal receiver. The application was made, but the chancery court refused to make such an order.
“The present appeal is from the order appointing a receiver, and wrestiijg the possession of the property and affairs of the district from the custody of the state chancery court. The propriety of this order is the sole issue involved; This question is fully argued in appellant’s original brief, where the pertinent authorities are cited.
“But appellees say that the district court acquired possession of the property and affairs of the district through the alleged removal of the Harper ease, and that there was, therefore, no breach of the comity that should obtain between courts of concurrent jurisdiction. We wish to analyze this contention, with perfect frankness, and without any indulgence in refinements or subtleties.
“We concede that the removal of a receivership cause from a state court to a federal court carries the receivership with it, and transfers the’Custody of the property from the state to the federal court; and that the federal court can retain the receiver appointed by the state court, or replace him with one of its own choosing. We also concede that if the federal court denies a motion to remand, its judgment cannot be questioned collaterally, even though it appears on the face of the record that the cause was not removable. In making these concessions, we are stating a much stronger ease for the appellees than they have stated themselves. If, therefore, the record presented a case within the purview of the principles which we concede, the appellant could not ask this court to reverse the order appointing the receiver, on the ground that the property of the district was in the custody of the state chancery court, and the federal court had no right to wrest its possession from the state court.”
In the same brief counsel for appellant also make the following statement: “Unfortunately, no appeal can be prosecuted from the order of the district court denying the motion to strike the record in the Harper case from the file, or in the alternative, remanding the case. It may be that if the order appointing a receiver is set aside, the district court may see fit to appoint a receiver in the Harper ease. If so, an appeal could be prosecuted from that order, and the question of the removability of that ease be finally determined.”
While it is thus conceded that the order overruling the motion to remand cannot be appealed from, yet for a full understanding of the case it is necessary to give its history from the beginning, including the removal proceedings.
On August 1, 1930, E. Harper and C. E. Crigger filed a complaint in equity in the Mississippi county, Ark., chancery court, Chickasawba district, against drainage district No. 17 of Mississippi county, Ark., and R. C. Rose, B. A. Lynch, and C. W. Affliek, as commissioners of said district.
The allegations of the complaint are that drainage district No. 17 of Mississippi county was created by Act No. 103 of the General Assembly of the state of Arkansas in 1917 (page 485) for the purpose of constructing and maintaining a system of levees, canals, and ditches to protect and drain the lands in the district, that the district issued, sold, and delivered its negotiable bonds aggregating $3,985,500, which “were sold to various parties and were finally purchased and now are owned by the investing public,” and that benefits were assessed and levied upon each tract of land in the district and the entire revenues of the district were pledged as security for the bonds issued and sold.
The complaint contained also the following allegations:
“On account of the failure of the owners of large bodies of lands to pay the annual drainage taxes as they accrued, the tax lien was foreclosed, and the district was compelled, in the absence of any purchasers of said lands, to bid them in for the district. The total acreage thus bid in by the district, and now owned by the district, is approximately Fifteen Thousand. The district has been wholly unable to sell any of these lands, though it has made an effort to do so, and there is no market for them at the price the district is required by law to charge for them.
“The ownership of these lands by the district and the consequent failure of the lands to contribute to the revenues of the district, has shifted the tax burden disproportionately on the paying lands, thereby destroying the uniformity of taxation among the landowners, and causing the forfeiture of large bodies of additional lands each year that otherwise could and would have paid the drainage tax, thus rendering the district progressively less able to meet its obligations and to accomplish the purpose for which it was created.
“The delinquencies referred to have reduced the revenues of the district to such an extent that the district is wholly unable to meet its outstanding obligations, and it was compelled to default in the payment of the interest on its bonds, including- the interest on the bonds held by the plaintiff, E. Harper, due August 1,.1930, such interest amounting in tho aggregate to $120,000.00. The district has not sufficient funds on hand and will not have sufficient funds during the present year, to' pay this interest, nor will it have sufficient funds to pay either principal or the interest on its bonds as they severally accrue.
“The district has done no maintenance work whatever. As a result, parts of the canals and ditches have filled up, and a condition is fast approaching in which, for lack of proper maintenance, the entire system will cease to function. If this happens, the improvement will be a total failure, and there will be an irreparable loss to the landowners, the creditors, and the public alike.
“The district has $90,000 in cash on hand, a part of which should be used for maintenance. This is imperatively demanded in order to protect enormous bodies of cultivated lands in the district which will be overflowed in the event of high water if the ditches which are now stopped up are not cleaned out. The balance of the funds on hand should be applied pro rata, to the payment of tho past duo interest on the outstanding bonds. Certain bondholders are threatening by suit or otherwise, to subject these funds to payment in full of the interest due them, to the exclusion of the interest due the other bondholders. To protect everybody alike, this fund should bo put beyond the reach of garnishment or other judicial process by taking it into the custody of this court, so that it can be administered according to the equities of all parties concerned.”
The complaint also contained the following paragraph: “Plaintiff E. Harper is the owner and holder of certain of the bonds of the district, and he sues on his own behalf, and in behalf of all the owners and holders of bonds of the district who may wish to join herein. Plaintiff, C. E. Crigger, is the owner of cultivated lands in the district, which are assessed for improvement taxes by the district, and he sues on his own behalf, and in behalf of all other landowners in the district who may wish to join herein.”
The prayer of the complaint is as follows :
“First. For tho appointment of a receiver to take charge of the property, funds and affairs of the district, to be administered under appropriate orders of this court.
“Second. For an order directing tho receiver to ascertain at once what maintenance work is imperatively required in order to protect landowners in various parts of tho district from irreparable injury from fills and obstructions in the canals and ditches, and for a further order, on the coming in of the report of tho receiver, authorizing and directing him to remove such fills and obstructions, to the end that the canals and ditches may function and the threatened injury to tho contiguous lands be averted, and authorizing tho expenditure by the receiver of whatever amount may be necessary for the purpose, in order to conserve the interest of the landowners, the creditors and tho public.
“Third. For such other, further and general relief as the circumstances may demand and warrant, and to equity may seem meet and proper.”
The answer of the drainage district, omitting eaption and signature of defendants’ attorneys, was as follows:
“Comes Drainage District iSTo. 17 of Mississippi County, Arkansas, by its duly and legally acting Board of Commissioners, and for its answer to the complaint of the plaintiffs filed herein;
“Admits that the allegations contained in the complaint of plaintiffs are true in substance and fact.
“The defendant herein joins the plaintiffs in their prayer for the appointment of a receiver herein and to the end that the expense of such a receivership may be held to a minimum and that the receiver and the court may have tho benefit of the knowledge and experience of the Board of Commissioners and its organization, the defendant hereby tenders to the receiver and to the Court whatever assistance it may be able to render to the Court and tho receiver, sub ject to tho direction of the Court.
“Wherefore having fully answered, defendant prays that a receiver be appointed as set out in the prayer of the plaintiffs’ complaint; that this defendant bo directed by the Court and the receiver to do and perform such service as is required in the matter and for all other relief to which it may be entitled.”
The object of the suit as appears on the face of the complaint was to have funds belonging to the district applied to the making of certain repairs in the levees and ditches. The answer of the drainage district and the commissioners shows that they were in full accord with the purpose of the sujt. There was no controversy between the plaintiffs and the defendants, but the complaint showed that what was used for the purpose of repairing levees and ditches must be taken, from the funds which would otherwise be applicable to the payment of interest on and principal of the bonds.
In order to understand fully the situation on the day these proceedings were had in the chancery court of Mississippi county, a reading of Act No. 103 referred to in the complaint is necessary. It is found at page 485, volume 1, of the Acts of the General Assembly of Arkansas of 1917. The act is entitled “An Act to organize a drainage and levee district in Mississippi county to be known as Drainage District No. 17, for the purpose of reclaiming the lands therein by drainage ditches and levees, and to enable said district to borrow money; for the purpose of abolishing the Keystone Drainage District and for other purposes.”
The first section creates the district and describes the lands included therein. Section 2 (page 491) appoints the members of the board of directors of the district, and they are declared to be a corporate body by the name of drainage district No. 17.’ Section 4 (page 492) provides that the board shall prepare plans for the improvements contemplated by the act and procure estimates from competent engineers as to the cost of such improvements. Section 9 (page 495) provides that the board shall, immediately upon the filing of the plans with the clerk, proceed to view the lands and assess the value of the benefits to accrue to each tract by reason of such improvements. That section also provides that, when the assessment is completed, it shall be deposited with the clerks of the county courts of Mississippi county, and that the clerk shall give notice of the fact by publication for two weeks through Some weekly newspaper published in Mississippi county. Section 13 (page 499) provides that, after such notice has been given for two weeks, the board may apply to the county court and secure an order, which shall have the force of a judgment, providing that there shall be assessed upon the real property of the district a tax sufficient to pay the estimated cost of the improvement. Section 14 (page 500) provides that the amount of taxes shall be annually extended upon the drainage tax books of the county in which such lands lie and shall be collected by the collector of such county along with other taxes.
Section 15 (page 501) reads as follows: “As soon as the board is organized or as soon thereafter as it deems advisable, it shall proceed to a sale of bonds or negotiable notes to pay for the. expenses of said improvements or preliminary expense, and said bonds or notes shall be and constitute a lien on all real property taxed in the district the same extent that the tax levied as heretofore provided constitute a lien; and all revenue derived from taxation, sale of bonds or otherwise, under the provisions of this Act, shall be used and expended in accordance with the provisions of this Act.”
Section 29 (page 502) reads as follows: “If it should be determined that the tax as levied on the first assessment for the improvements to be made is not sufficient, to cover the cost and expense of making said improvements, then the board shall have the right to secure an additional taxation, by making application to the said county court, securing an order therefor, after which the same procedure shall be taken for assessment and collection as has been heretofore provided for the original taxation; provided that when any work has been begun under the provisions of this Act, which shall not be completed and paid for out of the first or other levy, it shall be the duty of said county court to make such levy for its completion from year to year until it is completed, provided that the total levy shall in no case exceed the value of the benefits assessed on said property; and the performance of said duty shall be enforced by mandamus by any person or board interested.”
Section 23 (page 504) contains the following paragraphs:
“In order to meet the initiatory expenses and to hasten the work, the board may borrow money at a rate of interest not exceeding six per cent per annum; may issue negotiable bonds or notes therefor, signed by the members of the board; and may pledge all assessments for the repayment thereof. It may also issue to the contractors who do the work, its negotiable evidence of debt, bearing interest at not exceeding six per cent.
“No bonds issued under the terms of this Aet shall run for more than thirty years and all issues of bonds may bo divided so that a portion thereof may mature each year, as the assessments are collected, or they may all be made payable at the same time, with proper provisions for a sinking fund.”
Section 26 (pago 506) reads as follows: ‘‘The district or corporate body herein created shall continue to exist after the completion of all ditches and levees and any other work initiated under this Aet, and such existence shall continue for the purpose of preserving the work done, cleaning out, deepening, widening ditches and keeping all of said work repaired whenever and wherever necessary.”
Section 27 (page 506) provides for the collection by suit by the board of delinquent taxes. The last paragraph of that section reads as follows: “In case the board shall fail to commence suit within sixty days after the taxes become delinquent, the holder of any bond issue by the district shall have right to bring suit for the collection of the delinquent assessments, and the proceedings in such suit brought by the bondholder shall in all respects be governed by the provisions applicable to suit by the board.”
Section 29 (page 512) reads as follows:
“All bonds issued by the board, under the terms of this Act shall be secured by a lien on all lands in the district, and the hoard shall see to it that a tax is levied annually, and collected under the provisions of this bill, so long as it may he necessary to pay any bond issued or obligation contracted under its authority; and the making good said assessment or levy, and collection may he enforced by mandamus.
“If any bond or interest coupon on any bond issued by said board is not paid within thirty days after its maturity, it shall be the duty of the chancery court of the county on the application of any holder of such bond or interest coupon so overdue, to appoint a receiver to collect the taxes aforesaid, and an assessor to reassess the benefits if necessary, and the proceeds of such taxes and collections shall be applied, after payment of costs, first to overdue interest, and then to payment pro rata of all bonds issued by the said board which are then due and payable; and the said receiver may be directed by suit to foreclose the lien of said taxes on said lands; and the suits so brought by the receiver, shall he conducted in all matters as suits by the hoard, as hereinbefore provided, and with like effect; and the decrees and deeds herein shall have the same presumptions in their favor; provided, however, that when all such sums have been paid, the receiver shall be discharged, and the affairs of the district conducted by the board as hereinbefore provided.”
The second paragraph of section 30 (page 513) reads as follows: “That to the payment of both the principal and interest of the bonds to be issued under the provisions of this Act, the entire revenues of the district arising from any and all sources, and all lands, real estate, railroads and tram-roads (is) subject to taxation in the district are by this Act pledged; and the board of directors are hereby required to set aside annually from the.first revenue collected from any source whatever, a sufficient amount to secure and pay the interest on said bonds, and a sinking fund for their ultimate retirement, if a sinking fund is contracted for.”
It thus appears from section 23 (page 504) that the assessments are pledged for the repayment of negotiable bonds or notes, and by section 30 (page 513) that “the entire revenues of the district arising from any and all sources” are pledged to the payment of principal and interest of the bonds to he issued under the provisions of the act. It also appears from section 26 (page 506) that the district should continue as a corporate body after the completion of the ditches and levees for the purpose of preserving the work done, cleaning out, deepening, widening ditches, and keeping all of said work repaired whenever and wherever necessary.
The aet does not state from what sources the money shall come for the making of such repairs. The other sections referred to devote all of the assessments and all of the revenues to the payment of the interest and principal on the bonds or other obligations.
The aet provides for a suit by a single bondholder upon the failure to pay the interest on, or the principal of, his bond. That authorization contemplated a class suit, and provided for a pro rata distribution of tbe assessments collected through such a suit to the payment of all past-due coupons and bonds. The aet does not authorize a suit by any bondholder to divert any part of the assessments or revenues to a,ny purpose other than the payment of the interest and principal of the bonds. The interest of Harper as a bondholder was antagonistic to the interest of Grigger as a landowner. Harper joined with Grigger to divert a part of the funds from the purpose for which they were pledged and to apply them to another purpose. The answer of the drainage district and of the members of the board of directors shows that they united with Harper and Crigger in that undertaking.
On August 20, 1930, the Guardian Trust Company, a corporation of Cleveland, Ohio, and Otis & Co., a partnership composed of individuals some of whom were residents and citizens of the state of Ohio, -others of the state of Colorado, others of the state of New York, others of the state of Illinois, and another of the state of Michigan, and another of the state of Pennsylvania, appeared specially and filed a motion praying that they be made parties defendant to the eause “to the end that they may present a petition and bond for removal to the United States District Court for the Jonesboro Division of the Eastern District of Arkansas.” The motion was accompanied by a petition of the same parties alleging the citizenship as above stated, and stating that Otis & Co-., a partner-, ship, represented holders of bonds of the district. aggregating $1,682,500, and (that such.representation was under a pledge executed under date of February 4, 1918.
The petition also alleged that the Guardian Trust Company represented holders of bonds of the district aggregating $2,300,000, and that such representation was under a pledge executed August 28, 1920.
The petition contained, among others, the following allegations:
“That said action named in the caption and instituted by the said C. E.. Crigger and E. Harper is a suit of a civil nature being a suit in equity and the immediate purpose thereof was to secure the appointment of a receiver to take possession of $90,000.00 in cash which was then deposited in a local bank at Blytheville, Mississippi County, Arkansas, and the same amount is also one of the items in controversy herein.
“The.petitioners allege that the suit brought by the said C. E. Crigger and the said E. Harper was a friendly suit instituted by collusion between the said C. E. Crigger and E. Harper on the one hand and the district and its directors, R. C. Rose, B. A. Lynch and C. W. Affliek on the other hand, and expressly allege that E. Harper was added as a plaintiff in the said suit for the fraudulent purpose of attempting to defeat a removal of this cause to the United States District Court for the Jonesboro Division of the Eastern District of Arkansas. * * *
“The said Drainage District, through its directors the said Rose, Lynch and Affliek, has been negotiating with the five investment banking houses representing the bondholders for some time previous to the filing of this suit, by the said Crigger and the said Harper, requesting and in fact demanding that the bond dealers should consent to the following program, waiving the provisions of the said bonds and pledges to-wit: i
“(a) That the bondholders should consent that not less than $15,000.00- be diverted from the amount of tax money collected by the district prior to August 1, 1930, and applied to the rebuilding of levees and cleaning out of drifts and willows and other rehabilitation work in the district and this.demand was eo-upled with the statement that the district was functioning only 50% because such repairs and rehabilitation work had not been done.
“(b) That the investment banking houses pay the deficiency necessary to meet the coupons due August 1,1930, after the deduction of the $15,000.00' or more for rehabilitation work.
“(c) That the bond dealers consent to a revision and readjustment of the assessments of benefits throughout the district and forfeit a part of the total pledge of benefits set out in the bond resolutions previously referred to.
“(d) That thereafter the entire bond issue be refunded in some manner so as to reduce tax payments within said district.
“These demands which had been made by the district and by its directors, the said Rose, Lynch and Affliek, are identical with the relief sought by the ■ said E. Harper and C. E. Crigger, and the allegations as to the necessity for a receiver are substantially identical with the allegations of the demand made in writing upon the investment banking houses to the said district and its directors a short time before the filing of the said suit of Harper and Crigger.”
The petition then alleges that the cause is removable, and for one-of the reasons says: “Because a rearrangement of the parties should be had according to their real status and demands and if and when such a rearrangement of parties plaintiffs and defendants be made then it will manifestly appear that the said plaintiffs C. E. Crigger and E. Harper are merely presenting in this suit the demands previously made upon the bondholders by the said Rose, Lynch and Affliek and by the said Board of Directors of Drainage District No. 17 of Mississippi County, through the said individuals and through their attorneys, all of which demands coincide exactly with the alleged cause of action and demands set up by the plaintiffs Harper and Crigger in the present suit. As more fully stated above the said district has already demanded of the bondholders that a portion of tho tax money be diverted to repairs and rehabilitation work; that a reassessment of benefits be permitted of the lands of the district; and that a refunding program be adopted sealing down the payments to be made to the bondholders. In substance all said demands are set up in the present complaint and from the fact that the district, entered its appearance and consented to receiver in the State Court without any notice whatever to the bondholders or to- the trustees, it is evident that there is no controversy between the plaintiffs Crigger and Harper on one hand and the drainage district and its commissioners on the other, and upon a rearrangement of the parties, both the present plaintiffs and defendants would be placed on the side of the plaintiffs and the real defendants in this cause are the bondholders and their trustees, petitioners herein.”
A bond for removal accompanied the petition.
On the 25-th of August, 1930, the Chicago Mill & Lumber Corporation filed a motion entitled “Motio-n of Chicago Mill & Lumber Company to be made party plaintiff.” The motion, omitting caption and signature, reads as follows:
“Comes the Chicago Mill & Lumber Corporation and makes itself a party plaintiff in the above entitled cause, and for cause of action, says:
“This plaintiff is a private corporation-organized and existing under the laws of the State of Delaware. Its principal business office is located at Chicago, Illinois, and it is duly authorized as a foreign corporation to do business in the State of Arkansas, and maintains an office and place of business at Blytheville, Arkansas.
“It is the owner in fee simple of certain lands situated within Drainage District No. 17 of Mississippi County, Arkansas, a list of which is attached hereto- as a part hereof, marked Exhibit ‘A.’
“The plaintiff, E. Harper, is an employee in the office of this plaintiff at Memphis, Tennessee and is the legal owner and holder of the bonds mentioned in the complaint heretofore filed in the above entitled cause, but holds the legal title thereto as trustee for the use and benefit of this plaintiff, who is the equitable owner of said bonds.
“This plaintiff adopts all tho allegations of the complaint filed by E. Harper and C. E. Crigger, and prays as prayed in said complaint. In addition thereto-, this plaintiff prays as follows:
“For an order authorizing and directing' tho receiver to repair the levees constructed by the district and to remove the fills and other obstructions in the ditches, to the end that the levees, canals and ditches may function and the threatened injury to the contiguous lands be averted, and authorizing the expenditure by the receiver out of any moneys in his hands or coming into his hands, of whatever amount may be necessary for this purpose, in order to- protect and conserve the interests alike of the landowners, the creditors and the public.
“And this plaintiff prays for such other, further and general relief as the circumstances ma,y demand _ and warrant, and to equity may seem meet and p-roper.”
On the 30th of August, 1930, the First National Bank of Blytheville, Arkansas, filed in the, samo cause a motion entitled “Motion of First National Bank of Blytheville to- be made party plaintiff.” The motion, omitting caption and signature, reads as follows :
“Comes now the First National Bank of Blytheville, Arkansas, and having first obtained leave of tho court to be joined as a party plaintiff in this cause, says:
“That it is the owner and holder of bonds of the Drainage District No. 17 of Mississippi County, Arkansas, of the par value of $8000.00, said bonds being numbered 1049, 1050, 3051, 3052, 1053-, 12-92, 1336, 1979 and maturing August 1, 1935, August 1st, 1937, and August 1st, 1941. That the semi-annual interest due upon said bonds on the 1st day of August, 1930, is past due and unpaid, and that default has been made by said district in the payment of the interest due thereon.
“This plaintiff further states that it is informed, and believes, that there is now in the hands of the receiver heretofore appointed by this court for said district, the approximate sum of $89,000.00, derived from the collection of assessments levied by said drainage district to pay the principal and interest of the bonds issued thereby. Plaintiff further alleges that it is informed, and believes, that much of the lands of the district are delinquent in the payment of the annual assessments levied thereon and that suits should bo filed by said receiver to enforce the eollection of said assessments, to the end that the funds derived therefrom may be applied on the bonds and interest issued and outstanding by said district.
“Wherefore this plaintiff prays that an order be issued by this honorable court, ordering and directing the receiver heretofore appointed in this cause to proceed in the manner provided by law for the collection of all sums due said district upon the assessments heretofore levied upon the lands therein; that said receiver be ordered and directed to apply the funds in his hands, pro rata, upon the interest due upon the various bonds issued and outstanding by said district, and to take such other and further steps for the preservation of the assets of said district and the payment of the indebtedness and obligations of said district, as to the court may seem equitable, just pnd right.”
The record does not show orders of court making the Chicago, Mill & Lumber Corporation and the First National Bank of Blythe-ville parties plaintiff.
On August 30,1930, an amendment to the complaint of the district and directors was filed which, omitting caption and signatures, reads as follows: “Plaintiffs allege that drainage taxes due the district are delinquent and ought to be collected, wherefore they pray for an order directing the receiver to collect such taxes, 'and if necessary, to bring suit to foreclose the lien of such tax on the lands as provided by law.”
On September 4,1930, the court made the following order on the motion of the Guardian Trust Company and Otis & Co.:' “The petition of The Guardian Trust Company and Otis & Company as trustees/ to be made parties defendant, coming on to be heard, it is ordered that they be and they are hereby made parties defendant for the special purpose of permitting them to file a petition for removal to the United States Court for the Jonesboro Division of the Eastern District of Arkansas.”
On the same day the court in the same cause made the following order upon the petition for removal:
“This cause coming on for hearing upon petition and bond of The Guardian Trust Company and Otis & Company, trustees, heretofore made defendants in order that they might file petition and bond for removal, upon their petition and affidavits asking an order transferring this cause to the United States District Court for the Jonesboro Division of the Eastern District of Arkansas;
“The court finds that the petitioners have filed their bond duly conditioned with good and sufficient sureties as provided by law and have given due and legal notice of the petition for removal. But the court further finding that the said petition and affidavits do not constitute a sufficient petition for removal to said United States District Court,
“Now Therefore said bond is hereby approved, but the said petition is overruled and refused.”
On the 15th of September, 1930, in the District Court of the United States for the Jonesboro Division of the Eastern District of Arkansas, the Guardian Trust Company, a corporation, as trustee, and Otis & Co., as trustee, filed a complaint against drainage district No. 17 of the Mississippi county, Ark., and B. C. Bose, B. A. Lynch, and C. W. Affliek, directors of said district. The complaint alleged that the plaintiffs were trustees for bondholders under two different pledges issued by the drainage district, that the interest coupons on the bonds due August 1,1930, were unpaid by the district, and that thirty days thereafter, under the terms of the statute, the trustees were authorized to secure the appointment of a receiver to take charge of the assessment of benefits and that the suit was brought on behalf of themselves as trustees under the respective pledges to them, and also on behalf of any bond owner or holder who might desire to join. The prayer of the complaint was that the pledge of the revenues of the district be foreclosed, and that a receiver be appointed to take charge of the revenues and assets of said district, and to collect a special assessment sufficient to pay the coupons and bonds then due, and those that might mature thereafter, and for all other proper relief.
On September 19, 1930, the plaintiffs, in the suit brought in the chancery court of Mississippi county, filed in the District Court of the United States for the Jonesboro Division 'of the Eastern District of Arkansas, a response to petition for removal and motion to remand, which, omitting caption and signature, reads as follows:
“The plaintiffs, responding to the petition for removal, and moving the court to remand the cause, respectfully say:
“That plaintiffs in this suit are: C. E. Crigger, a citizen and resident of the State of Arkansas, who owns land in the Drainage District, First National Bank of Blythe-ville, a corporation organized under the Jaws of Arkansas, and a citizen of Arkansas, which owns $8,000.00 of tho bonds of the¡ Drainage District, E. Harper, a citizen and resident of Tennessee, who holds the legal title to certain bonds of the district, in trust, however, for the Chicago Mill & Lumber Corporation; and the Chicago Mill & Lumber Corporation, a corporation organized under the laws of the State of Delaware, which owns lands in the district and is the equitable owner of the bonds held by E. Harper.
“The sole defendants are: Drainage District No. 17 of Mississippi County, Arkansas, a quasi public corporation created by a special act of the legislature of Arkansas, and having its domicile in this state; and R. C. Rose, B. A. Lynch and C. W. Affliek, who are citizens and residents of this State, and who together compose tho board of directors of the Drainage District.
“As two of the plaintiffs, and all of the defendants, are citizens and residents of this state, it is not a suit of which the district courts of the United States are given original jurisdiction by the Act of Congress, and for this reason the cause is not removable on the ground of prejudice or local influence.
“Neither the Guardian Trust Company, nor Otis & Company, as trustees, are parties to tho suit. They are not defendants, and they have not been sued. They have not been made or become defendants. The complaint states no cause of action against them, and no relief is sought as to them. If interested in the subject matter of the suit, they are only interested indirectly. They are not necessary, indispensable, proper or actual parties. They have refused to become actual parties to the suit.
“They filed a petition in tho office of the clerk of the Chancery Court of Mississippi County for the Chickasawba District entitled as if filed in this cause, praying for an order removing the cause to this court, hut they were not defendants, or parties in any character, when the petition was filed, and the act of filing the petition was in law a nullity.
“They also filed a motion in said court to be made parties defendant for the qualified, limited, sole and exclusive purpose of filing a petition and bond for removal to this court, without otherwise submitting themselves to tho jurisdiction so that any relief, if asked could be granted against them, or they could bo bound in any manner by the orders and decree of that court. The court entered an order making them parties defendant in this qualified sense, for the sole and exclusive purpose of filing the petition and bond for removal.
“The Guardian Trust Company and Otis & Company, as Trustees, are not parties defendant, within the meaning and purview of the Removal Act of Congress (Judicial Code, § 28 [28 USCA § 71]) and have no right to file a petition for removal on any ground.
“They have no interest in their fiduciary capacity in this controversy, and they arc not authorized by the terms of their respective pledges, nor have they been authorized by the bondholders, or any of them, to become parties defendant. The pledges themselves, which are tho patents of their power, give them no authority to become parties defendant, or to hind the bondholders by doing so. The power conferred is very limited, and is confined to just one contingency. The thing pledged is tho ‘uncollected assessment' levied by the county court upon the real property’ in the district, and ‘all assessment that may hereafter be levied thereon.’ The sole and only authority conferred on the trustees is the following:
“ ‘In caso any property owner makes default in the payment of any assessment,’ the trustees ‘may take all steps, whether by suit in chancery or by a mandamus, for the enforcement of the rights of the holders of said bonds that are granted to said holders,’ or to the district by the terms of the act creating the district.
“The only right granted by the act creating the district to the bondholders
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.
ALDRICH, Chief Judge.
This is a diversity action containing counts in tort for deceit and in contract, with a counterclaim for the return of money advanced. Following jury verdicts for plaintiff on the tort claims, and for the corporate defendant on the contract claim and on its counterclaim, all parties appeal.
Plaintiff, B & B Electroplating Co., is a New Jersey corporation whose prin-pal officers and employees are E. Brown and H. Brown. In 1962 it was engaged in copperplating, chiefly extruded aluminum busbars. Defendant Magnat Corporation is a Massachusetts corporation which makes steel and aluminum cylinders of the type used as rollers in the printing trade. For this purpose they must be copperplated. Magnat’s cast aluminum cylinders, while potentially desirable because of their light weight, were difficult to plate because of their porosity. In 1962 defendant Bernard, Magnat’s principal officer, learned that plaintiff had successfully plated three of Magnat’s aluminum cylinders. Bernard called upon plaintiff and asked if it would be willing to do some more on order. As a result, plaintiff plated thirty-four aluminum cylinders, only two of which were ultimately unacceptable. Bernard then called on the Browns, congratulated them on their success, and suggested that plaintiff move to Massachusetts to do Magnat’s aluminum work. Plaintiff was reluctant, but, for reasons discussed below, was persuaded to move. The venture was a total failure, and plaintiff suffered considerable loss.
In the tort action, plaintiff claimed that both its moving and the venture’s failure were caused by three misrepresentations made by Bernard on behalf of Magnat: that Magnat “had a substantial demand for and orders for aluminum rollers”; that it had the capacity to produce aluminum cylinders suitable for plating; and that the orders would not fall below 20,000 square inches a day. Bernard testified that he spoke to all of these matters, but only in terms of hope. The Browns testified that he spoke in terms of affirmative statements of fact.
In denying the post trial motions based upon alleged lack of evidence the court said, in part,
“My view is that Bernard scrupulously told the truth, both during the business negotiations with the Browns and at the trial before the Court and jury. Yet I can understand that the Browns were in good faith (though I believe mistaken) when they testified that they interpreted Bernard’s words to mean not merely that he expressed his honest opinion as to the business B & B might get, but also he represented the actual business which was already available and would flow to B & B if the Easthampton plant were begun. I also understand how, when the Browns testified as to their interpretation, a jury could reasonably find that the Browns were telling the truth, that a reasonable man would have interpreted Bernard’s words in the sense in which the Browns interpreted them, that Bernard made representations of fact as to specific items of future of business, that those representations of fact were material, that they were intended to induce reliance by B & B, that they actually did induce such reliance, and that such reliance caused damage to B & B in the amount of $22,500.”
We have reviewed the record, and find substantial basis for this statement, construing it, as we construe the substance of the Browns’ testimony, to mean that Bernard represented not that he had actual orders for aluminum, but a present potential in the amount stated. Plaintiff’s difficulty here, in our opinion, is not the asserted one, that it failed to show that these representations were made. Rather, it failed to show their falsity. Plaintiff’s lack of success was due simply to its inability to plate the cylinders supplied to it by Magnat. If the total demand was overstated, it is clear that plaintiff could not satisfy even what demand there was.
This brings us to what we consider the nub of this portion of the case. It is common ground between the parties that, although plaintiff eventually successfully plated thirty-two of the thirty-four cylinders originally submitted by Magnat, many had to be done over, some more than once, before they were acceptable. When Bernard suggested that plaintiff move to Massachusetts, the Browns both said that they could not profitably do so unless Magnat were able to remedy the porosity of its cylinders. Bernard replied that Magnat was moving its plant and buying all new foundry equipment. By Bernard’s version, he merely “hoped” the surface of the new product would be better. E. Brown testified that Bernard stated flatly that “the new product would be similar to an extrusion,” i. e., relatively nonporous. H. Brown testified:
“[We told Bernard that] ‘we could not live with the surface we are now plating.’ He says, ‘Well, there shouldn’t be too much concern as far as that goes.’ So he said he would be or he could assure us that our surface that we would receive from him would be of the same appearance as the [extruded] bar we were doing in the shop that particular time. * * * Mr. Bernard explained that there would be no worries in the surface of the material.”
None of this testimony was shaken on cross-examination. Concededly, Magnate new product proved to be no different from its old.
The jury clearly was warranted in believing the Browns’ account of these conversations rather than Bernard’s. It could have found that the Browns reasonably construed Bernard’s statements not as mere “sellers talk,” or prophesies of facts presently unaseertainable, Harris v. Delco Products, Inc., 1940, 305 Mass. 362, 25 N.E.2d 740; Yerid v. Mason, 1960, 341 Mass. 527, 170 N.E.2d 718, but as representations of the existing and known fact that the equipment to be installed in the new plant produced aluminum comparable in porosity to the extruded metal. Cf. Pietrazak v. McDermott, 1960, 341 Mass. 107, 167 N.E.2d 166; Chatham Furnace Co. v. Moffatt, 1888, 147 Mass. 403, 18 N.E. 168. The evidence would warrant the conclusion that Bernard misrepresented that he knew the capabilities of the new equipment, and that plaintiff reasonably relied on the misrepresentation to its detriment. There was no error in permitting the verdicts to stand on the counts for deceit.
This would be the end of this part of the case were it not for the fact that in refusing to set aside the verdicts in the tort action or to direct verdicts for the defendants, the district court made some broad statements that we would not wish to be thought, by affirming the judgment, to approve sub silentio. Although, as previously quoted, the court held that the jury could reasonably find in plaintiff’s favor, in a subsequent paragraph it said that it was doing so, in part, in recognition of our recent rulings “which allow tort plaintiffs to recover on a scintilla of evidence.”
The court did not identify any decisions of this court which in terms support the scintilla rule, and we are aware of no express mention since United States v. Krumsiek, 1 Cir., 1940, 111 F.2d 74, where we specifically condemned it. Possibly the court meant that our general view, nonetheless, is that tort plaintiffs are entitled to go to the jury even though unsupported by substantial evidence. Some plaintiffs, at least, would be surprised to hear this. Particularly, we wonder how a decision like Dehydrating Process Co. v. A. O. Smith Corp., 1 Cir., 1961, 292 F.2d 653, cert. den. 368 U.S. 931, 82 S.Ct. 368, 7 L.Ed.2d 194, could be squared with such a conclusion. Be that as it may, the district court has seriously misstated our position, and we so note. The rule in this circuit remains that a scintilla of evidence is insufficient.
The court’s refusal to direct a verdict was not error, even though it may have acted in part under a mistaken conception of the applicable rule. Nor was there an abuse of discretion in its refusal to grant a new trial. As we have pointed out, plaintiff’s case was substantially supported.
We find no merit in the cross-appeal. Plaintiff sought to couch, or to interpret, the Browns’ testimony of the oral conversation in terms of an express contract. Defendants, besides denying that any contract was made, pleaded the section of the statute of frauds requiring a writing for contracts not performable in one year. Mass.Gen.Laws, c. 259, § 1. The length of time Magnat was to supply the plaintiff with aluminum cylinders at the rate of 20,000 square inches a day was never expressed, in so many words, by any party. Plaintiff makes a plausible argument that the supposed contract could have been performed in less than a year. We need not explore it. Both Browns testified flatly that the contract could not be performed within a year. Plaintiff complains that this testimony was elicited by questions from the court, but this is irrelevant. Even if plaintiff’s witnesses could be thought to have misinterpreted the contract, their testimony was neither withdrawn nor modified. It left at least as an issue of fact the question whether the contract could have been performed within a year.
Plaintiff further contends that the court erred in instructing the jury to determine whether plaintiff’s board had authorized the alleged contract, because defendant admitted authorization, and because plaintiff’s bringing of suit constituted ratification as a matter of law. Plaintiff’s first argument reads considerably more into the complaint and answer than their language warrants. Whatever merit the second may have, it should have been put to the trial judge. When, as here, the grounds for objection are not clear from the nature of the objection itself, a party cannot wait until he reaches the appellate court to explain them. Fed.R.Civ.P. 51; Curko v. William Spencer & Son Corp., 2 Cir., 1961, 294 F.2d 410; cf. Krock v. Electric Motor & Repair Co., 1 Cir., 1964, 327 F.2d 213, 217, cert. den. 377 U.S. 934, 84 S.Ct. 1338, 12 L.Ed.2d 298. This ground for the objection was brought out no more clearly in plaintiff’s earlier objections to questioning along the same lines.
Finally, plaintiff contends that Magnat’s successful counterclaim for the return of monies advanced could not be maintained without a prior demand, since there had to be an “accounting.” Neither of the cases cited by plaintiff contradicts the well-established rule that bringing suit constitutes adequate demand. Cassiani v. Bellino, 1959, 338 Mass. 765, 157 N.E.2d 409; Burnham v. Allen, 1854, 67 Mass. 496. In Pomroy v. Gold, 1841, 43 Mass. 500, plaintiff’s action failed because defendant was not in breach of contract until the plaintiff tendered performance on his part. In Bolles v. Stearns, 1853, 65 Mass. 320, when the defendant had an option to perform in either of two ways, the plaintiff could not maintain an action which, in effect, compelled performance in one way, unless the defendant had refused to perform in either. By the time of the present suit, there was nothing plaintiff could properly have done with what remained of the monies advanced other than to return them to defendant.
Affirmed.
. Lest we be thought to have ignored it, we note that defendants’ claim that recovery for this oral misrepresentation is barred by the statute of frauds is untenable. Schleifer v. Worcester North Savings Inst., 1940, 306 Mass. 226, 27 N.E.2d 992.
. B. & B. Electroplating Co. v. Magnat Corp., D.Mass., 1965, 245 F.Supp. 9, 11-12.
. See, e. g., Arena v. Luekenbach Steamship Co., 1 Cir., 1960, 279 F.2d 186, cert. den. 364 U.S. 895, 81 S.Ct. 222, 5 L.Ed.2d 189; New York Central R. R. v. Moynihan, 1 Cir., 1964, 338 F.2d 644, cert. den. 381 U.S. 905, 85 S.Ct. 448, 14 L.Ed.2d 285; Naumkeag Theatres Co. v. New England Theatres, Inc., 1 Cir., 1965, 345 F.2d 910, cert. den. 382 U.S. 906, 86 S.Ct. 241, 15 L.Ed.2d 158; New York, N. H. & H. R. R. v. Cragan, 1 Cir., 1965, 352 F.2d 463, cert. requested. It is true that we erroneously minimized the plaintiffs burden in one F.E.L.A. case, New York N. H. & H. R. R. v. Henagan, 1 Cir., 1959, 272 F.2d 153, rev’d 364 U.S. 441, 81 S.Ct. 198, 5 L.Ed.2d 183.
. In the cited ease we held that in deciding whether to direct a verdict for lack of substantial evidence the court could look, to some extent, to the defendant’s evidence.
. Plaintiff’s claim that its reliance on the alleged contract estops defendant from pleading the statute is inapposite in an action on a contract for damages. Bruni v. Andre, 1959, 339 Mass. 708, 162 N.E.2d 52; Andre v. Ellison, 1949, 324 Mass. 665, 88 N.E.2d 340.
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.
Edith B. Bass, petitioner herein, brings for review a decision of the Board of Tax Appeals upholding the Commissioner’s determination that there is a deficiency of $150,596.51 in petitioner’s income tax for the calendar year 1937. Rractically the entire amount of the deficiency resulted from a ruling that an issue of preferred stock by Bird & Son, Inc. to its shareholders incident to a readjustment of the corporation’s capital structure constituted a taxable stock dividend under the Revenue Act of 1936, 49 Stat. 1648. Relevant provisions of the Act are copied in the footnote.
Bird & Son, Inc. was incorporated under the laws of Massachusetts in 1918, and has been profitably engaged in the biisiness of manufacturing and selling paper and paper products. On September 14, 1937, its authorized and outstanding capital stock consisted of 600,000 shares of common stock without par value, representing a stated capital of $6,000,000. The earned surplus, as then shown on the books, stood at the figure of $5,701,003.82. All of the stock was held in a voting trust which was to terminate on October 9, 1937. The voting trust certificates for most of the stock were held by officers and employees of the corporation and by members of the Bird family.
In anticipation of the expiration of the voting trust, consideration was given to revising the capital structure of the corporation. There was no market for the voting trust certificates and many holders thereof had requested that some arrangement be made to afford a satisfactory market on which they could sell a portion of the holdings. On May 3, 1937, the board of directors appointed a committee to consider the matter. This committee made its report on August 17, 1937. The plan which it proposed was ultimately approved and carried out.
The plan called for the authorization of an issue of 50,000 shares of cumulative preferred stock with a par value of $100 each. 30,000 of such shares, representing $3,000,-000 of capital, were to be issued in place of 300,000 common shares, the common stock to he simultaneously reduced by such amount. There was further to be a split-up of the remaining 300,000 of common shares, which represented $3,000,000 of capital, on a basis of two for one; 600,000 common shares representing a stated capital of $5 each were to be issued in exchange for the said 300,000 of common shares representing a stated capital of $10 each. The remaining 20,000 shares of preferred stock were to be held in reserve, to be issued later at the discretion of the directors. Application was to be made for listing the preferred and common stock on the Boston Stock Exchange.
In all the formal steps which were duly taken by the directors and the stockholders to effectuate the plan, it was made clear that the readjustment of the capital structure was to be carried through “without any capitalization or impairment of any existing surplus or accumulated and undivided profits”. As the Board specifically found, the directors “believed that $6,000,-000 was a sufficient and proper capitalization for the corporation and surplus should not be changed but should be left as it was for future corporate purposes”.
The plan as proposed by the committee was prompted by a desire, first, to provide marketable shares and thus to satisfy the needs of the shareholders and, second, to provide the corporation with some additional marketable shares which might later be sold to liquidate large bank loans theretofore incurred by one of the corporation’s subsidiaries, or which might be issued as stock dividends so as to capitalize accumulated profits, if that should later prove to be desirable. It was felt that an issue of preferred stock would be more likely than the common stock to command a market price approximating its intrinsic value. The establishment of a market for the shares would tend to benefit the corporation in case it should desire later to sell the remaining 20,000 of preferred shares. It does not appear just what business reason moved the directors to propose the two-for-one split-up of the common shares.
On September 14, 1937, the Commissioner of Corporations and Taxation approved the certificate of the directors setting forth the amendment to the articles of association as duly voted by the stockholders in accordance with the plan. Thereupon the directors proceeded immediately to execute the plan. The single certificate for 600,000 shares of the outstanding common stock held by the voting trustees was surrendered and cancelled, in exchange for which there were issued in the names of the voting trustees a temporary certificate for 30,000 shares of the preferred stock and a temporary certificate for 300,000 shares of common stock without par value. In effectuation of the split-up of the common shares, this temporary certificate for 300,000 shares of common was in turn cancelled and a temporary certificate for 600,000 shares of common was issued in the names of the voting trustees. This all took place on September 15, 1937. Appropriate entries were made on the books of the corporation. The capital stock account, which on September 14, 1937, had showed a stated capital of $6,000,000 represented by 600,000 shares of common stock without par value, was changed to indicate a stated capital of $3,000,000 represented by 600,000 shares of common stock without par value and $3,000,000 represented by 30,000 shares of preferred stock with a par value of $100 per share. No entries were made in the surplus account as a result of the transactions; the earned surplus, as shown on the books, remained at $5,701,-003.82.
The holders of the voting trust certificates, at the termination of the voting
trust on October 9, 1937, turned in these certificates for their proportionate amounts of common and preferred stock. The petitioner, who had held voting trust certificates for 54,510 shares received in exchange therefor certificates for 54,'510 shares of common stock and 2,725% shares of preferred stock. The fair market value of the preferred stock at the time Mrs. Bass received it was agreed to be $86 per share.
It was ruled by the Commissioner that receipt by petitioner of these 2,725% shares of preferred stock constituted income derived from a taxable stock dividend during the year 1937 in the sum of $234,393. The Board took the same view.
We assume in favor of the Government, without deciding, that where a corporation having only common stock outstanding declares a stock dividend of preferred stock, the stockholders thereby receive taxable income. It was so held in Strassburger v. Commissioner, 2 Cir., 1941, 124 F.2d 315, now pending before the Supreme Court on certiorari. But that decision is not controlling in the case at bar, because here the corporation declared no stock dividend, either avowedly or in disguised form. See Hood Rubber Co. v. Commonwealth, 1921, 238 Mass. 369, 371, 372, 131 N.E. 201. So far as we are aware, the present case and Jacob Fischer v. Commissioner, 46 B.T.A. -, decided April 28, 1942, are the only cases where the Commissioner has laid claim to tax an alleged stock dividend though there had been no capitalization of earnings. The Government’s position here is not supported by any court decision.
“A stock dividend always involves a transfer of surplus (or profit) to capital stock.” Graham and Katz, Accounting in Law Practice, 2d ed. 1938, § 80. As the court said in United States v. Siegel, 8 Cir., 1931, 52 F.2d 63, 65, 78 A.L.R. 672: “A stock dividend is a conversion of surplus or undivided profits into capital stock, which is distributed to stockholders in lieu of a cash dividend.” Congress itself has defined the term “dividend” in § 115(a) of the Act as meaning any distribution made by a corporation to its shareholders, whether in money or in other property, out of its earnings or profits. In Eisner v. Macomber, 1920, 252 U.S. 189, 40 S.Ct. 189, 64 L.Ed. 521, 9 A.L.R. 1570, both the prevailing and the dissenting opinions recognized that within the meaning of the revenue acts the essence of a stock dividend was the segregation out of surplus account of a definite portion of the corporate earnings or profits theretofore available for dividends, the freezing of such segregated earnings as part of the permanent capital resources of the corporation by the device of capitalizing the same, and the issuance to the stockholders of additional shares of stock representing the profits so capitalized. See 252 U.S. at .pages 210, 211, 220, 221, 228, 229, 40 S.Ct. at pages 194, 197, 198, 200, 201. Where the court divided was on the question whether a stock dividend was equivalent to a distribution of earnings. Compare page 211 with pages 227-229.
Whether profits are to be capitalized is not a mere matter of bookkeeping; there are important business differences according as one course or the other is pursued. If profits are capitalized by means of a stock dividend such profits are no longer available for the declaration of a dividend at the discretion of the directors but become part of the permanent capital of the corporation, thereby tending to enhance the corporation’s credit. If profits are not capitalized they may be distributed as dividends some time in the future; and it would be a contradiction in terms to say there has been in any sense a “distribution” out of “earnings or profits” when such earnings have been expressly held intact in the surplus account for possible future distribution.
In the present case the directors were satisfied that there was no business need for increasing the capitalization of the corporation, and the Board so found. The corporation deliberately refrained from increasing its capital, and deliberately kept its surplus account unchanged. The business reasons which dictated the above described rearrangement of corporate structure had no relation to the existence of this surplus, and would have been equally valid even had there been no surplus in existence at the time. There is nothing in the record to warrant any suspicion that the corporation sought to make a surreptitious distribution of earnings to the shareholders in any form, direct or indirect.
Mr. Justice Brandeis, dissenting in Eisner v. Macomber, 1920, 252 U.S. 189, pages 230, 231, 40 S.Ct. 189, 202, 64 L.Ed. 521, 9 A.L.R. 1570, suggested that Congress might have constitutional power to tax as income of the stockholder his pro rata share of undistributed profits earned, even if no stock dividend representing it had been paid. He pointed out, however, that Congress has chosen to limit the income tax “to that share of the stockholder in the earnings which is, in effect, distributed by means of the stock dividend paid. In other words to render the stockholder taxable there must be both earnings made and a dividend paid.” When no dividend is paid, but the shareholder receives preferred stock representing different rights and interests in the corporation in exchange for common stock theretofore held by him, this does not constitute a realization of income in the amount of the market value of the preferred shares. If this value is' in excess of the shareholder’s basis of the common stock surrendered up, the gain upon such exchange might be taxed under §§ 22(a), 111 and 112(a) unless the transaction falls within § 112(b) (3), in which case the gain upon the exchange is not recognized. The Government is not here proceeding on the theory that there was a taxable gain on an exchange. Rather, it insists that there was in substance no exchange.
We think the Commissioner and the Board attached undue emphasis to the fact that after the transaction was completed the shareholders still had 600,000 shares of common stock, and, in addition, had received 30,000 shares of preferred stock worth $86 a share. From this it was concluded that the preferred stock must have been received as a stock dividend, and that the transaction could not have been an exchange governed by the provisions of § 112. The Board thought that the corporation had taken a “devious route” in rearranging its capital structure for no reason other than to give the transaction the semblance of an exchange and to disguise the distribution of a stock dividend. In this connection the Board said:
“The same result could have been reached, so far as this record shows, by merely issuing a certificate for 30,000 shares of preferred stock, allowing the voting trustees to retain the original certificate for 600,000 shares of no par common, and making book entries showing that 30,000 shares of preferred represented $3,000,000 of capital and the 600,000 common shares without par value had henceforth a stated value of $3,000,000. The stated value of the common stock could have been reduced without changing the certificate. All semblance of an exchange disappears if the steps taken in regard to the certificates for the common stock are disregarded.”
But the,explanation of the form in which the transaction was cast is found in the technical requirements of the Massachusetts corporation law. Mass.Gen.Laws (Ter. Ed.) 1932, c. 156, § 41A, authorizes a corporation having shares without par value, by vote of a majority of all its stock at a meeting duly called for the purpose, to “change such shares or any class thereof into a greater number of shares without par value, or provide for the exchange thereof pro rata for a greater number of shares without par value”, without increasing the corporation’s stated capital. There seems to be no other statutory provision permitting any rearrangement of the capital structure without increase or reduction of capital and the issue and surrender of shares pursuant to formal amendment of the articles of association approved by the Commissioner of Corporations and Taxation. At the argument before us the Government did not contend otherwise. It was necessary for the corporation to execute the plan of recapitalization in the form it followed, namely, increasing the capital by the provision for new preferred shares and simultaneously and correspondingly decreasing the capital by surrender and cancellation of half of the original common shares. Since § 16 of chapter 156 provides that no stock shall be issued at any time unless the cash, or the property, services or expenses for which it was authorized to be issued, “has been actually received or incurred by, or conveyed or .rendered to, the corporation, or is in its possession as surplus”, and since the preferred stock was not paid for by transferring earnings from surplus account to capital, the issuance of the preferred stock would have been void unless there had been surrendered up in exchange an equivalent amount of the common stock. See Teehan v. United States, D.C.D.Mass. 1928, 25 F.2d 884.
Even had the Massachusetts statute permitted the revision of the corporate structure in the more direct way suggested by the Board, still the transaction would not have had to be regarded as a stock dividend. Section 112 of the Revenue Act does not require an actual exchange of physical certificates. It is enough if there has been an exchange of stock; and that there would have been if the Board’s suggested method of readjustment had been followed. The substance of the transaction then would have been, an exchange of 600,000 shares of non-par stock representing a capital of $6,000,000 for 30,000 shares of preferred stock representing $3,000,000 of capital and 600,000 shares of common stock representing $3,000,000 of capital, with no increase of the corporation’s capital by the capitalization of earnings or profits.
In our opinion the transaction was a “recapitalization” within the meaning of § 112(g)(1)(D). It was no more than the “reshuffling of a capital structure within the framework of an existing corporation contemplated by the term ‘recapitalization’.” Helvering v. Southwest Consolidated Corp., U. S. Supreme Court, Feb. 2, 1942, 62 S.Ct. 546, 552, 86 L.Ed. -. Art. 112(g)-2, Treasury Regulations 94, gives the issuance of preferred stock for outstanding common stock as an example of a recapitalization and therefore a reorganization. See Elmer W. Hartzel v. Commissioner, 1939, 40 B.T.A. 492, 499, 501, acquiesced in by the Commissioner, 1939-2 Cum.Bull. 16. This regulation would have fitted the case at bar like a glove if the corporation had omitted the second step in the transaction, that is, the two-for-one split-up of the common shares remaining in the shareholders’ hands after they had surrendered up 300,000 shares of common for 30,000 shares of preferred. This second step might have been omitted without detriment to the essential purpose of the reorganization. The fact that it was deemed convenient to have $3,000,000 of capital represented by 600,000 common shares instead of by 300,000 common shares did not render the first step any less a genuine exchange of common stock for preferred in pursuance of a plan of reorganization (recapitalization) within the meaning of § 112(b)(3). Suppose the steps had been taken in the reverse order, and with an interval of time between. For instance, in May, 1937, there might have been a two-for-one split-up so as to have the $6,000,000 of stated capital represented by 1.200.000 shares of common instead of by 600.000 shares of common. The receipt of such additional shares by way of split-up admittedly would have been non-taxable. See § 112(b)(2). Then suppose that in September, 1937, the corporation had decided to issue 30,000 preferred shares of a par value of $3,000,000 in exchange for 600,000 shares of common, with no increase of capital. This would certainly have been a non-taxable exchange within § 112(b) (3) ; and hence the preferred stock would not have represented a taxable dividend to the shareholders within the meaning of § 115(a) and § 115(f)(1). Jacob Fischer v. Commissioner, 46 B.T.A. -, decided April 28, 1942, a decision hardly reconcilable with that of the Board in the case at bar. See also § 115(h)(1). We cannot see what difference it makes in the case at bar that the two steps were taken simultaneously as part of a single plan of reorganization.
If the corporation had not had accumulated earnings available for dividends on September 15, 1937, the Government of course could not have made the contention that the issuance of preferred stock on that date constituted a stock dividend, nor could it have been doubted that the execution of the plan of recapitalization would have been a tax-free exchange within § 112(b) (3) in which neither gain nor loss would have been recognized. But the Board’s view is that the mere existence of such accumulated earnings converted the transaction, for income tax purposes, into a taxable stock dividend, by virtue of the presumption in § 115(b), even though the corporation did not in fact capitalize any part of such earnings and, indeed, had no need for any increase of capital. As to this, the petitioner rightly observes : “From this suggestion it would have to follow that it is impossible for a corporation having any earnings to reclassify its existing capital stock without becoming involved in a dividend and that the recapitalizations permitted to be made without deterrent recognition of gain under Section 112 would frequently be subject to far more deterrent tax as on a dividend.” Congress, in § 115(h)(1), seems to have provided expressly against this result. See the elaboration of this subsection in Treasury Regulations 94, Art. 115-11.
There is no need to adopt the narrow construction of § 112 urged by the Commissioner in order to harmonize it with § 115(b). The latter subsection attributes a source to distributions when distributions are made; for purposes of the Revenue Act every distribution to shareholders is deemed to be made out of earnings or profits to the extent thereof, despite the effort of the corporation to earmark such distribution as coming from some other source, such, for example, as paid-in surplus, or unrealized appreciation in value of capital assets. The decisions cited by the Commissioner as applying § ll'5(b) were all cases where an undoubted distribution had taken place, most of them in cash. Leland v. Commissioner, 1 Cir., 1931, 50 F.2d 523; Baker v. Commissioner, 2 Cir., 1936, 80 F.2d 813; Faris v. Helvering, 9 Cir., 1934, 71 F.2d 610; Commissioner v. Sansome, 2 Cir., 1932, 60 F.2d 931, certiorari denied Sansome v. Burnet, 287 U.S. 667, 53 S.Ct. 291, 77 L.Ed. 575; United States v. Kauffmann, 9 Cir., 1933, 62 F.2d 1045; Murchison’s Estate v. Commissioner, 5 Cir., 1935, 76 F.2d 641; Walker v. Hopkins, 5 Cir., 1936, 12 F.2d 262. Section 115(b) does not, however, prescribe the criteria for determining when a distribution has taken place, as distinguished from an exchange, which is governed by § 112.
The Commissioner contends that there is “no more justification for treating a situation, otherwise covered by Section 115(b), as a ‘recapitalization’ because earnings had not been capitalized, than there would be for treating stock dividends as a ‘recapitalization’ when the corporation had capitalized earnings”; that the taxpayer, in order to sustain her position, “is put to the necessity of contending that all stock dividends are ‘recapitalizations’.” We think this argument is specious. A stock dividend may be a recapitalization, because it does involve a change of the capital structure, but the issuance of additional stock representing capitalized earnings does not involve an “exchange” and hence does not fall within § 112(b)(3).
Gregory v. Helvering, 1935, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596, 97 A.L.R. 1355, cited by the Board, is no authority for the position taken. There, the creation of the ephemeral new corporation was simply an operation having no business or corporate purpose — “a mere device which put on the form of a corporate reorganization as a disguise for concealing its real character, and the sole object and accomplishment of which was the consummation of a preconceived plan, not to reorganize a business or any part of a business, but to transfer a parcel of corporate shares” to the stockholders. Page 469 of 293 U.S., page 267 of 55 S.Ct., 79 L.Ed. 596, 97 A.L.R. 1355. In substance, assets of the corporation were distributed to its shareholders and the corporation’s surplus was correspondingly reduced. In these circumstances the distribution was held taxable as a dividend. In the case at bar, however, there was a permanent revision of the capital structure pursuant to a plan of recapitalization having a genuine business purpose. The transaction was not a tax-dodging subterfuge. There was in fact no “distribution” out of ■“earnings or profits”.
It is quite true that to a certain extent the transaction in the present case had the same effect as if $3,000,000 of profits had been capitalized and 30,000 shares of preferred stock had been issued as a stock dividend; that is, in both situations the aggregate book value of each stockholder’s holdings would remain unchanged, because the book value of 600,000 shares of common necessarily is reduced by an amount equal to the book value of the new 30,000 shares of preferred. Of course, the fact that there has been no increase in the aggregate wealth of the shareholders does not in itself establish that they have not received a dividend. United States v. Phellis, 1921, 257 U.S. 156, 171, 42 S.Ct. 63, 66 L.Ed. 180. On the other hand, neither does this fact establish that the stockholders have received a dividend. On that issue the fact is colorless. What distin- „ guishes the, present transaction from a stock dividend is that here no portion of the surplus was capitalized.
That this is the significant distinction may be tested in another way. We are told that the Government plans to ask the Supreme Court to overrule Eisner v. Macomber, 252 U.S. 189, 40 S.Ct. 189, 64 L.Ed. 521, 9 A.L.R. 1570. Let us suppose that the Government succeeds in this endeavor. Then compare these two situations in the case of Bird & Son, Inc., having a stated capital of $6,000,000 represented by 600,000 shares of common stock without par value, and having an earned surplus at the round figure of $6,000,000: (1) The corporation, without capitalizing any of its earn ings, splits up its 600,000 shares of common two for one into 1,200,000 shares of common ; (2) the corporation capitalizes all the $6,000,000 profits by means of a stock dividend of 600,000 additional shares of common to the shareholders. Case (1) is admitted by the Government not to involve a taxable dividend, even though the corporation did have on hand accumulated profits out of which a dividend might have been de dared. Yet in both cases the aggregate book value of each shareholder’s holdings remains unchanged. In each case upon consummation of the transaction the shareholders have in the aggregate 1,200,000 common shares of a book value of $10 a share, in place of 600,000 common shares having a book value of $20 a share. Case (2) would be a taxable stock dividend if Eisner v. Macomber were overruled. Case (1) is concededly not taxable. The only difference is that in Case (2) there has been a transfer to capital account of the funds in the surplus account and the issuance to the stockholders of additional shares of stock representing the profits so capitalized; whereas in Case (1) the accumulated earnings remain intact, available for future dividend distributions. The latter is the fact in the case at bar, and, we think, the controlling fact.
The decision of the Board of Tax Appeals is vacated and the case is remanded to the Board for further proceedings not inconsistent with this opinion.
Ҥ 22. Gross Income
“(a) General Definition. ‘Gross income’ includes gains, profits, and income derived from * * * sales, or dealings in property * * * also from * * * dividends * *
Ҥ 111. Determination of Amount of, and Recognition of, Gain or Loss
“(a) Computation of gain or loss. The gain from the sale or other disposition of property shall be the excess of the amount realized therefrom over the adjusted basis provided in section 113(b) for determining gain, and the loss shall - be the excess of the adjusted basis provided in such section for determining loss over the amount realized.”
“§ 112. Recognition of Gain or Loss “(a) General rule. Upon the sale or exchange of property the entire amount of the gain or loss, determined under section 111, shall be recognized, except as hereinafter provided- in this section. -
“(b) Exchanges solely in kind ífc ífc iji J¡í
“(2) Stock for stock of same corporation. No gain or loss shall be recognized if common stock in a corporation is exchanged solely for common stock in the same corporation, or if preferred stock in a corporation is exchanged solely for preferred stock in the same corporation.
“(3) Stock for stock on reorganization. No gain or loss shall be recognized if stock or securities in a corporation a party to a reorganization are, in pursuance of the plan of reorganization, exchanged solely for stock or securities in such corporation or in another corporation a party to the reorganization.
* * * * * *
“(g) Definition of reorganization. As used in this section and section 113—
“(1) The term ‘reorganization’ means * * * (D) a recapitalization * *
Ҥ 115. Distributions by Corporations
“.(a) Definition of dividend. The term ‘dividend’ when used in this title (except in section 203(a) (3) and section 207 (c) (1), relating to insurance companies) means any distribution made by a corporation to its shareholders, whether in money or in other property, (1) out of its earnings or profits accumulated after February 28, 1913, or (2) out of the earnings or profits of the taxable year (computed as of the close of the taxable year without diminution by reason of any distributions made during the taxable year), without regard to the amount of the earnings and profits at the time the distribution was made.
“(b) Source of distributions. For the purposes of this Act every distribution is made out of earnings or profits to the extent thereof, and from the most recently accumulated earnings or profits. Any earnings or profits accumulated, or increase in value of property accrued, before March 1, 1913, may be distributed exempt from tax, after the earnings and profits accumulated after February 28, 1913, have been distributed, but any such tax-free distribution shall be applied against and reduce the adjusted basis of the stock provided in section 113.
“(f) Stock dividends
“(1) General rule. A distribution made by a corporation to its shareholders in its stock or in rights to acquire its stock shall not be treated as a dividend to the extent that it does not constitute income to the shareholder within the meaning of the Sixteenth Amendment to the Constitution.
Hs sfc $ sj; !}c
“(g) Redemption of stock. If a corporation cancels or redeems its stock (whether or not such stock was issued as a stock dividend) at such time and in such manner as to make the distribution and cancellation or redemption in whole or in part essentially equivalent to the distribution of a taxable dividend, the amount so distributed in redemption or cancellation of the stock, to the extent that it represents a distribution of earnings or profits accumulated after February 28, 1913, shall be treated as a taxable dividend.
“(h) Effect on earnings and profits of distributions of stock. The distribution (whether before January 1, 1936, or on or after such date) to a distributee by or on behalf of a corporation of its stock or securities or stock or securities in another corporation shall not be considered a distribution of earnings or profits of any corporation—
“(1) if no gain to such distributee from the receipt of such stock or securities was recognized by law.
******
“(j) Valuation of dividend. If the whole or any part of a dividend is paid to a shareholder in any medium other than money the property received other than money shall be included in gross income at its fair market value at the time as of which it becomes income to the shareholder.” 26 U.S.C.A.Int.Rev.Acts, pages 825, 854, 855, 859, 868, 870, 871.
See footnote 5, infra.
It is possible for a corporation to payout a taxable dividend by means of a distribution of its own stock to shareholders without increasing its stated capital. Thus the corporation might use a portion of its surplus earnings to make purchases of its own stock, and might later distribute this treasury stock to the remaining shareholders as a dividend. No increase of capital is involved, since there is merely a reissue of existing paid-up shares. Such a distribution of treasury stock would not be a stock dividend within the ordinary meaning of that term. Accepting to the full the authority of Eisner v. Macomber, 1920, 252 U.S. 189, 40 S.Ct. 189, 64 L.Ed. 521, 9 A.L.R. 1570, suck a distribution would nevertheless seem to be quite clearly a distribution out of corporate earnings or profits taxable as income to the shareholders in the amount of the market value of the shares when received by the shareholders. For present purposes it is the same as if the corporation had used accumulated earnings to buy any other property — say, the stock of another corporation — and had distributed such substituted property in specie as a dividend to its shareholders.
This is in no way inconsistent with § 112(b) (2). The implication of that subsection is that it does not cover an exchange of common for preferred or of preferred for common. But § 112(b) (2) does not require that an exchange must be in pursuance of a plan of reorganization, which distinguishes it from § 112 (b) (3). If A owns common stock and B preferred stock in the X corporation and they exchange their securities, gain or loss upon the exchange will be recognized because the exchange is not pursuant to a plan of reorganization within § 112(b) (3), nor is it the kind of exchange described in § 112(b) (2). In view of the difference in scope of the two subsections there is no reason to read into § 112 (b) (2) the implication that the issuance of preferred stock for outstanding common stock should not be deemed a “recapitalization” within the meaning of § 112(b) (3).
In Jacob Fischer v. Commissioner the corporation had outstanding an issue of 7,000 shares of common of a par value of $100 per share, or $700,000. During 1936 a plan of recapitalization was duly executed under which the corporation’s charter was amended so that, instead of its outstanding stock, its authorized stock would consist of 35,000 shares of new common of a par value of $10 per share, or $350,000, and 14,000 shares of new preferred of the par value of $25 per share, or $350,000. The corporation’s capitalization, the amount of its surplus, and the amount of its undivided profits remained the same as before the readjustment of the capital structure. Each shareholder received 5 shares of new common and 2 shares of new preferred for the surrender of each share of old common previously held. In effect this was an exchange of 3500 old common shares for 14,000 shares of new preferred, and a simultaneous 10-for-one split-up of the remaining 3500 shares of old common. It was held that the receipt of the preferred stock was neither a stock dividend under § 115(f) (1) nor essentially equivalent to a dividend under § 115(g).
If in the Fischer case referred to in the preceding footnote, the split-up had been on a two-for-one basis so that the remaining 3500 shares of old common of a par value of $100 per share were exchanged for 7,000 shares of new common at $50 a share, then the net result would have been the same as in the case at bar; after the recapitalization the shareholders would have had the same number of common shares as before and in addition would have had 14,000 shares of new preferred.
Art. 115-11 reads in part as follows:
“The general rule provided in section 115(b) that every distribution is made out of earnings or profits to the extent thereof and from the most recently accumulated earnings or profits, does not apply to:
“(1) The distribution, in pursuance of a plan of reorganization, by or on behalf of a corporation a party to the reorganization, to its shareholders of stock or securities in such corporation or in another corporation a party to the reorganization—
“(B) in any taxable year (beginning before January 1, 1936, or on or after such date) in exchange for its stock or securities (see section 112(b) (3)) if no gain to the distributees from the receipt of such stock or securities was recognized by law.”
The Commissioner would have been on the other side of the fence if this had been a case where Bird & Son, Inc., was claiming a dividends paid credit under § 27 of the Revenue Act of 1936, 49 Stat. 1665, 26 U.S.C.A.Int.Rev.Acts, page 837. Skenandoa Rayon Corp. v. Commissioner, 2 Cir., 1941, 122 F.2d 268.
Thus, suppose 600,000 shares of common without par value had originally been issued for $10 a share and that of the $6,000,000 thus obtained, $3,000,000 had been entered on the books as stated capital and $3,000,000 as paid-in surplus. Later, the corporation purports to capitalize this paid-in surplus, and issues to the stockholders 30,000 shares of new preferred stock having a par value of $100 per share as representing this surplus so capitalized. If the corporation had on hand accumulated earnings of $6,000,000 out of which a cash or a stock dividend might have been paid, it would seem that under § 115(b) the distribution of the preferred stock, for income tax purposes, would have to be attributed to the accumulated earnings as its source rather than to the paid-in surplus account. Such, however, was not the situation in the case at bar for here there has been merely a reshuffling of the capital structure within the framework of the existing corporation, without any increase of its capital — an exchange of securities in pursuance of a plan of reorganization (recapitalization) within the meaning of § 112(b) (3).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
KRAVITCH, Circuit Judge:
The plaintiff Hiram Walker & Sons, Inc. (Hiram Walker), filed this action in the Southern District of New York against defendants Indian River Transport, Inc. (Indian River), Eller & Company, Inc. (Eller), R.B. Kirkconnell & Bro., Ltd. (Kirk Line), and Jamaica Merchant Marine Atlantic Line, Ltd. (Jamaica Line), seeking damages for the loss of several thousand gallons of the liqueur Tia Maria. Upon Eller’s motion, the case was subsequently transferred to the Southern District of Florida. After all parties moved for summary judgment, the district court dismissed Kirk Line and Jamaica Line from the action, and granted Hiram Walker’s motion against Eller and Indian River on the question of liability. Indian River and Eller each filed an interlocutory appeal in this court, but because of a jurisdictional problem those appeals were never decided on the merits. The district court subsequently held a bench trial to determine the amount of damages due Hiram Walker. Following the trial, the district court quantified Hiram Walker’s damages, for which it adjudged Eller and Indian River each fifty percent liable. Eller and Indian River appealed; Hiram Walker cross-appealed against those two defendants but did not appeal the district court’s dismissal of the actions against Kirk Line and Jamaica Line. We consolidated all appeals from the earlier summary-judgment order and the order following trial; we now reverse and remand.
I. BACKGROUND
Hiram Walker purchased five thousand gallons of Tia Maria from Estate Industries in Jamaica on March 15, 1985. On March 26, a twenty-three ton tank containing the liqueur was loaded aboard the M/V Mov-ant Bay in Kingston, apparently in good order. Kirk Line had chartered the Mov-ant Bay from its proprietor, Jamaica Line, for a shipment of cargo including Hiram Walker’s liqueur, which was shipped under a Kirk Line-Hiram Walker bill of lading. The tank arrived in Miami three days later. Kirk Line hired Eller, a stevedore, to unload the tank from the Morant Bay and store it at the dock.
Hiram Walker contracted with Indian River to transport the liqueur overland to New Jersey; Hiram Walker and Indian River agreed that Indian River was to pump the liqueur from the tank into its freight trailer. On April 1, Jones, an employee of Indian River, arrived at the port to effect the pumping transfer. An Eller employee removed the tank from storage and aligned it with the trailer. Jones attempted to connect the tank and the trailer, but realized that a fitting needed to connect the hoses was missing. Even though another fitting on the back of the tank might have been used to pump the liqueur into the trailer, Jones decided that pumping the liqueur would be impossible; therefore, he asked Marshall, an Eller employee, to help him accomplish a “gravity feed” — essentially, Jones wanted to pour the liqueur from the tank to the trailer. To effect a gravity feed, the tank had to be elevated higher than the trailer. Marshall directed another Eller employee, Wright, to assist Jones. Wright lifted the tank on a large forklift; Wright, however, was not licensed to operate forklifts of this capacity.
Wright and Marshall neglected to put straw mats or other dunnage between the metal forks and the metal container. Fifteen minutes into the operation, the tank apparently began to slide off the forks because of the lack of dunnage. Deciding that the tank was not properly balanced, Marshall instructed Wright to find another forklift. Wright did not lower the tank, but left the forklift holding the tank suspended eight feet off the ground for ten minutes; leaving a load suspended was a violation of standard company procedure. As Wright returned, the tank fell off the forklift. The tank ruptured, and eighty-five percent of the Tia Maria in the tank spilled out. The liqueur remaining in the tank was contaminated during the clean-up, in which several fire-engine companies covered the area with anti-explosive foam.
II. BASIS OF FEDERAL JURISDICTION
The claim against Indian River was pleaded as a federal question; and against Eller, in diversity. The district court analyzed the cases against Eller and Indian River under maritime tort law; because the accident in question did not occur at a maritime situs, however, admiralty jurisdiction would not support the claims against these two defendants. Harville v. Johns-Manville Products Corp., 731 F.2d 775, 782 (11th Cir.1984); Boudloche v. Conoco Oil Corp., 615 F.2d 687, 688 (5th Cir.1980). On appeal, Indian River argues that the district court lacked subject-matter jurisdiction over the claim asserted against it. We of course may consider the question of Article III subject-matter jurisdiction for the first time on appeal; additionally, an explanation of the basis of federal jurisdiction over each defendant will point out the source of law applicable to each claim.
A. Federal subject-matter jurisdiction
Hiram Walker urges that its claim against Indian River arises under the Car-mack Amendment, 49 U.S.C. § 11707, which provides in relevant part:
A common carrier providing transportation or service subject to the jurisdiction of the Interstate Commerce Commission ... shall issue a receipt or bill of lading for property it receives for transportation under this subtitle. That carrier ... [is] liable to the person entitled to recover under the receipt or bill of lading. The liability imposed under this paragraph is for the actual loss or injury to the property caused by (1) the receiving carrier.... Failure to issue a receipt or bill of lading does not affect the liability of a carrier....
49 U.S.C.A. § 11707(a)(1) (1988). In its complaint, Hiram Walker alleged that Indian River “totally breached, failed and violated its duties as an interstate common carrier in receiving, tending, caring for and delivering the [shipment of Tia Maria] in good condition, but on the contrary, so seriously [damaged] the same while in its possession that it was rendered a total loss.” Section 1337 of Title 28 imposes an amount-in-controversy requirement over suits brought under the Carmack Amendment; that requirement is satisfied by the allegations in the complaint. The complaint sufficiently pleaded a federal claim against Indian River.
Because the Carmack Amendment would not support the claim against Eller, Hiram Walker alleged that this claim was properly within the court’s diversity jurisdiction. 28 U.S.C. § 1332. In the complaint, Hiram Walker conspicuously failed to allege that it and Indian River were of diverse citizenship. Diversity jurisdiction ordinarily is not available “when any plaintiff is a citizen of the same State as any defendant.” Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365, 374, 98 S.Ct. 2396, 2403, 57 L.Ed.2d 274 (1978). An exception to the general rule exists, however, when the plaintiff joins a non-diverse defendant sued under federal law with a diverse defendant sued in diversity. Romero v. Int’l Terminal Operating Co., 358 U.S. 354, 381, 79 S.Ct. 468, 485, 3 L.Ed.2d 368 (1959) (“Since the Jones Act provides an independent basis of federal jurisdiction over the non-diverse respondent, ... the rule of Strawbridge v. Curtiss, 3 Cranch 267, 2 L.Ed. 435, does not require dismissal of the claims against the diverse respondents.”); Kauth v. Hartford Ins. Co., 852 F.2d 951, 958-59 (7th Cir.1988); Baker v. J.C. Penney Co., 496 F.Supp. 922 (N.D.Ga.1980). In Baker, Judge Vining observed that an anomaly would be created by “not allowing a plaintiff to do in one federal suit what he would be entitled to do in two separate federal suits.” 496 F.Supp. at 924.
Alternatively, the claim against Eller was properly within the pendent-party jurisdiction of the district court. We recently held that district courts have
the power to hear the state claim against the second party if (1) the federal claim against the first party is substantial, meaning not “inescapably” frivolous, Jackson v. Stinchcomb, 635 F.2d 462, 471 (5th Cir.1981), (2) the statute conferring jurisdiction over the federal claim does not “expressly or by implication negate[ ]” the existence of pendent jurisdiction, Aldinger v. Howard, 427 U.S. 1, 18, 96 S.Ct. 2413, 2422, 49 L.Ed.2d 276 (1976), and (3) the state claim arises out of a “common nucleus of operative fact,” such that the plaintiff would be expected to try the federal and state claims together. [United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966)].
Giardiello v. Balboa Ins. Co., 837 F.2d 1566, 1570 (11th Cir.1988) (emphasis in original). Here, the federal claim is substantial and the claims against Eller and Indian River, as joint tortfeasors, arise out of a “common nucleus of operative fact.” With regard to the second prong, even though claims under the Carmack Amendment may be brought in state court, 49 U.S.C. 11707(d)(1), Congress has neither expressly nor impliedly foreclosed the possibility of pendent-party jurisdiction under the Carmack Amendment. Boudreaux v. Puckett, 611 F.2d 1028, 1031 (5th Cir.1980) (no negation of pendent-party jurisdiction under 15 U.S.C. § 1981 even though such claims may be brought in state court); compare Aldinger, 427 U.S. at 19, 96 S.Ct. at 2422 (Congress impliedly negated pendent-party jurisdiction over counties in suits predicated on 28 U.S.C. § 1343(3), which provides jurisdiction for suits brought under 42 U.S.C. § 1983, because counties were not “persons” covered by § 1983 under the then-extant construction) with Giardiello, 837 F.2d at 1571 (no negation of pendent-party jurisdiction under ERISA); First Alabama Bank v. Parsons Steel, Inc., 747 F.2d 1367, 1377 (11th Cir.1984) (no negation of pendent-party jurisdiction under Bank Holding Company Act), rev’d on other grounds, 474 U.S. 518, 106 S.Ct. 768, 88 L.Ed.2d 877 (1986); and Lykins v. Pointer Inc., 725 F.2d 645, 647 (11th Cir.1984) (no negation of pendent-party jurisdiction under 28 U.S.C. § 1346(b)).
B. Source of the rule of law
For Indian River, federal law governs the determination of liability and the measure of damages under the Carmack Amendment, and common-law principles give content to the federal rule. Hector Martinez & Co. v. Southern Pacific Transportation Co., 606 F.2d 106, 108 n. 1 (5th Cir.1979), cert. denied, 446 U.S. 982, 100 S.Ct. 2962, 64 L.Ed.2d 838 (1980); Dublin Co. v. Ryder Truck Lines, Inc., 417 F.2d 777, 778 (5th Cir.1969).
Analysis of the source of law for the claim against Eller is a bit more complicated. This action originally was filed in the Southern District of New York, and Eller moved that court, pursuant to 28 U.S.C. § 1404(a), to transfer the case to the Southern District of Florida. The Florida federal court, therefore, must apply the rule that would have been applied by the transferor New York federal court. Van Dusen v. Barrack, 376 U.S. 612, 639, 84 S.Ct. 805, 821, 11 L.Ed.2d 945 (1964). The New York federal court would have applied the New York choice-of-law rule in determining whether to apply Florida tort law or New York tort law to this claim. Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941).
Over twenty-five years ago the New York Court of Appeals abandoned the strict lex loci delicti rule in favor of interest analysis for choice-of-law in torts cases. Babcock v. Jackson, 12 N.Y.2d 473, 191 N.E.2d 279, 240 N.Y.S.2d 743 (1963). Interest analysis would in any event lead a New York court to apply Florida law in judging Eller’s conduct, even were Florida law inconsistent with the law in New York. See Schultz v. Boy Scouts of America, Inc., 65 N.Y.2d 189, 480 N.E.2d 679, 491 N.Y.S.2d 90 (1985) (“when the conflicting rules involve the appropriate standards of conduct, rules of the road, for example, the law of the place of the tort ‘will usually have a predominant, if not exclusive concern’ ”); Hacohen v. Bolliger Ltd., 108 A.D.2d 357, 489 N.Y.S.2d 75 (1985) (where defendant’s standard of conduct is judged, court should look to the place of the tort in order to give effect to that jurisdiction’s interest in regulating conduct within its borders). Eller’s conduct is therefore to be measured under Florida law.
III. LIABILITY OF INDIAN RIVER AND ELLER
A. Indian River
We review the disposition of a motion for summary judgment de novo, applying the same standards that should have been applied by the district court. Eastern Air Lines v. Air Line Pilots Assoc. Int’l, 861 F.2d 1546, 1549 (11th Cir.1988). The district court drew the following inferences from the papers the parties submitted in support of their cross-motions for summary judgment:
A gravity feed, unlike a pumping transfer, required that the tank containing the liqueur be elevated to a height sufficient to allow sheer gravitational force to impel the liqueur in the tank to drain downward to the [Indian River] trailer. This operation, of course, was intrinsically and conspicuously fraught with dangers which would not have been present in a pumping transfer. It therefore seems plain that had Jones brought a cam-lock, the instrumentality needed to perform the transfer of the liqueur properly, the accident resulting in [Hiram Walker’s] tank of liqueur being dropped and spilled, would never have occurred.
On the basis of these observations, the district court adjudged Indian River liable for the damage to the Tia Maria. The trial court disregarded contradictory evidence and plainly drew inferences against Indian River, the non-movant. In the procedural posture of this case, the district court’s exercise of its fact-finding powers constituted reversible error.
The claim against Indian River appears to based on both a theory of tort and a theory of contract: Indian River behaved negligently in failing to bring the required fitting and then requesting a gravity transfer; alternatively, Indian River breached an express term of its contract with Hiram Walker by failing to perform a pump transfer. At least two questions are presented under a theory of tort that were not susceptible of resolution against Indian River on a motion for summary judgment. First, drawing inferences in favor of the non-movant, the district court should have concluded that it was “highly extraordinary” that Indian River’s failure to bring the proper fitting “should have brought about the harm.” Restatement (Second) of Torts § 435(2). The court may yet draw that conclusion after a full airing of the facts at trial, a conclusion that would absolve Indian River of liability for the lost liqueur.
Second, Indian River has demonstrated a very substantial question whether Eller’s behavior should be considered a superseding cause of the accident, another finding that would preclude Indian River’s liability. Restatement (Second) of Torts §§ 440-453. It is beyond dispute that Eller’s conduct “actively operate[d] in producing harm to [Hiram Walker] after [Indian River’s] negligent act or omission ha[d] been committed.” Restatement (Second) of Torts § 441(1). Eller’s conduct was thus an “intervening force” causing the spill; again drawing all inferences in favor of Indian River, the court should have determined that the intervening force was a superseding cause. Among other considerations, Eller's negligence brought about “harm different in kind from that which would otherwise have resulted from [Indian River’s] negligence;” Eller’s negligence was not “a normal result” of Indian River’s negligence; the intervening force was due to Eller’s action; and “the intervening force [was] due to an act of [Eller] which [was] wrongful toward [Hiram Walker] and as such subjected] [Eller] to liability.” See Restatement (Second) of Torts § 442. Evidence before the district court established the foregoing for summary judgment purposes; the court had before it proof that gravity transfers are common and usual, and that Eller had previously performed gravity feeds for Indian River’s drivers who had arrived without the proper pumping equipment.
As a matter of law, Indian River’s conduct in ordering a gravity feed cannot be characterized as negligent on the basis of the facts before the district court. The district court had before it no evidence tending to show that gravity feeds are inherently and unreasonably dangerous; to the contrary, the court was presented with evidence that dockworkers often perform gravity feeds. It may be that gravity feeds are more difficult than pump transfers, but that alone would not render one who requests a gravity feed liable for any damage that arises from a botched execution. We are presented with no substantial evidence that a competently executed gravity feed is an unreasonable solution to the problem of transferring a liquid from one tank to another; indeed, a gravity feed may under some circumstances be more efficient than pumping transfers. We cannot write a rule of law which would prevent prudent persons from requesting gravity feeds.
Nor was summary judgment against Indian River proper under a theory of contract. Assuming Indian River did breach its contract with Hiram Walker, it would be liable only for those damages which it had “reason to foresee as a probable result of the breach when the contract was made.” Restatement (Second) of Contracts § 351(1); see Hadley v. Baxendale, 9 Ex. 341, 156 Eng.Rep. 145 (1854). We certainly cannot say as a matter of law that Indian River had “reason to foresee” that its failure to perform a pump transfer and its request that Eller undertake a gravity feed would result in the loss of nearly all of the Tia Maria. Whether framed as a tort or a breach of contract, summary judgment should not have been entered against Indian River on the question of liability.
B. Eller
We agree that the undisputed facts surrounding the loss of the Tia Maria established Eller’s negligence as a matter of Florida law. See Russ v. State, 140 Fla. 217, 191 So. 296 (1939); Seaboard Coast Line R.R. Co. v. Griffis, 381 So.2d 1063, 1065 (Fla.App.) (“Negligence is the failure to observe, for the protection of another’s interest, such care and precaution as the circumstances demand, or the failure to do what a reasonable and prudent person would ordinarily have done under the circumstances.”), cert. denied, 376 So.2d 72 (Fla.1979); Stirling v. Sapp, 229 So.2d 850, 853 (Fla.1969) (“Where the facts are undisputed and the evidence is reasonably susceptible of but a single inference, the question of defendant’s negligence ... becomes one of law for the court.”). An Eller employee not licensed to operate the particular forklift raised the twenty-three ton tank containing Tia Maria without placing dun-nage between the tank and the blades of the forklift. When his supervisor noticed that the tank was slipping, the employee left the tank suspended above the ground for several minutes while searching for another forklift. The tank fell and ruptured; the Tia Maria was lost to the happy wharf rats. Hiram Walker satisfied its burden of producing enough undisputed evidence to make out a prima facie case for negligence under the Russ standard. The burden shifted to Eller to show that, notwithstanding these facts, its employees’ behavior was reasonable under the circumstances. Eller argues that the trial court incorrectly presumed that the Eller forklift operator should have complied with standard operating procedures and “lowered the tank when the tilt was first noticed to save the day.” Eller, who had the burden of showing that this direct inference from the undisputed facts was at least questionable, points to no proffer that calls the inference into doubt. Even assuming that the tank could not have been lowered, Eller does not proffer evidence suggesting why it should not be held negligent for allowing an unlicensed forklift operator to lift the tank without proper dunnage. Accordingly, Eller has raised only a “metaphysical doubt” as to the material facts and its claim must fail. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (when moving party has satisfied its burden, non-movant must come forward with “specific facts showing that there is a genuine issue for trial ” (quoting Fed.R.Civ.P. 56(c)) (emphasis in original)).
Hiram Walker and Eller also join issue on the effect of a “Himalaya” clause in Kirk Line’s bill of lading, which provides that the “limitation of liability [in the Carriage of Goods by Sea Act (COGSA) ] shall inure ... to the benefit of any independent contractors performing services hereunder including stevedoring in connection with the goods covered hereunder.” COGSA limits liability to $500 for damage to the tank, a “customary freight unit.” E.g., Caterpillar Americas Co. v. S.S. Sea Roads, 231 F.Supp. 647 (S.D.Fla.1964), aff'd, 364 F.2d 829 (5th Cir.1966). Kirk Line hired Eller, a stevedore, to complete its delivery obligation; Eller was an independent contractor. On summary judgment, however, the trial court concluded as a matter of law that “Eller was a volunteer and acted only when [Indian River] failed to provide the necessary equipment for the pumping operation.” Accordingly, the court found that Eller was not acting within the scope of its stevedoring responsibilities to Kirk Line, and was not entitled to the limitation-of-liability provision of COG-SA. We review this determination de novo, applying the law of COGSA which the parties to the bill of lading made applicable beyond the Act’s legal scope. Assicurazioni Generali v. D’Amico, 766 F.2d 485, 488 (11th Cir.1985); Triple E Development Co. v. Floridagold Citrus Corp., 51 So.2d 435, 438 (Fla.1951) (intent of parties governs construction of contract).
Although Himalaya clauses must be “strictly construed and limited to intended beneficiaries,” Robert C. Herd & Co. v. Krawill Machinery Corp., 359 U.S. 297, 305, 79 S.Ct. 766, 771, 3 L.Ed.2d 820 (1959); Certain Underwriters at Lloyds v. Barber Blue Sea Line, 675 F.2d 266, 269 (11th Cir.1982), “[w]hen a bill of lading refers to a class of persons such as ‘agents’ or ‘independent contractors' it is clear that the contract includes all those persons engaged by the carrier within the scope of the carriage contract.” Id. at 270. Kirk Line was responsible under the bill of lading for delivering the Tia Maria to Hiram Walker’s agent Indian River; Eller would be an intended beneficiary of the Himalaya clause as long as Kirk Line had not completely discharged its responsibility by the time of the spill. Assicurazioni Generali, 766 F.2d at 489. The question thus presented is whether Kirk Line’s duty was fulfilled when Eller aligned the tank with Indian River’s truck; if so, Kirk Line had completed its responsibilities under the bill of lading before the spill occurred, and Eller could not be said to have been an “independent contractor performing services” under the bill of lading at the time of the accident. If, however, because of Indian River’s failure to secure the proper fitting, delivery was not completed by the mere alignment of the tank with the trailer, then Kirk Line’s duty of delivery would have continued and Eller would have been “an independent contractor performing services” under the bill of lading at the time of the spill, entitled to the $500 limitation.
Hiram Walker proffered the following evidence on this narrow question. First, it offered the deposition testimony of Eller’s director of safety, in which he stated that Eller employees had performed the gravity transfer for the convenience of Indian River and agreed that “doing the gravity transfer bit was over and above the normal expected activities of Eller in transferring products.” Second, this witness testified that during a pumping transfer, Eller had the duty to align the tank and the trailer, but Indian River had the duty to effect the transfer. (Another deposition witness, El-ler’s employee Marshall, confirmed that Indian River bore responsibility for the mechanics of a pump transfer once Eller aligned the tank and the trailer.) Finally, Hiram Walker offered the affidavit of its traffic manager, who stated that “[i]t was HIRAM WALKER’S understanding with INDIAN RIVER that it was the latter’s sole responsibility to transfer the bulk products from the ocean tanks to its tankers. It was not part of HIRAM WALKER’S agreement with KIRK LINE that KIRK LINE would bear that responsibility.”
Eller for its part proffered the affidavit of its local Miami manager, who stated that Eller’s responsibility as an independent contractor for Kirk Line was to “physically move the cargo from ELLER’s lot and deliver the cargo to the consignee by transferring physical possession of the cargo to the consignee.” Of course, Eller’s local manager is probably in a better position than its safety director to know the stevedore’s responsibilities.
Neither party’s proffer demonstrates as a matter of law or undisputed fact at what point discharge of Kirk Line’s responsibility under the bill of lading occurred. The affidavit of Hiram Walker’s safety manager is the only direct evidence that the agreement between Hiram Walker and Kirk Line did not contemplate Kirk Line having any responsibility for the actual transfer of the Tia Maria, but this evidence has substantial weaknesses: it is a conclu-sory statement of an interested party and makes no reference to the actual written agreement between Kirk Line and Hiram Walker; further, it may be predicated upon the incorrect assumption that only a pump transfer would occur.
Inferences from the statements of Eller’s director of safety and its Miami manager lead in opposite directions; a reasonable inference from the statement proffered by Hiram Walker is that Eller — and therefore presumably Kirk Line — had no responsibility for the actual transfer of the liquid cargo whether the transfer was effected by a gravity feed or by pumping. On the other hand, one could reasonably infer from the statement proffered by Eller that the stevedore — and thus presumably Kirk Line — remained responsible under the bill of lading until the last of the liquid cargo was transferred to the care of Hiram Walker’s agent Indian River. Moreover, there are good reasons why a consignee such as Indian River may be responsible for a pumping transfer but not a gravity feed: the pump itself is apparently attached to the consignee’s trailer, but as gravity feeds require the use of a forklift, a stevedore may have primary responsibility for that kind of operation. When a pumping transfer is effected, delivery may occur when the tank and the trailer are aligned — but it does not necessarily follow that delivery in the case of a gravity feed can finally occur before the last of the liquid is drained into the trailer; the scope of Kirk Line’s duty under the bill of lading may thus depend upon the type of transfer that actually is performed. The district court should determine after trial whether Kirk Line’s obligations had completely terminated by the time of the spill, but its conclusion on summary judgment was in error.
REVERSED and REMANDED.
. Aetna, Hiram Walker’s insuror, paid the entire loss and thus Hiram Walker no longer has an interest in the case. Under the normal rules of subrogation, Aetna was the real party in interest and should have sued in its own name. Frank Briscoe Co. v. Georgia Sprinkler Co., 713 F.2d 1500, 1502 n. 1 (11th Cir.1983). The district court stated that Aetna should have filed an appearance, but held that the defect did not warrant dismissal of the claim because counsel for plaintiff advised on the record that he was bringing the claim for the use and benefit of Aetna. This was a bench trial, the fact finder knew that Aetna was the real party in interest, and no defendant has shown any prejudice. The district court did not abuse its discretion by constructively joining Aetna as a party plaintiff and refusing to dismiss the claim.
. See Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (in banc). The Eleventh Circuit adopted as binding precedent all decisions rendered by the former Fifth Circuit prior to October 1, 1981.
. Venue may have been incorrect in the New York district court. See 49 U.S.C. § 11707(d)(2)(A)(iii). No party raised this objection, however, and the error was probably cured by the subsequent transfer to the Southern District of Florida.
. Hiram Walker argues that because this case was to be tried without a jury, we should apply the clearly erroneous test of Rule 52 to the findings made by the district judge on summary judgment. Cf. Nunez v. Superior Oil Co., 572 F.2d 1119, 1123-25 & n. 6 (5th Cir.1978) (“If decision is to be reached by the court, and there are no issues of witness credibility, the court may conclude on the basis of the affidavits, depositions, and stipulations before it, that there are no genuine issues of material fact, even though decision may depend on inferences to be drawn from what has been incontrovertibly proved.’’) Assuming that the pleadings incontrovertibly proved all material facts such that only inferences remained to be drawn, we would be left with a definite and firm conviction that the district court erred in holding Indian River liable. Moreover, the trial judge may have incorrectly assumed that no facts were in dispute, for the judge noted that "all the parties to this action have moved for summary judgment, thereby clearly indicating their accord that no genuine issue of fact remains to be resolved.” This is not a correct statement of the law; a movant may be correct in stating that the facts relevant to his theory of the case are not in dispute, yet contest the relevant issues of fact under his opponent’s theory. Walling v. Richmond Screw Anchor Co., 154 F.2d 780, 784 (2d Cir.), cert. denied, 328 U.S. 870, 66 S.Ct. 1383, 90 L.Ed. 1640 (1946). For this reason we think it prudent not to accord a presumption of correctness to the district judge’s fact-finding.
. It is irrelevant that Hiram Walker may have agreed to waive a substantial portion of Eller’s liability; Eller's conduct nonetheless subjected it to liability to Hiram Walker.
. Hiram Walker quotes three Restatement (Second) of Torts provisions, arguing that they prove that Indian River’s negligence in failing to bring the correct fitting was not superseded by Eller’s negligence. None of these sections indicates as a matter of law that Eller’s conduct is not a superseding cause:
(1) Where the negligent conduct of the actor creates or increases the foreseeable risk of harm through the intervention of another force, and is a substantial factor in causing the harm, such intervention is not a superseding cause.
Restatement (Second) of Torts § 442A. Although failing to bring the proper fitting may have increased the risk that the tank would fall (because that danger inheres in a gravity transfer), Indian River’s failure to bring the proper fitting was not indisputably a substantial factor causing the tank to fall.
(2) Where the negligent conduct of the actor creates or increases the risk of a particular harm and is a substantial factor in causing that harm, the fact that the harm is brought about through the intervention of another force does not relieve the actor of liability....
Restatement (Second) of Torts § 442B. Again, Indian River's failure to bring the proper fitting was not necessarily a substantial factor causing the tank to fall.
(3)The intervention of a force which is a normal consequence of a situation created by the actor’s negligent conduct is not a superseding cause of harm which such conduct has been a substantial factor in bringing about.
Restatement (Second) of Torts § 443. Negligent execution of a gravity feed is by no means a "normal consequence” of attempting a gravity feed.
.The colloquy between counsel for Indian River and the safety director for Eller, proffered by Hiram Walker in an attempt to show that gravity feeds are inherently and unreasonably dangerous, merely suggests that gravity feeds are more difficult than pumping transfers.
. There is some confusion in the briefs concerning Indian River’s liability for Eller’s conduct. We do not read the district court’s order on summary judgment to impose liability on Indian River under a theory of agency; the court held Indian River liable for its own acts and omissions.
. So named after the vessel in an English case. See the exegesis in Brown & Root, Inc. v. M/V Peisander, 648 F.2d 415, 417 n. 5 (5th Cir.1981).
. Indian River argues that delivery had already been completed under clause 12 of the bill of lading, which provides that delivery is complete when goods are taken "into the custody of customs or other authorities." Acknowledging that no record evidence suggests that "customs or other authorities” took possession of the liqueur, Indian River argues that "it is a more than reasonable inference that inspection had occurred within the meaning of the bill of lading prior to" Indian River’s arrival. Indian River cannot base its case on a provable fact it never attempted to establish below.
. Because we have reversed the district court's determination of liability as to both Indian River and Eller, we need not address the parties’ arguments about the quantification of damages and the district court’s decision not to award pre-judgment interest. When considering the question of pre-judgment interest on remand, as to the claim against Eller, the district court is free to consider the effect of Argonaut Ins. Co. v. May Plumbing Co., 474 So.2d 212, 215 (Fla.1985) (pre-judgment interest under Florida law — as Florida law supplies the rule for the liability claim against Eller, New York choice-of-law principles mandate that Florida law also supply the rule of decision for Hiram Walker’s claim for pre-judgment interest, see Entron, Inc. v. Affiliated FM Ins. Co., 749 F.2d 127, 131 (2d Cir.1984)). As to the pre-judgment interest claim against Indian River, the district court should consider the applicability of the reasoning in George R. Hall, Inc. v. Superior Trucking Co., 532 F.Supp. 985, 996-98 (N.D.Ga.1982) (prejudgment interest under the Carmack Amendment).
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.
MAHONEY, Circuit Judge:
Plaintiff-appellant, cross-appellee Krein-dler & Kreindler (“Kreindler”), the relator in this qui tam action filed on behalf of the United States under the False Claims Act, 31 U.S.C. § 3729 (1988) et seq. (the “FCA”), appeals from a summary judgment of the United States District Court for the Northern District of New York, Neil P. McCurn, Chief Judge, entered November 14, 1991 that dismissed Kreindler’s complaint for failure to comply with the applicable statute of limitations. The underlying memorandum-decision and order is reported as United States ex rel. Kreindler & Kreindler v. United Technologies Corp., 777 F.Supp. 195 (N.D.N.Y.1991).
Defendant-appellee, cross-appellant United Technologies Corp. ("UTC”) cross-appeals from the district court’s determination that Kreindler had standing to bring this action. UTC also contends on cross-appeal that the district court lacked subject matter jurisdiction over this suit, a contention raised below but not addressed by the district court.
We affirm on the basis of an absence of subject matter jurisdiction, viewing the suit as “based upon the public disclosure of allegations or transactions in a... civil... hearing” within the meaning of 31 U.S.C. § 3730(e)(4)(A) (1988), and concluding that Kreindler is not an “original source of the information” underlying this action within the meaning of § 3730(e)(4)(A) and (B).
Background
Kreindler previously represented Audrey L. Bryant, widow of United States Army warrant officer Charles Bryant, in a wrongful death action, Bryant v. UTC, 83 Civ. 992 (N.D.N.Y.), brought against UTC as a result of Charles Bryant’s death in the 1982 crash of a UH-60A (“Black Hawk”) helicopter manufactured by UTC. In connection with the discovery in that case, Kreindler entered into a stipulation and protective order (the “Stipulation”) which stated that all UTC documents provided in discovery were “confidential and proprietary information which shall be used by plaintiff solely for the purposes of [the Bryant ] action,” and were to be immediately returned to UTC or destroyed upon the final termination of that action. The Bryant action was settled in 1987 prior to trial. In the settlement agreement, Krein-dler agreed to return all discovery documents and to honor the terms of the Stipulation. The agreement stated further that it was “binding upon Mrs. Bryant and [UTC] and their respective... attorneys.” The agreement was signed by Mrs. Bryant, an attorney for UTC, and an attorney from Kreindler.
Army design specifications for the Black Hawk required that the helicopter be capable of being transported aboard military cargo aircraft. To accomplish this, the main rotor blades had to be folded, and the blade folding and unfolding had to be done rapidly and without maintenance technicians. Because folding the blades without disconnecting the control rods attached to them would transmit unacceptable pressure to the control assembly of the helicopter, UTC incorporated blade fold pins into its prototype helicopter design. The pins were inserted into holes in the helicopter’s internal control mechanisms during blade folding. The function of these pins was to withstand and sustain the physical loads generated by folding the main rotor blades for transportation without disconnecting the attached control rods, preventing these physical loads from damaging sensitive flight control system components. The applicable contract did not specifically require blade fold pins, but did require blade folding capability.
Under Department of Defense regulation DOD-STD-480A (Apr. 12, 1978), UTC was required to seek approval from the assigned Army contracting officer for changes and waivers impacting upon safety and performance. Engineering changes to the Black Hawk design were classified as either Class I, those affecting “contractually specified form, fit or function,” or Class II, minor changes not having such an effect, such as alterations in documentation or hardware. UTC was contractually required to submit Class I change requests to the contracting officer at the Army Aviation Systems Command (“AVSCOM”) in St. Louis, Missouri.
In late 1977 or early 1978, UTC discovered that certain engineering changes prevented the use of blade fold pins because the prefabricated holes into which the pins were to be inserted did not line up properly. According to Kreindler, UTC unilaterally and secretly revised its design to eliminate the pins rather than refabricate the components or submit design changes to the government for approval. In addition, UTC allegedly did not propose any substitute design for protecting the flight control system from pressure generated by folding the rotor blades. UTC contends that it abandoned the blade fold pin concept not only because of the alignment problems, but also because the final design of the helicopter made it too tall to fit into several cargo transport aircraft without disconnecting the pitch control rods connecting the blades to the control mechanisms. UTC claims that the disconnection alleviated the blade fold loads and made the blade fold pins unnecessary. UTC also maintains that the change was made with the full knowledge of the responsible Army officials.
The first Black Hawk helicopters were delivered to the Army in the summer of 1979. According to UTC, during training exercises in November 1979, UTC and the Army discovered that folding the rotor blades without disconnecting the pitch control rods exerted excess pressure that could crack ball bearings manufactured by the Fafnir Corporation (“Fafnir bearings”) that were utilized in the flight control system. In November 1979, UTC changed the procedure by which rotor blades could be folded, requiring the pitch control rods to be disconnected before folding “to prevent loading the control system.” In December 1979, the Commander of AVSCOM circulated a memorandum to all Army field units using the Black Hawk which advised that folding the rotor blades without disconnecting the pitch control rods could damage the Fafnir bearings, and ordered the Army units to inspect all affected Black Hawks and replace any damaged bearings.
On November 6, 1979, UTC submitted an engineering change notice that called for the replacement of the Fafnir bearings in all newly produced Black Hawks with solid rollers that could withstand greater pressure. Kreindler claims that when UTC switched to solid rollers, it concealed the fact that the change was necessitated because the blade fold loads resulting from the lack of blade fold pins tended to crack the Fafnir bearings. According to Krein-dler, UTC falsely categorized the change notice as a Class II change rather than a Class I change in order to avoid retrofitting existing helicopters. UTC contends that the change notice was prompted by the warnings put out by Fafnir in its 1979 catalogue. See supra note 1. According to UTC, it did not become aware of the relationship between failure to disconnect the pitch control rods and the cracked bearings until November 15, 1979, after it had submitted the change notice.
The first 115 Black Hawks delivered to the Army, for which payment was made in March 1981, contained the Fafnir bearings which could not withstand blade folding pressures without disconnection of the pitch control rods. These helicopters were eventually retrofitted with solid metal rollers in 1983, after the fatal accident that led to the Bryant litigation. Although the related change notice specified that safety and standards were affected, UTC classified it as a Class II change.
Kreindler filed this action on December 30, 1987, contending that UTC knowingly violated its government contract and presented false or fraudulent claims for payment of over 700 Black Hawk helicopters delivered to the United States Army without blade fold pins, a contractually required and critical safety and performance feature. Kreindler asserted that this constituted a fraud on the government under the FCA, which imposes liability upon any person who
knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval.
31 U.S.C. § 3729(a)(1) (1988). “Knowingly” is defined to mean that
a person, with respect to information—
(1) has actual knowledge of the information;
(2) acts in deliberate ignorance of the truth or falsity of the information; or
(3) acts in reckless disregard of the truth or falsity of the information,
and no proof of specific intent to defraud is required.
31 U.S.C. § 3729(b) (1988).
Kreindler filed this action under seal, as required by 31 U.S.C. § 3730(b)(2) (1988), and forwarded the complaint to the United States Department of Justice, which had the option, under 31 U.S.C. § 3730(b)(4)(A) (1988), of conducting the action. After investigation, the United States notified Kreindler and the district court, pursuant to 31 U.S.C. § 3730(b)(4)(B) (1988), that it declined to pursue the action. Kreindler then served the complaint on UTC.
UTC filed motions pursuant to Fed. R.Civ.P. 12(b)(1) and 56 which asserted that: (1) the FCA’s qui tam provisions allowing private citizens who have not suffered actual or threatened injury to sue on behalf of the government are unconstitutional, and Kreindler thus did not have standing to sue; (2) the court lacked subject matter jurisdiction in view of § 3730(e)(4) because the suit was based upon the public disclosure of the underlying allegations in the Bryant action and Kreindler was not an “original source of the information” upon which the action was based within the meaning of that provision; and (3) the claim was barred by the applicable statute of limitations.
The district court denied UTC's motion to dismiss on standing grounds, concluding that the government’s alleged injury as a result of UTC’s conduct provided a valid basis for Congress to confer standing upon-Kreindler to bring the action. 777 F.Supp. at 199-200. The court determined, however, that the action was barred by the pertinent statute of limitations, id. at 200-05, and accordingly declined to address the issue of subject matter jurisdiction posed by § 3730(e)(4). 777 F.Supp. at 205.
Kreindler appeals from that determination. UTC cross-appeals from those portions of the district court’s decision which (1) held that Kreindler had standing, and (2) declined to dismiss the case for lack of subject matter jurisdiction pursuant to § 3730(e)(4).
Discussion
Under the FCA, individuals are authorized to “bring a civil action for a violation of [the Act] for the [complaining] person and for the United States Government.” 31 U.S.C. § 3730(b)(1) (1988). The action is brought in the name of the government, id., and the government may either intervene and prosecute the action, § 3730(b)(2), or allow the original plaintiff — the qui tam relator — to proceed with the suit under § 3730(b)(4)(B).
Whether or not the government joins in the action, the relator is entitled to a portion of the proceeds if the prosecution is successful. If the government intervenes in the suit, the relator receives no less than fifteen and no more than twenty-five percent of the ultimate recovery. 31 U.S.C. § 3730(d)(1) (1988). If the government does not join the suit, the relator receives from twenty-five to thirty percent of the recovery. 31 U.S.C. § 3730(d)(2) (1988).
We address on this appeal (1) UTC’s claim that the qui tam provisions of the FCA violate Article III of the Constitution; and thus did not validly vest Kreindler with standing to bring this action; (2) Krein-dler’s contention that the district court erred in its statute of limitations ruling; and (3) UTC’s argument that subject matter - jurisdiction was not proper under § 3730(e)(4)(A). '
A. Standing.
UTC argues that the FCA violates Article III of the Constitution by granting standing to private individuals to sue on the government’s behalf when they have not personally suffered actual or threatened injury. The district court relied, 777 F.Supp. at 199, upon three recent cases upholding qui tam plaintiff standing: United States ex rel. Truong v. Northrop Corp., 728 F.Supp. 615 (C.D.Cal.1989); United States ex rel. Newsham v. Lockheed Missiles & Space Co., 722 F.Supp. 607 (N.D.Cal.1989); and United States ex rel. Stillwell v. Hughes Helicopters, Inc., 714 F.Supp. 1084 (C.D.Cal.1989).
Article III, section 2 of the Constitution confines federal court jurisdiction to the adjudication of “[c]ases” and “[cjontroversies” in which the plaintiff has standing to maintain thé suit. Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343 (1975). The constitutional doctrine of standing requires the plaintiff to show actual or threatened injury resulting from defendant’s conduct that is redressible by a court. Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 99-100, 99 S.Ct. 1601, 1607-08, 60 L.Ed.2d 66 (1979).
Congress, however, may create a legal interest and confer standing to assert it. “The actual or threatened injury required by Art. Ill may exist solely by virtue of ‘statutes creating legal rights, the invasion of which creates standing.’ ” Warth, 422 U.S. at 500, 95 S.Ct. at 2206 (quoting Linda R.S. v. Richard D., 410 U.S. 614, 617 n. 3, 93 S.Ct. 1146, 1148 n. 3, 35 L.Ed.2d 536 (1973)); see also Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205, 212, 93 S.Ct. 364, 368, 34 L.Ed.2d 415 (1972) (White, J., concurring); Sierra Club v. Morton, 405 U.S. 727, 732, 92 S.Ct. 1361, 1364-65, 31 L.Ed.2d 636 (1972). In such a case, the prudential, judicially-created limitations on standing — such as individualized or particularized injury to the plaintiff — are not required, although the plaintiff must still allege some injury. “Congress may grant an express right of action to persons who otherwise would be barred by prudential standing rules.” Warth, 422 U.S. at 501, 95 S.Ct. at 2206; see also Gladstone, 441 U.S. at 103 n. 9, 99 S.Ct. at 1609-10 n. 9. When Congress has extended standing under a statute to the limits of Article III, “the courts accordingly lack the authority to create prudential barriers to standing in suits brought under that [statute].” Havens Realty Corp. v. Coleman, 455 U.S. 363, 372, 102 S.Ct. 1114, 1121, 71 L.Ed.2d 214 (1982) (citing Gladstone, 441 U.S. at 103 n. 9, 109, 99 S.Ct. at 1609-10 n. 9, 1612-13).
Nevertheless, some injury-in-fact must be shown to satisfy constitutional requirements, for Congress cannot waive the constitutional minimum of injury-in-fact. In a qui tam action, the plaintiff sues on behalf of and in the name of the government and invokes the standing of the government resulting from the fraud injury. See United States ex rel. Milam v. University of Texas M.D. Anderson Cancer Ctr., 961 F.2d 46, 49 (4th Cir.1992) (“The government, and not the relator, must have suffered the ‘injury in fact’ required for Article III standing.”). “Where there is evidence of palpable injury to the entity on whose behalf and in whose name the suit is brought, it is superfluous to require that the relator be individually aggrieved.” Truong, 728 F.Supp. at 619 (footnote omitted); see also Stillwell, 714 F.Supp. at 1098 (“There is no constitutional prohibition to the relator’s suing, under a statutory grant of standing, on the injury to the United States.”); 13A Charles A. Wright et al., Federal Practice and Procedure § 3531.13, at 76 (1984) (“if Congress wishes, indeed, it can enact a qui tam statute to enable a private party to invoke the standing of the government to collect a civil penalty”). Thus, the government’s alleged losses from UTC’s fraud confer standing on Kreindler.
The government remains the real party in interest, however, in the FCA suit. As we have previously stated, “although qui tam actions allow individual citizens to initiate enforcement against wrongdoers who cause injury to the public at large, the Government remains the real party in interest in any such action.” Minotti v. Lensink, 895 F.2d 100, 104 (2d Cir.1990); see also Milam, 961 F.2d at 49 (“We could not lightly conclude that the party upon whose standing the justiciability of the case depends is not the real party in interest.”).
The qui tam plaintiff has the requisite personal stake in the outcome of the case to assure “that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends.” Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 703, 7 L.Ed.2d 663 (1962). Because the qui tam relator: (1) funds the prosecution of the FCA suit, (2) will receive a private share in the government’s recovery only upon prevailing, and (3) may be liable for costs if the suit is frivolous, the relator’s personal stake in the case is sufficiently ensured. See United States ex rel. Givler v. Smith, 775 F.Supp. 172, 181 (E.D.Pa.1991); Truong, 728 F.Supp. at 619 n. 7; Stillwell, 714 F.Supp. at 1098-99.
UTC argues that such an interpretation permits Congress to circumvent Article III standing requirements. Citing Valley Forge Christian College v. Americans United for Separation of Church & State, Inc., 454 U.S. 464, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982), UTC argues that Congress cannot authorize suit by a relator who has not suffered an injury distinct from the harm suffered by all citizens when the government is defrauded. In Valley Forge, however, plaintiffs claimed standing only as taxpayers or citizens. 454 U.S. at 469-70, 102 S.Ct. at 756-57. Here, by contrast, the qui tam relator stands in the shoes of the government, which is the real party in interest.
The traditional Article III separation-of-powers concerns, as enunciated in Valley Forge, 454 U.S. at 472-74, 102 S.Ct. at 758-60, are not violated by allowing qui tam suits under the FCA. Such suits do not constitute an intrusion into areas committed to other governmental branches, for the courts are specifically engaged in the implementation of legislative policy. Thus, in adjudicating FCA cases, courts further the Congressional purpose of augmenting executive enforcement of fraud cases. See Public Interest Bounty Hunters v. Board of Governors of the Fed. Reserve Sys., 548 F.Supp. 157, 161 (N.D.Ga.1982) (“Qui tam plaintiffs therefore stand in the position of ‘private attorneys general’ whom Congress has ‘deputized’ to enforce federal laws.”); see also Priebe & Sons, Inc. v. United States, 332 U.S. 407, 418 (1947) (Frankfurter, J., dissenting) (in qui tam actions, “society makes individuals the representatives of the public for the purpose of enforcing a policy explicitly formulated by legislation”); Spann v. Colonial Village, Inc., 899 F.2d 24, 30 (D.C.Cir.1990) (plaintiff enforcing Fair Housing Act of 1968 acts as private attorney general vindicating Congressional policy), cert. denied, 498 U.S. 980, -, 111 S.Ct. 508, 509, 112 L.Ed.2d 521 (1990), — U.S. -, 111 S.Ct. 751, 112 L.Ed.2d 771 (1991).
Accordingly, the Supreme Court has stated that:
Qui tam suits have been frequently permitted by legislative action, and have not been without defense by the courts....
Congress has power to choose this method to protect the government from burdens fraudulently imposed upon it; to nullify the... statute because of dislike of the independent informer sections would be to exercise a veto power which is not ours. Sound rules of statutory interpretation exist to discover and not to direct the Congressional will.
United States ex rel. Marcus v. Hess, 317 U.S. 537, 541-42, 63 S.Ct. 379, 383, 87 L.Ed. 443 (1943) (footnotes omitted). More recently, in Lujan v. Defenders of Wildlife, — U.S. -, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992), the Court, although denying citizen standing under the Endangered Species Act of 1973, 16 U.S.C. § 1531 (1988) et seq., distinguished “the unusual case in which Congress has created a concrete private interest in the outcome of a suit against a private party for the govern.ment’s benefit, by providing a cash bounty for the victorious plaintiff.” — U.S. at -, 112 S.Ct. at 2143. See also United States ex rel. Woodard v. Country View Care Ctr., Inc., 797 F.2d 888, 893 (10th Cir.1986) (“The [FCA] statute of course eliminated any standing problem.”); United States ex rel. Weinberger v. Equifax, Inc., 557 F.2d 456, 460 (5th Cir.1977) (same), cert. denied, 434 U.S. 1035, 98 S.Ct. 768, 54 L.Ed.2d 782 (1978). A concrete case or controversy exists, and the asserted harm is redressible by civil penalties and damages. 31 U.S.C. § 3729(a) (1988).
Finally, the FCA qui tam provisions do not usurp the executive branch’s litigating function because the statute gives the executive branch substantial control over the litigation. See Truong, 728 F.Supp. at 621-22; Stillwell, 714 F.Supp. at 1086-93. This multi-branch approach is consistent with the fundamental structure and concepts of the Constitution. “While the Constitution diffuses power the better to secure liberty, it also contemplates that practice will integrate the dispersed powers into a workable government. It enjoins upon its branches separateness but interdependence, autonomy but reciprocity.” Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 635, 72 S.Ct. 863, 870, 96 L.Ed. 1153 (1952) (Jackson, J., concurring); see also id. at 610 (Frankfurter, J., concurring) (“[T]he content of the three authorities of government is not to be derived from an abstract analysis. The areas are partly interacting, not wholly disjointed.”).
B. Statute of Limitations.
As indicated supra, the district court dismissed this action on the basis of the applicable statute of limitations, § 3731(b) (set forth supra note 2), and therefore did not address the issue of subject matter jurisdiction posed by § 3730(e)(4). This procedure was inappropriate. As we stated in Rhulen Agency, Inc. v. Alabama Insurance Guaranty Association, 896 F.2d 674 (2d Cir.1990):
Where, as'here, the defendant moves for dismissal under Rule 12(b)(1), Fed.R.Civ. P., as well as on other grounds, “the court should consider the Rule 12(b)(1) challenge first since if it must dismiss the complaint for lack of subject matter jurisdiction, the accompanying defenses and objections become moot and do not need to be determined.” 5 C. Wright and A. Miller, Federal Practice and Procedure, § 1350, p. 548 (1969); cf., Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 776, 90 L.Ed. 939 (1946) (motion to dismiss for failure to state a claim may be decided only after finding subject matter jurisdiction).
Id. at 678; see also Jones v. State of Ga., 725 F.2d 622, 623 (11th Cir.) (“exceptions” to this “generally preferable approach” exist when plaintiff’s claim has no plausible foundation or is clearly foreclosed by Supreme Court precedent), cert. denied, 469 U.S. 979, 105 S.Ct. 380, 83 L.Ed.2d 316 (1984); United States ex. rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Blue Cross Blue Shield of Ga., Inc. (“Blue Cross”), 755 F.Supp. 1040, 1047 (S.D.Ga.) (citing Jones, court in qui tam action considered first whether § 3730(e)(4) precluded subject matter jurisdiction), dismissed on rehearing, 755 F.Supp. 1055 (S.D.Ga.1990).
Before we move on to the dispositive issue of subject matter jurisdiction under § 3730(e)(4), however, we will briefly state our disagreement with two aspects of the district court’s discussion of the statute of limitations issue, since that discussion occurs in a published opinion that might be regarded, absent any correction or clarification by this court, as precedential in this circuit.
The three-year limitations period stated in § 3731(b)(2) commences on “the date when facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances.” See supra note 2. In considering this aspect of the limitations issue, the district court stated:
The intentional concealment from the Army of the abandonment of the blade fold pin concept is the basis of relator’s claim_ However, none of the helicopters delivered to the Army had blade fold pins, a fact that was obvious to Army officials in 1979. There is no question of fact regarding the Black Hawk Project Manager’s Office's knowledge of the alleged defect. Accordingly, the relator has no claim under the False Claims Act, since the government “knew of those very facts or characteristics” which allegedly made defendant’s claims false.
777 F.Supp. at 204 (quoting Boisjoly v. Morton Thiokol, Inc., 706 F.Supp. 795, 810 (D.Utah 1988)).
Boisjoly is not addressed to the “known or reasonably should have been known” language of § 3731(b)(2), but rather to the threshold requirement of § 3729(a)(1) that a defendant “knowingly” present a false claim to the United States government in order for FCA liability to attach. We disagree with Boisjoly’s interpretation of § 3729(a)(1), and concur in the contrary view expressed by the Ninth Circuit in United States ex. rel. Hagood v. Sonoma County Water Agency, 929 F.2d 1416 (9th Cir.1991). That case expressly rejected the contention that government knowledge of the falsity of a claim automatically bars an FCA action, stating: “The requisite intent is the knowing presentation of what is known to be false. That the relevant government officials know of the falsity is not in itself a defense.” Id. at 1421 (citing United States v. Ehrlich, 643 F.2d 634, 638-39 (9th Cir.), cert. denied, 454 U.S. 940, 102 S.Ct. 474, 70 L.Ed.2d 247 (1981)). The court added that “Boisjoly may be defensible on its facts; its dicta are an unreliable guide.” Id.
It is unclear whether the Boisjoly statement at issue here is a dictum, especially since the Boisjoly court stated it as a holding. See 706 F.Supp. at 810. In any event, we agree that it is an unreliable guide. Although the ruling in favor of the defendant was warranted on the facts of that case, we agree with Hagood that the statutory basis for an FCA claim is the defendant’s knowledge of the falsity of its claim, see § 3729(a) & (b), which is not automatically exonerated by any overlapping knowledge by government officials.
As the government concedes in an ami-cus brief addressed to this issue, on the other hand, government knowledge may be relevant to a defendant’s liability:
The fact that a contractor has fully disclosed all information to the government may show that the contractor has not “knowingly” submitted a false claim, that is, that it did not act with “deliberate ignorance” or “reckless disregard for the truth.” See 31 U.S.C. § 3729(b). In some cases, the fact that government officials knew of the contractor’s actions may show that the contract has been modified or that its intent has been clarified, and therefore that the claim submitted by the contractor was not “false.”
Amicus curiae brief of the United States at 16.
The district court in this case also stated that it “was not persuaded by [Kreindler’s] ‘continuing fraud’ theory, i.e., that a fraudulent claim was made with the delivery of each helicopter, since the alleged defect in each helicopter was known to the government in 1979.” 777 F.Supp. at 205. This comment occurred in the aftermath of the district court’s adoption of Boisjoly, a case addressed to the issue of liability rather than the statute of limitations. In any event, the quoted statement does not reflect the law generally applicable with respect to the FCA statute of limitations.
Specifically, the number of asserta-ble FCA claims is not measured by the number of contracts, but rather by the number of fraudulent acts committed by the defendant. See United States v. Bornstein, 423 U.S. 303, 311, 96 S.Ct. 523, 528-29, 46 L.Ed.2d 514 (1976); see also Ehrlich, 643 F.2d at 638 (“if a person knowingly causes a specific number of false claims to be filed, he is liable for an equal number of forfeitures”); United States v. Woodbury, 359 F.2d 370, 377-78 (9th Cir.1966) (same). Further, as to each such claim, the six-year limitations period of § 3731(b)(1) “begins to run on the date the claim is made, or, if the claim is paid, on the date of payment.” Blusal Meats, Inc. v. United States, 638 F.Supp. 824, 829 (S.D.N.Y.1986) (collecting cases), aff'd, 817 F.2d 1007 (2d Cir.1987).
We turn to the issue of subject matter jurisdiction that we deem dispositive of this appeal.
C. Subject Matter Jurisdiction under 31 U.S.C. § 3730(e)(4) (1988).
Section 3730(e)(4) provides in pertinent part:
(A) No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing... unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.
(B) For purposes of this paragraph, “original source” means an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section which is based on the information.
As the language of this statute makes clear, “[t]he satisfaction of... § 3730(e)(4) is... an issue of subject matter jurisdiction.” United States ex rel. Precision Co. v. Koch Indus., Inc., 971 F.2d 548, 551 (10th Cir.1992) (collecting cases), petition for cert. filed, 61 U.S.L.W. 3437 (U.S. Nov. 30, 1992) (No. 92-927). Section 3730(e)(4) is intended to bar “parasitic lawsuits” based upon publicly disclosed information in which would-be rela-tors “seek remuneration although they contributed nothing to the exposure of the fraud.” United States ex rel. John Doe v. John Doe Corp., 960 F.2d 318, 319 (2d Cir.1992); see also United States v. CAC-Ramsay, Inc., 744 F.Supp. 1158, 1159 (S.D.Fla.1990) (“it will usually serve no purpose to reward a relator for bringing a qui tam action if the incident of fraud is already a matter of public knowledge by virtue of ‘public disclosure’ ”), aff'd mem., 963 F.2d 384 (11th Cir.1992).
UTC contends that discovery material containing all of the information upon which Kreindler’s claim is based was filed with the district court in the Bryant litigation. Although Kreindler was barred from disclosing that information by the Stipulation, the Bryant record was not sealed. Indeed, the district court denied a motion by UTC “for the sealing of all pleadings in this case containing copies of protected [UTC] documents.” Thus, the information was publicly disclosed because it was available to anyone who wished to consult the court file.
As the Third Circuit stated in United States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Prudential Insurance Co. (“Prudential ”), 944 F.2d 1149, 1155-56 (3d Cir.1991), § 3730(e)(4) was “designed to preclude qui tam suits based on information that would have been equally available to strangers to the fraud transaction had they chosen to look for it as it was to the relator. Information gleaned in litigation and on file in the clerk’s office falls in this category.” See John Doe, 960 F.2d at 322 (“Potential accessibility by those not a party to the fraud was the touchstone of public disclosure [in Prudential,]”). See also Wang v. FMC Corp., 975 F.2d 1412, 1416-17 (9th Cir.1992) (information revealed through discovery in a civil litigation “publicly disclosed” for purposes of a subsequent qui tam action) (citing Prudential, 944 F.2d at 1157-60); Precision Co., 971 F.2d at 553-54 (allegations in prior civil suit “publicly disclosed” within meaning of § 3730(e)(4)(A)); United States ex rel. Houck v. Folding Carton Admin. Comm., 881 F.2d 494, 504 (7th Cir.1989) (same), cert. denied, 494 U.S. 1026, 110 S.Ct. 1471, 108 L.Ed.2d 609 (1990). But see Blue Cross, 755 F.Supp. at 1048-50 (information revealed in civil litigation not disclosed “in a... civil... hearing” within meaning of § 3730(e)(4)(A)); United States ex rel. Stinson, Lyons, Gerlin & Busta-mante, P.A. v. Provident Life & Accident Ins. Co. (“Provident ”), 721 F.Supp. 1247, 1256-57 (S.D.Fla.1989) (civil litigation probably not a § 3730(e)(4)(A) “hearing,” but case decided on other grounds).
Kreindler argues that even if the discovery material was publicly disclosed, Kreindler did not obtain the pertinent information “solely” from that material, but also through independent investigation. The phrase “solely,” however, is not included in § 3730(e)(4)(A), which addresses actions “based upon” public disclosure of the underlying allegations or transactions. Further, Precision Co., 971 F.2d at 552-53, explicitly repudiates the notion that § 3730(e)(4)(A) bars only actions based “solely” upon publicly disclosed information, concluding that the statute applies to a “qui tam action... based in any part upon publicly disclosed allegations or transactions.” 971 F.2d at 553.
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.
TORRUELLA, Circuit Judge.
This appeal arises out of the district court’s refusal to adjust appellant’s sentence level downward by two points for acceptance of responsibility. Because we find that the district court did not abuse its discretion, we affirm.
Appellant was found guilty by a jury of three counts of drug-related crimes. After the trial, appellant made statements of admittance during an interview with the probation officer. At his sentencing hearing, appellant also stated “I know I did wrong and besides having done it wrong, I’m very repentant, and I ask forgiveness from the court.” Appellant contends that these statements demonstrate the required acceptance of responsibility.
The district judge disagreed, and sentenced him to 48 months imprisonment on counts one and two, and 78 months imprisonment on count three, all to run concurrently. This sentence fell within the applicable guideline range for appellant’s offense level.
We note that the district court’s conclusion as to the downward adjustment is consistent with Application Note 2 of United States Sentencing Guideline § 3E1.1, pertaining to acceptance of responsibility. That Note explains that “[tjhis adjustment is not intended to apply to a defendant who puts the government to its burden of proof at trial by denying the essential factual elements of guilt, is convicted, and only then admits guilt and expresses remorse.” The Note continues, stating that in “rare situations” a defendant may qualify for the adjustment while still having a trial, but only based upon “pre-trial statements and conduct.”
Appellant contends that he could not admit guilt before trial because his codefend-ants threatened him and his family. Appellant contends that this duress excuses his otherwise untimely admissions. We note, however, that the trial judge knew of appellant’s contention before he rejected the request for the downward adjustment.
We review the district court’s finding in this case with great deference because “the sentencing judge is in a unique position to evaluate a defendant’s acceptance of responsibility.” United States v. Uricoechea-Casallas, 946 F.2d 162, 167 (1st Cir.1991) (citing United States Sentencing Guideline § 3E1.1 comment). We therefore will reverse the finding only if it amounts to clear error. United States v. Bradley, 917 F.2d 601, 606 (1st Cir.1990). Given this standard, we cannot conclude that the district judge erred in denying the downward adjustment.
The district court had the opportunity to assess appellant’s demeanor and credibility, and evaluate his acceptance of responsibility, including his allegations of threats, in the context of the case as a whole. See id. Due to his assessment of these factors, the district court concluded that appellant did not accept responsibility at the hearing, but merely expressed remorse. This conclusion is bolstered by the presentence report, which expressly found that appellant was not eligible for the reduction because appellant made no pre-trial admissions.
Given the lack of any pre-trial acceptance of responsibility, and the insistence of the Sentencing Guidelines for such a timely acceptance of responsibility, we cannot say that the district judge committed clear error in refusing to apply the downward adjustment.
Affirmed.
. Counts one and two charged appellant with willfully, knowingly and intentionally using a telephone in committing and facilitating the commission of the crime of distribution of cocaine on two separate dates. Count three charged appellant with willfully, knowingly and unlawfully distributing approximately 918 grams of cocaine.
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.
GEORGE C. PRATT, Circuit Judge:
Plaintiffs appeal from a judgment of the United States District Court for the Southern District of New York, Mary Johnson Lowe, Judge, dismissing their complaint that defendants made material misrepresentations and omissions in a debenture offering in violation of § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j; § 11 of the Securities Act of 1933, 15 U.S.C. § 77k; and § 12(2) of the Securities Act of 1933, 15 U.S.C. § 111. Finding that the complaint “fail[ed] to allege any omission or misstatement of fact — material or otherwise — within the meaning of the securities laws”, the district court granted summary judgment to defendants. The court also dismissed plaintiffs’ state-law claims for lack of pendent jurisdiction. Since we conclude that plaintiffs presented sufficient evidence to create a genuine issue as to whether the offering was materially misleading, we reverse the summary judgment and remand the case for further proceedings.
BACKGROUND
Defendant Wherehouse Entertainment, Inc. offered 61/)% convertible subordinated debentures whose key selling feature was a right of holders to tender the debentures to Wherehouse in the case of certain triggering events which might endanger the value of the debentures. The tender right was to arise if:
(a) A person or group * * * shall attain the beneficial ownership * * * of an equity interest representing at least 80% of the voting power * * * unless such attainment has been approved by a majority of the Independent Directors;
(b) The Company * * * consolidates or merges * * * unless approved by a majority of the Independent Directors;
(c) The Company * * * incurs * * * any Debt * * * excluding * * * Debt which is authorized or ratified by a majority of the Independent Directors, immediately after the incurrence of which the ratio of the Company’s Consolidated Total Debt to its Consolidated Capitalization exceeds .65 to 1.0.
Indenture § 5.02, 11-12 (June 15, 1986); see also Prospectus Summary, “Optional Tender”, 3 (July 10, 1986); id. Description of Debentures, “Optional Debenture Tender”, 25-26.
The offering materials defined an “Independent Director” as “a director of the Company” who was not a recent employee but who was a member of the board of directors on the date of the offering or who was subsequently elected to the board by the then-independent Directors. Indenture, § 5.02, 12; Prospectus Description of Debentures, “Optional Debenture Tender”, 26. The reason offered for this unusual right to tender was that it would be a protection against certain forms of takeover attempts, including leveraged buyouts. Prospectus Description of Debentures, “Effect on Certain Takeovers”, 27. At the heart of this appeal is the meaning of the limitation placed on the right to tender by the role of “Independent Directors”.
Plaintiffs are financial institutions that purchased 34% of the convertible debentures. Eighteen months after the purchase, Wherehouse entered into a merger agreement with defendants WEI Holdings, Inc. and its subsidiary WEI Acquisition Corp. The practical effect of the merger, accomplished through a leveraged buy-out, left Wherehouse with a debt approaching 90% of its capitalization and left plaintiffs’ debentures valued at only approximately 50% of par. Plaintiffs attempted to exercise their right to tender, but the company refused to redeem the debentures on the ground that the “board of directors” had approved the merger.
Plaintiffs then commenced this suit for damages and an injunction to prevent the merger. Named as defendants were Wherehouse, various officers of Where-house, the underwriter of the debentures, WEI Holdings, Inc., WEI Acquisition Corp., and the bank that was financing the tender offer. Plaintiffs claimed that the descriptions of the debentures in the registration materials, as well as representations made during conversations, were materially misleading. Specifically, they claimed that, even though the defendants knew that the right to tender was illusory, their representations of the right as valuable and protected had misled investors into buying the debentures and therefore violated federal securities laws. In the alternative, claiming that the representations created a right to tender under the contract, plaintiffs asserted state-law claims of breach of contract, interference with contract, breach of implied duty of good faith, and fraudulent conveyance.
Defendants argued that all the relevant provisions were clear and unambiguous and that no false statements were made; thus the offering was not materially misleading or in violation of the securities laws.
The district court found nothing misleading. It granted summary judgment to defendants and dismissed plaintiffs’ state-law claims for lack of pendent jurisdiction. The district court held that defendants were not required to speculate about the likelihood of a waiver of debentureholders’ rights by the Independent Directors and that, even if the right were worthless, defendants were not required to use pejorative terms describing it as such. Moreover, it found the tender option was not illusory, because it (was possible that it) might provide a benefit to debentureholders in the case of a takeover hostile to shareholders which management chose to fight. Finally, according to the district court, the definition of “Independent Directors” was adequate because further description of their role, the extent of their discretion, their interests, or their intent would constitute mere legal conclusions, characterizations, or descriptions of underlying motives and were not required disclosures. Thus, the district court found that the descriptions of the right were not misstatements, and that the alleged omissions were not required to be disclosed under the securities laws.
We disagree with the district court’s atomistic consideration of the presentation of the debentureholders’ right to tender. The district court concluded that defendants had not misled plaintiffs because the information they included in the written and oral representations was “literally true”. We think, however, that when read as a whole, the defendants’ representations connoted a richer message than that conveyed by a literal reading of the statements. The central issue on all three claims is not whether the particular statements, taken separately, were literally true, but whether defendants’ representations, taken together and in context, would have mislead a reasonable investor about the nature of the debentures.
Some statements, although literally accurate, can become, through their context and manner of presentation, devices which mislead investors. For that reason, the disclosure required by the securities laws is measured not by literal truth, but by the ability of the material to accurately inform rather than mislead prospective buyers. Greenapple v. Detroit Edison Co., 618 F.2d 198, 205 (2d Cir.1980) (where method of presentation or “gloss” placed on information obscures or distorts significance of material facts, it is misleading). Even “ ‘a statement which is literally true, if susceptible to quite another interpretation by the reasonable investor * * * may properly * * * be considered a material misrepresentation.’ ” Beecher v. Able, 374 F.Supp. 341, 347 (S.D.N.Y.1974) quoting SEC v. First American Bank & Trust Co., 481 F.2d 673 (8th Cir.1973).
We hold that the district court erred in granting summary judgment to the defendants because plaintiffs have raised a triable issue as to whether the written and oral representations about the right to tender these debentures were materially misleading to a reasonable investor in violation of § 11 and § 12 of the 1933 Securities Act and also of § 10(b) of the 1934 Securities Exchange Act. Since the analysis for all three securities claims is similar, we will first consider it in some detail under § 11, and then review it only briefly under §§ 12 and 10(b).
A. Section 11 of the Securities Act of 1933
Section 11 states that any signer, officer of the issuer, and underwriter may be held liable for a registration statement which “contained an untrue statement of a material fact or omitted to state a material fact * * * necessary to make the statements therein not misleading”. Plaintiffs claim that these offering materials misstated the right to tender and omitted important information about it in violation of § 11. They argue that a reasonable investor would have believed that the right to tender was valuable because it was presented as a right to be exercised at the holder’s option and as a protection against takeovers that might affect the security of the debentures. In truth, however, the right to tender was illusory, they argue, because it was designed to be exercised only at the option of management and therefore was intended to protect the interests of shareholders, not of debenturehold-ers.
Plaintiffs are correct that the offering materials can reasonably be read to present the option to tender as a valuable right. The language used was invariably language of entitlement:
Holder’s Right to Tender. The Holder of any Security or Securities shall have the right, at his option, * * * to tender for redemption any such Security or Securities.
Indenture § 5.01, 10 (emphasis added). The prospectus summary provided that:
“Each holder of Debentures has the option to require the Company to redeem the holder’s Debentures.”
“Optional Tender”, 3 (emphasis added). And the prospectus itself stated:
“Holders of the Debentures will have the option * * * to require the Company to redeem such Debentures.”
Description of Debentures, “Optional Debenture Tender”, 25 (emphasis added).
Further, a jury could reasonably view the presentation of the right to tender as a special feature to protect investors, for the offering materials stressed the purported value of the right in any takeover transaction which would threaten the value of the debentures.
Since the events which give rise to such right of redemption could be expected to occur in connection with certain forms of takeover attempts, the optional tender provisions could deter takeovers where the person attempting the takeover views itself as unable to finance the redemption of the principal amount of Debentures which may be tendered * * * To the extent that Debentures may be tendered * * * the Company would be unable to use the financing provided by the sale of the Debentures offered hereby. In addition, the ability of the Company to obtain additional Senior Debt based on the existence of the Debentures would be similarly adversely affected.
Prospectus Description of Debentures, “Effect on Certain Takeovers”, 27; see also id. “Optional Debenture Tender”, 26.
Finally, the right was restricted only in that it was subject to action by “the Independent Directors”. Similar language describing the restriction — the right to tender occurs upon a triggering event, “unless [the event is] approved by a majority of the Independent Directors” (emphasis added)— is found in the Indenture, § 5.02, 11-12; in the prospectus summary, “Optional Tender”, 3; and again in the full prospectus, Description of Debentures, “Optional Debenture Tender”, 25-26. A jury could reasonably find that this repeated use of the word “unless” encouraged the inference that exercise of the right would be the norm and that waiver would be the exception.
Although the offering materials explain that the Independent Directors would be chosen from the company’s board of directors, the term “Independent Director” implies a special status, some distinction from an “ordinary” director. The term suggests that these directors would be “independent” of management and the normal obligations of board members to act in the interests of shareholders. Thus the restriction could reasonably be understood to mean that in the case of a triggering event, the right to tender would arise unless the Independent Directors find the event to be in the interests of the debentureholders. In short, as plaintiffs argue, a reasonable investor could have regarded the right to tender as a valuable right, protected by Independent Directors who would, in situations endangering the security of the debentures, consider debentureholders’ interests before approving any waiver of their right.
By thus representing that in a takeover context the Independent Directors would be considering the interests of debenture-holders, the defendants implied that the Independent Directors had a duty to protect the debentureholders’ interests. Defendants, however, have shown nothing in their corporate charter or by-laws that would have permitted, much less required, these Independent Directors to favor de-bentureholders over shareholders. Moreover, at the time of the approval of this merger, the Independent Directors constituted all but one of the “ordinary” directors on the board. As ordinary directors, they had a fiduciary duty to protect the interests of shareholders in any takeover situation, regardless of deben-tureholders’ interests or rights. It is inevitable, then, that the so-called Independent Directors had no independence; they would never protect the interests of debenture-holders except by coincidence because, as ordinary directors, they were required by law to protect the interests of the shareholders. From this perspective, there is merit in plaintiffs’ contentions that the right to tender was illusory and that the representations of it in the offering materials were misleading.
In sum, on a fair reading of the offering materials, despite their literal meaning, an investor could have reasonably believed that the tender option was presented as a valuable right for debentureholders; that it provided a special feature of protection for their interests; and that Independent Directors were to render independent votes on the right to tender based on the impact of a merger and on the interests of deben-tureholders. But if, as plaintiffs claim, the right to tender was illusory because the Independent Directors were tied to management, served its needs, protected shareholders’ interests, and would inevitably waive the right in any merger beneficial to management regardless of deben-tureholders’ interests, then the offering materials could be found by a rational trier of fact to be materially misleading in violation of § 11 of the Securities Act of 1933. Plaintiffs have therefore raised a genuine issue as to whether the written representations could have misled a reasonable investor, Greenapple, 618 F.2d at 205, and summary judgment was therefore unwarranted.
B. Section 12 of the Securities Act of 1933
Section 12(2) of the Securities Act of 1933 presents a problem similar to § 11, but it has the added factor of oral representations made to the investors in order to induce them to purchase. Section 12(2) states that anyone who makes a securities offering “by means of a prospectus or oral communication, which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements * * * not misleading * * * shall be liable” (emphasis added). In an affidavit, Thomas Revy of plaintiff Froley, Revy, alleges that in a phone conversation and at a “due diligence” lunch, officers of Wherehouse specifically represented that the debentures included the right to tender as a “protective covenant for the debentureholders” against takeovers. Plaintiffs claim these oral communications were untrue and violated § 12(2).
Defendants argue that the statements were accurate because they would protect holders in the event of a takeover that was hostile to management. The district court agreed, finding that “where the company might find itself subjected to an hostile takeover, the right to tender could, indeed, be ‘protective’ of the debentureholders’ interests.”
However, the language used — “protective covenant” and “special protection” — is promissory and unrestricted. The statements clearly imply that the protection to debentureholders would extend to the case of any takeover hostile to the holders’ rights. It would be, to say the least, a cramped interpretation to view the right to tender as a “protective covenant for the debentureholders” if its protection were limited to a takeover that was hostile only to management and the shareholders. Finally, by representing that this special right to tender was the key selling feature of otherwise low-value debentures, defendants could be found to have implied that debentureholders would be protected against takeovers hostile to their own interests, regardless of the interests of shareholders, and thus to have misled plaintiffs as to the true nature of the right. Summary judgment was therefore inappropriate on plaintiffs’ § 12(2) claim.
C. Section 10(b) of the Securities Exchange Act of 193)
Section 10(b) of the Securities Exchange Act of 1934, the general fraud provision of the act, prohibits any person from using or employing “any manipulative or deceptive device” in connection with the sale of a security. To state a claim under this section, plaintiffs “must allege material misstatements or omissions indicating an intent to deceive or defraud in connection with the purchase or sale of a security.” Luce v. Edelstein, 802 F.2d 49, 55 (2d Cir.1986); Ernst & Ernst v. Hochfelder, 425 U.S. 185, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976). Plaintiffs claim that disclosure of the true nature of the tender provision not only would have altered a reasonable investor’s investment decision, but would have dissuaded investment here by showing these debentures to be a poor risk. They allege that Wherehouse knew this and so deliberately misrepresented the right-to-tender feature, thereby misleading investors in violation of § 10(b).
The district court, having dismissed the claims under §11, found it was therefore impossible to state a § 10(b) claim. Since we have concluded that a question of fact is presented as to whether the offering materials and the oral communications, taken together, could have misled a reasonable investor, it follows that a jury should also determine whether the defendants violated § 10(b).
D. Pendent Claims
Since the only reason for the district court’s dismissing plaintiffs’ pendent state-law claims was that the federal basis for jurisdiction had disappeared, now that we have reinstated the federal claims, the pendent claims are reinstated as well.
Reversed and remanded.
SAND, District Judge:
The reasons why I am constrained to dissent may be briefly stated.
The question whether an anti-takeover provision provides a “special protection” to debentureholders cannot be answered in the negative merely because the “Independent Directors” decided to waive its provisions and approve a particular transaction. These directors were explicitly empowered to act in this fashion by virtue of the fully disclosed terms of the provision. A significant function of an anti-takeover provision is to serve as a deterrent to hostile takeovers, including takeovers which would be contrary to the interests of both shareholders and debentureholders. One cannot, I believe, fairly characterize such a provision as being “worthless” to the debenturehold-ers, even though as a matter of Delaware law directors owe a fiduciary duty solely to shareholders. The anti-takeover provision was therefore a “special protection” to de-bentureholders, albeit a limited one.
Federal securities laws do not impose an obligation to advise investors of the fundamentals of corporate governance. The disclosure required by the federal securities laws is not a “rite of confession or exercise in common law pleading. What is required is the disclosure of material objective factual matters.” Data Probe Acquisition Corp. v. Data Lab, Inc., 722 F.2d 1, 5-6 (2d Cir.1983), cert. denied, 465 U.S. 1052, 104 S.Ct. 1326, 79 L.Ed.2d 722 (1984). Especially is this so where, as here, the investor-complainants are sophisticated financial institutions making major investments. The role of the federal securities laws is not to remedy all perceived injustices in securities transactions. Rather, as invoked in this case, it proscribes only the making of false and misleading statements or material omissions.
Whether the Independent Directors breached an implied duty of good faith or otherwise acted contrary to their fiduciary obligations are matters of state law. Here, the federal claims were asserted only conditionally, the express condition being the failure of the state law claims. These state claims were properly dismissed by the court below for lack of pendent jurisdiction.
Believing no valid federal claim to be present, I would affirm essentially for the reasons set forth in the Opinions of the Magistrate and 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:
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A
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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.
MESKILL, Circuit Judge:
This appeal results from the efforts of governmental authorities to require compliance with statutory safety standards by those health care facilities which care for governmentally-sponsored patients. We must determine whether or not a full evidentiary hearing is necessary in this case prior to a nursing home’s decertification as a skilled nursing facility under the Medicaid program, and further, whether or not Congress intended, or the Constitution requires, procedural uniformity with regard to the granting of waivers under Medicare and Medicaid.
The government’s efforts were first reviewed by this Court in Maxwell v. Wyman, 458 F.2d 1146 (2 Cir., 1972) (Maxwell I). There, pursuant to a prior statutory scheme, the New York State Departments of Social Services and Health teamed up to regulate “skilled nursing homes” and to determine whether “providers” of Medicaid services had met the requirements of the Life Safety Code of the National Fire Protection Association (Life Safety Code), as mandated by Title XIX of the Social Security Act. Title XIX at that time also permitted the State agency to waive “specific provisions of the Life Safety Code which, if rigidly applied, would result in unreasonable hardship upon a nursing home, but only if such agency makes a determination . . . that such waiver will not adversely affect the health and safety of the patients of such skilled nursing home . . ..” 42 U.S.C. § 1396a(a)(28)(F)(i); 45 C.F.R. § 249.-33(a)(l)(vii).
Prior to the Maxwell I case, however, the New York State Department of Social Services refused to grant any waivers because it felt that any violation of the Life Safety Code necessarily “adversely affect[ed]” the health and safety of patients. The appellants in that case were 148 proprietors of “skilled nursing homes” which the Department of Social Services was attempting to disqualify from Medicaid reimbursement because of Life Safety Code violations. The State agency offered no hearings on the waiver issue since it had determined no waivers should be granted under any circumstances. This Court directed that hearings on waivers take place before the “provider agreements” were terminated, deciding that 42 U.S.C. § 1396a(a)(28)(F)(i) and 45 C.F.R. § 249.-33(C)(2) mandated a case-by-case inquiry into both the “unreasonable hardship” caused by rigid enforcement of the Life Safety Code and the possibility of adversely affecting the patients’ health and safety by granting waivers of violations.
Subsequently, on September 8, 1972, the State made a fire safety survey of the Case Nursing Home. Mrs. Case, the owner-operator of the home, was then given a purported hearing which the State Attorney General admitted was insufficient. Consequently, a new State hearing was agreed to and held. A final State determination however, was never made because new federal legislation intervened to shift the responsibility of making Life Safety Code waiver determinations from the several states to the Secretary of Health, Education and Welfare (Secretary). Further State action with respect to appellant’s Life Safety Code violations thereafter ceased except for a subsequent State Survey Agency Fire Safety Survey made on December 20, 1973, and reviewed May 5, 1974.
On October 18, 1974, the Regional Director of HEW notified Mrs. Case by letter that, based on the surveys made by the State agency, his staff had recommended that waivers of the reported violations not be granted. The letter included copies of those surveys and indicated that Mrs. Case could request a “review” of that recommendation prior to a final determination. Such a “review” was timely requested and was held on December 17, 1974. That “review” was held more in the form of an informal meeting than an evidentiary hearing. Mrs. Case’s legal counsel made extensive opening remarks concerning the relative safety of the facility and the advisability of granting waivers of violations of the Life Safety Code in instances where the facility could not technically comply with its requirements. He' also presented Mrs. Case’s fire safety consultant who discussed general means for remedying the remaining violations. The consultant further expressed his expert opinion that the facility, in its present condition, afforded its patients reasonable safety from the dangers of fire. During the “review,” Mrs. Case’s counsel proposed to submit detailed plans for correcting those deficiencies which could be corrected and to point out and seek waivers of those which could not. The staff officer in charge of the proceeding accepted that proposal. The review was conducted with no sworn testimony, although a tape recording was made of the proceeding.
By letter dated January 20, 1975, Mrs. Case’s counsel transmitted the proposed corrections and requests for waivers to the regional office of HEW. There was no further apparent communication between the parties until March 25, 1975, when the HEW Regional Director of Long Term Care notified Mrs. Case that, notwithstanding the proposed corrections, the facility would not meet the requirements of the Life Safety Code in certain listed respects. The notification further denied the request for waivers of the admittedly uncorrectable technical violations. At no time prior to the notification of the final determination did any representative of the Secretary indicate to Mrs. Case or her attorney what criteria would be used to determine whether or not those violations would, if waived, “adversely affect the health and safety of the patients.” On April 11, 1975, Mrs. Case received formal notification from the New York State Department of Social Services that, effective April 12, 1975, as a result of the HEW determination, the nursing home would no longer be certified as a provider of skilled nursing facility services for Medicaid patients and that county officials would be contacting the home prior to May 12, 1975, to arrange for the removal of those patients.
Appellant Case initiated this action by complaint and order to show cause on April 18, 1975, seeking alternatively (1) the convening of a three judge court to restrain the enforcement, operation and execution of 42 U.S.C. § 1396a(a)(28) as repugnant to the United States Constitution, (2) preliminary and permanent injunctions directing the defendants to afford the plaintiffs full administrative hearings prior to decertification and removal of Medicaid patients, or (3) full review of the agency action pursuant to the provisions of the Administrative Procedure Act. On May 9, 1975, Judge Port denied the application for the convening of a three judge court, and refused to enjoin the defendants’ further actions with respect to decertification and removal of Medicaid patients prior to full administrative hearings. Judge Port did, however, order that the Secretary grant the plaintiff a full evidentiary hearing with respect to the granting of waivers of the Life Safety Code provisions within 90 days after a request for such a hearing.
I. Pre-termination Due Process
We turn first to the appellant’s claim that the district court erred in not granting injunctive relief, pending a due process administrative hearing of her claim that the Secretary should have waived the uncorrectable violations of the Life Safety Code. The cornerstone of appellant’s argument is that a due process hearing is required prior to the Secretary’s determination that the nursing home was no longer a “skilled nursing facility.” We disagree with that contention given the particular facts of this case.
It is clear that Mrs. Case has a property interest in her expectation of continued participation in the Medicaid program. Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). The procedural requirements of due process must reflect a balance between government’s interest and the nature of the individual interest being affected by the governmental action. Frost v. Weinberger, 515 F.2d 57 (2 Cir., 1975); Cf. Escalera v. New York City Housing Authority, 425 F.2d 853 (2 Cir., 1970) cert. denied 400 U.S. 853, 91 S.Ct. 54, 27 L.Ed.2d 91. As the Supreme Court stated in Cafeteria Workers v. McElroy, 367 U.S. 886, 895, 81 S.Ct. 1743, 1748, 6 L.Ed.2d 1230 (1961), “[t]he very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation.” The fundamental requisites of due process are some kind of notice and some kind of hearing. Goss v. Lopez, 419 U.S. 565, 579, 95 S.Ct. 729, 42 L.Ed.2d 521 (1975). But “the timing and content of the notice and the nature of the hearing will depend on appropriate accommodation of the competing interests involved.” Id., 95 S.Ct. at 738; Cafeteria Workers v. McElroy, supra, 367 U.S. at 895, 81 S.Ct. 1743; Cf. Morrissey v. Brewer, 408 U.S. 471, 481, 92 S.Ct. 2593, 33 L.Ed.2d 484 (1972). In the ordinary situation, a recipient of a governmental benefit should be given a hearing comporting with the requirements of due process before that right is terminated. Cf. Bell v. Burson, 402 U.S. 535, 542, 91 S.Ct. 1586, 29 L.Ed.2d 90 (1970). But cf. Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970). However, where certain emergency situations which threaten the public safety exist and where the individual interest is of less importance, “an official body can take summary action pending a later hearing.” Boddie v. Connecticut, 401 U.S. 371, 379, 91 S.Ct. 780, 28 L.Ed.2d 113 (1971); See Goldberg v. Kelly, supra, 397 U.S. at 263, n. 10, 90 S.Ct. 1011, 1018; Ewing v. Mytinger & Casselberry, Inc., 339 U.S. 594, 601, 70 S.Ct. 870, 94 L.Ed. 1088 (1950); Fahey v. Mallonee, 332 U.S. 245, 253-54, 67 S.Ct. 1552, 91 L.Ed. 2030 (1947).
In applying this flexible due process approach to the present case, we begin with the obvious; that there is indeed a significant government interest in securing the safety of Medicaid patients housed in facilities which admittedly do not meet the safety standards of the Life Safety Code. This is not a case where the factual determination that there are Life Safety Code violations has ever been at issue. The appellant has admitted since the initial Maxwell I case in 1972 that because her facility is a two-story, wood-frame building it violates the Life Safety Code provisions applicable to nursing homes. Nor has she contested the Secretary’s conclusion that the widths of the doorways to patient rooms, the rear stairway, and the corridors of the building are too narrow to comply with the Life Safety Code requirements. In the event of a fire in such a building, the speedy evacuation of infirm and elderly patients from the second floor could be hampered severely by the existing conditions.
The Secretary and his engineering consultants have determined that these violations adversely affect the health and safety of the patients. They may be wrong, but that initial judgment, given the uncontested state of facts, must be given great weight in assessing the magnitude of the potential harm and the strength of the governmental interest.
Mrs. Case argues that the “danger” threat is belied by the Secretary’s inaction from July 1, 1973, when he was vested with the waiver power until October, 1974, when his first deficiency notice was sent, and by the further delay from that time until the May 12, 1975 deadline for the removal of the patients. Even though lengthy delays inherent in bureaucratic activities are deplorable, they do not diminish the legitimate interest which the government agencies have, and have steadfastly, albeit ploddingly, pursued since 1972.
We need not decide here whether the conditions existing at the Case establishment were so hazardous as to justify summary action by the Secretary to have the patients removed, to insure their safety, pending any hearing on the validity of his judgment, since the Secretary did grant Mrs. Case the informal “review” session prior to his taking action. That review session must be measured, in light of the government’s interest, against Mrs. Case’s interest in continued participation in the Medicaid program. The record indicates that 18 of the 21 patients in Mrs. Case’s facility at the time of Judge Port’s order were patients whose bills were paid under Medicaid. Mrs. Case asserts that the denial of Medicaid reimbursements will deal her business a blow from which it will never recover. She maintains that the anticipated delay between the removal of the patients and her supposed eventual vindication after a full hearing and judicial review would necessitate her going out of business. This anticipated damage to Mrs. Case, which is certainly serious, does not compare favorably with the government’s interest in the safety of her patients. A nursing facility’s “need” for patients has nothing to do with the statutory benefits structure. The facility’s need is incidental. That a particular nursing facility cannot survive without Medicaid participation was certainly not Congress’ foremost consideration in its creation of the Medicaid program. This is not to derogate Mrs. Case’s property interest in her expectation of continued participation. We must, however, place that right in proper perspective with regard to the health and safety expectations of the patients, which expectations the Secretary has a valid interest in protecting. The benefits to a nursing home from its participation in Medicaid reimbursement result from nothing more than a statutory business relationship.
When measuring the adequacy of specific procedural requirements, we must compare the risk of a mistaken decision to the deprivation which may flow from that decision. In this case a mistaken decision might unnecessarily close Mrs. Case’s nursing home. In the event of fire, however, a delay in that decision might result in unnecessary patient deaths. On balance, it is clear that in this case the governmental interest in protecting the health and safety of the patients justified termination after something less than a full evidential hearing. In two recent cases, Frost v. Weinberger, supra, and its most significant pillar, Arnett v. Kennedy, 416 U.S. 134, 94 S.Ct. 1633, 40 L.Ed.2d 15 (1974), where the government’s interests were dramatically less significant, both this Court and the Supreme Court approved procedures similar to those here in question prior to the termination of a property interest.
In Arnett, a federal employee was dismissed for making allegedly false and defamatory statements about co-employees. The Supreme Court upheld the validity of the statutory and regulatory procedures prescribed for such a dismissal. Those procedures were basically notice of the action and any charges preferred against the employee, a copy of the charges against him, a reasonable time for filing a written answer and supporting affidavits, and a written decision. In Frost, the government’s sole interest was to determine who, among several claimants, were the proper beneficiaries of Social Security death benefits.
In the instant case, the procedure used by the Secretary, prior to his action against Mrs. Case, compares favorably with those procedures used in both Ar-nett and Frost. On October 18, 1974, Mrs. Case was notified that her nursing facility violated the Life Safety Code in certain specified respects and that the Secretary was not disposed toward granting waivers of those violations in her case. The notification included copies of the actual survey reports and further informed Mrs. Case that she could seek a review of the initial decision. At that review session, Mrs. Case’s counsel went through the list of deficiencies with her expert, fire safety consultant, who indicated ways by which some of the deficiencies could be corrected and also expressed his opinion that, with those corrections, notwithstanding the remaining violations, the facility was reasonably safe for the patients.
After the session, Mrs. Case was given the opportunity to present by letter detailed plans for correcting the Life Safety Code violations. Subsequently, she did so. This procedure surely put all of the necessary facts, which were not in dispute with respect to the existence of violations, before the Secretary. Mrs. Case forcefully argues, however, that she was never made aware of what standards would be used by the Secretary in deciding whether or not waivers would be granted. She claims that without this knowledge, she could not effectively demonstrate that she had met or, in the future, could meet those standards. She feels that the opportunity to be heard which was given her was thus meaningless.
While we agree that Mrs. Case should have been made aware of what corrections would be necessary in order to be granted waivers, we do not accept her argument that the procedure was rendered meaningless by the absence of the information. Nor do we feel that such a failure means that the requisite due process was not given. Mrs. Case proposed to correct all of the violations which were within her means to correct. The Secretary’s determination indicated that three of the proposed corrections were insufficient to meet the Life Safety Code requirements. Those deficiencies, together with the deficiencies sought to be waived, convinced the Secretary that the facility would still present a safety hazard to the patients. Even if all of the proposals of correction had been accepted, the Secretary’s position With respect to waivers makes clear that the existence of the uncorrectable deficiencies alone were considered to be of a sufficiently serious nature so as to preclude the granting of waivers. There was no dispute about the facts. Consequently, the only issue present was whether or not the admittedly uncorrectable deficiencies were serious enough to preclude waiving them. At the review proceeding, Mrs. Case’s counsel and safety expert both attempted to convince the hearing officer that the uncorrectable deficiencies were not serious enough to endanger the health and safety of the patients. They were apparently unsuccessful in that attempt. We fail to see what Mrs. Case would or could have done differently to change that result had she known what standards the Secretary would apply.
We hold that the Secretary afforded Mrs. Case the due process procedural rights to which she was entitled.
II. Post-termination Evidentiary Hearing
We must now decide whether or not a full evidentiary post-termination hearing with judicial review is mandated. The district court, without explicitly stating its reasons, ordered the Secretary to provide a full evidentiary hearing, to be held, as nearly as practicable, in conformance with the provisions of 42 U.S.C. § 405(b). The Secretary has appealed from that portion of the district court’s order, claiming that the pre-termination “review” procedure complied with all due process requirements and that there is no statutory or constitutional need for any further proceedings. Mrs. Case, on the other hand, argues that both the Constitution and the Social Security Act requires a full evidentiary hearing. We are satisfied that the Social Security Act does indeed require the hearing ordered by the district court.
When Congress created the complementary Medicare (42 U.S.C. § 1395 et seq., popularly known as Title XVIII of the Social Security Act) and Medicaid (42 U.S.C. § 1396 et seq., popularly known as Title XIX of the Social Security Act) programs, it maintained the distinction between a strictly federal program and a program administered by the several states with the support of the federal treasury. Notwithstanding that distinction, subsequent amendments to the state-administered Medicaid legislation have given the Secretary the task of determining whether or not technical violations of uniform fire-safety standards, by any particular health care facility participating in either program, may be waived. Because of the structural and historical differences between the two programs, however, the Secretary’s procedures for making those determinations are not the same under each program.
The Secretary’s determination not to waive the violations of the Life Safety Code with respect to providers of Medicaid services is authorized by the 1972 amendments to the Social Security Act.
Any health care facility, under Title XVIII of the Act (Medicare), which the Secretary determines does not meet the statutory definition of a “provider of services” in that Title, is entitled to a full hearing and judicial review of the matter. Section 1395ff(c) of Title 42 of the United States Code provides:
“Any institution or agency dissatisfied with any determination by the Secretary that it is not a provider of services, or with any determination described in section 1395cc(b)(2) of this title, shall be entitled to a hearing thereon by the Secretary (after reasonable notice and opportunity for hearing) to the same extent as is provided in section 405(b) of this title, and to judicial review of the Secretary’s final decision after such hearing as is provided in section 405(g) of this title.”
Clearly, Medicare providers are entitled to a full hearing upon a determination that they are not entitled to Life Safety Code waivers. The Secretary does not dispute that a Medicare provider would be entitled to such a hearing. Section 246 of Public Law 92-603, however, gave the Secretary the exclusive authority to waive violations of the Life Safety Code with respect to both Medicaid and Medicare providers. That Public Law was entitled “Uniform Standards for Skilled Nursing Facilities Under Medicare and Medicaid.” Congress effectuated the concentration of authority in the Secretary with respect to the waivers by providing that, in order for a “skilled nursing facility” to qualify for participation in Medicaid reimbursements, it must qualify, with certain exceptions, as a “skilled nursing facility” as defined in Title XVIII, the Medicare Title, of the Social Security Act.
Title XVIII requires that a “skilled nursing facility,” in order to be eligible for Medicare participation, must meet the provisions of the Life Safety Code as applicable to nursing homes. Title XVIII, in its definition of a “skilled nursing facility,” gives the Secretary the authority to waive violations of the Life Safety Code if rigid enforcement would create a hardship for a particular facility and if the granting of such waivers would not adversely affect the health and safety of the patients.
In essence, when the Secretary determines that waivers of Life Safety Code violations should not be granted to a nursing home, he is determining that such a home does not qualify as a “skilled nursing facility” and thus as a “provider of services” under the Medicare provisions, Title XVIII, of the Social Security Act. Acting upon that determination, the particular state agency involved then draws the mandated conclusion that such a facility is not eligible to participate in that state’s “plan for medical assistance” as defined in Title XIX.
Since the Secretary is doing no more than determining that a particular nursing home is not a Title XVIII provider of services, 42 U.S.C. § 1395ff(c) provides for administrative and judicial review of that determination. There is no indication anywhere that Congress intended to deny any such facility administrative and judicial review of the Secretary’s determination simply because that facility was participating only in the Medicaid program and not the Medicare program. It is true that there are vast differences in the two programs. Medicare is administered entirely by the Secretary while Medicaid is generally within the province of the several states. As far as the granting of Life Safety Code waivers is concerned, however, there is no difference in administration; waivers are the exception to the rule. The Secretary makes all determinations in connection with waivers. The requirements of the Life Safety Code are the same for each program and, presumably, the standards for granting waivers of that Code are the same for each program. The differences between the two programs have no relevance to determinations made by the Secretary with respect to waivers of the Life Safety Code. Congress could have maintained the complete distinction between the two programs. It did not do so. We think it highly unlikely that Congress intended to impose uniform standards of safety upon both Medicare and Medicaid nursing homes and to place the administration of those standards under one authority and then, after striving for uniformity, provide for review for only a part of that uniform system for maintaining the safety of patients.
In the present case we recognize that there is precious little in the nature of factual issues to be determined by a full evidentiary hearing. That the specified violations of the Life Safety Code exist at the Case Nursing Home is not disputed. A full hearing, however, will hopefully provide a record upon which the Secretary can make a knowledgeable decision with respect to his discretionary grant or denial of waivers. Further more, that record should also provide the basis for judicial review of that discretionary decision should an abuse of discretion be claimed.
Affirmed.
. The Medicaid program was administered in each state at that time by a “single State agency,” pursuant to 42 U.S.C. § 1396a(a)(5). In New York that agency was the Department of Social Services. That department executed a “provider agreement” with each nursing home pursuant to 42 U.S.C. § 1396a(a)(27). In order to qualify for reimbursement, each nursing home had to have a state operating certificate issued by the State Department of Health and must have qualified as a “skilled nursing home,” which qualification required, among other things, that the Department of Social Services find the home to be in compliance with the Life Safety Code. 42 U.S.C. § 1396a(a)(28)(F)(i). See footnote 14, infra.
. SeeMaxwell v. Wyman, supra, 458 F.2d at 1149.
. Id. at 1150.
. Initially, this appeal was instituted by plaintiffs Case d/b/a Case Nursing Home and Louise Ungaro d/b/a Phillips Nursing Home. Subsequently, appellant Ungaro withdrew from the appeal.
. In the meantime, a number of the original appellants in Maxwell I had successfully challenged, at either the hearing or appellate level, the initial denial of Life Safety Code waivers. See Maxwell v. Wyman, 478 F.2d 1326 (2 Cir., 1973); Maxwell v. Lavine, 41 A.D.2d 346, 343 N.Y.S.2d 331 (3d Dept., 1973).
. Public Law 92-603, § 246(b)(3), effective July 1, 1973.
. Pursuant to 45 C.F.R. § 249.33(a), the State agency conveyed to HEW its recommendation, based upon that survey, not to recertify appellant’s home as a skilled nursing facility. On October 21, 1974, an HEW inspector made a fire safety survey of the appellant’s facility. Once again, violations of the Life Safety Code were reported. That survey also contained no recommendations for any waivers of the Life Safety Code.
. It appears that this tape recording was not transcribed or used for any purpose until after the regional director had made his final determination.
. These are the major Life Safety Code violations cited in the Secretary’s March 25 determination. There were numerous other violations which Mrs. Case proposed to correct, and which the Secretary apparently would have accepted.
. Maxwell I is not to the contrary since that decision was based upon state statutes requiring a hearing prior to the revocation, suspension, limitation or annulment of a state operating certificate.
. The waiver of Life Safety Code provisions embodied in 42 U.S.C. § 1395x(j)(13) does,'admittedly, consider the “hardships” involved in discontinuing a skilled nursing facility’s participation, but such a concern obviously does not imply that Congress contemplated a program designed to benefit nursing homes.
. See Judge Friendly’s analysis of this subject in Frost v. Weinberger, supra, 515 F.2d at 66-67, note 19; see generally Friendly, ‘‘Some Kind of Hearing,” 123 U.Pa.L.Rev. 1267 (1975).
. Those standards, contained in the affidavit of Alan J. Saperstein submitted to the district court, appeared to be flexible in keeping with the Secretary’s discretion in his determinations, but are clearly pointed towards assuring adequate facilities for evacuation of patients from a two-story, wood-frame building. The Secretary concluded that the doors, corridors and stairways were too narrow for safe evacuation. Mrs. Case admits that she could not correct these deficiencies.
. Act of October 30, 1972; Public Act 92-603, § 246. Prior to the effective date of those amendments, the respective states made determinations as to whether or not a particular facility qualified as a provider of Medicaid services under Title XIX of the Social Security Act. See, Maxwell I, supra.
. A “skilled nursing facility” is included in the definition of “provider of services” contained in 42 U.S.C. § 1395x(u).
. Act of October 30, 1972; Public Act 92-603, § 246(a); 42 U.S.C. § 1396a(a)(28). Prior to the enactment of Public Act 92-603, Title XIX itself incorporated the Life Safety Code into its own requirements for participation in Medicaid reimbursements. Public Law 90-248, § 234; 42 U.S.C. § 1396a(a)(28)(F).
. Act of October 30, 1972; Public Act 92-603, § 246(b); 42 U.S.C. § 1395x(j)(13). Prior to the enactment of Public Act 92-603, Title XVIII contained no Life Safety Code requirements for participation in the Medicare program.
. Id.
. In the instant case, after the Secretary had made his determination, it was the state and local authorities who were called upon to ter“inate ^ Case from,her particiPation in the Medlcaid pr0gram and remove her patlents'
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.
THOMSEN, Senior District Judge:
The claims, counterclaims, cross-claims and third-party claim filed in the district court in this action arose out of the collapse of a pier facility in Norfolk, Virginia, owned and operated by appellant Lone Star Industries, Inc., resulting in the death of two Lone Star employees and injuries to a third, as well as damages to the pier and to the M/V Heina. The vessel, which was discharging a cargo of cement clinker at the pier when the casualty occurred, is owned by appellee A/S J. Ludwig Mowinckles Rederi (Mowinckles), and was under charter to appellee Gearbulk, Ltd.
The pier facility was designed and constructed for Lone Star by appellee Tidewater Construction Corp. to receive and accommodate cargoes of cement clinker from large self-unloading vessels (like the M/V Heina) under charter to Gearbulk. Clinker is discharged by use of a vessel’s crane into two large hoppers mounted on the pier, which can be moved along the pier to permit unloading of all hatches without moving the vessel. The clinker is carried by conveyor belts from the hoppers to a storage bin.
On the morning of November 8, 1972, the south hopper on the pier collapsed during the unloading of the M/V Heina and fell onto the ship and into the water. Two Lone Star employees on the pier were killed, and a third was injured. The estates of the deceased Lone Star employees have filed wrongful death actions against Mowinckles and Tidewater in a state court, and against Mowinckles in the district court. The injured employee filed an action against Mowinckles and Tidewater in a state court. Those actions have not yet come to trial, and Lone Star is not a party to any of them. Workmen’s compensation benefits have been paid under the Virginia Workmen’s Compensation Act, Va. Code Ann. § 65.1-1 et seq. (1973 Repl.Vol.).
Mowinckles instituted this suit in admiralty in the Eastern District of Virginia against Lone Star and Tidewater, alleging negligence and breach of contract, and seeking damages for injury to the ship and indemnification for any liability which may be imposed on it in the pending wrongful death or personal injury actions brought against it by Lone Star employees or their estates, and attorneys’ fees and expenses incurred in defense of those actions. Lone Star filed a counterclaim against Mowinckles, alleging negligence on the part of the vessel and seeking recovery for damages to the pier. Tidewater also filed a counterclaim against Mowinckles, alleging negligence on the part of the vessel, and seeking damages from Mowinckles for expenses incurred in rebuilding and repairing the pier and indemnification for all sums it had already incurred or would incur in connection with any actions, including personal injury and wrongful death actions, arising out of the casualty. Lone Star filed a cross-claim against Tidewater, alleging negligence and breach of contract by Tidewater in the design and construction of the pier facility, and seeking recovery for all damage to the pier as well as indemnification for all liability and expenses incurred and to be incurred in this case and in any other actions arising out of the casualty. In a cross-claim against Lone Star, Tidewater alleged that the sole cause of the accident was Lone Star’s negligence and breach of contract, and sought payment of the unpaid balance due Tidewater under its contract with Lone Star to repair and rebuild the pier, and indemnification for any liability and expenses incurred by Tidewater in Mowinckles’ federal suit or any other actions arising out of the casualty.
In an opinion dated February 2, 1976, the district court found: that the ship had not in any way caused the collapse of the pier; that there was no negligence or breach of warranty by Tidewater in the design or construction of the pier facility; that Lone Star employees had permitted the hopper to be excessively overloaded; and that such overloading was the sole proximate cause of the casualty. The court concluded that neither Mowinckles nor Tidewater had any liability for damages to Lone Star or to each other, that Mowinckles should recover from Lone Star its damages in full, and that Tidewater should recover on its cross-claim against Lone Star for the reconstruction of the pier and facilities. No appeal has been taken from the judgment entered on those ruling.
In September 1976, after further argument, the district court ruled on the indemnity claims, holding that the indemnification issue was ripe for determination and that Mowinckles and Tidewater are entitled to indemnification from Lone Star for all sums, including attorneys’ fees and expenses, already incurred or to be incurred by them in the wrongful death and personal injury actions. The stated basis of the decision in favor of both Mowinckles and Tidewater was that Lone Star had been the primary tortfeasor whereas Mowinckles and Tidewater had been only passive parties; the decision in favor of Mowinckles was also based on breach by Lone Star of an implied warranty of workmanlike service.
On this appeal Lone Star challenges only the district court’s judgment on indemnification. The issues presented are: (1) whether the indemnity claims were ripe for adjudication; (2) whether Mowinckles and Tidewater are entitled to indemnification on a tort theory based on the district court’s finding that Lone Star’s negligence was the sole proximate cause of the casualty, and (3) whether Mowinckles is entitled to indemnification based on a contract theory of a breach by Lone Star of an implied warranty of workmanlike service. Because we conclude that the claims of Mowinckles and Tidewater for indemnification against their expenses and possible liability in the pending actions brought by Lone Star employees or their estates were not ripe for adjudication, we do not reach the other issues.
I
Noting that there is a split of authority as to when the determination of an indemnity issue is premature, the district court adopted the following rule:
To not be premature, a ship owner’s claim for indemnity from an employer of an injured shoreworker must be made after some expenses have been incurred in defending against the shoreworker’s claim. The shoreworker’s claim need not be resolved prior to bringing suit for indemnity.
The court then held that the issue of indemnification was ripe for adjudication because both Mowinckles and Tidewater had incurred some expenses in defense of claims by Lone Star employees or their estates.
The authorities on this issue are few and conflicting. The district court relied primarily on Ellerman Lines, Ltd. v. Atlantic & Gulf Stevedores, Inc., 339 F.2d 673 (3 Cir. 1964), cert. denied, 382 U.S. 812, 86 S.Ct. 23, 15 L.Ed.2d 60 (1965). In that case a shipowner filed suit against a stevedore claiming indemnity for all sums it had already paid or would have to pay in a suit then pending in the same federal court brought against the shipowner by an injured longshoreman employed by the stevedore. The Third Circuit concluded that the action for indemnification was not premature, because it had been commenced after the shipowner had incurred some expenses in defending the personal injury suit. The court observed, however, that it would be duplicitous, unnecessarily time consuming and an invitation to controversy if the two proceedings were tried on separate occasions; it therefore instructed the district court on remand to consider the question of consolidation, and to consolidate the two proceedings “if it finds no disadvantages outweighing the obvious advantages of consolidation.” 339 F.2d at 675.
Before the decision in Ellerman, two district courts in the Third Circuit had found that claims for indemnification against liability incurred or to be incurred in pending actions were premature where the legal liability of the indemnitee had not yet been established. Mitsui Steamship Co. v. Jarka Corp., 218 F.Supp. 424 (E.D.Pa.1963); West Africa Navigation, Ltd. v. Nacirema Operating Co., 191 F.Supp. 131 (E.D.Pa.1961). In Greenwich Marine, Inc. v. S. S. Alexandra, 339 F.2d 901 (2 Cir. 1965), the Second Circuit held that a claim for indemnification in a suit involving loss and damage to cargo was premature, and therefore could not serve as the basis for seizure of the vessel. In that case, however, no suit against the indemnitee for the cargo damage had been instituted, and it was quite possible that no suit which might give rise to an indemnity claim would ever be instituted.
This Circuit has not yet ruled on the issue of the ripeness of a shipowner’s claim for indemnity against liability and expenses incurred or to be incurred in a pending but not yet decided personal injury or wrongful death action. In Rederi A/B Dalen v. Maher, 303 F.2d 565 (4 Cir. 1962), we held that an adjudication of liability was not a prerequisite to a shipowner’s claim for indemnity from a stevedore for counsel fees incurred in defending a wrongful death action brought by a longshoreman’s widow against the shipowner where the wrongful death action had been fully settled and the stevedore, who had been impleaded by the shipowner, had paid the full amount of the settlement to the shipowner. We concluded that in those circumstances the formality of reducing the wrongful death claim to final judgment was not a prerequisite to the shipowner’s indemnity claim for counsel fees. We followed Maher in American Export Lines v. Norfolk Shipbuilding & Drydock Corp., 336 F.2d 525 (4 Cir. 1964), where the shipowner had been absolved by a jury of all liability to an employee of the shipyard and was claiming indemnity from the shipyard only for legal expenses incurred in the successful defense of the employee’s suit.
II
Whether an indemnification issue is ripe for adjudication depends on the facts and circumstances of the ease under consideration. Here, there has been neither a determination of liability nor a settlement in any of the personal injury or wrongful death actions pending against Mowinckles and Tidewater in the district court and state courts. We cannot tell at this time what the outcome of those actions will be; the fact finders therein may find, on the evidence presented to them, that Mowinckles or Tidewater or both are liable to the plaintiff or plaintiffs in those cases. To award, in this action, indemnification against all liability and expenses, incurred or which may be incurred by Mowinckles or Tidewater in those actions, could lead to incongruous ■ results. The fact that they have already incurred some expenses in defending those actions does not make ripe their claims for indemnification against all potential liability and expenses. We conclude that a ruling on indemnification in the setting presented to the district court was premature.
An important factor in considering ripeness is whether resolution of the tendered issue is based upon events or determinations which may not occur as anticipated. See generally 13 Wright, Miller & Cooper, Federal Practice and Procedure § 3532 (1975). The district court awarded indemnification to Mowinckles and Tidewater on the basis of its finding in a suit for damages to property that, as between Mowinckles, Lone Star and Tidewater, Lone Star was the primary tortfeasor and Mowinckles and Tidewater were only passive parties. That finding, however, will not be conclusive on the issue of liability of Mowinckles or Tidewater or both to the plaintiffs in the personal injury and wrongful death actions. The plaintiffs in those actions are not parties to or in privity with any party to the instant case, and will not be bound by the district court’s findings and judgment in this case on the issues of negligence and responsibility for the casualty.
Lone Star is not now a party to any of the personal injury or wrongful death actions; it may, however, be brought into one or more of those actions under federal or Virginia rules governing third-party practice. See F.R.Civ.P. 14(a); Va.R.Civ.P. 3:10. If Lone Star is so impleaded, Mowinckles or Tidewater may attempt to claim, as between themselves and Lone Star in those actions, a conclusive effect for the district court’s finding herein that, with respect to the damages to the ship and to the pier and facilities, Lone Star was the primary tortfeasor whereas they were only passive parties. That finding, however, would not be determinative of the issue in controversy between Lone Star and Mowinckles or Tidewater in the personal injury or wrongful death actions, namely, whether Lone Star should indemnify Mowinckles or Tidewater or both for their potential liability for the personal injuries to or deaths of the Lone Star employees. Whether Mowinckles or Tidewater should be indemnified by Lone Star against liability for the personal injuries to or deaths of the Lone Star employees would depend in the first place upon whether, in those actions, Mowinckles or Tidewater or both are found to be liable for the personal injuries or deaths. That question cannot be answered at this time.
Likewise, the question whether a breach by Lone Star of an implied warranty of workmanlike service would require that Lone Star indemnify Mowinckles against liability and expenses in the personal injury and wrongful death actions will depend upon the findings in those actions with respect to whether, and if so in what way, Mowinckles was negligent or otherwise responsible for the personal injuries to or deaths of the plaintiffs therein. See, e. g., Weyerhaeuser S. S. Co. v. Nacirema Operating Co., 355 U.S. 563, 567, 78 S.Ct. 438, 2 L.Ed.2d 491 (1958); LeBlanc v. Two-R Drilling Co., 527 F.2d 1316, 1320-21 (5 Cir. 1976); Fairmont Shipping Corp. v. Chevron International Oil Co., 511 F.2d 1252, 1258 n. 11, 1260 (2 Cir.), cert. denied, 423 U.S. 838, 96 S.Ct. 66, 46 L.Ed.2d 57 (1975); Old Dominion Stevedoring Corp. v. Polskie Linie Oceaniczne, 386 F.2d 193, 196-97 (4 Cir. 1967).
Under the circumstances the claims of Mowinckles and Tidewater for indemnification should not be resolved in this action. With respect to the wrongful death actions pending in the district court, the proper course is that suggested in Ellerman Lines, Ltd. v. Atlantic & Gulf Stevedores, Inc., supra. See also Blake v. Farrell Lines, Inc., 417 F.2d 264 (3 Cir. 1970). District courts have broad discretion under F.R.Civ.P. 42(a) to consolidate causes pending in the same district. See generally 9 Wright & Miller, Federal Practice and Procedure § 2384, at 272 (1971). Consolidation under Rule 42(a) may be used to achieve the same result as could be reached by means of third-party practice under F.R.Civ.P. 14(a). Therefore, on remand the district court should consider, after providing the parties an opportunity to be heard, whether Mowinckles’ indemnification claim should be consolidated with the suits brought by the estates of deceased Lone Star employees against Mowinckles in the district court.
VACATED AND REMANDED.
. The casualty occurred before the effective date of the 1972 Amendments to the Longshoremen’s and Harbor Workers’ Compensation Act, 33 U.S.C. § 901 et seq. The expanded shoreside coverage of the Act, see Northeast Marine Terminal Co. v. Caputo,-U.S.-, 97 S.Ct. 2348, 53 L.Ed.2d 320 (1977), is not applicable, and the employees, who were killed or injured while working on the pier, were entitled to state workmen’s compensation benefits.
. These rulings appear in the district court’s memorandum opinion and order of September 3, 1976, the amendment order of September 16, 1976, and the judgment entered on September 21, 1976.
. See Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp., 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133 (1956), and its progeny.
. The district court applied federal law to decide all of the indemnity issues, apparently assuming that admiralty law would control all issues in the case even though the injuries to and deaths of the Lone Star employees occurred on the pier, see Victory Carriers, Inc. v. Law, 404 U.S. 202, 92 S.Ct. 418, 30 L.Ed.2d 383 (1971), and the workmen’s compensation benefits were paid under Virginia law and not under the Longshoremen’s and Harbor Workers’ Compensation Act. Because we conclude that the indemnification claims were not ripe for adjudication, we do not reach, and therefore intimate no opinion on, the question of what law governs the merits of the several indemnification claims in this case.
Lone Star argues that state law should govern on the issue of the ripeness of the indemnification claims for adjudication. We conclude that the district court was correct in looking to federal law to determine whether a decision on the indemnity claims would be premature, because the question of the ripeness of a claim for adjudication in a federal court is essentially a question of the judicial power of the court over the claim and whether the court should exercise that power.
. A practical approach was also taken in Moran Towing & Transportation Co. v. United States, 56 F.Supp. 104 (S.D.N.Y.1944). That court held that an action for indemnification against a potential damage award in a pending state court suit was not premature, but added that “the trial of this [indemnity] action should be stayed until after the liability of the libellant is finally determined in the State Court action.” 56 F.Supp. at 106.
. The Third Circuit distinguished West Africa in Ellerman on the basis that whereas in West Africa no claim was made for damages already suffered, part of the shipowner’s indemnity claim in Ellerman was for legal expenses already incurred in the pending personal injury action. See Ellerman Lines, Ltd. v. Atlantic & Gulf Stevedores, Inc., supra, at 675 n. 3.
. We intimate no opinion as to the correctness of the district court’s conclusions in his second opinion (from which this appeal is taken) that a warranty of workmanlike service was implied in the contractual relationship between Lone Star and Mowinckles and that Lone Star breached that warranty.
. With respect to the pending state court actions, we note that under Rule 3:10 of the Virginia Rules of Civil Procedure, which became effective in 1975, a defendant may bring in a third-party who is or may be liable to the defendant for all or part of the plaintiff's claim. It is possible, therefore, that Mowinckles or Tidewater may implead Lone Star in those actions. We express no opinion on whether under Virginia law a separate action for indemnity could be maintained. The Supreme Court of Virginia has held that there is no right to indemnification until there has been actual loss or damage suffered by the indemnitee. City of Richmond v. Branch, 205 Va. 424, 137 S.E.2d 882 (1964); American National Bank v. Ames, 169 Va. 711, 748, 194 S.E. 784, 797, cert. denied, 304 U.S. 577, 58 S.Ct. 1046, 82 L.Ed. 1540 (1938).
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.
WOODBURY, Circuit Judge.
W. W. Cross & Company, Inc., hereinafter referred to as the Company, is a Maine corporation engaged in the business of manufacturing cut -tacks and cut nails in the town of Jaffrey, New Hampshire. By- concession its activities are such as to render it engaged in “commerce” as defined in § 2(6) of the National. Labor Relations Act, as amended by the Labor Management Relations Act, 49 Stat. 449, 61 Stat. 136, 29 U.S.C.A. § 152(6). For convenience we shall hereinafter refer to the original Act as now amended simply as the Act.
United Steelworkers of America, C.I.O. Í9 a “labor organization”, as defined in § 2(5) of the Act, admitting employees of the Company to membership, which organization, since February 17, 1945, has been the duly constituted exclusive bargaining representative of an appropriate bargaining unit of the Company’s production employees.
Acting upon a charge filed by the Union against the Company on January 16, 1946, the National Labor Relations Board, after usual proceedings under § 10 of the Act, 29 U.S.C.A. § 160, entered an order on June 17, 1948, directing the Company in the negative to cease and desist from refusing to bargain collectively with the Union with respect to a group health and accident insurance program which the Company had unilaterally initiated, and, in the affirmative, directing the Company, upon request of the Union, to bargain collectively with it as the exclusive representative of an appropriate employee unit as to that program. But, the National Labor Relations Act having been amended in the meantime by the Labor Management Relations Act, which became effective on August 22, 1947, the Board conditioned both the negative and the affirmative parts of its order upon compliance by the Union within thirty days with the requirements of § 9(f) (g) and (h) of the Act, 29 U.S.C.A. § 159 (f-h).
The Union complied with the requirements of § 9(f) and (g) of the Act within thirty days of the date of the Board’s order and the Board amended its order accordingly, and thereupon both the Company and the Union as persons aggrieved filed petitions in this court under § 10(f) of the Act to review the order of the Board; the Union contending that the order should be modified by striking out the condition therein requiring compliance by it with the provisions of 9(h) of the Act, and the Company contending that the order should be set aside on the ground that group health and accident insurance is -not a matter as to which it could be compelled under the Act to bargain collectively with its employees.
The constitutional validity of what has come to be known as the anti-communist affidavit provision imported into the National Labor Relations Act by the Labor Management Relations Act (§ 9(h) of the Act) was carefully considered by the District Court of the United States for the District of Columbia in National Maritime Union of America v. Herzog, 78 F.Supp. 146; was considered again by the District Court of the United States for the Southern District of New York in American Communications Ass’n, C.I.O., et al. v. Douds, 79 F.Supp. 563, probable jurisdiction noted November 8, 1948, both statutory three-judge courts, and was fully considered once more by the United States Court of Appeals for the Seventh Circuit in United Steel Workers of America, C.I. O., et al. v. N.L.R.B., 170 F.2d 247, now pending in the Supreme Court on certiorari. 335 U.S. 910, 69 S.Ct. 480. And in all of these cases, although one judge dissented in each, it was held that the requirements of § 9(h) were constitutional. We are satisfied that this holding is correct and, in view of the extended discussion of the matter in the cases cited, we see no occasion to canvass the question again. An order will therefore be entered denying the Union’s petition for review,
At first glance, it might be suggested that this conclusion renders the question presented by the Company’s petition moot, for the Union not having complied with the condition upon which the Board’s order was granted within the time allowed for compliance, there is now no order of the Board against the Company outstanding requiring it to bargain with the Union as to a group insurance program or anything else. But if the Supreme Court in the United Steel Workers and American Communications Ass’n cases now pending before it holds the anti-communist affidavit provisions of § 9(h) of the Act unconstitutional and invalid, the Board’s order will stand as an unconditional one and hence one that will support a petition to this court for enforcement. And, if the Supreme Court in the above case holds the requirement of § 9(h) valid, the Board can, and we suppose would, extend the time for filing affidavits by the Union to give it a reasonable opportunity to comply with the condition which, if done, would also render the order enforceable here unless for some other reason the order should prove to be invalid. Under these circumstances it does not seem to us that the question presented by the Company’s petition can properly be said to be moot. We shall therefore proceed to consider it.
Section 8(a) (5) of the Act, 29 U.S.C.A. § 158(a) (5), makes it an Unfair labor practice for an employer “to refuse to bargain collectively with the representatives of his employees, subject to the provisions of section 9(a)”, and § 9(a) of the Act provides that the duly designated or selected representatives of an appropriate employee unit “shall be the exclusive representatives of all the employees in such unit for the purposes of collective bargaining in respect to rates of pay, wages, hours of employment, or other conditions of employment” [Italics supplied.] The question then is whether a group health and accident insurance program is a subject matter included within the meaning of the words of the statute which we have italicized.
The Company contends that it is not. Its argument, as briefly summarized in its brief, is this:
“The statute defined the subjects of collective bargaining; these were intended to cover basic conditions of employment which at that time were commonly the subject of collective bargaining, but not welfare activities, such as health and accident insurance, which were not; the background and legislative history of the statute show this to have been the intention of Congress, and the language of the statute is consistent with it.' Absence of welfare activities, such as insurance, from collective bargaining as practised up to 1935 when the statute was enacted, is evidenced by quotations from recognized authorities.”
This argument was elaborately considered, and we think satisfactorily exploded, by the United States Court of Appeals for the Seventh Circuit in Inland Steel Co. v. N.L.R.B., 170 F.2d 247, cer-tiorari denied April 25, 1949, wherein it was held that a pension plan was an appropriate subject for collective bargaining. We are content to rest on the reasoning of the opinion in the above case so far as refutation of the Company’s argument is concerned. That is to say, we think in view of the general purpose and policy of the Act that Congress did not intend to restrict the duty to bargain collectively only to those subjects which up to 1935 had been commonly bargained about in negotiations between employers and employees. On the contrary we think that Congress intended to impose upon employers a duty to bargain collectively with their employees’ representatives with respect to any matter which might in the future emerge as a bone of contention between them, provided, of course, it should be a matter “in respect to rates of pay, wages, hours of employment, or other conditions of employment.”
The question then comes down to whether a group insurance program is a matter having to do with “wages” or “other conditions of employment”, for it obviously has nothing to do with “hours of employment”, and if it has to do with “rates of pay” at all (the amount of an employee’s contribution to the Company’s program depended upon the amount of the employee’s weekly pay) its connection therewith is lenuous at best. Indeed we narrow the question still further, for believing a group insurance program to fall within the scope of the word “wages” as used in the Act, we see no need to consider, and therefore explicitly pass, the question whether such a program could also be included within the scope of the phrase “other conditions of employment.”
The word “wages”, following the phrase “rates of pay” in the Act must have been intended to comprehend more than the amount of remuneration per unit of time worked or per unit of work produced. We think it must have been meant to comprehend emoluments resulting from employment in addition to or supplementary to actual “rates of pay”. This does not necessarily mean that the word “wages” as used in the Act covers all satisfactions, pleasures or gratifications arising from employment such as playing on a company baseball team, or attending a company picnic, or belonging to a company social dub, although perhaps under some peculiar circumstances of employment in an isolated plant it might. Nor does our construction of the word “wages” necessarily mean that we construe it as covering “real wages” in all the breadth with which some economists use that phrase.
At least, without attempting to mark the outer boundaries of the meaning of the word “wages” as used in the Act, or attempting to enunciate a generalizing principle for the decision of future cases, (generalization must await the accumulation of a body of decided cases pricking out the line between subject matters within the Act and subject matters outside its scope) we think it can safely be said that the word “wages” in § 9(a) of the Act embraces within its meaning direct and immediate economic benefits flowing from the employment relationship. And this is as far as we need to go, for so construed the word covers a group insurance program for the reason that such a program provides a financial cushion in the event of illness or injury arising outside the scope of employment at less cost than such a cushion could be obtained through contracts of insurance negotiated individually. Thus it seems to us that the Company’s petition for review should also be denied and the order of the Board enforced as prayed for in its answers to the instant petitions.
A decree will therefore be entered denying both the Union’s and the Company’s, petitions for review, and affirming and enforcing the order of the Board, but, in view of the litigation now pending in the-Supreme Court, certification and issuance of the decree to the National Labor Relations Board will be stayed until further order of the court.
The Union as inte-rvenor in the Company’s petition supports the Board’s position as to the Company’s duty under the Act to bargain collectively with its employees with respect to group insurance,
This ease was decided with United Steel Workers of America, C.I.O., et al. v. N. L. R. B., supra, in which certiorari was granted on January 17, 1949.
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.
BAUER, Chief Judge.
In this appeal, we review for the second time Gary McKnight’s claim that he should be reinstated to his employment at General Motors Corporation (“GM”). We first reviewed his claim in 1990, after he won a jury verdict on a 42 U.S.C. § 1981 claim and a judgment under Title VII. McKnight v. General Motors Corp., 908 F.2d 104 (7th Cir.1990) (“McKnight II”). On the § 1981 claim, the jury awarded McKnight $55,000 in compensatory damages, $55,000 in back pay, and $500,000 in punitive damages. The jury awarded no damages based on impairment of future earning capacity. On the Title VII claim tried before the court, the judge declined to order GM to reinstate McKnight. The only other relief McKnight requested under Title VII was back pay, which was rendered superfluous by the jury’s $55,000 back-pay award. McKnight v. General Motors Corp., 705 F.Supp. 464, 468 (E.D.Wis.1989) (“McKnight I”).
We reversed the verdict under § 1981 in light of Patterson v. McLean Credit Union, 491 U.S. 164, 109 S.Ct. 2363, 105 L.Ed.2d 132 (1989), and remanded those claims to the district court for dismissal. McKnight II, at 908 F.2d at 115, 117. We upheld the Title VII verdict, and affirmed McKnight’s back-pay award under that theory. We also directed the court to reconsider its refusal to reinstate McKnight and to determine, if reinstatement was not appropriate, whether McKnight should receive front pay in lieu of reinstatement. Id. We direct interested readers to McKnight I and II for the underlying facts in this case.
On remand, the district court reconsidered its reinstatement order, and again declined to order GM to reinstate McKnight or to award front pay. The court also denied McKnight’s motion to reconsider that decision. Written opinions on both decisions were published in McKnight v. General Motors Corp., 768 F.Supp. 675 (E.D.Wis.1991) (“McKnight III”). McKnight appeals, arguing that the court abused its discretion in denying the relief he requests. He also contends that the court disobeyed our instructions in McKnight II on remand because it did not reopen the record and take evidence on McKnight’s then-current financial condition, employment status, and his relationships with existing GM employees. McKnight also argues that he was entitled to prejudgment interest, and that the district court abused its discretion in refusing to award it. On cross-appeal, GM argues that the attorneys’ fees award entered after trial pursuant to a stipulation by the parties should be reduced in light of our dismissal of McKnight’s § 1981 claims. We shall discuss each claim in turn.
Reopening the Record
We do not believe the district court abused its discretion in declining to reopen the record or in refusing to order reinstatement or front pay. In its initial opinion, McKnight I, the district court stated that reinstatement was not appropriate in this case because the relationship between McKnight and GM was acrimonious, and because McKnight preferred not to be reinstated in his former position, but in a corporate finance or banking position. Reinstatement was also inappropriate, it found, because
It is clear that in the instant case the plaintiff has been fully compensated and thereby made whole by the award of compensatory damages, and the defendant has been properly punished by the award of punitive damages. Complete justice requires no more in the context of the remedial purpose of Title VII.
705 F.Supp. at 469. Based on this language, we found that “the district judge declined to order [reinstatement] because the relationship between McKnight and GM had been poisoned by this litigation and also because the award of $500,000 in punitive damages, on top of the compensatory damages awarded, was remedy enough.” McKnight II, 908 F.2d at 115.
Because we struck the punitive and compensatory damages, we ordered the district court to reconsider its refusal to order McKnight’s reinstatement, or in lieu thereof, to award front pay. Contrary to McKnight’s present contention however, we did not order the court to reopen the record and gather new evidence on McKnight’s employment status. Our opinion was silent as to whether the record should be supplemented. That decision, together with the decision on the merits, was left to the sound discretion of the trial judge. “A discretionary order will only be set aside if it is clear that no reasonable person could concur in the trial court’s assessment.” Tennes v. Commonwealth, 944 F.2d 372, 381 (7th Cir.1991). “The district court’s decision must strike us as fundamentally wrong for an abuse of discretion to occur.” Anderson v. United Parcel Service, 915 F.2d 313, 315 (7th Cir.1990).
The district judge declined to reopen the record for several reasons. He noted correctly that our opinion did not require it. McKnight III, 768 F.Supp. at 678. He also explained that Patterson did not alter the remedies available under Title VII. Finally, he noted that McKnight had a full opportunity at trial to present evidence of his past and future damages and had failed to provide any authority for his position that the district judge was required to reopen the record on remand.
McKnight’s reliance on Grafenhain v. Pabst Brewing Co., 870 F.2d 1198, 1201 (7th Cir.1989) and Welborn v. Reynolds Metals Co., 868 F.2d 389 (11th Cir.1989), for the proposition that the district court was required to reopen the record because of our remand, is misplaced. A district court’s duties on remand are governed by the opinion ordering it. As Black’s dictionary defines it (and as we used the term in McKnight II), “reconsideration implies reexamination, and possibly a different decision by the entity that initially decided it.” Black’s Law Dictionary 1272 (6th ed. 1990). Although the district court in Grafenhain, reopened the record to determine the amount of front pay, as GM points out, it only did so after it determined based upon the trial record that front pay was appropriate. Id. at 1202. This is an important distinction — in Grafenhain, the amount of the award was determined in light of a reduction-in-force instituted by the defendant shortly after the plaintiff was wrongly discharged. Because the court found that the plaintiff would have lost his job for legitimate reasons during the RIF, it awarded front pay only for the period between the plaintiff’s termination and the RIF. Id.
Similarly, in Welborn, the Eleventh Circuit reversed the district court’s judgment that the plaintiff had failed to establish a prima facie case of discrimination. 810 F.2d 1026, 1028 (11th Cir.1987). It remanded the case, and the district court reinstated the plaintiff but awarded back pay of only $1.00 because it found the plaintiff failed to present sufficient evidence at trial to support a larger award. The district court declined to receive additional evidence on back pay, either relating to the pre-trial or post-trial period. Welborn, 868 F.2d at 391. The Eleventh Circuit held that the district court could refuse to hear further evidence relating to the pre-trial period, but that it abused its discretion in refusing to hear evidence supporting a back-pay award from the time of trial until the plaintiff’s reinstatement. Id. The court explained that there was no way for the plaintiff to present evidence at trial of her post-trial back-pay damages. Because Title VII is designed to make victims of discrimination whole, claimants are generally entitled to back pay from the date of the adverse employment action until reinstatement. Thus, the plaintiff should have been allowed to present evidence for the post-trial period. Id. at 391. The court also held that the plaintiff should have been allowed to present evidence on her reinstatement status. Id. But these rulings governed a proceeding where the appellate court reversed the trial court’s judgment in favor of the defendant, and imposed liability. Because of its earlier judgment, the trial court in Welborn never evaluated the amount of back pay to which the plaintiff was entitled or to what position she should be reinstated. On remand, then, the court was required to evaluate what damages would make the plaintiff whole at the time the damages were awarded.
In this case, our remand was not based upon a reversal of the district court’s evaluation of the facts at trial. Rather, because we vacated the § 1981 damages and questioned the completeness of the district court’s explanation of its decision to deny reinstatement, we asked the district court to reconsider whether McKnight needed to be reinstated or given front pay to be made whole. This ruling did not require the district court to reopen the record, and we do not believe the court abused its discretion in refusing to do so.
Reinstatement & Front Pay
As to the merits of the district court’s refusal to reinstate McKnight, or to award front pay, we again note that this decision is consigned to the sound discretion of the district court. Tennes v. Commonwealth, 944 F.2d 372 (7th Cir.1991); Grafenhain v. Pabst Brewing Co., 870 F.2d 1198, 1201 (7th Cir.1989). “Under an abuse of discretion standard, the proper inquiry is not how the reviewing court would have ruled if it had been considering the case in the first place, but rather whether any reasonable person could agree with the district court.” Id. at 1201; see also EEOC v. Gurnee Inn Corp., 914 F.2d 815 (7th Cir.1990).
Although reinstatement is usually the preferred remedy, reinstatement is not always required. The decision regarding reinstatement is within the discretion of the district court, and several factors may persuade the district judge after careful consideration in a particular case that the preferred remedy of reinstatement is not possible or is inappropriate.
Coston v. Plitt Theatres, Inc., 831 F.2d 1321, 1330 (7th Cir.1987), cert. denied, 485 U.S. 1007, 108 S.Ct. 1471, 99 L.Ed.2d 700, vacated on other grounds, 486 U.S. 1020, 108 S.Ct. 1990, 100 L.Ed.2d 223, on remand, 860 F.2d 834 (7th Cir.1988). In Coston, the two factors relied upon by the district court were hostility which it believed made reinstatement futile, and the lack of an available position for plaintiff. 831 F.2d at 1330. We also noted that genuine employer dissatisfaction with an employee’s job performance is another factor for a court to consider in its determination whether reinstatement is appropriate. Id. at 1332. Nevertheless, we stated that we are “cognizant of the legitimate concern that the hostility common to litigation not become an excuse to avoid ordering reinstatement on a general basis.... ” Id. at 1330. In Tennes, we affirmed the court’s refusal to reinstate because we found the district court’s determination that “there is no reason to believe the parties would enjoy a productive and amicable working relationship,” and that the plaintiff “would not enjoy the confidence or respect of current management” was reasonable. Tennes, 944 F.2d at 381. The district court also declined to award front pay in part because the amount would be “too speculative” due to a high turn-over rate for other employees and because of the plaintiff’s weak employment history in general and with the employer in particular. Id.
The jury refused to award McKnight damages for “loss of future earning capacity” caused by GM’s discrimination. See Special Verdict at 2, Rec. Doc. 83. A jury’s verdict, when § 1981 and Title VII claims are tried simultaneously, binds the judge on factual issues common to both claims. Daniels v. Pipefitters Association, 945 F.2d 906, 923 (7th Cir.1991) (citing cases), cert. denied, — U.S. -, 112 S.Ct. 1514, 117 L.Ed.2d 651 (1992). Therefore, we believe the trial judge was bound by the jury’s determination that McKnight suffered no impairment of his future earning ability. Damages for impaired future earning capacity are generally awarded in tort suits when a plaintiff’s physical injuries diminish his earning power. See, e.g., Johnson v. Director, 911 F.2d 247 (9th Cir.1990) (worker’s compensation), cert. denied sub nom., Todd Pacific Shipyards Corp. v. Director, — U.S.-, 111 S.Ct. 1582, 113 L.Ed.2d 646 (1991); Gorniak v. National Railroad Passenger Corp., 889 F.2d 481 (3d Cir.1989) (FELA suit by railroad employee). We have also affirmed loss of earning capacity awards in employment discrimination cases. See Morales v. Cadena, 825 F.2d 1095, 1100 (7th Cir.1987) (affirming award based on jury’s consideration of plaintiff’s emotional turmoil, depression, and career disruption). To recover for lost earning capacity, a plaintiff must produce “competent evidence suggesting that his injuries have narrowed the range of economic opportunities available to him.... [A] plaintiff must show that his injury has caused a diminution in his ability to earn a living.” Gorniak, 889 F.2d at 484. Thus, the jury determined that McKnight’s ability to earn from the time of trial onward was not impaired.
The trial court held that reinstatement was not appropriate because McKnight asked for a “completely different job and to be relocated in a new city.” McKnight III, 768 F.Supp. at 679. The court found no basis to conclude that McKnight is qualified to perform the job he requests or that there is a position available. Id. at 680. Moreover, because McKnight’s career goals have changed, the district court did not believe Title VII’s purposes would be served by putting McKnight in a job “he does not want.” Id. McKnight challenges this factual finding, and argues that the court should have considered his present “desperate” financial condition. The court noted the possibility that McKnight requests reinstatement to force GM to buy him out. As we pointed out, such motivation is a valid reason for denial. McKnight II, 908 F.2d at 116. Finally, the court stated that the compensatory and punitive awards did not influence his initial decision not to reinstate McKnight given the change in career goals McKnight presented at trial. The court also repeated his concerns about the acrimonious relationship between the parties. Id. We cannot find that the district court abused his discretion in basing his refusal to reinstate McKnight on these factors.
McKnight relies on Ellis v. Ringold School District, 832 F.2d 27 (3d Cir.1987), cert. denied, 494 U.S. 1005, 110 S.Ct. 1298, 108 L.Ed.2d 475 (1990), to challenge one of the district court’s reasons for declining to reinstate him. At trial, McKnight presented extensive evidence that after his discharge, he changed his career and became a stockbroker. McKnight I, 705 F.Supp. at 469. Moreover, in his post-trial motion for reinstatement, McKnight stated that he preferred to be reinstated to a position as a corporate finance portfolio manager or analyst in GM’s New York office. See Plaintiff’s Reply Brief in Support of his Post-Verdict Motion for Reinstatement, Rec. Doc. 92, at 3-4. As we have noted, when the district court reconsidered McKnight’s reinstatement, it relied in part upon this career change to refuse to reinstate McKnight to his position as a manufacturing supervisor. McKnight III, 768 F.Supp. at 680. The court also expressed concern over McKnight’s ability to assume a position managing GM’s corporate finances. Id.
In Ellis, after her discharge the plaintiff, a school teacher, worked for higher pay in a munitions factory for two years, then taught for a semester at a private school, and finally took a job as a janitor. 832 F.2d at 29. The district court did not discuss the plaintiffs request for reinstatement in its order, and the defendant argued on appeal that the plaintiff’s decision to work in industry meant that she was not entitled to reinstatement as a teacher. Id. at 30. The Third Circuit noted that this “argument would have greater force if, in fact, the court had denied reinstatement.”. Id. Moreover, the court explained that “[sjtanding alone, the fact that a plaintiff takes a job in an unrelated field to meet her obligation of mitigation should not be construed as a voluntary withdrawal from her former profession.” Id. The plaintiff asked to be reinstated to her former position as a teacher, which distinguishes Ellis from the situation in the case at bar.
Further, in this case, the district court did consider and deny McKnight’s request for reinstatement, and McKnight did more than take a job in an unrelated field. He testified at trial that he had become a stockbroker, and in his post-trial pleadings requesting reinstatement, expressed a preference for a job in his new field. The district court denied front pay on remand in part because the jobs McKnight held after his discharge from GM paid more. See 768 F.Supp. at 680; see also discussion of McKnight’s post-GM employment history, infra at 1372.
Damages in employment discrimination cases are not intended to insure a plaintiff’s future financial success. “Damages should ordinarily extend only to the date upon which ‘the sting’ of any discriminatory conduct has ended.” Smith v. Great American Restaurants, Inc., 969 F.2d 430, 439 (7th Cir.1992) (quoting Syvock v. Milwaukee Boiler Manufacturing Co., Inc., 665 F.2d 149, 160 n. 14 (7th Cir.1981)). In fact, in Syvock, we approved the district court’s determination that
A proper cutoff time for a damage assessment in this case should be the day when the wounds of discrimination should have healed. In this case it is certain that the sting of any discriminatory conduct ended, or should have ended, substantially in advance of the date the trial on damages commenced.
665 F.2d at 160 n. 14. McKnight presented himself to the jury as a successful stockbroker, and at the time of trial he was employed as a broker by Gruntol Corporation. Gruntol paid McKnight $12,840 in wages between April and August 1988. See Trial Transcript (“Tr.Trans.”), Vol. IVB at 48-49. McKnight kept this job until December of 1988. Affidavit of Gary McKnight, Rec. Doc. 146, at 1. Before he worked for Gruntol, McKnight told the jury that he worked as a broker for another company, Oppenheimer & Co., for approximately a year and a half. He earned about $54,000 from Oppenheimer in 1987. Tr.Trans. Vol. IV-B at 41. While he worked at GM, McKnight earned $32,000 a year. McKnight I, 705 F.Supp. at 468.
Based oh this evidence, the court could have found that the sting of discrimination had ended by the time of trial. In any event, the jury did find that McKnight’s future earning ability was not impaired. The district court also looked to this evidence when he denied reinstatement and front pay. He explained that “it is arguable that Mr. McKnight presented a ‘success’ story to the jury — electing to impress the jurors with his entitlement to large damages, 'both compensatory and punitive. He now would reverse his field and seek to demonstrate his impoverished condition at a reopened trial.” McKnight III, 768 F.Supp. at 682. Here, through reinstatement or a front pay award, McKnight appears to be attempting to force GM to insure his future employment success. At trial he presented evidence that he had made a successful career change. Now, he presents evidence that he has had trouble keeping jobs since then. McKnight Affidavit, Rec.Doc. 146, at 1-2. Nevertheless, as we have explained, “You cannot just leave the labor force after being wrongfully discharged, in the hope of someday being made whole by a judgment at law.” Hunter v. Allis-Chalmers Corp., 797 F.2d 1417, 1426 (7th Cir.1986). McKnight’s plea for help from his “desperate” financial decision does make us question whether he expects GM to ensure his future employment success. See Brief in Support of Plaintiff’s Motion for Reconsideration, Rec.Doc. 145, and McKnight Affidavit, Rec.Doc. 146.
We also note that when a party fails to provide the district court with the essential data necessary to calculate a reasonably certain front pay award, the court may deny the front pay request. Coston, 831 F.2d at 1335, & n. 6. Such information includes the amount of the proposed award, the length of time the plaintiff expects to work for the defendant, and the applicable discount rate. Id. Moreover, front pay awards, while often speculative, cannot be unduly so. The longer a proposed front pay period, the more speculative the damages become. Hybert v. Hearst Corp., 900 F.2d 1050, 1056 (7th Cir.1990). Here, McKnight provides no basis for calculating an appropriate award, even for the picture of his employment history he presented at trial. The district court invited the parties to file written memoranda further addressing the issues of reinstatement and front pay at á status conference held shortly after our remand. See May 16, 1991 Transcript at 4-5. Both parties declined. McKnight’s motion for reconsideration also lacks the data the district court needed to calculate front pay.
Given the speculative nature of front pay in this case, together with McKnight’s trial strategy and post-discharge’ employment history, we do not believe the district court abused its discretion in declining to order his reinstatement or to award front pay.
Prejudgment Interest
McKnight also challenges the district court’s refusal to order GM to pay prejudgment interest on his back pay award. “An award of prejudgment interest lies within the discretion of the trial court.” Kossman v. Calumet County, 800 F.2d 697, 702 (7th Cir.1986), cert. denied, 479 U.S. 1088, 107 S.Ct. 1294, 94 L.Ed.2d 151 (1987), appeal after remand, 849 F.2d 1027 (1988). In more recent cases, we have cabined that discretion somewhat. “The time has come, we think, to generalize, and to announce a rule that prejudgment interest should be presumptively available to victims of federal law violations.” Gorenstein Enterprises v. Quality Care-USA, 874 F.2d 431, 436 (7th Cir.1989). “Title VII authorizes pre-judgment interest as part of the backpay remedy in suits against private employers.” Loeffler v. Frank, 486 U.S. 549, 557, 108 S.Ct. 1965, 1970, 100 L.Ed.2d 549 (1988). “Indeed, the Supreme Court has said that it is a ‘normal incident’ of relief in Title VII suits.” EEOC v. Gurnee Inn Corp., 914 F.2d 815, 819 (7th Cir.1990) (quoting Loeffler, 486 U.S. at 558, 108 S.Ct. at 1971). Nevertheless, in Brooms v. Regal Tube Co., 881 F.2d 412 (7th Cir.1989), we refused to grant a plaintiffs request for prejudgment interest because the plaintiff never presented the issue to the district court, and raised it for the first time on appeal. We held that “at a minimum, a party must request the interest in a post-trial motion if he or she has failed to plead the relief in the original complaint.” Brooms, 881 F.2d at 424 n. 9 (citing Williamson v. Handy Button Machine Co., 817 F.2d 1290, 1298 (7th Cir.1987)).
Here, McKnight did not ask for prejudgment interest until after we remanded the case and the district court entered its decision and order on remand on July 15, 1991. See Plaintiff’s Motion for Order Requiring Payment of Partial Post-Judgment Interest & Pre-Judgment Interest, dated August 1, 1991, Rec.Doc. 147. This request came almost three years after the district court entered its first judgment, and much later than the plaintiff’s request in Brooms. McKnight provides no explanation for his tardy motion. This case is clearly distinguishable from Williamson v. Handy Button Machine Co., 817 F.2d 1290, 1298 (7th Cir.1987), where the plaintiff only waited until after the judgment was entered to ask for prejudgment interest. Here, McKnight waited through the district court’s first entry of judgment, the appeal to this court, the remand, and entry of a second judgment before asking for interest. This is simply too long. Brooms, 881 F.2d at 424. Therefore, we find that the district court correctly denied as untimely McKnight’s request for prejudgment interest.
Attorneys’ Fees
GM asks us to set aside the attorneys’ fees award entered by the district court. The parties stipulated to the amount of fees prior to the first appeal in this case, and the district court’s judgment is based on this stipulation. The district court was entitled to hold GM to the stipulation, absent “manifest injustice” to the parties. See Grafenhain, 870 F.2d at 1206; see also Cates v. Morgan Portable Building Corp., 780 F.2d 683, 690-91 (7th Cir. 1985) (“Although stipulations are to be encouraged in order to economize on the costs of litigation, a judge has the power to relieve a party from a stipulation when it is reasonable to do so ...”). The stipulation contemplated the possibility that the judgment might be modified on appeal. See Stipulation Regarding Attorneys’ Fees, Rec. Doc. 104, at 2. Moreover, GM is a sophisticated litigant, and was represented by experienced counsel during the negotiation and entry of the stipulation. We do not believe the district court abused its discretion when it refused to relieve GM of the stipulation. Moreover, the district court determined that the fee award was “entirely reasonable” because the Title VII and § 1981 claims involved common facts. McKnight III, 768 F.Supp. at 681. Although we have ordered courts to reduce attorneys’ fees awards in cases where § 1981 awards have been vacated, Brooms, 881 F.2d at 412; Coston v. Plitt Theatres, Inc., 860 F.2d 834 (7th Cir.1988), appellate review of an attorneys’ fees award is very limited. Kossman v. Calumet County, 849 F.2d 1027, 1030 (7th Cir.1988). The district court’s holding falls within its sound discretion, and we decline to disturb it.
For the foregoing reasons, the judgment of the district court is
Affirmed.
. When we evaluate the relief awarded by the district court, we may look to both Title VII and ADEA (Age Discrimination in Employment Act) cases. As we pointed out in Syvock v. Milwaukee Boiler Manufacturing Co., Inc., 665 F.2d 149, 162 n. 19 (7th Cir.1981), although Title VII and ADEA cases are "not necessarily automatically interchangeable in establishing the existence of discrimination, both Title VII and ADEA vest trial courts with a similar broad discretion in awarding such legal or equitable relief as the courts deem appropriate.” Id. (comparing 42 U.S.C. § 2000e-5(g) (1976) with 29 U.S.C. § 626(b) (1976)).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
STEPHENS, Chief Justice.
The appellee, Mrs. Clara Raffloer Droes-se, was a native-born citizen of the United States. She married—apparently prior to the Act of September 22, 1922, 42 Stat. 1021, Ch. 411—a German national and thereby lost her citizenship. Thereafter, by virtue of her husband’s death and the taking of an. oath of allegiance to the United States, Mrs. Droesse regained her citizenship under the Act of June 25, 1936, 49 Stat. 1917, Ch. 801. In 1946 Mrs. Droes-se was in Germany and there voted for a mayoralty candidate in an election at the village of Schoenau Berchtesgaden. The Nationality Act of October 14, 1940, 54 Stat 1168, Ch. 4, of § 401(e), provides that a person who is a national of the United States, whether by birth or naturalization, shall lose his nationality by voting in a political election in a “foreign state”; § 501 provides that whenever a diplomatic or consular officer of the United States has reason to believe that a person while in a “foreign state” has lost his American nationality under any provision of Chapter 4 of the Act, he shall certify the facts upon which such 'belief is based to the Department of State in writing, and that if the report of such officer is approved by the Secretary of State, a copy of the certificate shall be forwarded to the Department of Justice and to the person to whom it relates. On account of these provisions the appellant, the Secretary of State, issued a Certificate of Loss of Nationality by Mrs. Droesse. Thereafter Mrs. Droesse filed suit in the United States District Court for the District of Columbia against the Secretary of State. In her complaint she alleged the facts set forth above and also that at the time of the election referred to she was sixty-seven years of age and alone and acting under duress—it having been represented to her by the urgent and forceful pleas of her village neighbors that her vote was necessary to' defeat a Communist candidate for mayor—and that she did not vote with the intent to adopt allegiance to Germany or to forsake her allegiance to the United States. Mrs. Droesse alleged further that at the time of the election the village of Schoenau Berchtesgaden was in the American Zone of Germany and that the supreme authority and control over that Zone and its inhabitants had been conferred by the Allies upon, and was being exercised by, the United States. She therefore contended that that part of Germany in which her vote was cast was not a “foreign state” within the meaning of § 401(e) and that the determination of the Secretary of State that she 'had lost her status as a citizen of the United States was accordingly without warrant of law. Mrs. Droesse prayed that judgment be entered declaring that she is a citizen of the United States. The allegations thus made by Mrs. Droesse were admitted by the Secretary of State in his answer to her complaint except the allegations as to the purpose and manner of her voting and as to the village of Schoe-nau Berchtesgaden being located in the American Zone of Germany at the time of the election and as to the authority and control over that Zone by the United States. Those allegations the Secretary denied. The Secretary contended that Mrs. Droesse had expatriated herself, in view of the provisions of § 401(e), by voting in the election referred to.
The District Court, for reasons not apparent—but not here material in view of what appears below—ruled that there was no genuine issue of material fact in the case. It therefore rendered judgment on the pleadings. Its judgment was in Mrs. Droesse’s favor and was in the following terms:
ORDERED that the Certificate of the Loss of Nationality of the United States issued by the Department of State and forwarded to plaintiff by the American Consulate General at Munich, Germany, be, and it hereby is, can-celled; and it is further
ORDERED, ADJUDGED AND DECREED that Clara Raffloer Droesse is, and she hereby is declared to be, a national of the United States.
From that judgment the Secretary of State took the present appeal.
Pending the appeal, Private Law 144, 82nd Congress, 1st Session, 65 Stat. A 55 (1951), was enacted, providing as follows:
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That, notwithstanding the provisions of section 401(e) of the Nationality Act of 1940, as amended, Mrs. Clara Raffloer Droesse shall be held and considered to have retained her United States citizenship.
By virtue of this Private Law the relief sought in Mrs. Droesse’s complaint was accomplished. Therefore the case on appeal is moot. Dinsmore v. Southern Express Company, 183 U.S. 115, 22 S.Ct. 45, 46 L.Ed. 111 (1901). In respect of this there is no dispute.
The sole question arising upon the appeal is presented by virtue of a motion by Mrs. Droesse to dismiss the appeal as moot and an opposition, to this motion by the Secretary of State and a motion on his part to reverse and remand with directions to dismiss the complaint. There is, as said, no dispute as to the mootness of the case. The point of difference between the parties is that Mrs. Droesse contends that there should be a mere dismissal of the appeal, the judgment of the District Court to be left standing, whereas the Secretary contends that that judgment should be reversed or vacated and the complaint of Mrs. Droes-se ordered dismissed.
In support of his contention the Secretary of State relies upon Securities and Exchange Commission v. Harrison, 340 U.S. 908, 71 S.Ct. 290, 95 L.Ed. 656 (1951); United States v. Munsingwear, Inc., 340 U. S. 36, 71 S.Ct. 104, 95 L.Ed. 36 (1950); United States v. Hamburg-Amerikanische Co., 239 U.S. 466, 36 S.Ct 212, 60 L.Ed. 387 (1916). In the Munsingwear case the United States filed a complaint on two counts against Munsingwear 'alleging violations of a regulation fixing the maximum price of commodities which Munsingwear sold. The first count prayed for an injunction, the second sought treble damages. By agreement and a pre-trial order the second count was 'held in abeyance pending trial and final determination of the injunction count. A second action was brought by the United States against Munsingwear for treble damages for alleged violation of the same price regulation during the year subsequent to the period covered by the complaint in the first action. The second action, by agreement, was continued pending the outcome of the trial of the first or injunction count of the complaint in the first action. On the trial of that count the District Court ruled that Munsingwear’s prices complied with the regulation and accordingly dismissed the case. The United States appealed from the judgment of dismissal to the Court of Appeals for the Eighth Circuit. While the appeal was pending the commodities involved were decontrolled. Munsingwear then moved to dismiss the appeal upon the ground that the case had become moot and the Court of Appeals granted that motion. Munsing-wear then moved in the District Court to dismiss the treble damage counts in the two actions upon the ground that the unre-versed judgment of the District Court on the injunction count in the first action was a bar, under the doctrine of res judicata, against prosecution of the treble damage count in that action and of the second treble damage suit. That motion was granted, the District Court directing the treble damage actions to be dismissed. On appeal the Court of Appeals, by divided vote, affirmed. [178 F.2d 204.] The Supreme Court granted certiorari in each of the two treble damage actions and affirmed the decision of the Court of Appeals, thus itself deciding that the unreversed judgment of the District Court in the injunction suit barred prosecution of the treble damage actions. It pointed out that the controversy in each of the suits concerned the prop>er pricing formula applicable to Munsingwear’s commodities under the maximum price regulation and that that question was in issue and determined in the injunction suit and that the parties were the same both in that suit and in the actions for treble damages, and that there was no question but that the District Court in the injunction suit had jurisdiction both over the parties and the subject matter and that its judgment remained unmodified. The Supreme Court therefore ruled that the case fell squarely within the doctrine of res judicata and that the question -whether Munsingwear had sold the commodities in violation of the federal regulation having been determined in the first suit was therefore laid at rest. The Supreme Court said:
“That is the result unless the dismissal of the appeal on the ground of mootness and the deprivation of the United States of any review of the case in the Court of Appeals warrant an exception to the established rule.
* * *
“But we see no reason for creating the exception. If there is hardship in this case, it was preventable. The established practice of the Court in dealing with a civil case from a court in the federal system which has become moot while on its way here or pending our decision on the merits is to reverse or vacate the judgment below and remand with a direction to dismiss.2[] That was said in Duke Power Co. v. Greenwood County, 299 U.S. 259, 267 [57 S.Ct. 202, 81 L.Ed. 178], to be ‘the duty of the appellate court.’ That procedure clears the path for future relitigation of the issues between the parties and eliminates a judgment, review of which was prevented through happenstance. When that procedure is followed, the rights of all parties are preserved; none is prejudiced by a decision which in the statutory scheme was only preliminary.
“In this case the United States made no motion to vacate the judgment. It acquiesced in the dismissal. It did not avail itself of the remedy it had to preserve its rights. Denial of a motion to vacate could bring the case here. Our supervisory power over the judgments of the lower federal courts is a broad one. See 28 U.S.O. § 2106, 28 U.S.C.A. § $L06, 62 Stat. 963; United States v. Hamburg-American Co., 239 U.S. 466, 478 [36 S.Ct. 212, 60 L.Ed. 387] ; Walling v. Reuter Co., 321 U.S. 671, 676-677 [64 S.Ct. 205, 88 L.Ed. 432], As already indicated, it is commonly utilized in precisely this situation to prevent a judgment, unreviewable because of mootness, from spawning any legal consequences.
“The case is therefore one where the United-States, having slept on its rights, now asks us to do what by orderly procedure it could have done for itself. The case illustrates not the hardship of res judicata but the need for it in providing terminal points for litigation.”
We have stated this ' case and quoted from it at length because it is apparently intended by the Supreme Court to announce a rule for the guidance of the United States Courts of Appeals in disposing of cases which become moot pending appeal.
Counsel for Mrs. Droesse urges that the Munsingwear and Hamburg-Amerikanische cases involved a likelihood of future relitigation of the issues between the parties and that it was on that account that the Supreme Court ordered the lower courts’ judgments vacated rather than merely dismissing the appeals, whereas the instant case involves no possibility of re-litigation of the issues between the parties because Private Law No. 144 gave final recognition to Mrs. Droesse’s citizenship; counsel urges that the instant case is therefore exceptional and should be disposed of for mootness, not in the manner of disposition of the three cases cited, but by mere dismissal of the appeal. Assuming, without deciding, that there is no possibility of relitigation of the issue as to- Mrs. Droesse’s citizenship, we still cannot reach the result sought by her counsel. It is true that in the opinion in the HamburgAmerikanische case the possibility of further litigation arising was referred to; the court apparently had in mind that if the judgment in the moot case was not vacated, it might prejudice such litigation. In the Munsingwear case there was, at the time the Court of Appeals had before it the motion to dismiss the appeal in the injunction suit as moot, other litigation pending, to wit, the treble damage suits; a trial of those suits would be barred by the judgment in the injunction suit unless that judgment was vacated—because the parties and issues were the same. Yet the Court of Appeals did not dismiss the appeal with directions to vacate the judgment of the District Court, it merely dismissed the appeal—presumably because the United States, as the Supreme Court later said, made no motion to vacate and acquiesced in the dismissal. But among the cases cited by the Supreme Court in the footnote above quoted there are instances in which there was no possibility of further litigation of the issue between the parties in the case on appeal even arising, and yet the Court ordered the lower court’s judgment vacated. Berry v. Davis, 242 U.S. 468, 37 S.Ct. 208, 61 L.Ed. 441 (1917), Brownlow v. Schwartz, 261 U.S. 216, 43 S.Ct. 263, 67 L.Ed. 620 (1923). We think the language of the Supreme Court in the Munsingwear case clearly directs the Courts of Appeals that in all civil cases in the United States courts which become moot pending appeal, and in which a motion to dismiss as moot is accompanied by a motion to' direct that the judgment below be vacated, both motions should be granted.
Counsel for Mrs. Droesse cites Schenley Distilling Corp. v. Anderson, 333 U.S. 878, 68 S.Ct. 914, 92 L.Ed. 1154 (1948), Pan American Airways Corp. v. Grace & Co., 332 U.S. 827, 68 S.Ct. 203, 92 L.Ed. 401 (1947), and Uyeki v. Styer, 329 U.S. 689, 67 S.Ct. 486, 91 L.Ed. 604 (1947), as moot cases in which, because there was no likelihood of further litigation between the parties on the same issues, the appellate tribunal merely dismissed the appeals, i. e., without directing that the lower courts’ judgments foe vacated. In the Schenley case a motion by the appellee to dismiss the appeal upon the ground of mootness was joined in by the appellant. There was no motion to' vacate the judgment below. In the Pan American case all parties joined in the motion to dismiss writs of certiorari upon the ground that there was no longer any controversy between the parties. Again there was no motion to vacate the judgment below. In the Uyeki case the Supreme Court, acting apparently sua sponte, dismissed the writ of certiorari for the reason that case had become moot. Neither of the parties asked either for dismissal or for a vacating of the judgment below. These three decisions therefore lend no support to the contention of counsel for Mrs. Droesse.
This appeal accordingly will be dismissed as moot and the case remanded to the District Court with directions to vacate its judgment.
. By section 3 of the Act referred to in the text it is provided that loss of citizenship shall not result from the marriage of a citizen of the United States to an alien. Prior to that Act such a loss did occur, See the Act of March 2, 1907, 34 Stat. 1228, Oh. 2534, § 3.
[2.] In footnote 2 in the opinion of the Supreme Court, the Court said:
“This has become the standard disposition in federal civil cases: New Orleans Flour Inspectors v. Glover, 161 U.S. 101, 103 [16 S.Ct. 492, 40 L.Ed. 632], modifying 160 U.S. 170 [16 S.Ct. 321, 40 L.Ed. 382]; United States v. Hamburg-American Co., 289 U.S. 466 [36 S.Ct. 212, 60 L.Ed. 387]; Berry v. Davis, 242 U.S. 468 [37 S.Ct. 208, 61 L.Ed. 441]; United States v. American-Asiatic Steamship Co., 242 U.S. 537 [37 S.Ct. 233, 61 L.Ed. 479]; Board of Public Utility Commissioners v. Compania General de Tabacos de Filipinas, 249 U.S. 425 [39 S.Ct. 332, 63 L.Ed. 687]; Commercial Cable Co. v. Burleson, 250 U.S. 360 [39 S.Ct. 512, 63 L.Ed. 1030]; United States v. Alaska Steamship Co., 253 U.S. 113 [40 S.Ct. 448, 64 L.Ed. 808]; Heitmuller v. Stokes, 256 U.S. 359, 41 S.Ct. 522, 65 L.Ed. 990; Atherton Mills v. Johnston, 259 U.S. 13 [42 S.Ct. 422, 66 L.Ed. 814]; Brownlow v. Schwartz, 261 U.S. 216 [43 S.Ct. 263, 67 L.Ed. 620]; Alejandrino v. Quezon, 271 U.S. 528 [46 S.Ct. 600, 70 L.Ed. 1071]; Norwegian Nitrogen Co. v. Tariff Commission, 274 U.S. 106 [47 S.Ct. 499, 71 L.Ed. 949]; United States v. Anchor Coal Co., 279 U.S. 812 [49 S.Ct. 262, 73 L.Ed. 971]; Sprunt & Son v. United States, 281 U.S. 249 [50 S.Ct. 315, 74 L.Ed. 832]; Hargis v. Bradford, 283 U.S. 781 [51 S.Ct. 342, 75 L.Ed. 1411]; Mahan v. Hume, 287 U.S. 575 [53 S.Ct. 223, 77 L.Ed. 505]; Railroad Commission of Texas v. Macmillan, 287 U.S. 576 [53 S.Ct. 223, 77 L.Ed. 505]; Coyne v. Prouty, 289 U.S. 704 [53 S.Ct. 658, 77 L.Ed. 1461]; First Union Trust & Savings Bank v. Consumers Co., 290 U.S. 585 [54 S.Ct. 61, 78 L.Ed. 517]; Danciger Oil & Refining Co. v. Smith, 290 U.S. 599 [54 S.Ct. 209, 78 L.Ed. 526]; O’Ryan v. Mills Novelty Co., 292 U.S. 609 [54 S.Ct. 779, 78 L.Ed. 1469]; Hammond Clock Co. v. Schiff, 293 U.S. 529 [55 S.Ct. 146, 79 L.Ed. 639]; Bracken v. S. E. C., 299 U.S. 504 [57 S.Ct. 18, 81 L.Ed. 374]; Leader v. Apex Hosiery Co., 302 U.S. 656 [58 S.Ct. 362, 82 L.Ed. 508]; Woodring v. Clarksburg-Columbus Short Route Bridge Co., 302 U.S. 658 [58 S.Ct. 365, 82 L.Ed. 509]; Retail Food Clerks & Managers Union v. Union Premier Food Stores, 308 U.S. 526 [60 S.Ct. 376, 84 L.Ed. 445]; S. E. C. v. Long Island Lighting Co., 325 U.S. 833 [65 S.Ct. 1085, 89 L.Ed. 1961]; Montgomery Ward & Co. v. United States, 326 U.S. 690 [66 S.Ct. 140, 90 L.Ed. 406]; Brotherhood of Locomotive Firemen & Enginemen v. Toledo, P. & W. R. Co., 332 U.S. 748 [68 S.Ct. 53, 92 L.Ed. 335]; S. E. C. v. Engineers Public Service Co., 332 U.S. 788 [68 S.Ct. 96, 92 L.Ed. 370]; Hodge v. Tulsa County Election Board, 335 U.S. 889 [69 S.Ct. 250, 93 L.Ed. 427]; S. E. C. v. Philadelphia Co., 337 U.S. 901 [69 S.Ct. 1047, 93 L.Ed. 1715].
“So far as federal civil cases are concerned, there are but few exceptions to this practice in recent years. See Cantos v. Styer, 329 U.S. 686 [67 S.Ct. 364, 91 L.Ed. 6021; Uyeki v. Styer, 329 U.S. 689 [67 S.Ct. 486, 91 L.Ed. 604]; Pan American Airways Corp. v. Grace & Co., 332 U. S. 827 [68 S.Ct. 203, 92 L.Ed. 401]; Schenley Distilling Corp. v. Anderson, 333 U.S. 878 [68 S.Ct. 914, 92 L.Ed. 1154].”
. As appears from the preceding statement in the text of the Munsingwear ease, there was in that case a motion by Munsingwear in the Court of Appeals to dismiss the injunction suit as moot, but no motion by the United States to vacate the judgment of the District Court. The United States acquiesced in the dismissal. Therefore the judgment of the District Court was not vacated.
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.
MEHAFFY, Circuit Judge.
Defendant, Frank LaRocca, has appealed a jury conviction finding him guilty of a one-count indictment which charged that he testified falsely before a federal grand jury investigating the shooting of government witness Kenneth Bruce Sheetz in Kansas City, Missouri on June 20, I960.
The grand jury had been convened to determine the ownership of a .38 caliber Smith & Wesson revolver, serial number 114318, found at the scene of the crime and investigate the relationship, if any, of this weapon and the assault on the government witness under subpoena to testify in the case of United States v. Anthony Biase, a criminal proceeding then pending in the United States District Court at Omaha, Nebraska.
The evidence adduced at defendant’s perjury trial established that he is a 73 year old Italian immigrant, who is retired from the grocery business and presently living in Kansas City, Missouri. On August 12, 1957 while visiting long-time friends, Frank and Lena Costanzo, in Gunnison, Colorado, defendant purchased a .38 caliber Smith & Wesson revolver identical to, but bearing a different serial number than, the weapon under grand jury investigation. The purchase was made at Elmer’s Sporting Goods Store from the proprietor, William G. Elmer, who testified that Frank Costanzo, the landlord of his building, introduced defendant as “John Sutonano”, which he duly recorded in his federal firearms record as the name as the vendee.
According to Elmer, Frank Costanzo and the defendant returned to his store on October 11 and the defendant, still using the alias John Sutonano, inquired about purchasing twelve more .38 caliber Smith & Wesson revolvers for Christmas presents. Elmer informed defendant that he did not have any more revolvers of that kind on hand, but would have to obtain the guns from his wholesale jobber in Denver, agreeing to telephone defendant at Costanzo’s house when the shipment arrived.
The order was subsequently placed with the jobber, Whitney Sporting Goods Company, which in turn did not have this item in stock, and according to its president had to special order the revolvers from the Smith & Wesson factory in Massachusetts. When the Whitney Company received the shipment on October 23, its president testified that the revolvers, one of which bore the same serial number as the weapon under investigation, were reshipped to Elmer’s Sporting Goods in Gunnison that same day.
Elmer received the shipment of revolvers on October 28. He immediately telephoned the Costanzo house, advised Lena Costanzo that “the package had arrived”, and inquired as to the whereabouts of “John”. It was Elmer’s testimony that Lena Costanzo told him that the defendant was not there, but she would call Elmer back when he arrived. Elmer stated that a day or two after the guns arrived, on or about October 29th, 30th or 31st, he received a telephone call from Lena Costanzo informing him that the defendant was at her house and to deliver the guns after closing his store that evening. Elmer delivered the twelve revolvers in their original shipping carton to Costanzo house about 6:00 p. m. When he arrived, only defendant and Lena Costanzo were present. Elmer placed the carton of revolvers on a kitchen table. Defendant removed from the carton one of the individually packaged revolvers, opening it for an inspection of the merchandise. After discussion of the price with Elmer, defendant paid him the agreed $676.00 in cash, whereupon Elmer departed.
Pertaining to this sale, Norman Brown, Elmer’s son-in-law and employee, testified that he posted the entry in the firearms record which indicates that twelve .38 caliber Smith & Wesson revolvers ordered from the Denver jobber were received on October 28. Elmer stated that he made the subsequent entry that these revolvers were sold to one John Sutonano of Kansas City, and both Elmer and Brown agreed that Brown entered the date of this sale as October 30. Elmer testified that throughout the dealings, defendant never used the name, “Prank LaRocca”. Elmer first identified defendant as the man who purchased the revolvers by selecting his picture from photographs of several persons shown him by federal agents. While testifying at defendant’s trial, Elmer positively identified defendant in person as the man to whom he sold the revolvers.
Frank Costanzo, 79 years old and of poor memory, admitted that he was present when defendant purchased a revolver from Elmer on August 27 but denied defendant used the alias “John Sutonano” and disclaimed any knowledge concerning defendant’s alleged purchase of twelve more revolvers during any subsequent visit. Lena Costanzo denied she had any telephone conversations with Elmer, recalled being present when Elmer delivered a box to Frank LaRocca at her house, but denied hearing any of the conversation between the two men or having any knowledge of the contents of the box.
Dr. Joseph Yasso, a Kansas City osteopath and only defense witness, testified that he examined and treated defendant in 1958 for hardening of the arteries, a lung condition, and other maladies associated with old age.
When summoned before the grand jury to testify concerning his knowledge about the revolver found at the scene of the shooting identified by Elmer as one of the twelve guns sold Frank LaRocca, alias “John Sutonano”, defendant, upon interrogation by two government attorneys, gave the following testimony which the jury below found was perjurious:
“Q. Did you ever purchase a gun from William Elmer?
“A. No, sir.”
“Q. Did you ever purchase a gun in Gunnison, Colorado?
“A. No, sir.”
“Q. While you were at Costanzo’s home as a guest, did anyone deliver a box to you?
“A. Not that I know of.
“Q. Did anyone deliver a box of guns to you?
“A. No, sir.
“Q. While you were at that home ?
“A. No, sir.”
“Q. I’d just like to repeat a couple of the questions I asked before. Did you ever receive a gun from anyone in Colorado?
“A. Never.”
“Q. Did anyone from a sporting goods store ever deliver anything to you at the home of Lena Costanzo and Frank Costanzo ?
“A. I repeat the same, no.”
Defendant urges reversal of his conviction on grounds that (1) his alleged false statements were unrelated to a material matter under investigation by the grand jury; (2) the indictment of the grand jury was invalid because its investigation was directed at defendant without informing him of this fact; (3) the District Court erred in refusing to instruct the jury the government must prove perjury by substantial evidence excluding every hypothesis other than that of guilt; (4) the evidence of perjury was insufficiently corroborated; (5) the District Court erred in admitting evidence prejudicial to defendant concerning the assault of the government witness; and (6) also erred in its failure to require the government to produce all the statements of its witnesses in conformity with the Jencks Act, 18 U.S.C.A. § 3500.
Defendant first mounts an attack upon the indictment relying on our decision in Brown v. United States, 245 F.2d 549 (8th Cir. 1957). In that case we held that because the evidence indicated the defendant was brought before the grand jury with the view of getting’ him to commit perjury and without any purpose of indicting anyone for a previous offense committed at least in part within the grand jury’s jurisdiction, the grand jury exceeded its powers. The evidence there, however, was strong to the effect that the defendant, a government investigator, had been sent on an undisclosed assignment to Omaha, Nebraska, for the ulterior purpose of getting him to perjure himself before a grand jury improperly convened there to investigate defendant’s implication in a possible conspiracy to “whitewash” a government inquiry of corruption within the collector’s office of the Internal Revenue Service in St. Louis, Missouri.
In the instant case, the grand jury investigation was conducted in Kansas City, Missouri, the locus of the assault on the government witness. Its purpose was to trace the suspected role the revolver found near the scene of the shooting played in the crime. Credible evidence before that body indicated the defendant was the last known purchaser, possessor and, hence, owner of the weapon. Therefore, it was only logical that he was subpoenaed to testify concerning his alleged ownership and any knowledge of its disposition which might shed light on the weapon’s connection with the crime. At the outset the defendant was apprized by the government attorneys who questioned him of his rights under the Fifth Amendment. He voluntarily testified denying categorically that he had ever purchased a gun or guns from anyone in Gunnison, Colorado and especially from sporting goods proprietor Elmer or had ever received a box of guns delivered by Elmer to him at the Costanzo house.
The government had no ax to grind in its interrogation of defendant, except insofar as his testimony supplied information leading towards the potential issuance of a true bill indicting those persons responsible for obstructing justice by assaulting a government witness. The record therefore belies the claim the government’s motive for subpoenaing defendant was not in furtherance of a legitimate investigatory function of the grand jury but designed solely to entrap defendant in a charge of perjury. Thus, to this extent the rationalé in Brown is readily distinguishable. See Masinia v. United States, 296 F.2d 871 (8th Cir. 1961). Moreover, the grand jury is imbued with broad inquisitorial powers and is not obliged to furnish witnesses testifying before it a program defining the crime to be investigated or the persons against whom an accusation is sought. Blair v. United States, 250 U.S. 273, 282, 39 S.Ct. 468, 63 L.Ed. 979 (1919); Hale v. Henkel, 201 U.S. 43, 26 S.Ct. 370, 50 L.Ed. 652 (1906); United States v. Neff, 212 F.2d 297 (3rd Cir. 1954).
Defendant further contends that the grand jury’s investigation of an offense occurring in Missouri was immaterial and unrelated to defendant’s testimony regarding certain events which occurred outside of its jurisdiction in Colorado and, therefore, even if his testimony was false, it was not definable as perjurious in this instance. We are unimpressed with this argument. There is no question that when the grand jury is investigating a possible federal offense within its jurisdiction, it is authorized to receive evidence as to any acts related to the offense even though they occurred outside of its jurisdiction. Masinia v. United States, supra.
The governing criterion that is recognized by this Circuit concerning the relevancy or materiality of the alleged false testimony to the purpose of the grand jury's investigation is whether or not the perjurious statements impede and hamper the course of the investigation "in the sense that it has a tendency to affect the ultimate action of the grand jury”. Dolan v. United States, 218 F.2d 454 (8th Cir. 1955), cert. denied 349 U.S. 923, 75 S.Ct. 665, 99 L.Ed. 1255 (1955); Claiborne v. United States, 77 F.2d 682 (8th Cir. 1935); see also United States v. Parker, 244 F.2d 943 (7th Cir. 1957), cert. denied 355 U.S. 836, 78 S.Ct. 61, 2 L.Ed.2d 48 (1957). Clearly, the impact of defendant’s false testimony would be to thwart the grand jury in its efforts to determine a link between the ownership and possession of this weapon and the crime. Upon reaching this impasse, the grand jury was definitely dissuaded from bringing an indictment against anyone based only on the weapon’s mysterious discovery. The District Court quite correctly ruled as a matter of law that defendant’s alleged perjured testimony was material to the subject matter of the grand jury investigation.
Contrary to another of defendant’s contentions, the inclusion of evidence of the facts surrounding the shooting of the government witness did not create prejudicial error. This evidence was admitted for the limited purpose of establishing the materiality between the grand jury’s investigation and defendant’s false statements which was essential to the government’s proof that a valid indictment for perjury had been returned. Masinia v. United States, supra, 296 F.2d at 881.
In a prosecution for perjury the government must prove the defendant knowingly and willfully made a false statement upon a material matter in a case in which the law of the United States authorizes an oath to be administered before a competent tribunal. 18 U.S.C.A. § 1621, footnote 1, supra. The degree of proof required of the government to establish these elements has been defined as “substantial evidence excluding every other hypothesis than that of guilt”. See Blumenfield v. United States, 306 F.2d 892, 897 (8th Cir. 1962) and cases therein cited. Stated differently, but to the samé effect, “to sustain a conviction, it must be shown by clear, convincing and direct evidence to a moral certainty and beyond a reasonable doubt that the defendant committed wilful and corrupt perjury”. Smith v. United States, 169 F.2d 118, 121 (6th Cir. 1948); Beckanstin v. United States, 232 F.2d 1 (5th Cir. 1956).
Defendant contends that the District Court’s instruction requiring only that the prosecution prove defendant’s guilt beyond the customary “reasonable doubt” to prevail fell below the higher standard of proof demanded in a perjury ease. The effect of which, the defendant argues, permitted the jury to misuse much of the evidence which supported the more logical hypothesis that defendant testified truthfully before the grand jury or even if some of his statements were false, they were made mistakenly and without corrupt motive due to his failing memory.
We do not believe the jury was led astray by the court’s inelaborate charge on burden of proof. Any definitive omission, we think, was corrected by its detailed instruction forbidding a conviction unless the jury found independent evidence corroborating the testimony of the government’s chief witness Elmer who furnished the direct proof that defendant testified falsely before the grand jury when he stated he had never purchased from Elmer any guns which the latter delivered to him at the Costanzo house in Gunnison, Colorado. Furthermore, the court carefully spelled out the alternatives the jury could consider in evaluating the witnesses’ testimony based on their credibility. The jury was correctly instructed it could credit a portion or reject all of the testimony of a witness it believed had not testified truthfully to a material matter. While it is arguable that most of the testimony of witnesses Frank and Lena Costanzo is consistent with defendant’s innocence, this Court cannot invade the jury’s province to assign whatever weight, if any, to such testimony.
Therefore, a review of all the court’s instructions in their combined context does not convince us that the court committed reversible error in charging the jury as to the government’s burden of proof in a prosecution for perjury. Cf. Newman v. United States, 331 F.2d 968, 971 (8th Cir. 1964).
Defendant also challenges the existence in the record of any independent evidence corroborating witness Elmer’s oath as required to sustain a conviction in a perjury ease. [For the rule see Weiler v. United States, 323 U.S. 606, 65 S.Ct. 548, 89 L.Ed. 495 (1945).] The immediate answer to this barren defense may be found in the aggregate of corrobative evidence consisting of Elmer’s business records, i. e., his fedei*al firearms record book confirming the transactions with defendant to which he testified ; a stipulation admitting defendant’s arrival in Gunnison during this same time period; testimony of Elmer’s wholesale distributor and his son-in-law identifying and tracing the transfer of the weapon subsequently found at the scene of the crime; and finally, portions of Frank and Lena Costanzo’s testimony conflicting with defendant’s disclaimer of purchase of any revolvers in Gunnison, Colorado as stated before the grand jury.
Following direct examination of the government’s witnesses, counsel for defendant requested production by the government of all their prior written statements pursuant to the Jeneks Rule, 18 U.S.C.A. § 3500. Defendant claims his rights were prejudiced by the government’s failure to turn over with the sworn typewritten affidavits given by Elmer to the federal agents who interviewed him, certain handwritten statements transcribed by them from which the typed statements were prepared. The government denied possession in its files of any handwritten statements of the witness in addition to the four typewritten affidavits produced.
The District Judge made a thorough inquiry of the matter during trial. Elmer testified that on every occasion when he was interviewed, the agents would prepare a hand-written statement by recording the substance of his answers to their questions returning later with a typewritten facsimile which he read and approved before swearing to its veracity. Thereupon, the court ruled that the statements produced contained all the information elicited from the witness by the agents and the government had fully complied with the Jeneks Rule.
This defense was raised again in defendant’s post trial motion for acquittal or a new trial. The trial court conducted an in camera inspection of all the government’s interview reports concerning the questioning of witness Elmer. The court concluded in its memorandum order denying defendant’s motion that all statements “adopted or approved” by the witness within the purview of the Jencks Rule had been produced at trial by the government and delivered to defendant for use in cross-examination.
We are satisfied that the District Court settled for nothing less than strict compliance by the government with the dictates of the Jencks Rule, and, in any event, was correct in concluding that any inadvertent error arising from the government’s inability to produce the •original handwritten statements was harmless. Citing Rosenberg v. United States, 360 U.S. 367, 79 S.Ct. 1231, 3 L.Ed.2d 1304 (1959). See also Hayes v. United States, 329 F.2d 209, 219-220 (8th Cir. 1964).
For the reasons hereinbefore stated, the conviction of defendant is affirmed.
. Section 1621, 18 U.S.O.A. defines the crime of perjury as follows:
“Whoever, having taken an oath before a competent tribunal, officer, or person, in any case in which a law of the United States authorizes an oath to be administered, that he will testify, declare, depose, or certify truly, or tbat any written testimony, declaration, deposition, or certificate by Mm subscribed, is true, willfully and contrary to such oatb states or subscribes any material matter which he does not believe to be true, is guilty of perjury, *. *
. The government and defense attorneys stipulated that the defendant arrived in Gunnison, Colorado at 4:56 p. m. October 31, 1957 via commercial airlines from Denver, Colorado.
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.
JAMES M. CARTER, Circuit Judge:
The appellant was convicted in a trial without a jury of refusing to be inducted into the armed forces and sentenced to three years imprisonment. We affirm.
The case presents two questions:
1. Is a selective service registrant entitled, under the facts of this case, to have his classification as I-A reopened when he files his claim as a conscientious objector, after there is mailed to him a notice of induction? Involved in the question is whether this case is within Ehlert v. United States, in which a hearing in banc has been granted.
2. Was there a basis in fact for the registrant’s claim for a II-A occupational deferment which required a reopening of his case and reconsideration by the draft board ?
The selective service file of appellant discloses that when he completed his classification questionnaire on March 25, 1963, he made no claim to be a conscientious objector, but rather marked Series VIII pertaining thereto, “Does not apply.” Appellant was classified I-A on November 10, 1965. On appeal this classification was changed to II-S, student deferment, until June 1966. Appellant was again classified I-A on December 14, 1966 and so notified on December 21, 1966. He again appealed, but on this appeal the appeal board voted to retain him in I-A classification.
Appellant having been previously found physically acceptable for military service on February 4, 1964, was mailed an order for induction on April 19, 1967, with a reporting date of May 4, 1967.
On February 7, 1967, the Board received a request by appellant for deferment for Peace Corps service. On February 20, 1967 the Board received a communication from Peace Corps Headquarters, Washington, D. C., that the defendant had been selected to train in the Peace Corps beginning July 9, 1967.
On April 25, 1967, after the order to report for induction had been mailed on April 19, 1967, the Board received a second communication from the appellant indicating he had been accepted into the Peace Corps. This was confirmed on May 1, 1967 by letter from the Peace Corps to the Board.
Both matters, the conscientious objector claim and the Peace Corps deferment claim were reviewed by the local board on May 3, 1967 but appellant’s classification of I-A was not reopened and on May 3, 1967 the appellant was so advised.
On May 4, 1967 the date set for reporting for induction, the appellant reported to the induction station as ordered but refused to step forward and be inducted into the armed forces. He refused to sign a statement setting forth his reasons for refusing to be inducted.
On April 25, 1967, when appellant notified the Board he had been accepted into the Peace Corps, he also requested and was given on April 28, 1967, a Form for Conscientious Objector, (SSS Form 150) which was returned on May 1, 1967. In the Form 150, appellant responded to Series II dealing with religious training and belief as follows:
“I neither accept nor reject the existence of a Supreme Being. To me this is not important. What is important to me is man and the sacredness of every human life. I believe in goodness, understanding, and love of mankind for their own sakes.
“These virtues and my regard for life are forces which rule my life and are the criteria upon which I base my décisions and actions. “Participation in the Armed Forces, war, and killing, directly, or indirectly would violate everything I believe in and hold sacred.”
The defendant stated that the foregoing belief was based on values received from his parents and knowledge and ideas gained from his formal education, from reading and from observations on life.
The defendant further stated that he relied on his conscience for religious guidance. He described his actions and behavior which most conspicuously demonstrated the consistency and depth of his religious convictions as follows:
“I have never participated in violence or fighting. I have participated in service projects while in the Boy Scouts. I am a member of a volunteer ski patrol which gives first aid to the injured. I believe in and have volunteered for the Peace Corps.”
While the defendant indicated that his mother and father were Jewish, he himself claimed membership in no religious sect or organization.
The appellant contends that he presented “a nonfrivolous prima facie ease for a conscientious objector classification and said claim was timely filed and denial of said 1-0 classification by the selective system was without a basis in fact, arbitrary and contrary to law.”
Appellant also urges that the information he submitted made out a prima facie case for occupational deferment and therefore the Board should have reopened, and its failure to do so was an abuse of discretion and a denial of due process. These contentions raise the questions to be decided on appeal, as stated early in this opinion.
THE C. 0. CLAIM
It is apparent that appellant’s conscientious objection beliefs matured long before the notice for his induction was mailed to him. We thus have a case of a late claim of conscientious objection and not of crystallization of belief after the receipt of the notice of induction, the question pending before this court in banc in Ehlert v. United States, No. 21930.
Dugdale v. United States, (9 Cir. 1968) 389 F.2d 482, states: “It was incumbent on Dugdale to submit statements and information which, if true, would be a basis for the change in classification. He was required to show a ‘change of status’ occurring after receipt of the induction notice. He did not do so.” Id. p. 484. Accord; Oshatz v. United States, (9 Cir. 1968) 404 F.2d 9; Briggs v. United States, (9 Cir. 1968) 397 F.2d 370; Parrott v. United States, (9 Cir. 1966) 370 F.2d 388, cert. denied sub nom. Lawrence v. United States, 387 U.S. 908, 87 S.Ct. 1690, 18 L.Ed.2d 625 (1967).
Other Circuits have ruled on the question of “late” filings of claims of conscientious objection. If the registrant has formed conscientious objection beliefs before the order for induction, and has ample time to notify the Board to this effect and has failed to do so, he is not entitled to have his classification reopened. United States v. Griffin, (2 Cir. 1967) 378 F.2d 899; United States v. W. F. Kroll, (3 Cir. 1968) 400 F.2d 923, cert. denied 393 U.S. 1069, 89 S.Ct. 728, 21 L.Ed.2d 393 (1969); United States v. Helm, (4 Cir. 1967) 386 F.2d 434, cert. denied 390 U.S. 958, 88 S.Ct. 1045, 19 L.Ed.2d 1153 (1968); Nelloms v. United States, (5 Cir. 1968) 399 F.2d 295, cert. filed 393 U.S. 1011, 89 S.Ct. 724, 21 L.Ed.2d 716; United States v. Taylor, (6 Cir. 1968) 351 F.2d 228; United States v. Porter, (7 Cir. 1963) 314 F.2d 833, rehear. denied 4/16/63; Salamy v. United States, (10 Cir. 1967) 379 F.2d 838.
Other circuits have held the ordinary allowance of the C.O. exemption requires reasonable rules for its invocation and that noncompliance with the rules results in forfeiture of the exemption. Davis v. United States, (5 Cir. 1967) 374 F.2d 1 and cases from other circuits cited in note 5, p. 4.
THE CLAIM FOR OCCUPATIONAL DEFERMENT
The facts concerning this part of the case have been stated in Section I.
To secure an occupational deferment, a registrant must establish he was engaged in an occupation necessary to the national health, safety or interest, 32 C.F.R. § 1622.22. An occupation “is necessary to the maintenance of the national health, safety or interest only when all the following conditions exist:
1. The registrant is * * * engaged. in the activity in issue;
2. The registrant cannot be replaced because of a shortage of persons with his qualifications or skill in such activity ;
3. The removal of the registrant would cause a material loss of effectiveness in such activity.” 32 C.F.R. § 1622.23(a) [Emphasis added].
Appellant presented no evidence to the Board that he could not be replaced “because of a shortage of persons with his qualifications or skill” or that the “removal of the registrant would cause a material loss of effectiveness in such activity.” 32 C.F.R. § 1622.23(a).
The burden of proof was on the appellant to show that he was eligible for another class, besides I-A, 32 C.F.R. § 1622.10. A registrant’s classification is to be determined solely on the basis of the official Selective Service forms and other written information supplied to the Board and contained in his file, 32 C.F.R. § 1623.1(b).
A registrant must present some basis in fact before a local board is required to reopen his classification and consider the new material. Petrie v. United States (9 Cir. in banc 1969), 407 F.2d 267, interpreted “basis in fact” in this context to mean a “prima facie” case. Id. p. 274. Petrie controls this case as to the claim for occupational deferment. Petrie was a flight instructor but he “did not make a prima facie showing as to the second of the enumerated conditions [in 32 C.F.R. § 1622.23 (a)], namely that he could not be replaced as a flight instructor.” Id. p. 276. Appellant, assuming he could' clear the hurdle of being engaged in a vital occupation, made no showing whatever as to the second condition, replacement.
It is clear that the Board did not act arbitrarily, capriciously or contrary to law in refusing to reopen defendant’s classification and consider his request for the conscientious objector classification, or a classification in II-A, occupational deferment. Thus there was no violation of due process of law as contended by the appellant. The judgment is affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
AINSWORTH, Circuit Judge:
Petitioner, N.L.R.B., seeks enforcement of its order of December 13, 1965 directed to respondent, Ortronix, by which it found that respondent violated Sections 8(a) (5) and (1) of the National Labor Relations Act (29 U.S.C. § 151 et seq.) by refusing to bargain with the Union (Sheet Metal Workers’ International Association, AFL-CIO), which was certified by the Board following a representation election. The unfair labor practice charge was made by the Board without a hearing on the merits, the trial examiner having granted the General Counsel’s motion for judgment on the pleadings, which was affirmed by the Board (156 N.L.R.B. No. 1). We hold that the action of the Board is arbitrary and unreasonable because under the circumstances of the case there were material disputed facts which required a hearing on the merits as provided for by Sections 10(b) and 10(c) of the Act (29 U.S.C. § 160).
On September 20, 1963, the Union filed its petition seeking to represent the company’s production and maintenance employees. The Regional Director held a hearing after which he directed an election be held. The company’s request for a review of that decision was denied. On March 31, 1964, the election was held which the company won by a vote of 166-84. The Union filed objections to the election because of alleged unfair labor practices having occurred at the Orlando, Florida, plant. An ex parte administrative investigation was conducted by the Regional Director who sustained the Union’s objections and directed the holding of a new election. The company requested the Board to review the Regional Director’s rulings maintaining the Union’s objections to the election and calling a new election; it also requested a hearing, all of which was denied by the Board.
On January 21, 1965, a second election was held and this time the Union prevailed by a vote of 75-59. The company then filed objections to the second election. The Regional Director conducted another ex parte administrative investigation and determined that none of the objections of the company warranted setting aside the election. The company requested that the Board review the Regional Director’s decision, which was denied. Thereafter the Regional Director certified the Union as the bargaining representative but the company declined to bargain. The unfair labor practice charge was then filed by the Union with the Regional Director for refusal of the company to bargain and a complaint was issued which the company answered admitting its refusal to bargain but giving as its reason for refusal the improper certification of the Union because of alleged errors in the representation proceedings.
The General Counsel for the Board filed a motion for summary judgment on the ground that the company’s answer raised only issues heretofore decided in the representation cases. The company moved to dismiss the motion for summary judgment. Both motions were referred to a trial examiner who denied the company’s motion and directed that within ten days it submit evidence, either newly discovered or unavailable at the time of the representation proceedings, which the company would offer for the record in any hearing held under the unfair labor practice complaint. The company failed to submit evidence, and on September 14, 1965, the trial examiner found “that the statutory violation alleged in the complaint is established by pleadings and that no litigable issue remains requiring a hearing for the purpose of taking evidence. Accordingly, the General Counsel’s motion for judgment on the pleadings is hereby granted.” Thereafter the Board adopted the trial examiner’s findings, conclusions and recommendations as its own.
Respondent company claims that the summary judgment procedure was unauthorized either under the National Labor Relations Act or the Administrative Procedure Act (5 U.S.C. §§ 1001 et seq.). The company contends that it has never had an opportunity to present, either to the Board or one of its trial examiners, in a formal proceeding, the facts on which it relies to sustain its objections to the second election in which the Union prevailed nor has it been confronted in such a formal proceeding with the evidence on which the Regional Director relied to set aside the first election which the company had won.
Representation proceedings do not come before us by direct review, but where an unfair labor practice is charged for refusal to bargain, and the employer has refused to recognize the certification, the election proceedings are then before the court for review and the representation cases and the unfair labor practice case become as one and the complete record is fully reviewable. United States Rubber Company v. N.L.R.B., 5 Cir., 1967, 373 F.2d 602, 603 (see footnote 3 and cases there cited).
Thus we look to what happened in the representation proceedings (conducted without formal hearing) to determine if there was material conflicting evidence. When the Regional Director maintained some of the Union’s objections and set aside the first election he did so on the basis of findings that the company’s personnel manager (McGraw) and its president (Kilbey) had made pre-election speeches to the company’s employees — a captive audience — promising to pave the parking lots, to furnish picnic tables upon which the employees could eat lunch and to provide company picnics. The company president had predicted “a lot of grief” in the event of a Union victory which “could have a radical effect on the company and cause all sorts of undesirable results,” etc. The personnel manager’s speech stated that the Union “cannot guarantee you anything in the way of new and additional benefits, they can’t even guarantee you that you will keep all of the benefits you now have”; that if the company refused the Union’s demands, the Union “will probably call a strike, and there goes jobs and business down the drain,” and other expressions of similar nature. The Regional Director found that such conduct interfered with the employees’ expression of a free choice in the election. The Regional Director also found that the company had coercively threatened and interrogated employees, engaged in acts of surveillance, attempted to create the impression of surveillance of Union activity, and discriminatorily discharged and laid off numerous employees. The election was set aside. The company contends that the Union should have been required to state its grounds for objection with greater specificity; that the objections were vague and indefinite so that the employer did not know how to meet them nor was it adequately apprised of the issues of fact created. The company also objected to failure of the Regional Director to disclose information which he had obtained in the course of his investigation and which was not made known until the Regional Director made his decision. The company contends, therefore, that it did not know what evidence it had to meet in a proceeding conducted in this manner without formal hearing, and that it should have been given the opportunity to fully explore the facts and allegations against it, after notice and hearing, with an opportunity to cross-examine any and all witnesses.
The company’s principal objection to the second election which the Union won was directed to alleged misrepresentations in handbills distributed by the Union three days before the election which stated that most employees of the company who were laid off the previous summer “were forced to start again at the ‘new employee’ hiring rate.” It contends that this unfair practice violated our holding in N.L.R.B. v. Houston Chronicle Publishing Company, 5 Cir., 1962, 300 F.2d 273, where in a similar case we set aside an election for false representations by the Union, which were made immediately before the election. The company also alleged that the Union made coercive promises and threats to the employees. The Regional Director held that the misrepresentations were timely known to the company before the election and nothing was done to refute them; that, therefore, there was no justification for setting aside the election. The Board denied the company’s request for review of the Director’s ruling, stating that “It raises no substantial issues warranting review.”
In our view there exist numerous substantial and material issues of fact — there is head-on clash between the company and Union allegations of irregularity in the two elections — which call for a formal hearing and the failure of the Board to provide one was a denial of procedural due process. See United States Rubber Company v. N.L.R.B., 5 Cir., 1967, 373 F.2d 602. The employer here seeks to overturn the result of an election and the burden is on it to show that the election was unfairly conducted. A hearing is, therefore, necessary and indispensable if a proper and fair resolution of all the disputed facts contained in the charges and counter-allegations of the company and the Union, taken with the facts which the Regional Director considered as a result of his investigations, is to be made by the Board. Until this is done, under the circumstances here, the employer will not have been given an opportunity to carry the burden of proving its case. On review of the Board’s findings, we have discretion to require that the Board not shut off a party’s right to produce evidence or conduct cross-examination material to the issues, as well as to see that a party’s rights are not finally foreclosed until his case has been fairly heard. National L. R. Board v. Indiana & Michigan Elec. Co., 318 U.S. 9, 28, 63 S.Ct. 394, 405, 87 L.Ed. 579 (1943). Since substantial and material factual issues exist, they can be resolved only after a formal hearing. See Home Town Foods, Inc. v. N. L.R.B., 5 Cir., 1967, 379 F.2d 241; National Labor Relations Bd. v. Dallas City Packing Co., 5 Cir., 1956, 230 F.2d 708; National Labor Rel. Bd. v. West Texas Utilities Co., 5 Cir., 1954, 214 F.2d 732; National Labor Relations Board v. Sidran, 5 Cir., 1950, 181 F.2d 671; N.L.R.B. v. Capital Bakers, Inc., 3 Cir., 1965, 351 F.2d 45.
Enforcement of the Board’s order is denied and the case is remanded for a full hearing as to the validity of the elections and certification.
. The applicable provisions in pertinent part read as follows: (29 U.S.C. § 160) “(b) Whenever it is charged that any person has engaged in or is engaging in any such unfair labor practice, the Board, or any agent or agency designated by the Board for such purposes, shall have power to issue and cause to be served upon such person a complaint stating the charges in that respect, and containing a notice of hearing before the Board or a member thereof, or before a designated agent or agency, at a place therein fixed, not less than five days after the serving of said complaint: * * * The person so complained of shall have the right to file an answer to the original or amended complaint and to appear in person or otherwise and give testimony at the place and time fixed in the complaint.
In the discretion of the member, agent, or agency conducting the hearing or the Board, any other person may be allowed to intervene in the said proceeding and to present testimony. Any such proceeding shall, so far as practicable, be conducted in accordance with the rules of evidence applicable in the district courts of the United States under the rules of civil procedure for the district courts of the United States, adopted by the Supreme Court of the United States pursuant to section 2072 of Title 28.
(29 U.S.C. § 160)
“(c) The testimony taken by such member, agent, or agency or the Board shall be reduced to writing and filed with the Board. Thereafter, in its discretion, the Board upon notice may take further testimony or hear argument. If upon the preponderance of the testimony taken the Board shall be of the opinion that any person named in the complaint has engaged in or is engaging in any such unfair labor practice, then the Board shall state its findings of fact and shall issue and cause to be served on such person an order requiring such person to cease and desist from such unfair labor practice, and to take such affirmative action including reinstatement of employees with or without back pay, as wiE effectuate the policies of this subchapter: * * *
If upon the preponderance of the testimony taken the Board shall not be of the opinion that the person named in the complaint has engaged in or is engaging in any such unfair labor practice, then the Board shall state its findings of fact and shall issue an order dismissing the said complaint. No order of the Board shaE require the reinstatement of any individual as an employee who has been suspended or discharged, or the payment to him of any back pay, if such individual was suspended or discharged for cause. In case the evidence is presented before a member of the Board, or before an examiner or examiners thereof, such member, or such examiner or examiners as the case may be, shall issue and cause to be served on the parties to the proceeding a proposed report, together with a recommended order, which shall be filed with the Board, and if no exceptions are filed within twenty days after service thereof upon such parties, or within such further period as the Board may authorize, such recommended order shall become the order of the Board and become effective as therein prescribed.”
. Such an administrative investigation is provided for in Section 102.69(c) of the Board’s Rules & Begulations (29 C.F.R. 102.69(c)).
. In Neuhoff Brothers, Packers, Inc. v. N.L.R.B., 5 Cir. 1966, 362 F.2d 611, we reviewed a case in which summary judgment had been granted against the company on a union complaint that the company refused to bargain, and said, “ * * * we must assume that for the Board to prevail, any factual issues that may have properly been raised before the Board, are to be viewed most strongly from the standpoint of the company * * The Board’s order was enforced.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
BIGGS, Circuit Judge.
A bill of complaint was filed in the court below by the appellees against the appellant, Independence Shares Corporation, a Pennsylvania corporation, and certain affiliated companies. The appellees purchased Capital Savings Plan Contract Certificates issued by Capital Savings Plan, Inc., and have alleged in their bill of complaint that these were sold to them by the fraud and misrepresentations of Capital Savings Plan, Inc. by the use and means of instruments of transportation or communication in interstate commerce and by the use of the mails. At the time of the sales, Independence Shares Corporation was a wholly owned subsidiary of Capital Savings Plan, Inc. Upon December 31, 1938, however, Capital Savings Plan, Inc. and Independence Shares, Inc. merged and the appellant, the resultant corporation, acquired all of the assets and assumed all of the liabilities of Capital Savings Plan, Inc.
The bill of complaint also alleges that the assets of Independence Shares Corporation are being wasted and dissipated and that that corporation is insolvent. The bill prays the appointment of a receiver for the assets of the corporation who shall ascertain and adjudicate the claims of creditors and shall liquidate and dissolve the company. The complaint also asks for certain injunctive relief which we will discuss at a later point in this opinion. The bill is cast in the form of a class suit brought by the appellees not only on their own behalf but also for the benefit of all certificate holders similarly situated.
The court below denied motions to dismiss the bill of complaint made upon the ground that it stated no cause of action and that the court was without jurisdiction, and referred the case to a master to hear and report upon the question of solvency or insolvency of the appellant. This order, 27 F.Supp. 763, filed May 18, 1939, has been appealed from by Independence Shares Corporation.
The contract certificates purchased by the appellees called for payments to be made by the subscribers. These payments were made by the subscribers to the other appellant, The Pennsylvania Company for Insurances on Lives and Granting of Annuities as trustee. The Pennsylvania Company made certain deductions from the sums paid to it and invested the balance as directed by Independence Shares Corporation in Independence Trust Shares for the. accounts of the respective certificate holders. Independence Shares Corporation created these trust shares by itself purchasing the shares of stock of certain specified corporations. The trust shares represent interests in the stocks so bought. The Pennsylvania Company in turn purchased aliquot portions of the trust shares and holds its purchases as we have stated for the benefit of the accounts of the certificate holders. At the time of the filing of the bill of complaint a sum of money representing charges made by the appellant for the reinvestment of funds was in the possession of The Pennsylvania Company. By an order entered June 2, 1939, the court below enjoined The Pennsylvania Company from paying over the sum referred to to Independence Shares Corporation or otherwise disposing of it during the pendency of the action. The Pennsylvania Company has appealed from this order.
Since the two appeals grow out of the same set of facts, we will dispose of them in one opinion.
The complainants with one exception are citizens of Pennsylvania. The jurisdiction of the court below cannot be sustained therefore upon diversity of citizenship. Lee v. Lehigh Valley Coal Company, 267 U.S. 542, 45 S.Ct. 385, 69 L.Ed. 782; Salem Trust Co. v. Manufacturers. Finance Company, 264 U.S. 182, 44 S.Ct. 266, 68 L.Ed. 628, 31 A.L.R. 867; Osthaus v. Button, 3 Cir., 70 F.2d 392. Nor does the amount in controversy exceed the sum of $3,000. Section 24(1) of the Judicial Code as amended, 28 U.S.C.A. § 41(1). The claims of the appellees may not be aggregated and the claim of no one appellee amounts to more than $2,000. Moore’s Federal Practice, Vol. 2, Section 23.08; Pinel v. Pinel, 240 U.S. 594, 36 S.Ct. 416, 60 L.Ed. 817; Lion Bonding & Surety Co. v. Karatz, 262 U.S. 77, 43 S.Ct. 480, 67 L. Ed. 871.
In our opinion, none the less, the court below had jurisdiction of the controversy by virtue of the provisions of Sections 12 (2) and 22(a) of the Securities Act of 1933 (May 27, 1933, c. 38, Title I, 48 Stat. 84 and 86, 15 U.S.C.A. §§ 771(2) & 77v(a).
Section 22(a) provides that “The district courts of the United States * * * shall have jurisdiction of offenses and violations under this title * * * and, concurrent with State and Territorial courts, of all suits in equity and actions at law brought to enforce any liability or duty created by this title [subchapter]. * * * ”
Section 12(2) of the Act states that “Any person who * * * sells a security * * * by the use of any means or instruments of transportation or communication in interstate commerce or of the mails, by means of a prospectus or oral communication, which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements, * * * and who shall not sustain the burden of proof that he did not know, * * * of such untruth or omission, shall be liable to the person purchasing such security from him, who may sue either at law or in equity in any court of competent jurisdiction, to recover the consideration paid for such security with interest thereon, less the amount of any income received thereon, upon the tender of such security, or for damages if he no longer owns the security.”
Jurisdiction in this case, however, is not dependent upon diversity of citizenship and amount in controversy. The field which is carved out for the operation of federal jurisdiction by Section 22(a) is “all suits in equity and actions at law brought to enforce any liability or duty created by this title [subchapter].” Since the Act stems from the exercise of federal power under .the commerce clause there is no question raised in the case on the line of power.
Section 12(2) of the Securities Act therefore provides a right to sue in a District Court of the United States for one who has purchased securities upon an untrue statement of a material fact made by the use of any means of transportation.or communication in interstate commerce and that such a suit may be maintained by the aggrieved person in an action at law or by a bill in equity depending upon whether the cause of action is cognizable at law or in equity. At the present time, the remedy of the aggrieved person lies in the “civil action” prescribed by Rule 2 of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c. The nature of the suit, however, remains as specified by Section 12(2). The defrauded person must seek to recover “the consideration” paid by him. The relief given by the section is for a money judgment or for a money decree payable to the individual who has been defrauded.
Section 16 of the Act, 48 Stat. 84, 15 U.S.C.A. § 77p, providing that “The rights and remedies provided by this title [sub-chapter] shall be in addition to any and all other rights and remedies that may exist at law or in equity” does not relate to venue as indicated by the court below or enlarge the remedy given by Section 12(2). Congress by the language employed sought only to make it abundantly clear that it was not pre-empting this field to the federal jurisdiction, thereby prohibiting recovery to defrauded individuals under the law of the states as that existed prior to the passage of the Securities Act.
Since the recovery of the appellees is limited as we have indicated, it follows that The Pennsylvania Company is not a proper party to the suit. The appellees have stated no cause of action against it and indeed have alleged no breach of duty upon its part cognizable under the Securities Act or otherwise. .The injunction against The Pennsylvania Company therefore may not be maintained. Nor does Section 12(2) enlarge the right of the appellees to the appointment' of a receiver for the corporation upon the ground that it is insolvent or its assets are being dissipated. The law in this respect remains as it was. See Pusey & Jones Co. v. Hanssen, 261 U.S. 491, 497, 43 S.Ct. 454, 67 L.Ed. 763, and the authorities there cited. It follows that none-of the prayers of the bill of complaint asking for specific relief may be granted.
The complaint states a cause of action within the purview of Section 12(2) of the Securities Act, however, and ends with a general prayer for relief. Amendment may be made to the complaint pursuant to R.S. § 954, 28 U.S.C.A. § 777, and Rule 15(a) of the Rules of Civil Procedure by limiting this prayer to a demand for money judgment. Such an amendment would be one of form rather than of substance since the complaint sets forth every fact necessary to entitle the appellees to obtain such relief. It is clear from the complaint that the appellees seek the recovery of the consideration paid by them for their contract certificates and by the contents of the complaint Independence Shares Corporation is made fully aware of the charges which it must meet. United States v. Powell, 4 Cir., 93 F.2d 788. See McAndrews v. Chicago, L. S. & E. R. Co., 7 Cir., 162 F. 856. As was stated by the Supreme Court in Maty v. Grasselli Chemical Co., 303 U.S. 197, 200, 58 S.Ct. 507, 509, 82 L.Ed. 745, “Pleadings are intended to serve as a means of arriving at fair and just settlements of controversies between litigants. They should not raise barriers which prevent the achievement of that end.”
The complaint sets forth a cause of action at law rather than in equity, for while Independence Shares Corporation may occupy a fiduciary relationship toward the appellees and the other certificate holders, none the less the action given by Section 12(2) of the Securities Act is one against the seller of the securities for the recovery of money. The type of amendment from equity to law formerly permitted under Equity Rule 22, 28 U.S.C.A following section 723, is no longer necessary in view of Rple 2 of the Rules of Civil Procedure. The complaint as amended will serve as a continuation of the old suit, the filing of the original bill tolling the statute of limitations imposed by section 13 of the Securities Act, 15 U.S.C.A. § 77(m). See Friederichsen v. Renard, 247 U.S. 207, 213, 38 S.Ct. 450, 62 L.Ed. 1075, and the decisions there cited. It must also be borne in mind that under Rule 15(c) of'the Rules of Civil Procedure, an amendment when made relates back to the date of the original pleading.
The question of whether the appellees upon a proper showing might not obtain injunctive relief against Independence Shares Corporation in aid of the remedy supplied to them by Section 12(2) of the Act, is not before us and therefore we do not pass upon it.
In conclusion we state that the appellants contend that Section 12(2) of the Act gives the appellees no right to maintain their suit as a class action. We are unable to agree with this contention. The suit at bar is of the type denominated a “spurious” class suit and may be maintained under Rule 23(a) (3). of the Federal Rules of Civil Procedure. See Moore’s Federal Practice, Vol. 2, p. 2241, paragraph 23.04-(3). In the case at bar numerous persons are interested in common questions of law or fact affecting the several rights of many individuals. Common relief may be sought despite the fact that individuals may recover separate judgments different in amounts. It should be noted that the misrepresentations set forth by the bill are alleged to be common to the sales made by the agents of the appellant company and of Capital Savings Plan, Inc. to the appellees and the other subscribers upon whose behalf the suit was instituted. We do not at this time express an opinion upon the question whether subscribers who are not now named as parties plaintiff may intervene in the cause in view of the statute of limitations set up in the Act.
Accordingly the orders appealed from are reversed and the cause is remanded with directions to proceed in conformity with this opinion.
Moore’s Federal Practice states in respect to “spurious” class suits: “This is a permissive joinder device. The presence of numerous persons interested in a common question of law or fact warrants - its use by persons desiring to clean up a litigious situation.”
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.
TANG, Circuit Judge:
These appeals are from a district court order granting $110,552.73 in attorneys’ fees and costs to plaintiff Lewis in a shareholder derivative and securities law class action.
The facts underlying this appeal are thoroughly detailed in the district court’s opinion. Lewis v. Anderson, 509 F.Supp. 232, 234-35 (C.D.Cal.1981). In 1973 Disney adopted a stock option plan for key employees. In 1974, the Stock Option Committee of Disney’s board of directors, without the approval of the shareholders, granted to the 1973 option grantees additional stock options at much lower prices. In 1974, Lewis filed this derivative action challenging the validity of the stock option grants, contending, inter alia, that the Stock Option Committee members breached their fiduciary duties to Disney’s shareholders in making the grants and violated the federal securities law by not disclosing the 1974 changes in the stock option program.
Shortly after the action was filed, Disney’s board of directors created a Special Litigation Committee to investigate the charges in Lewis’ complaint and to decide whether it was in Disney’s best interest to pursue the litigation against the defendant board members and option grantees. After a preliminary investigation, the Committee recommended that the board of directors seek shareholder ratification of the Stock Option Committee’s authority to make the 1974 grant. The board followed the recommendation, and on February 9, 1977, Disney’s shareholders voted to approve the Stock Option Committee’s action. Based upon this ratification, the Special Litigation Committee decided that further prosecution of the Lewis litigation was not in the best interests of Disney or its shareholders.
Pursuant to the Committee’s decision, the district court in 1977 granted partial summary judgment against Lewis, holding that the action would be dismissed under the business judgment rule if, after a mini-trial, the court determined that the Special Litigation Committee had acted independently and in good faith. This judgment was affirmed on appeal. Lewis v. Anderson, 615 F.2d 778 (9th Cir.1979), cert. denied, 449 U.S. 869, 101 S.Ct. 206, 66 L.Ed.2d 89 (1980).
Concluding that he could not demonstrate that the Special Litigation Committee had not acted in good faith, Lewis moved in December 1980 to dismiss his action. Lewis also petitioned the court to award him $381,210.36 in attorneys’ fees and expenses against Disney, contending that his lawsuit had conferred substantial benefits to both the company and its shareholders. On March 11, 1981, the district court granted Lewis’ fee petition in part. It ruled that the submission of the 1974 stock option grants for shareholder approval was a substantial benefit to Disney and its shareholders and attributable to Lewis’ lawsuit. It therefore held that Lewis was entitled to attorneys’ fees for time expended prior to the 1977 shareholder ratification. After a hearing on the appropriate amount to be awarded, the court awarded Lewis $105,-971.25 in attorneys’ fees and $4,581.48 for expenses. Both Lewis and Disney appeal the award.
The main issue on appeal is whether the district court erred in concluding that federal and California law permit an attorneys’ fee award to Lewis for the corporate benefit of shareholder ratification. Assuming that a fee should have been awarded, did the district court abuse its discretion by awarding a fee that was excessive, as Disney argues, or insufficient, as Lewis argues. We affirm the district court.
A district court’s award of attorneys’ fees may not be reversed absent an abuse of discretion. Kerr v. Screen Extras Guild, 526 F.2d 67, 69 (9th Cir.1975), cert. denied, 425 U.S. 951, 96 S.Ct. 1726, 48 L.Ed.2d 195 (1976). Any fact findings underlying the award are subject to review under the clearly erroneous standard. Morola v. Atlantic Richfield Co., 493 F.2d 292, 295 (3d Cir.1974). The legal principles the court relies upon to inform its discretion, however, are subject to de novo review. See id.
The award here was based upon the substantial benefit doctrine. Under both federal and California law, the doctrine permits a plaintiff to recover attorneys’ fees if his action has conferred a substantial benefit upon a class represented by the defendant. See Mills v. Electric Auto-Lite Co., 396 U.S. 375, 394-96, 90 S.Ct. 616, 626-27, 24 L.Ed.2d 593 (1970); Reiser v. Del Monte Properties Co., 605 F.2d 1135, 1139 (9th Cir.1979); D’Amico v. Board of Medical Examiners, 11 Cal.3d 1, 25, 520 P.2d 10, 28, 112 Cal.Rptr. 786, 804 (1974).
Disney argues that California law governs here because the benefit of shareholder ratification pertains more to Lewis’ state law claims than to his federal securities law claims. Disney is technically correct. If the plaintiff’s relief derives from a state law cause of action, any entitlement to attorneys’ fees must also derive from state law. Kabatoff v. Safeco Insurance Co., 627 F.2d 207, 210 (9th Cir.1980). On the other hand, Lewis seeks credit for some benefits attributable only to Lewis’s federal securities claims, in which case federal law would apply. See generally Reiser, 605 F.2d 1135, 1137-1140 (discussing federal law on attorneys’ fees).
The district court found that federal and California law were indistinguishable with respect to the substantial benefit doctrine. We agree. The California courts have relied primarily upon federal precedent in developing a state law version of the doctrine. Fletcher v. A.J. Industries, Inc., 266 Cal. App.2d 313, 323, 72 Cal.Rptr. 146, 152 (1968). Jutkowitz v. Bourns, Inc., 118 Cal. App.3d 102, 112, 173 Cal.Rptr. 248, 254 (1981). Moreover, neither party has identified any significant difference between California and federal law in applying the doctrine. Therefore we need not decide which law governs. Kabatoff, 627 F.2d at 209. Substantial Benefit
The district court based its fee award to Lewis on the ground that Lewis’ action prompted Disney to seek shareholder ratification of the 1974 stock option grants and that ratification was a substantial benefit to Disney and its shareholders.
Disney contends that the award is contrary to federal and California interpretations of the substantial benefit doctrine because Lewis’ litigation did not “succeed.” Disney concedes that neither federal nor California law requires a plaintiff to obtain judgment as a pre-condition for fees. It acknowledges that both federal and California law permit a fee recovery when a substantial benefit arises from a settlement rather than a judgment. See United Operating Co. v. Karnes, 482 F.Supp. 1029 (S.D. N.Y.1980); Fletcher v. A.J. Industries, Inc., 266 Cal.App.2d at 324, 72 Cal.Rptr. at 153. It also concedes that federal law permits a fee award if a benefit arises from corporate remedial action that moots the plaintiff’s claim. See Reiser v. Del Monte Properties Co., 605 F.2d 1135, 1140 n. 4 (9th Cir.1979); Ramey v. Cincinnati Enquirer, Inc., 508 F.2d 1188, 1196 (6th Cir.1974), cert. denied, 422 U.S. 1048, 95 S.Ct. 2666, 45 L.Ed.2d 700 (1975); Kahan v. Rosenstiel, 424 F.2d 161, 167 (3d Cir.), cert. denied, 398 U.S. 950, 90 S.Ct. 1870, 26 L.Ed.2d 290 (1970). Disney claims, however, that this authority does not apply here because Lewis’ suit resulted in a voluntary dismissal rather than its being settled or mooted.
The unifying principle of these decisions is that even if a plaintiff does not ultimately prevail, attorneys’ fees are nonetheless awardable if his action creates a substantial benefit. This standard is satisfied here. Although no settlement occurred and the shareholder ratification did not technically moot Lewis’ action, Disney’s success in obtaining shareholder ratification effectively remedied and, in a broad sense, mooted the complaint’s claim that the 1974 stock option grants were invalid for lack of shareholder approval. The ultimate fate of the action itself does not determine whether Disney’s shareholders should share the cost of obtaining the benefit resulting from Lewis’s action.
Aside from the requirement of establishing a substantial benefit, courts have imposed only the additional requirement that a plaintiff must demonstrate that his complaint was “meritorious.” See, e.g., Kahan, 424 F.2d at 167. This requirement is met if the plaintiff’s complaint has sufficient merit to survive a motion to dismiss on the pleadings. Id. This standard was satisfied. Lewis’ complaint withstood Disney’s motion for summary judgment. Moreover, the district court found, and Disney does not dispute, that Lewis would probably have prevailed on the merits had Disney not obtained shareholder ratification. Lewis, 509 F.Supp. at 238.
Disney also contends that shareholder ratification is too ephemeral a benefit to permit a fee award under California law. It relies primarily upon the California Supreme Court decision in Woodland Hills Residents Ass’n, Inc. v. City Council, 23 Cal.3d 917, 945, 593 P.2d 200, 216, 154 Cal.Rptr. 503, 519 (1979), which states that a plaintiff may recover attorney’s fees under the substantial benefit doctrine if the non-pecuniary benefit conferred is “concrete and clearly substantial.” Disney argues that the benefit fails to meet this test.
Woodland Hills does not preclude a fee award here. The district court concluded that shareholder ratification was a substantial benefit because it vindicated Disney’s shareholder’s right to be consulted on major management issues and raised the standards of fiduciary relationships within Disney. Lewis, 509 F.Supp. at 238. While less tangible than the recovery of money damages, Fletcher v. A.J. Industries, 266 Cal.App.2d 313, 324, 72 Cal.Rptr. 146, 153 (1968), held that this type of “corporate therapeutics” is sufficiently beneficial to a corporation and its shareholders to warrant an attorneys’ fee award. Woodland Hills does not overrule Fletcher’s rule or result. Rather, Woodland Hills cites Fletcher approvingly as a case that satisfies the “concrete and clearly substantial” standard. Woodland Hills, 23 Cal.3d at 946, 593 P.2d at 216, 154 Cal.Rptr. at 519.
Disney argues that the benefit in Fletcher was more “substantial and concrete” than the benefit conferred here. The plaintiff in Fletcher succeeded in permanently changing the corporation’s management procedures and in creating an arbitration forum to assess money damages against several of the corporation’s officers. In contrast, Disney notes, the shareholder ratification here produced neither long-lasting changes in corporate procedure nor any monetary recovery.
We reject this distinction. Fletcher’s holding was not based on the narrow ground that fees are awarded only if longstanding procedural changes are instituted or if a monetary recovery is made. Instead, Fletcher endorsed a rule permitting fee recovery when important shareholder rights are successfully asserted:
The final question in the present case is whether the benefits realized by the corporation were sufficiently “substantial” to warrant the award. To find that they were, the trial court need not determine that abuses existed in the corporate management, and that the action corrected them. It will suffice if the court finds, upon proper evidence, that the results of the action “maintain the health of the corporation and raise the standards of ‘fiduciary relationships and of other economic behavior,’ ” or “prevents) an abuse which would be prejudicial to the rights and interests of the corporation or affect the enjoyment or protection of an essential right to the stockholder’s interest.”
Fletcher, 266 Cal.App.2d at 324, 72 Cal.Rptr. at 153 (quoting Bosch v. Meeker Cooperative Light and Power Ass’n. 257 Minn. 362, 366-67, 101 N.W.2d 423, 426-27 (1960)).
Lewis contends that it should be reimbursed for attorneys’ fees and expenses for the period after the February 9, 1977 shareholder ratification. The substantial benefit conferred by Lewis’ action was the shareholder ratification. Because the post-ratification activities did not result in corporate or shareholder benefit, these fees and expenses were properly denied.
Disney contends that the district court should not have awarded fees for all time expended until the shareholder ratification. Ratification resulted from the totality of Lewis’ effort prior to the ratification. All specific claims in Lewis’ complaint related to the charge that the 1974 stock option grants were invalid without the approval of the shareholders.
Having considered both parties’ objections to the amount of the award, we conclude that the district court did not abuse its discretion. Manhart v. City of Los Angeles, 652 F.2d 904, 907-08 (9th Cir.1981).
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.
WILBUR, Circuit Judge.
This is an action for the infringement of patent No. 1,586,277), issued by the United States to John M. Young, now owned by the appellant, covering a familiar type of tin can, a right cylinder, used as container for food products, such as coffee, butter, etc. The type of ean involved is one in which the cover is severed from the cylindrical body upon opening, by removing from the upper end of the outer cylindrical surface a tearing strip of familiar design. The object of the invention is to utilize the top portion of the can as a reelosure cover to be used after the ean is opened by removal of the tearing strip, the cover fitting tightly enough to form a closure that will protect the contents of the ean. The method of thus utilizing the top portion of the can for reeoverage in order to protect the contents of the can is common in the canning industry. The.contents are sometimes preserved by what is known as an •outside slip cover, fitting over the outer portion of the can at the top (a familiar example of this type of cover being the old-fashioned tin dinner-pail). In appellant’s patent the air-tight closure is effected by friction between a countersunk part of the top and a ring or bulge at the top of the can and on the face of its interior wall. When the top is forced down inside the can, this countersunk part of the top contacts with the bulge or ring on the inside of the ean. Claims contained in the appellant’s patent, issued May 25, 1926, known as the Young patent, deal with the latter form of can, in which the countersunk portion of the top, when removed and replaced for reeoverage, upon depression comes in contact with an inner ring or bulge formed on the inside of the ean, spoken of in the briefs as an inner fold, bend or bead.
In view of the fact that the argument narrows the alleged invention to a single element in this combination, we can largely confine our consideration to that element. Appellant’s claim is narrowed in the briefs to the single item of the offsetting of the annular depending ring or countersink in the top of the ean from the side of the can. to the exact distance that the inner ring, bend, or fold projects into the inside of the can, so that upon removal of the tearing strip the countersunk portion of the top slips inside this inner ring, bend, or fold, with a snug fit, thus sealing the contents.
The accompanying diagram of vertical cross sections, one through a portion of appellant’s can, and the other through a portion of appellee’s can, which are substantially as set forth in the briefs of the par- ■ ties in connection with their respective contentions, illustrate the point thus advanced by the appellant:
We have indicated in cross-hatching, and have marked “X” on each diagram, the portion of the top of ean body, in each of the two cans, which appellant claims is covered by the Young patent.
We restate the above proposition in the language of the appellant:
“The thing that was not known or old was the insetting or offsetting of the bung or internal reclosure from the seam by the thickness of the fold or bend so that the material of the can body part which contained the score lines may extend down from the seam on the outside of the fold in a single cylindrical plane to the bottom of the fold or bend itself. The construction of the ean beneath the fold or bend is, we submit, unimportant to the consideration of the claims because the structure in which the invention is embodied is located wholly above this portion of the ean body.”
In view of the claim that the shoulder “X” of the appellee’s can infringes the offset “X” of the appellant’s patent, it should be stated that the basis of this contention is the assumption that the 3-ply portion of the appellee’s can is the equivalent of the internal fold or bend of the appellant’s can, which is marked 18 on the above drawing. It is significant that when the application for appellant’s patent was pending before the Patent Office, the Examiner in the Patent Office called the attention of the applicant to the similarity between his method of reclosure and that involved in the Ginzler patent (British, 1910). A diagram of a vertical cross section, of the Ginzler.can is here shown:
It will be observed that in the Ginzler can the inner portion of the cap or cover contacts with an interior bend or fold in the side of the ean. The original claims presented by the applicant were rejected by the patent Examiner for lack of novelty over the Ginzler. Attention was also called by the Examiner to a prior French patent to Delpeut and a British patent to Spindler. Thereupon the claims of the Young application were amended to read as they appear in the patent in suit. The written amendments were presented to the Patent Office with the accompanying statement on behalf of the applicant that the patents referred to had been carefully examined, and that:
“In the Ginzler patent there is an upward bend, but it does not extend inward towards the middle of the ean, and the upper and lower parts of the can wall have to be out of line with each other to accommodate such a fold. This fold lies parallel with and against the inner face of the can wall and has not the yielding and gripping features of my bend 18. My claims distinguish very clearly from a construction like that in the Ginzler patent. It will be noticed also that in this patent there is no preformed (delineated by score lines) tearing strip but a rude and rough tear is made through the material of the can wall by a stiff internal tearing element, so that this can is entirely unsuitable to provide a replaceable cover.
“In the Spindler and Delpeut patents a replaceable cover may be formed, but it is an outside slip cover.
“I believe that I am the first to provide a can body with an inwardly extending bend, integral with the body, and with a plug closure to fit within said bend and similarly offset inwards from the double seam of the cover and from the can wall.”
No further objections being raised in the Patent Office, the patent in suit was issued to John M. Young,- assignor of appellant.
It thus appears that the appellant, in securing his patent, differentiated the inner ring or fold in his device from that in the Ginzler .patent, although in the Ginzler patent the folds extend inside the can, that is the .can bulges inwardly at the point of the fold; whereas, in the appellee’s can the side of the can is vertical in its cross section from the bottom of the can to the upper edge of the collar or band which is produced on the outside of the can at its upper end by an outward double folding of the metal blank or sheet from which the can is formed.
It is well settled that, where an applicant whose claim is rejected on reference to a prior patent, without objection or appeal, voluntarily restricts himself by an amendment of his claim to a specific structure, “having thus narrowed his claim * * * in order to obtain a patent the patentee may not by construction, or by resort to the doctrine of equivalents, give to the claim the larger scope which it might have had without the amendments, which amount to a disclaimer.” Weber Elec. Co. v. Freeman Elec. Co., 256 U. S. 668, 677, 41 S. Ct. 600, 603, 65 L. Ed. 1162.
In Royer v. Coupe, 146 U. S. 524, 532, 13 S. Ct. 166, 169, 36 L. Ed. 1073, it was stated to be well settled “that where a patentee, on the rejection of his application, inserts in his. specification, in consequence, limitations and restrictions, for the purpose of obtaining his patent, he cannot, after he has obtained it, claim that it shall be construed as it would have been construed if such limitations and restrictions were not contained in it.” (Citing prior decisions of the Supreme Court to this effect.)
In the amended claims, 1, 2, 3, and 5, relied on by appellant, which we presently quote, it will be observed that each claim speaks of this inner extension of the can body, and the offset equal thereto in the top. These claims are as follows:
“1. A can, comprising a body having score lines setting off a circumferentially arranged tearing strip near the top, the material of the body being bent inwardly within the body adjacent said tearing strip, and away from the line of that part of the can wall which is attached to the cover, and a cover seamed to the upper end of the body and having a downwardly extending friction wall arranged inwardly at a distance from the seam between the cover and body a distance equal to the inward extension of the bend of the body, said friction wall being adapted to enter within the bend after the tearing strip is removed to form a tight and readily removable closure.
“2. A can, comprising a body having score lines setting off a circumferentially arranged tearing strip near the top, the material of the body being bent inwardly within the body adjacent and spaced away from said tearing strip, and a cover seamed to the upper end of the body and having a, downwardly extending friction wall offset inwardly from the external wall of the cover above the bend of the body in amount equal to the horizontally inward extension of the bent portion of said body.
“3. A can, comprising a body provided with encircling score lines setting off a tearing strip, said body being bent internally near the top to provide an external friction seat wall of accurate dimension at the top of the body when the tearing strip is removed, and a cover seamed to said body and having an inwardly spaced vertically arranged inner friction wall of horizontal diameter equal to the internal diameter of said external friction seat wall.”
“5. A can comprising a body and a cover double seamed to said body, the cover having the usual countersunk portion adjacent the double seam, and having in said countersunk portion another depression of less diameter than said countersunk portion forming a wall to produce an internal friction closure element and the can body having score lines around the same setting off a tearing strip adjacent the double seam, and the body wall being bent inward adjacent the lower score line to form an external friction closure element adapted to receive the said friction closure element of the cover.”
To interpret the controverted features of the appellee’s can in the terms suggested by appellant, or to reach therefrom the conclusion that, they embody an infringement of appellant’s can, would we think be to disregard the physical features which clearly present themselves to an observer who compares the two cans. As previously stated, the interior of the can-body wall of the appellee’s can is at all points straight and wholly devoid of any interior bend or fold or any equivalent of a bend or fold. We do not regard the “collar” of the appellee’s can, or the outer fold of the “collar,” as being a part of the body wall proper of the can, but view the “collar” as being a folded band on the exterior of the can-body wall. Nor do we think that in its position on the outside and at the top of the can-body wall there is created, in the conjunction of the “collar” with the adjacent portion of the can-body wall, an interior fold or bend or an equivalent thereof, at or adjacent to the portion of the interior of the can body where the vertical wall of appellee’s can cover comes in contact with the interior of the can body. At the points where the can covers come in contact with the can interiors, it is apparent that the nature of the contact and the degree of friction and of yielding, or spring action, although depending to some extent on accurate dimensioning of can-cover wall and can interior, are quite different' in the two cans. In appellant’s can the wall of its closure cover comes in contact, when a closure is made, with a fold or bend which is formed within the can body, of material integral with the can body and which, as described in the Young patent, is “bent inwardly and * * thenee downwardly * * * the material of the body wall above and beneath the loops being in the same plane”; the bend thus provided being “open so that a rounded internal surface is provided for the reception of the friction plug cover.” It may be conceded that, as is stated in the Young patent, the friction seat which is formed by the internal bend “has some yielding and spring action radially to admit the friction element of the cover and tightly conform therewith to make a good closure.” As regards appellee’s can, its cover is provided with a countersunk or depressed portion forming a vertical wall adapted to slip inside of the top of the can body. The surface of the can interior where the wall of appellee’s can cover engages and comes in contact with it is straight and smooth, and devoid of any fold or bend, and, the can interior and cover wall being accurately dimensioned, the cover slips into its proper place so as to make a good closure, with no resistance except such as arises from closeness of fit. There is, obviously, some yielding in the portion of the can body which comes in contact with the can cover when a closure is made; but in view of the absence from appellee’s can of an internal fold or bend or any equivalent thereof, and the lack of the spring action that would result from contact between such bend and the cover wall, the nature of the parts which come in contact and of the resistance or friction resulting from contact are quite different in the two cans. If, as claimed by the patentee in his above-quoted answer to the Examiner concerning the Ginzler patent, there is no inner extension of the can body in the Ginzler patent, it is even clearer that there is no inner extension of the can body in the appellee’s can. It therefore would seem clear that the shoulder “X” in the appellee’s can cannot be said to be the equivalent of the offset “X” in the can made under appellant’s patent, as there is in appellee’s can no inner rim, fold, or bend equivalent to that in the appellant’s can; hence there can be no offset in the top of appellee’s can adapted to fit within an offset in the can body created by an inner rim, fold or bend, for there is in appellee’s can body no such inner rim, fold, or bend. The differences between the can of appellee and the can of appellant in the controverted portions, while not of wide range, are in our opinion sufficiently distinct in nature, function, and results to sustain the conclusion of noninfringement which was reached by the trial court.
The defendant has filed a cross-appeal from that portion of the judgment which held the appellant’s patent valid. In view of our conclusion that there is no infringement, it is unnecessary for us to consider the validity of the appellant’s patent.
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.
AUGUSTUS N. HAND, Circuit Judge.
The questions before us on this appeal, are whether the cash surrender values of four life insurance policies of which the wife of the bankrupt is the beneficiary, but in all of which the bankrupt reserved the right to change the beneficiary, are exempt from the claim of the trustee under section 55-a of the Insurance Law of the State of New York enacted on March 31, 1927 (Consol.Laws N.Y. c. 28).
Three of the policies (two issued by the Metropolitan Life Insurance Company and one by the Northwestern Mutual Life Insurance Company), having a total cash surrender value of $1,230.47, were issued prior to the enactment of section 55-a of the New York Insurance Law. If at that time there were creditors having valid claims, the policies were, to the extent of the above cash surrender value, assets which the trustee is entitled to collect for the benefit of those creditors. In re Messinger, 29 F.(2d) 158, 68 A.L.R. 1205 (C.C.A.2).
The remaining policy was issued by the New York Life Insurance Company under date of January 8, 1930, which is subsequent to the enactment of section 55-a supra, and had a cash surrender value of $1,330 at the date of bankruptcy.
The -District Court held that the first three policies to the extent of the total cash surrender value of $1,230.47 were estate assets not within the exemption provided by the state statute, but that the policy of the New York Life Insurance Company, because issued after the enactment of section 55-a supra, was within the statutory exemption.
The bankrupt has appealed from so much of the order as denies exemption in respect to the cash surrender value of the first three policies, claiming that all four* policies are exempt under section 55-a, and the trustee has appealed from so much of the order as held the policy issued by the New York Life Insurance Company exempt.
Appeal of the Bankrupt.
The bankrupt appeals from the portion of the order directing him to turn over the first three policies to the trustee or to pay the latter $1,230.47 as the cash surrender value thereof. He contends that the claim of the creditor Patchogue Citizens Bank & Trust Company was not such as to render the cash surrender value of $1,230.47 an asset which could not under our decision of In re Messinger, 29 F.(2d) 158, 68 A.L.R. 1205, lawfully be exempted by section 55-a supra. The reason given for taking this position is that neither the proof of claim nor the evidence shows an indebtedness of the bankrupt to the creditor antedating the enactment of section 55-a.
We are met at the outset with the objection to the bankrupt’s argument that the question before us is one of fact which was resolved against the bankrupt by the court below. We are permitted by section 24b of the Bankruptcy Act, as amended, 11 U.S.C. A. § 47(b), under which this appeal was allowed, to review only questions of law. It is said, however, that the following considerations require a decision of the appeal in the bankrupt’s favor: (1) The proof of debt sets forth no indebtedness antedating the statute; (2) the note relied on in the proof of debt succeeded other notes but they had been paid by the bankrupt; (3) the Patcliogue Bank was a secured creditor and the trustee could not maintain a turnover proceeding without liquidating the security •pursuant to section 57h of the Bankruptcy Act, 11 U.S.C.A. § 93(h).
There was evidence sufficient to justify the District Court in finding that the note held by the creditor for $23,847.65 succeeded earlier notes given for indebtedness which accrued prior to the enactment of section 55-a. The fact that these prior notes, except to the extent of $5,150, were marked “paid,” does not require us to hold that the earlier indebtedness represented by these notes was extinguished. No agreement to cancel it was established, nor was such an agreement at all probable. Indeed, we think it was disproved. All the notes were simply evidence of loans, and the creditor was, therefore, entitled to take the position that the claim it relied on existed prior to the enactment of section 55-a. Jagger Iron Co. v. Walker, 76 N.Y. 521; Cohen v. Rossmoore, 225 App.Div. 300, 306, 233 N.Y.S. 196. The four notes marked “paid” were so marked merely to guard against future negotiation and not to extinguish pro tanto existing obligations. While the proof of claim contained a list of notes outstanding, the evidence disclosed the earlier origin of the indebtedness upon which the Patcliogue Bank relies, and its claim may be treated as amended to conform to the proof. In re International Match Corporation, 69 F.(2d) 73 (C.C.A.2); Lewith v. Irving Trust Co., 67 F.(2d) 855 (C.C.A.2); In re Lynan, 127 F. 123 (C.C.A.2); In re Kessler, 184 F. 51 (C.C.A.2); and In re Basha, 200 F. 951 (C.C.A.2). The objection that the creditor was bound to liquidate its security and, as it has not done this, has failed to prove a valid claim for any excess is met because the claim relied on apparently is not one of the secured obligations and also because liquidation under section 57h, 11 U.S.C.A. § 93(h), is only necessary to prove claims in order to obtain a dividend. A creditor may resort to the cash surrender value of any life insurance policies of his debtor merely by proving that he was a creditor before any exemption statute was enacted.
The trustee can reach the cash surrender value of the first three policies, even though the proceeds after collection will ultimately pass to a particular creditor having claims antedating the enactment of section 55-a of the New York Insurance Law for the reason that the trustee represents all creditors. Theoretically there might be many such creditors whose claims against the cash surrender value would have to be marshaled in order that the asset in question might be properly shared among them.
For the foregoing reasons the order so far as respects the appeal by the bankrupt is affirmed.
Appeal of the Trustee in Bankruptcy.
• The trustee in bankruptcy objects to the portion of the order holding that the policy of the New York Life Insurance Company is exempt from the claim of the Patcliogue Bank on the ground that section 55-a of the New York Insurance Law, if applicable to the cash surrender value of that policy, would impair the obligation of contracts and thus would violate article 1, § 10, cl. 1, of the Constitution of the United States.
Section 55-a in so far as it is pertinent to the trustee’s appeal reads as follows :
“Rights of creditors and beneficiaries under policies of life insurance. If a policy of insurance, whether heretofore or hereafter issued, is effected by any person on his own life or on another life, in favor of a -person other than himself, or, except in cases of transfer with intent to defraud creditors, if a policy of life insurance is assigned or in any way made payable to any such person, the lawful beneficiary or assignee thereof, other than the insured or the person so effecting such insurance, or his executors or administrators, shall be entitled to its proceeds and avails against the creditors and representatives of the insured and of the person effecting the same, whether or not the right to change the beneficiary is reserved or permitted, and whether or not the policy is made payable to the person whose life is insured if the beneficiary or assignee shall predecease such person.”
The court below sustained the exemption on the ground that the policy of the New York Life Insurance Company was not issued until after the exemption statute took effect, and held that, if the exemption is to be avoided, both the claims of creditors who seek to reach the cash surrender value and the policy itself must antedate the enactment, The trustee contends that it is enough for the indebtedness to precede the enactment and that a creditor is entitled to resort to “future acquisitions” of his debtor for payment of his claim, unless an exemption existed at the time when the debt was incurred, so that the debt can be said to have been contracted with the exemption in view. Edwards v. Kearzey, 96 U.S. 595, 24 L.Ed. 793; Sturges v. Crowninshield, 4 Wheat. 122, 4 L.Ed. 529.
It is generally said that an impairment of a creditor’s rights must be substantial in order to come within the constitutional prohibition. Bronson v. Kinzie, 1 How. 311, 11 L.Ed. 143. Thus a workman’s tools or a farmer’s necessary implements may be within the protection of an exemption statute even as against prior creditors. Perhaps it may be reasonably argued that insurance policies ought to stand in a class by themselves, because of a fair doubt whether creditors are likely to lose anything through the issue to a debtor, after the passage of an exemption act, of an insurance policy in favor of a third person in which he retains a power of revocation. Whether the debtor here would have kept any part of the moneys expended in premiums, if he had not taken out insurance for the benefit of his wife, is perhaps a matter of speculation. It may be said that, if the chance of obtaining a policy which he might reasonably suppose to be exempt because of the terms of section 55-a of the New York Insurance Law had not existed, he might have lived on the moneys expended in premiums or might have taken out insurance payable to his wife vrithout reserving any power of revocation or might have expended his earnings in other ways — in all of which cases they would have been unavailable to his creditors. On the other hand, it is problematical whether a debtor who retains a power of revocation under circumstances like the present does not do so because he is- determined to keep control of the policy for all purposes and whether he would have acted thus, whether he had thought section 55-a applied or not. It seems entirely possible and perhaps probable that he would have saved his earnings and put them in the savings bank or otherwise have invested them, in case he had not taken out the insurance. In other words, the determining factors are too doubtful to enable us to say that creditors would lose no substantial right if such exemption statutes were held applicable.
But we find no decisions of the Supreme Court or of the highest courts of the state distinguishing between policies issued prior to the passage of exemption laws and those issued after. In Nelson v. McCrary, 60 Ala. 301, such a distinction was repudiated in respect to a homestead exemption where the land in question was purchased after the enactment of the statute creating the exemption. Johnson v. Fletcher, 54 Miss. 628, 28 Am.Rep. 388, is to the same effect, as also Foster v. Byrne, 76 Iowa, 295, 35 N.W. 513, 41 N.W. 22.
The following decisions relied on by the bankrupt are not in accord with our views: In re Weisman (D.C.) 10 F.Supp. 312, 314; In re Beach (D.C.) 8 F.Supp. 910, 911; In re Rosenberg-Oldstein Co. (D.C.) 236 F. 812, 813; Cecilian Operating Corporation v. Berkwit, 151 Misc. 814, 272 N.Y.S. 291.
If the distinction between policies taken before the enactment of the exemption statute and after it were tenable, we should expect that in the former contingency the courts would have allowed trustees in bankruptcy to reach only the cash surrender value at the date of the enactment and not the value accrued to the date of bankruptcy. Yet we believe the value at the time of bankruptcy has always been payable in those cases to the trustee. Bank of Minden v. Clement, 256 U.S. 126, 41 S.Ct. 408, 65 L.Ed. 857; Addiss v. Selig, 264 N.Y. 274, 190 N.E. 490, 92 A.L.R. 1384; In re Kest, 78 F.(2d) 705 (C.C.A.2); In re Messinger, 29 F.(2d) 158, 68 A.L.R. 1205 (C.C.A.2); In re Heilbron’s Estate, 14 Wash. 536, 45 P. 153, 35 L.R.A. 602.
In view of the general rule that statutes which may substantially impair the right of existing creditors are construed as not affecting the claims of such creditors, we cannot regard the New York exemption act as affecting the remedies of the Patchogue Bank. Many a man who becomes insolvent has little or nothing except the cash surrender value of an insurance policy, often of substantial worth. ' A distinction between policies issued before and after the passage of an exemption act is not tenable if in either case there are preexisting creditors. Such a distinction would be based upon mere speculation and, if indulged in, to justify an exemption would seem to involve a result against the general weight of authority. Indeed, it is hard to distinguish between an investment in life insurance and a deposit in a savings hank. W. B. Worthen Co. v. Thomas, 292 U.S. 426, 54 S.Ct. 816, 78 L.Ed. 1344, 93 A.L.R. 173; Bank of Minden v. Clement, 256 U.S. 126, 41 S.Ct. 408, 65 L.Ed. 857; Kener v. La Grange Mills, 231 U.S. 215, 34 S.Ct. 83, 58 L.Ed. 189; Edwards v. Kearzey, 96 U.S. 595, 24 L.Ed. 793; Gunn v. Barry, 15 Wall. 610, 21 L.Ed. 212; Sturges v. Crowninshield, 4 Wheat. 122, 4 L.Ed. 529; In re Messinger (C.C.A.) 29 F.(2d) 158, 68 A.L.R. 1205; In re Kest (C.C.A.) 78 F.(2d) 705; Addiss v. Selig, 264 N.Y. 274, 190 N.E. 490, 92 A.L.R. 1384; Nelson v. McCrary, 60 Ala. 301; Foster v. Byrne, 76 Iowa, 295, 35 N.W. 513, 41 N.W. 22; Dunn v. Stevens, 62 Minn. 380, 64 N.W. 924, 65 N.W. 348; The Homestead Cases, 22 Grat. (Va.) 266, 294, 12 Am. Rep. 507; Johnson v. Fletcher, 54 Miss. 628, 28 Am.Rep. 388; Rieger v. Wilson, 102 Mont. 86, 56 P.(2d) 176.
The order is so modified as to affirm the order of the referee in bankruptcy and to direct the bankrupt to turn over the policy of the New York Life Insurance Company to the trustee or pay the cash surrender value therefor amounting to $1330; othex-wise it 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.
BEAM, Circuit Judge.
This appeal arises out of the sale of 16,500 unregistered shares of Vertimag Systems Corporation stock for $99,000. Norman J. Ackerberg brought suit against Piper, Jaffray & Hopwood and several of its employees (the PJH defendants), as well as against Clark E. Johnson, Jr., the chairman of the board of Vertimag, from whom Ackerberg bought most of his shares. The complaint set forth nine counts, alleging violations of the Securities Act of 1933, 15 U.S.C. §§ 77a-77aa (1988), the Securities Exchange Act of 1934, 15 U.S.C. §§ 78a-78kk (1988), the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968 (1982) and various state securities laws. While many of these claims were ordered to arbitration and others dismissed, the district court refused to compel arbitration of the 1933 Act claims, and entered summary judgment in part of them in Ackerberg’s favor. All defendants appeal from the order of summary judgment, and Ackerberg cross-appeals from the district court’s calculation of damages. We reverse.
I.. BACKGROUND
Ackerberg bought the Vertimag shares in March of 1984. Ackerberg bought 12,-500 shares from Johnson, who, in addition to being the chairman of the board, was one of the founders of Vertimag and its largest individual stockholder. Ackerberg bought the remaining 4,000 shares from Roger Lindquist, a vice president at Piper, Jaffray & Hopwood, and the owner of at least 50,000 shares of Vertimag. Lind-quist’s shares were held by the Roger Lind-quist Partnership, an entity organized to invest in Vertimag and in other securities. Lindquist's partners were Gary Petrueci, a senior vice president at PJH who handled Ackerberg’s account, and James Vieberg, another registered representative at PJH. Ackerberg paid $6.00 per share for 16,500 shares, and paid PJH a commission of $2,062.
The Vertimag transaction began in October of 1983, when Vertimag proposed a private placement of $10,000,000 in securities, to be sold at $6.00 to $6.50 per share. In December of 1983, Ackerberg said that if he could invest around $100,000, he would be interested. Petrueci then gave Ackerberg a ninety-nine page private placement memorandum which contained detailed information about Vertimag.
On March 17, 1984, Ackerberg signed a subscription agreement, prepared by counsel for Vertimag. Ackerberg testified by deposition that he read and understood this document. Vertimag’s counsel stressed to Ackerberg that no sale could be made without the subscription agreement, which agreement informed Ackerberg that the Vertimag securities were unregistered and not readily transferable. Specifically, the agreement provided, in part, that:
2. The undersigned acknowledges and represents as follows:
# sfc ¡is jjs j}:
(e) That the undersigned has been given access to full and complete information regarding Vertimag....
‡ ‡ $
(g) That... the Shares have not been registered under the Securities Act of 1933 and, therefore, cannot be sold unless they are subsequently registered under said Act or an exemption from such registration is available, (iii) there is presently no public market for the Securities and the undersigned may not be able to liquidate the investment... and (iv) the transferability of the Securities is restricted....
3. The undersigned has been advised that the Securities are not being registered under the Securities Act of 1983 or the relevant state Securities laws and are being sold pursuant to exemptions from such Act and laws; and that your reliance upon such exemptions is predicted [sic] in part on the undersigned’s representations to you as contained herein.
Ackerberg also represented in the subscription agreement that his yearly income was in excess of $200,000, that his net worth was over $1,000,000, and that his liquid assets exceeded $500,000. Indeed, Acker-berg’s account at PJH alone totaled around $500,000.
Ackerberg began this litigation in March of 1985. As indicated, Ackerberg’s complaint contained nine counts against Johnson, PJH, and its employees Lindquist, Pe-trucci, and R. Hunt Greene, who was also involved in the sale of Vertimag to Acker-berg. Count one was based on § 12(1), count two on § 12(2), and count three on § 17(a) of the 1933 Act. Count four was based on § 10(b) of the Act of 1934. Counts five through eight were based on common law fraud, breach of contract, and violation of the Minnesota Blue Sky laws. Count nine alleged RICO violations. The third count was dismissed by the district court on June 11, 1985, and the sixth count dismissed as to Johnson on March 14, 1986. In the order of March 14, 1986, the district court also refused to dismiss the 1933 Act claims against Johnson, finding that Johnson had not proven entitlement to an exemption from registration under the Act. Counts four through nine against the PJH defendants were ordered to arbitration, leaving only the 1933 Act claims as to them.
On August 23, 1988, the district court entered summary judgment in favor of Ackerberg on the § 12(1) claim and refused to compel arbitration of either remaining 1933 Act claim. Johnson’s motion for summary judgment on all claims remaining against him was denied. The district court denied the motions of defendants for reconsideration on November 4, 1988.
The district court’s order of November 4, 1988, entered pursuant to Ackerberg’s motion under Rule 54(b) of the Federal Rules of Civil Procedure, was a final judgment as to Count I of the amended complaint. Rule 54(b) allows the entry of a final judgment “as to one or more but fewer than all of the claims or parties” in a case involving multiple claims and multiple parties. The court's entry of judgment on Ackerberg’s § 12(1) claim leaves pending the § 12(2) claim against Johnson and the PJH defendants, as well as claims four, five, seven, eight and nine against Johnson. The district court could enter a final judgment pursuant to Rule 54(b) only by determining that “there is no just reason for delay” within the meaning of the Rule. The court stated in its order of November 4, 1988, that a final judgment under Rule 54(b) was appropriate because “plaintiff’s counsel has represented that by the entry of such judgment, this matter may be effectively terminated, and because there is no just reason for delay in the entry of an order for judgment.” Order, Civ. No. 4-87-159, Nov. 4, 1988, at 7.
On January 10, 1989, the district court calculated damages on the § 12(1) claim by using a rescissionary formula which awarded Ackerberg the difference between the $6.00 per share he paid and $2.75 per share, the amount contemplated in a private placement proposed for May of 1984. Acker-berg was thus awarded damages of $14,-932.70 against the PJH defendants, and $46,716.07 against Johnson. The district court denied Ackerberg’s motion to amend the judgment.
The PJH defendants and Johnson appeal from the order of November 4, 1988, which order denied reconsideration of the final judgment entered, and from the court’s order refusing to compel arbitration of the 1933 Securities Act claims. On cross-appeal, Ackerberg appeals from the order denying his motion to recalculate damages.
II. DISCUSSION
A. Arbitration of 1933 Act claims
We begin with the order holding that Ackerberg’s 1933 Act claims were not arbitrable under Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182, 98 L.Ed. 168 (1953). The PJH defendants argued to the district court that Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987), which held that claims arising under the Act of 1934 are arbitrable, should also apply to claims arising under the 1933 Act. Defendants argued that McMahon effectively overruled Wilko, since the Court’s rationale could be applied to 1933 Act claims as well as to 1934 Act claims. Indeed, after McMahon, many courts did find that 1933 Act claims were arbitrable for that reason. See Rodriguez De Quijas v. Shearson/American Express, Inc., — U.S. -, 109 S.Ct. 1917, 1923 n. 1, 104 L.Ed.2d 526 (1989) (Stevens, J., dissenting). See also McMahon, 482 U.S. at 243, 107 S.Ct. at 2346 (Blackmun, J., dissenting) (“In today’s decision, however, the Court effectively overrules Wilko by accepting the Securities and Exchange Commission’s newly adopted position that arbitration procedures in the securities industry and the Commission’s oversight of the self-regulatory organizations (SROs) have improved greatly since Wilko was decided.”). The district court in this case, however, agreed with the Second Circuit that “the [Supreme] Court... did not overrule [Wilko] and it continues to govern us.” Order, Civ. No. 4-87-159, Aug. 23, 1988, at 7 (quoting Chang v. Lin, 824 F.2d 219, 222 (2d Cir.1987)). Thus, the district court refused to compel arbitration of the 1933 Act claims.
While, at the time, the district court was correct in declining to find that Wilko had been tacitly overruled, it is now clear that Wilko is no longer the law. In Rodriguez De Quijas, the Court noted that Wilko was based largely on a distrust of arbitration, and that such distrust is inconsistent with a clear congressional policy favoring arbitration. Wilko, the Supreme Court found, was “out of step with our current strong endorsement of the federal statutes favoring this method of resolving disputes.” Rodriguez De Quijas, 109 S.Ct. at 1920. Thus, the Court concluded that “Wilko was incorrectly decided and is inconsistent with the prevailing uniform construction of other federal statutes governing arbitration agreements in the setting of business transactions.” Id. at 1922. From Rodriguez De Quijas, then, it is clear that Acker-berg’s 1933 Act claims are arbitrable.
Nevertheless, Ackerberg makes two arguments in support of the proposition that the district court’s refusal to compel arbitration should not be reversed: (1) that the district court relied not only on Wilko, but also found in the alternative that the PJH defendants had waived their right to arbitration of the 1933 Act claims; and (2) that Volt Information Sciences, Inc. v. Board of Trustees, — U.S. -, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989) holds that an agreement specifying that state law governs the arbitrability of claims must be given effect, that the arbitration agreement between Ackerberg and Johnson provides that Minnesota law should govern arbitration, and that in this case, Minnesota law provides that 1933 Act claims are not arbitra-ble. We find neither argument persuasive.
First, Ackerberg argues that the district court was correct in finding that the PJH defendants waived their right to arbitration of the 1933 Act claims. By participating in discovery and especially by filing a motion for summary judgment on the 1933 Act claims, the PJH defendants took action inconsistent with their right to arbitration. The district court apparently credited this argument, for it held that:
Even if the law supported sending plaintiff’s Securities Act claims to arbitration, the Court would deny defendants’ motion because defendants have waived their purported right to arbitration by invoking the judicial machinery to this extent, and because arbitration of the Securities Act claims would not significantly advance the interests of judicial economy.
Order Civ. No. 4-87-159, Aug. 23, 1988, at 7. We cannot agree that, given the state of the law during the pendency of this case, the PJH defendants waived their right to arbitration.
It is clear that a question of waiver is one of law and subject to de novo review. See Rush v. Oppenheimer & Co., 779 F.2d 885, 887 (2d Cir.1985). We, therefore, look to whether the acts of the PJH defendants constitute, as a matter of law, a voluntary relinquishment of a known right.
Federal policy clearly favors arbitration. The Supreme Court has made it clear that “[t]he Arbitration Act establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.” Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 941-42, 74 L.Ed.2d 765 (1983). See also Nesslage v. York Securities, Inc., 823 F.2d 231, 234 (8th Cir.1987). This circuit has uniformly affirmed district court decisions which have found, under similar circumstances, no waiver of a right to arbitration. See Nesslage, 823 F.2d 231; Fogarty v. Piper, 781 F.2d 662 (8th Cir.1986); Phillips v. Merrill Lynch, Pierce, Fenner & Smith, 795 F.2d 1393 (8th Cir.1986). These three cases establish that, especially in cases in which any delay in making a motion to compel arbitration is based on unfavorable or uncertain law, waiver should not be found.
In Nesslage, defendants waited almost two years before filing a motion to compel arbitration, and meanwhile actively participated in discovery. Nesslage, 823 F.2d at 234. The district court found no waiver, and in affirming, we found it significant that at the time of the motion, claims arising under § 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 of the Securities Exchange Commission were not clearly arbitrable. Following the decision in Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985), which held that district courts must compel arbitration of pendent arbitrable claims, defendants made a motion to compel arbitration based on this change in the law. We found that since the motion “was filed soon after the Supreme Court’s decision in [Byrd],” it was “not untimely filed.” Nesslage, 823 F.2d at 234.
Similarly, in Fogarty, the motion to compel arbitration was not made until over one and one-half years after the litigation began. Fogarty v. Piper, 767 F.2d 513, 514 (8th Cir.1985). Defendants argued that the delay in filing the motion was due to a change in the law. At the time litigation began, Kiehne v. Purdy, 309 N.W.2d 60 (Minn.1981) provided that Minnesota Securities Act claims were not arbitrable. During litigation, however, the Supreme Court held in Southland Corp. v. Keating, 465 U.S. 1, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984) that states cannot invalidate arbitration clauses which are otherwise valid under the Federal Arbitration Act. Fogarty, 767 F.2d at 515. Thus, defendants filed a motion to compel arbitration, and this circuit agreed with the district court that defendants had not waived their right to arbitration. Fogarty, 781 F.2d at 663.
And in Phillips, the district court found no waiver where the litigation began in July of 1981, but the motion to compel arbitration was not made until March of 1985. Phillips, 795 F.2d at 1394. Plaintiff’s claims arose under Rule 10b-5 and were thus not clearly arbitrable until McMahon, decided in 1987. Following the Supreme Court’s decision in Byrd, which held that district courts must compel arbitration of pendent arbitrable claims, defendants filed a motion to compel arbitration, and this circuit agreed with the district court that the “motion was timely in light of the recent Supreme Court decision.” Id. at 1396 n. 9.
This case involves a similar situation. Prior to Rodriguez De Quijas, the PJH defendants were correct in relying upon Wilko for the proposition that their 1933 Act claims were not arbitrable. Thus, any motion to compel arbitration, given Wilko, would have been futile. Defendants must have known this, since they did make motions to compel arbitration of the other claims which were clearly arbitrable. Counts four through nine of plaintiffs complaint, based on Rule 10b-5, common law fraud, the Minnesota Blue Sky laws, breach of contract, and RICO, were all ordered to arbitration after motions by the PJH defendants. Moreover, the PJH defendants made their motion to compel arbitration of the 1933 Act claims on September 29, 1987, soon after the decision of June 8, 1987, in McMahon (which only arguably overruled Wilko). Thus, the PJH defendants made their motion as soon as the law appeared to allow an arbitration procedure.
Further, we cannot find waiver, the voluntary relinquishment of a known right, in a situation in which no right existed. Prior to Rodriguez De Quijas, the PJH defendants, at least in this Circuit, had no established right to compel arbitration of their 1933 Act claims. To find that the PJH defendants waived a right they did not have until after Rodriguez De Quijas is not only illogical, but also would encourage litigants, in order to avoid a finding of waiver, to file motions they knew to be futile. In Benoay v. Prudential-Bache Sec., Inc., 805 F.2d 1437 (11th Cir.1986), the Eleventh Circuit found no waiver where defendants did not file a motion to compel arbitration for over two and one-half years after litigation began. Since the motion was filed after a change in the law, the Eleventh Circuit found that the motion was timely. Id. at 1440. Like the Eleventh Circuit, we cannot “require a litigant to engage in futile gestures merely to avoid a claim of waiver.” Id. (quoting Miller v. Drexel Burnham Lambert, Inc., 791 F.2d 850, 854 (11th Cir.1986)). See also Fisher v. A.G. Becker Paribas Inc., 791 F.2d 691, 696-97 (9th Cir.1986) (since the intertwining doctrine before the decision in Byrd precluded arbitration of plaintiffs claims, defendant’s motion to compel arbitration before Byrd would have been futile, and failure to make it was thus not an act inconsistent with a known right); Peterson v. Shearson/American Express, Inc., 849 F.2d 464, 466 (10th Cir.1988) (citations omitted) (“Because Shearson almost certainly could not have obtained an order for arbitration of the Rule 10b-5 claim prior to McMahon, it did not waive its right to arbitrate the claim. There was no requirement that Shearson make a futile attempt to obtain arbitration on the federal claim given the state of the law; indeed, it would be difficult to argue that such an attempt had a basis in existing law.”). Accordingly, we find no waiver by the PJH defendants of their right to arbitration of the 1933 Act claims.
We now consider Ackerberg’s second argument, made for the first time at oral argument, in support of the district court’s order refusing to compel arbitration of the 1933 Act claims. Ackerberg contends that even if we find no waiver, we cannot compel arbitration of the 1933 Act claims because Minnesota law does not allow arbitration of 1933 Act claims, and because Volt Information Sciences, Inc. v. Board of Trustees, — U.S. -, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989) requires that we determine arbitrability according to Minnesota law. We disagree with Ackerberg’s reading of both Volt and Minnesota law.
Ackerberg relies on paragraph 15 of the customer agreement signed by PJH and Ackerberg. Paragraph 15 requires that “[t]his agreement and its enforcement shall be governed by the laws of the State of Minnesota.” Ackerberg argues that the parties agreed to have Minnesota law govern any arbitration arising out of their transaction, and that Minnesota law, in Johnson v. O'Brien, 420 N.W.2d 264 (Minn.App.1988), provides that claims arising under § 12 of the 1933 Act are not arbitrable. Ackerberg thus relies on Volt to conclude that where the parties agree that state law will control their arbitration agreement, and where state law differs from federal law, the state law will control.
Volt, however, cannot be read as Acker-berg suggests. Volt involved a conflict between a provision of the California Arbitration Act which allows a court to stay arbitration pending resolution of related, third-party litigation, and the Federal Arbitration Act, which contains no such provision. The Supreme Court held that since the parties agreed that their arbitration agreement would be governed by the law of California, application of the procedural rules in the California Arbitration Act was not preempted by the Federal Arbitration Act. Volt, 109 S.Ct. at 1251. Volt thus holds that the parties to an arbitration agreement can agree that state rules concerning arbitration will govern their proceedings. It clearly does not hold that state law can determine whether any given claim is arbitrable under the Federal Arbitration Act. Whether a claim is arbitrable under federal law is not a procedural question, and Volt clearly relies on this distinction. Hence, Volt does no more than hold that where “the parties have agreed to abide by state rules of arbitration, enforcing those rules according to the terms of the agreement is fully consistent with the goals of the FAA.” Id. at 1255. The Supreme Court did not hold that state law could prevent arbitration of a federal claim otherwise arbitrable under federal law.
Moreover, we do not read Minnesota law to preclude arbitration of claims arising under the Securities Act of 1933. The state district court in Johnson denied defendant’s motion to compel arbitration of its 1933 Act claims based on Wilko. The Minnesota Appeals Court affirmed, finding that, in 1988, Wilko was in fact controlling. The appeals court thus declined to read McMahon as if it overruled Wilko. “Until Wilko is overruled, we are compelled to apply the Supreme Court’s prevailing precedents with respect to predispute arbitration agreements and federal securities law.” Johnson, 420 N.W.2d at 267. Given that Wilko has now been expressly overruled, we conclude without difficulty that when construing federal law, as the Minnesota Appeals Court did in Johnson, the Minnesota courts will follow Rodriguez De Quijas and find that 1933 Act claims are arbitrable. Neither Volt nor Minnesota law, then, provides any obstacle to the arbi-trability of Ackerberg’s 1933 Act claims.
B. The § 12(1) 1933 Act claim against defendant Johnson
Although we find that Ackerberg’s 1933 Act claims against the PJH defendants are arbitrable, we must treat the § 12(1) 1933 Act claim against defendant Johnson differently. Johnson had no arbitration agreement with Ackerberg, nor was his position the same as that of the PJH defendants for purposes of federal securities law. On appeal, then, Johnson argues that the district court erred in its order of August 23, 1988, in which it granted summary judgment in favor of Ackerberg by concluding that Johnson was not entitled to an exemption under § 4(1) of the 1933 Act. We agree with Johnson that he is entitled, as a matter of law, to an exemption under § 4(1), 15 U.S.C. § 77d (1988), because Johnson is not an issuer, underwriter or dealer.
Johnson argues that he is entitled to an exemption under § 4(1) of the 1933 Act, which provides that the registration requirements of the 1933 Act, found in 15 U.S.C. § 77e, shall not apply to “transactions by any person other than an issuer, underwriter, or dealer.” 15 U.S.C. § 77d(l) (1988). We agree with the district court that the burden of proving entitlement to an exemption is on the party claiming entitlement. See SEC v. Ralston Purina Co., 346 U.S. 119, 126, 73 S.Ct. 981, 985, 97 L.Ed. 1494 (1953); G. Eugene England Found. v. First Fed. Corp., 663 F.2d 988, 989 (10th Cir.1973). We disagree, however, that Johnson has failed to meet his burden. In the absence of any finding that this transaction involved a distribution, Johnson has shown that he is not an issuer, underwriter or dealer within the meaning of § 4(1) of the 1933 Act.
The terms “issuer” and “dealer” are defined, respectively, in §§ 2(4) and (12), 15 U.S.C. §§ 77b(4) and (12). The parties do not seriously argue that Johnson was an issuer or a dealer. Clearly he is neither. Rather, Ackerberg contends that Johnson is an underwriter within § 4(1).
When considering whether Johnson is an underwriter, it is helpful to consider that the § 4(1) exemption is meant to distinguish “between distribution of securities and trading in securities.” L. Loss & J. Seligman, 2 Securities Regulation 627 (3d ed. 1989) (quoting H.R.Rep. No. 85, 73d Cong., 1st Sess. 15 (1933)). See also Hol-schuh, 694 F.2d at 137-38 (the 1933 Act “was created to exempt routine trading transactions with respect to securities already issued and not to exempt distributions by issuers or acts of others who engage in steps necessary to such distributions”).
The statutory definition of “underwriter” is found in § 2(11), 15 U.S.C. § 77b(ll) (1988). “The term ‘underwriter’ means any person who has purchased from an issuer with a view to, or offers or sells for an issuer in connection with, the distribution of any security.” The congressional intent in defining “underwriter” was to cover all persons who might operate as conduits for the transfer of securities to the public. T. Hazen, The Law of Securities Regulation § 4.24, at 141 (1985) (quoting H.R.Rep. No. 85, 73d Cong., 1st Sess. 13-14 (1933)). Thus, “underwriter” is generally defined in close connection with the definition and meaning of “distribution.” See Eugene England, 663 F.2d at 989 (“An underwriter is one who has purchased stock from the issuer with an intent to resell to the public.”); Ingenito v. Bermec Corp., 441 F.Supp. 525, 535 (S.D.N.Y.1977) (“It is apparent that to be an underwriter within the meaning of the ’33 Act, one must participate, in some manner, in the distribution of the securities to the public.”) The term “underwriter” thus focuses on “distribution.” Given the statutory definition of “underwriter,” the exemption should be available if: (1) the acquisition of the securities was not made “with a view to” distribution; or (2) the sale was not made “for an issuer in connection with” a distribution. See 15 U.S.C. § 77b(ll) (1988); ABA Report, The Section “^(PA)" Phenomenon: Private Resales of “Restricted" Securities, 34 Bus.Law 1961, 1975 (July 1979); Hazen, The Law of Securities Regulation at § 4.23, at 138. Relevant to both inquiries are whether the securities have come to rest in the hands of the security holder and whether the sale involves a public offering.
We begin by considering whether the securities were acquired by Johnson with a view to their distribution. The inquiry depends on the distinction between a distribution and mere trading; so long as Johnson initially acquired his shares from the issuer with an investment purpose and not for the purpose of reselling them, the acquisition was not made “with a view to” distribution. While this determination would at first seem to be a fact-specific inquiry into the security holder’s subjective intent at the time of acquisition, the courts have considered the more objective criterion of whether the securities have come to rest. That is, the courts look to whether the security holder has held the securities long enough to negate any inference that his intention at the time of acquisition was to distribute them to the public. Many courts have accepted a two-year rule of thumb to determine whether the securities have come to rest. See United States v. Sherwood, 175 F.Supp. 480, 483 (S.D.N.Y.1959) (“The passage of two years before the commencement of distribution of any of these shares is an insuperable obstacle to my finding that Sherwood took these shares with a view to distribution thereof."). This two-year rule has been incorporated by the SEC into Rule 144, which provides a safe harbor for persons selling restricted securities acquired in a private placement. 17 C.F.R. § 230.144 (1989). Professor Loss has also noted that a three-year holding period is “well nigh conclusive” that securities were acquired without a view to distribution. L. Loss & J. Seligman, 2 Securities Regulation at 672.
Johnson purchased his securities in 1979 or 1980, when Vertimag Systems was incorporated in California. He did not sell any of these shares to Ackerberg until 1984. While Ackerberg contends that the Roger Lindquist Partnership purchased its shares with a view to distribution, given an ongoing pattern of distributions beginning shortly after the partnership’s acquisition of its shares, see Brief for Appellee at 15-16, Ackerberg makes no such contention about Johnson’s shares. Thus, Johnson held his shares for at least four years before selling them to Ackerberg, a period well in excess of the usual two years required to find that the securities have come to rest.
Our second inquiry is whether the resale was made “for an issuer in connection with” a distribution. Whether the sale was “for an issuer” can also be determined by whether the shares have come to rest. That is the best objective evidence of whether a sale is “for an issuer” is whether the shares have come to rest. See ABA Report, 34 Bus.Law. at 1975.
To determine whether the sale was made “in connection with” a distribution, however, requires that we consider directly the meaning of “distribution,” and thus whether the resale involved a public offering. The definition of “distribution” as used in § 2(11) is generally considered to be synonymous with a public offering. In Gilligan, Will & Co. v. SEC, 267 F.2d 461 (2d Cir.), cert. denied, 361 U.S. 896, 80 S.Ct. 200, 4 L.Ed.2d 152 (1959), the court explained the connection between “underwriter,” “distribution,” and “public offering.” “Since § 2(11)... defines an ‘underwriter’ as ‘any person who has purchased from an issuer with a view to * * * the distribution of any security’ and since a ‘distribution’ requires a ‘public offering,’... the question is whether there was a ‘public offering.’ ” Id. at 466 (quoting H.R.Rep. No. 1838, 73d Cong., 2d Sess. (1934)). See also L. Loss & J. Seligman, 2 Securities Regulation at 1109 n. 567 (to find an underwriter, the sale must involve a contemplated distribution, “a term which the Commission regards as more or less synonymous with ‘a public offering’ as used in section 4(2)”); ABA Report, 34 Bus.Law. at 1962 (a distribution “is generally considered to be functionally equivalent to a ‘public offering’ as used in section 4(2)”).
The case law is equally clear that a public offering is defined not in quantitative terms, but in terms of whether the offerees are in need of the protection which the Securities Act affords through registration. Thus, the Supreme Court held in SEC v. Ralston Purina, 346 U.S. 119, 73 S.Ct. 981, 97 L.Ed. 1494 (1953) that the proper focus is on the need of the offerees for information.
Since exempt transactions are those as to which “there is no practical need for [the bill’s] application,” the applicability of [the private placement exemption] should turn on whether the particular class of persons affected needs the protection of the Act. An offering to those who are shown to be able to fend for themselves is a transaction “not involving any public offering.”
Id. at 125, 73 S.Ct. at 984. This circuit has followed Ralston Purina by finding that a public offering “turns on the need of the offerees for the protections afforded by registration_ If the offerees have access to such information, registration is unnecessary, and the section 4(2) exemption should apply.” Van Dyke v. Coburn Enter., Inc., 873 F.2d 1094, 1098 (8th Cir.1989). See also Sorrell v. SEC, 679 F.2d 1323, 1326 (9th Cir.1982) (“The offeree’s access to financial information about the investment, similar to what would be found in a registration statement, is crucial.”).
That “distribution” should be read in terms of “public offering,” and the need of the offerees for information, makes sense in light of the purpose of the 1933 Act as construed by this circuit. We held in Van Dyke that “[t]he design of the Act is to protect investors by promoting full disclosure of information thought necessary to make informed investment decisions.” Van Dyke, 873 F.2d at 1097. Moreover, the parties in this case do not dispute that Ackerberg is a sophisticated investor, not in need of the protections afforded by registration under the 1933 Act. As earlier stated, Ackerberg read and signed a subscription agreement in which he represented that: he had the knowledge and experience in investing to properly evaluate the merits and risks of his purchase of Verti-mag securities; he was able to bear the economic risk of the investment in Verti-mag securities; he was given full and complete information regarding Vertimag Systems Corporation; he knew that the securities were not registered under the 1933 Act, and were being sold pursuant to exemptions from the 1933 Act; and he knew that the sale was being made in reliance on his representations in the subscription agreement. Ackerberg further represented that his net worth was substantial, and the record clearly shows that Ackerberg is, if not a conscientious investor, at least a prolific one. We, therefore, have no trouble finding that Ackerberg is a sophisticated investor and not in need of the protections afforded by registration under the 1933 Act. Hence, this case involves no public offering, and thus no distribution. Absent a distribution, Johnson cannot be an underwriter within § 4(1), and is, therefore, entitled to that exemption.
III. CONCLUSION
Because we find that the PJH defendants did not waive their right to arbitration, and that they timely filed their motion to compel arbitration in light of McMahon, we must, in reliance on Rodriguez De Qui-jos, reverse the order of the district court refusing to compel arbitration of the 1933 Act claims against the PJH defendants. We must also reverse the district court order granting summary judgment in favor of Ackerberg on his § 12(1) 1933 Act claim against defendant Johnson. We thus remand this case to the district court with instructions to order to arbitration the 1933 Act claims against the PJH defendants, and to dismiss the § 12(1) 1933 Act claim against defendant Johnson.
. The parties disagreed at oral argument about whether this finding of the district court was dictum. Ackerberg argued that the district court clearly found waiver, to which the PJH defendants responded that the district court itself thought that its conclusion was merely dic-turn. The PJH defendants cite a statement by the district court at a motion for reconsideration: "Well, you know, in the appeals court context, that would be pure dictum. Frankly, you know, it is more support for the decision.” Transcript of Proceedings, September 28, 1988, at 35. Since the question of waiver of a right to arbitration is a matter of law, and
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
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:
Pursuant to Rule 18 of the Rules of this Court, we have concluded on the merits that this case is of such character as not to justify oral argument and have directed the clerk to place the case on the Summary Calendar and to notify the parties in writing See Murphy v. Houma Well Service, 5 Cir., 1969, 409 F.2d 804, Part I; and Huth v. Southern Pacific Company, 5 Cir., 1969, 417 F.2d 526, Part I.
Appellee Hardeman brought this action against the International Brotherhood of Boilermakers, Iron Shipbuilders, Blacksmiths, Forgers and Helpers, AFL-CIO, seeking damages under the Labor-Management Reporting and Disclosure Act of 1959, 29 U.S.C. § 401 et seq., for unlawful expulsion from the Union. The jury returned a verdict in favor of ap-pellee in the amount of $152,150.00 and the District Court entered a judgment in that amount.
The Union appeals, raising many of the same issues decided against it in International Brotherhood of Boilermakers, etc. v. Braswell, 388 F.2d 193 (5th Cir., 1968), a case arising out of the exact factual situation as that involved in the present case. The Braswell case is dispositive of those issues. We have carefully considered appellant’s other specifications of error and find them to be without merit.
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.
OPINION OF THE COURT
MANSMANN, Circuit Judge.
We write to clarify that, in an ERISA action, a plaintiffs failure to prove the existence of an employee benefit plan, though it results in a dismissal of the claim, does not deprive the district court of subject matter jurisdiction to enter a judgment on the merits. Additionally, we examine the standard for determining, in the absence of a formal plan document, whether an informal employee benefit plan exists. Because the district court used a vague standard to conclude a plan did not exist, and erroneously ruled that the absence of a plan deprived the court of jurisdiction, we will vacate the judgment of the district court and remand for further proceedings.
I.
The plaintiffs are former salaried nonunion employees of a steel plant closed in 1982. These employees seek to prove that their employer and its successors in interest maintained an informal benefit plan. They claim that this “Informal Plan” entitles them to severance benefits.
To prove the existence of the Informal Plan, the employees have referred to the following events and documents.
Effective July 1, 1962, Crucible, Inc., the owner of the plant, instituted a severance benefit that gave to laid-off employees, aged 60 or older with 15 or more years of service, an immediate retirement benefit without actuarial reduction, plus $25 per month until they became eligible for social security. The document’s procedure allowed an employee’s supervisor to propose the benefit through channels to the Retirement Board and to charge the cost of the benefit, if approved, back to the employee’s department. A 1965 memorandum expanded on these procedures. See R. at 78-82.
In 1968, a new memorandum added the immediate receipt of a “Special Retirement Benefit.” The 1968 Memorandum also instituted “20-30 year retirement,” in which laid-off employees having between 20 and 30 years of service, who would not be eligible for early retirement benefits, would receive the Special Retirement Benefit and an immediate, actuarially reduced annuity. The 1968 Memorandum also expanded in great detail upon the procedure for applying for the benefit. See R. at 127-163. The employees claim that the 1968 Memorandum was widely distributed. See Appellants’ Brief at 17; R. at 259-60 (memo referring to informal plan would have been distributed to all salaried employees if so addressed).
Soon after the 1968 Memorandum, Crucible issued a proxy statement in conjunction with Colt Industries, pursuant to a proposed consolidation of the two companies. One sentence of the proxy statement read: “Benefits under the various benefit, retirement and pension plans of Crucible will not be affected by the consolidation_” R. at 120.
After the consolidation, a document dated February 2, 1969, outlined benefits and a claims procedure that were similar to the benefits and procedure in the 1968 Memorandum. The employees claim that they did not receive the 1969 Memorandum or notice of its contents, which were confidential. See R. at 137 (cover letter limiting distribution). The 1969 Memorandum clearly noted that “employees do not have a right to these benefits,” and it also purported to terminate the 1968 Memorandum. R. at 137-48. The employees also allege that they did not have notice of a 1972 resolution by Crucible’s Board of Directors to rescind the 1969 Memorandum, and the defendant has admitted that written notice of the 1972 resolution was not disseminated to the employees generally. See, e.g., Appellant’s Brief, at 5; R. at 192 (defendant’s admission).
The employees claim that, throughout their employment, they were consistently assured that they would receive benefits “equal to or better than” union benefits, which were similar to those in the 1968 and 1969 Memoranda. See, e.g., Supp.App. at 99. Similarly, employees testified that they had a general knowledge that the 1968 plan existed. See, e.g., Supp.App. at 22, 26. The plaintiffs also offered evidence that the company knew that employees believed there was an Informal Plan, and that the company did not inform them otherwise. For example, an internal memo by E.A. March insisted that “there is no informal plan” and stated that efforts would be made to so inform employees in a retirement plan booklet. R. at 329. We have not been provided any evidence, however, that efforts were, in fact, made.
After the employees were terminated in 1982, they sued the Informal Plan pursuant to 29 U.S.C. § 1132(a)(1)(B), which authorizes a cause of action against a plan to recover benefits due. After the presentation of the employees’ case-in-chief on liability in this bifurcated non-jury trial, the district court, holding that an employee benefit plan did not exist, dismissed the employees’ claims.
Under the district court’s analysis, the employees’ claim for benefits was contingent on the existence — prior to the enactment of ERISA — of a valid unilateral offer under Pennsylvania law. The court determined that the employees had not received a binding unilateral offer prior to ERISA’s enactment in 1975 and therefore an employee benefit plan did not exist. Alternatively, and with little discussion, the district court held that the employees had not proved the existence of an employee benefit plan under the current ERISA standard first articulated in Donovan v. Dillingham, 688 F.2d 1367 (11th Cir.1982).
The district court concluded:
Two results flow from our deciding that no ERISA plan existed. First, we must dismiss the cause for want of subject matter jurisdiction.... Second, ERISA, by its terms, would not preempt any state law based on these same actions since they do not relate to a benefit plan.
Henglein v. Colt Indus. Operating Corp. Informal Plan for Plant Shutdown Benefits for Salaried Employees, No. 86-2021, at 6 (W.D.Pa. April 30, 1991) (unreported mem. op.) (citations omitted).
The district court dismissed the employees’ case pursuant to former Federal Rule of Civil Procedure 41(b), which allowed defendants to move for judgment after a plaintiff’s case-in-chief. See former Fed. R.Civ.Pro. 41(b), at 480 U.S. 992 (1987) (S.Ct. order containing text of former rule 41(b)). Consistent with its view that the dismissal was jurisdictional, however, the district court did not find facts specially, as former Rule 41(b) would have required in the event of a judgment on the merits. See former Rule 41(b) (fourth sentence); Fed. R.Civ.Pro. 52(a).
The employees appealed the dismissal, and the defendants, arguing that the dismissal was on the merits, cross-appealed.
II.
In an appeal from an involuntary dismissal after the presentation of evidence, see former Rule 41(b) (second sentence), we review the district court’s findings of fact for clear error, and we exercise plenary review over the district court’s legal conclusions. See Miller v. Fairchild Indus., Inc., 885 F.2d 498, 503 (9th Cir.1989), cert. denied, 494 U.S. 1056, 110 S.Ct. 1524, 108 L.Ed.2d 764 (1900); EEOC v. Metal Svc. Co., 892 F.2d 341, 346 n. 5 (3d Cir.1990). We have jurisdiction of this appeal from a final decision of the district court. See 28 U.S.C. § 1291.
III.
At the outset of our discussion, we observe that the employees have not brought any state claims in this case. Although the litigants have presented arguments sounding in state contract and tort law, the employees have not joined any party other than two putative employee benefit plans. It is axiomatic that a. breach of contract claim must be brought against a breaching party and that a fraud claim must be brought against a party making the misrepresentation. Moreover, the complaint clearly grounds this cause of action in 29 U.S.C. § 1132. Because the employees have sued only the plans and have alleged only ERISA claims, we construe' their causes of action to have been brought solely pursuant to 29 U.S.C. § 1132(a)(1) and not pursuant to state law.
The significance of our observation — that the employees have not alleged state law claims — relates to the issues of supplemental jurisdiction and of ERISA’s non-retroac-tivity provision. We turn to those precepts now.
IV.
A.
ERISA gives United States district courts subject matter jurisdiction of claims brought pursuant to 29 U.S.C. § 1132(a)(1)(B), which authorizes a cause of action for benefits due under an employee benefit plan. See 29 U.S.C. § 1132(e) (jurisdiction). Although § 1132(a) and § 1132(e) are related, the viability of a claim under § 1132(a)(1)(B) and jurisdiction pursuant to § 1132(e) are separate matters, and they should not be confused.
In an analogous case, Boyle v. Governor’s Veterans Outreach & Assistance Ctr., 925 F.2d 71 (3d Cir.1991), a district court had determined that a § 1983 defendant was not a state actor. The district court had then dismissed the plaintiff’s case on the grounds of lack of subject matter jurisdiction. We reversed, holding that the § 1983 requirement of state action was not jurisdictional but rather integral to the merits of the claim. We further held that the district court’s dismissal was only appropriate as under Rule 12(b)(6) (failure to state a claim) or as a grant of summary judgment if matters outside the pleadings had been considered. We noted that once federal law is invoked, then the facts alleged and their legal sufficiency are questions on the merits. Boyle, 925 F.2d at 74.
In ERISA cases such as this one, the existence of an employee benefit plan is integral to the merits of a claim for benefits under § 1132(a)(1)(B). Here, the district court concluded that a plan did not exist. That conclusion related to the viability of the claim but not to the district court’s jurisdiction. Thus, although the district court labeled its judgment as a dismissal entered for lack of subject matter jurisdiction, the judgment was clearly on the merits; that is, the district court reached a legal conclusion — to which the rules of issue and claim preclusion apply— that the employees had not proven the existence of a plan. Cf. Boyle, 925 F.2d at 74 (once federal law is invoked, facts and their legal sufficiency are questions on merits).
Furthermore, because the employees have not in fact asserted any supplemental state law claims, we need not address whether they might have done so. This case thus differs from a case like Harris v. Arkansas Book Co., 794 F.2d 358 (8th Cir.1986). In the Harris case, the Court of Appeals for the Eighth Circuit determined that an ERISA plan did not exist. The court then affirmed the district court’s dismissal of the plaintiff’s ERISA claim without prejudice to his supplemental state law claims.
Although we disagree with any statement in Harris that might indicate that the absence of a plan deprives the court of subject matter jurisdiction, it is well settled that, after disposal of a federal claim, a district court has discretion to hear, dismiss, or remand a supplemental claim for which there is no independent basis for federal subject matter jurisdiction. See United Mine Workers of America v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966); Carnegie-Mellon University v. Cohill, 484 U.S. 343, 108 S.Ct. 614, 98 L.Ed.2d 720 (1988); see also 13B Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction 2d § 3567.1 (2d ed. 1984 & Supp.1992).
Indeed, the district court in this case appears to have dismissed the employees’ ERISA claims as if they were supplemental state law claims; the district court first opined that the employees may have state law claims, and then the court dismissed for “lack of subject matter jurisdiction.” Because, however, the district court had jurisdiction over the ERISA claims, and because the court was not presented with any supplemental claims, the district court erred in stating the dismissal as “jurisdictional.”
B.
We note further that the district court interpreted ERISA’s “non-retroactivity” provision, 29 U.S.C. § 1144(b)(1), to require application of state rather than federal law here. Section 1144(b)(1) provides that ERISA does not apply to causes of action that arose or to acts or omissions that occurred before 1975. In Jameson v. Bethlehem Steel Corp. Pension Plan, 765 F.2d 49, 52 (3d Cir.1985), we held that the denial of employee benefits after 1975 gives rise to federal jurisdiction, even if the substantive issues were to be decided by pre-ERISA law. If the employees had brought an additional count sounding in contract against the companies, then the district court might have had either supplemental jurisdiction of the claim or federal question jurisdiction if the contract could be construed as an employee benefit plan. See Jameson, 765 F.2d at 52. The court, in that situation, would have been correct in determining the outcome by reference to state law. Id.
But, as we noted above, although the employees have argued state contract law issues, vigorously in some instances, they have not joined the putative contracting parties. Instead they have alleged the existence of and proceeded against an ERISA plan. State contract law is therefore not dispositive of the employees’ claim.
Thus, the employees’ claim here is that in 1982 the company had an informal employee benefit plan under which the employees were entitled to benefits. That claim must be resolved not under state law, but under ERISA, which refers to the surrounding circumstances to determine if a plan existed at the time benefits were denied. See Donovan v. Dillingham, 688 F.2d 1367 (11th Cir.1982). Those surrounding circumstances include the company’s history of representations — a history that straddles the enactment of ERISA.
V.
Before we examine the ERISA standard for determining the existence of an informal plan, we note that the question of a plan’s enforceability prior to ERISA and the question of a plan’s existence are different questions. ERISA applied, although not retroactively, to plans already in existence at the time of its enactment. Compare 29 U.S.C. § 1002(1) (defining plans to include any plan, program or fund “heretofore or hereinafter established”), with 29 U.S.C. § 1144(b)(1) (non-retroactivity). Indeed, ERISA was enacted to afford protections to participants of already existing plans. See, e.g., 29 U.S.C. § 1001 (Congressional Findings and Declaration of Policy, finding a recent rapid and substantial growth in employee benefit plans and declaring ERISA’s policy to be the protection of participants’ interests by establishing standards with respect those plans). Thus the pre-ERISA enforceability of a plan under state law is not a prerequisite to a finding that an employee benefit plan exists.
For example, if a company established a welfare plan prior to ERISA, ERISA’s substantive requirements would not apply to the company’s acts or omissions occurring before ERISA’s effective date of 1975. Assuming the welfare plan was a mere gratuity, a denial of benefits in 1974 would not be enforceable under state contract law for failure of consideration. If maintained, however, the plan would become subject to ERISA in 1975.
If, in the example, benefits were denied not in 1974, but in 1976, a district court would have jurisdiction to hear both a contract claim, see Jameson, 765 F.2d at 52, and an ERISA claim. See 29 U.S.C. § 1132 (authorizing, claims for benefits due under plans); id. § 1002(1) (including in its definition any plans “heretofore or ... hereinafter established” (emphasis added)). The court would apply state contract law to the contract claim and federal law to the ERISA claim.
In the example, pre-ERISA evidence (e.g., a 1972 plan document) would be relevant to show the plan’s existence for purposes of the claim, and its use as evidence would not contravene ERISA’s non-retroactivity requirement. In some situations, pre-ERISA rules might govern aspects of the ERISA claim. For example, in Tanzillo v. Local 617, 769 F.2d 140 (3d Cir.1985) we noted that “nothing in ERISA prevents a plan from ‘expressly providing that a break in service in years prior to the effective date of ERISA shall be governed by the rule in effect at the time of the alleged hiatus from covered employment.’ ” Id. at 146 (citation omitted).
Here, as in the example, pre-ERISA documents and events are relevant to prove or disprove the existence, in 1982, of an informal plan. And although the existence of a plan is a prerequisite to recovery under ERISA, the enforceability of that plan under the state law of unilateral contracts is not. Thus, the district court’s focus on the state law of unilateral contracts was misplaced.
We now turn to the merits of the dispute and the legal standards to be applied here.
VI.
In determining the existence of an employee benefit plan, the district court also referred to the ERISA standard first articulated by the Court of Appeals for the Eleventh Circuit. In Donovan v. Dillingham, 688 F.2d 1367 (11th Cir.1982), the court wrote: “In determining whether a plan, fund, or program (pursuant to a writing or not) is a reality, a court must determine whether from the surrounding circumstances a reasonable person could ascertain the intended benefits, beneficiaries, source of financing, and procedures for receiving benefits.” Id. at 1373.
We have acknowledged the Dillingham standard in previous cases. See United States v. Cusumano, 943 F.2d 305, 309 (3rd Cir.1991), cert. denied, — U.S. -, 112 S.Ct. 881, 116 L.Ed.2d 785 (1992); Frank v. Colt Indus., Inc., 910 F.2d 90, 97-98 (3rd Cir.1990). As well, our sister courts of appeals have ruled, on at least six occasions since Dillingham, that an informal severance arrangement may constitute an employee benefit plan subject to ERISA.
In determining whether an informal plan exists under the Dillingham standard, a district court should first determine what written representations were made by a putative sponsor to its employees over the course of their employment.
A properly distributed summary plan document containing a clear statement that employees did not have any severance benefits would be dispositive, because a written plan cannot be orally modified. Hozier v. Midwest Fasteners, Inc., 908 F.2d 1155, 1163-64 (3rd Cir.1990). For the same reason, a summary plan document that clearly limits benefits to those provided in a formal plan would be dispositive. We note that either statement would have to be “written in a manner calculated to be understood by the average plan participant.” 29 U.S.C. § 1022(a). Thus, the sponsor’s formal plans and summary plan documents should be of particular interest to the district court, and a clear delineation in a properly distributed document would be dispositive. The absence of any integration clause in a formal plan, however, might lead the district court to infer that another, informal plan did exist. Additionally, widely distributed informal documents should also be of interest since a widely distributed written plan, no matter how informal, cannot be modified orally. See Frank v. Colt Indus., 910 F.2d 90, 98 (3d Cir.1990) (written plans, no matter how informal, cannot be orally modified); Confer v. Custom Engineering Co., 952 F.2d 41, 43 (3d Cir.1991) (no oral modification).
If a company’s properly published written representations do not clearly limit benefits, the district court should consider all other evidence that would indicate the presence or absence of an informal employee benefit plan. For example, internal or distributed documents, oral representations, existence of a fund or account to pay benefits, actual payment of benefits, a deliberate failure to correct known perceptions of a plan’s existence, the reasonable understanding of employees, and the intentions of the putative sponsor would all be relevant to determine whether a plan existed. In determining an employee’s reasonable understanding, the district court may consider the employee’s background knowledge of particular documents (such as union benefit plans) and whether any representations of the company incorporated the terms of those documents. So long as they do not modify the terms of a written plan, oral representations by a knowledgeable and authorized management employee of the company may be evidence of a benefit plan, especially if a representation incorporates by reference the terms of a document or other plan. See Scott v. Gulf Oil Corp., 754 F.2d 1499, 1503-04 (9th Cir.1985) (existence of written instrument not a prerequisite to ERISA coverage).
We emphasize that an oral representation cannot modify a valid written plan. Confer, 952 F.2d at 43. But where the oral remarks give evidence of a separate plan not precluded by a written plan, the district court may credit the representations as evidence of a plan. To do so is entirely consistent with ERISA’s dual purpose of protecting the reasonable expectations of plan participants while allowing sponsors the flexibility to structure a plan with an express limitation in writing. To do otherwise would create a loophole inconsistent with ERISA by allowing a plan sponsor to make any promise regarding benefits without obligation, so long as the promise is not reduced to writing.
VII.
Although the district court purported to apply Dillingham, its application of law to the facts was unduly narrow. The district court considered only the 1969 Memorandum and the 1972 resolution.
The district court observed that the 1969 Memorandum provides only discretionary benefits and therefore did not give notice of any intended benefit or class of beneficiaries. The discretionary nature of benefits, however, does not alone deprive a document or program of its status as an employee benefit plan under the Dillingham standard, so long as a reasonable person can ascertain the contingent benefit and contingent beneficiaries. If an intended benefit is discretionary, then beneficiaries’ rights are limited, and review of a denial of benefits will be for abuse of discretion. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111, 109 S.Ct. 948, 954, 103 L.Ed.2d 80 (1989) (where trustee of a plan has discretion, court review is limited to restraining abuse of that discretion). A plan participant may still seek review of the denial of a benefit under an employee benefit plan, even if the only benefit available is conditioned on an administrator’s discretion. See, e.g., Anthuis v. Colt Indus. Operating Corp., 971 F.2d 999 (3d Cir.1992) (reviewing benefit denial for abuse of discretion).
Furthermore, the 1972 resolution may not have been publicized, and the district court did not determine whether the 1969 plan was widely circulated. Although an unpublicized repeal of a published program for providing benefits may evince some intent not to maintain that program, the district court must also consider public actions of the company and whether a reasonable person could determine the necessary elements of a plan by those actions. Thus, if the company had continued to promise to pay the plan’s benefits, the company’s promises would be evidence that the company had maintained the plan, despite the resolution. Similarly, if the company deliberately failed to inform the employees of the plan’s putative repeal, that too would indicate that the company maintained the plan. It would be for the district court, in the first instance, to determine whether the employees have proved the existence of a plan after considering any conflicting evidence.
The district court also appears to have considered the employees’ unfamiliarity with the terms of the 1968 and the 1969 Memoranda, but did not explain its relevance to a claim for benefits under ERISA. ERISA does not require that a beneficiary have any knowledge of a written plan’s terms, and our federal jurisprudence has not imposed that requirement either. See Dillingham, 688 F.2d at 1367 (standard for determining plan’s existence); Brown v. Ampco-Pittsburgh Corp., 876 F.2d 546, 550-51 (6th Cir.1989) (a plan existed despite employees unawareness of its terms); see also Frank v. Colt Indus., 910 F.2d at 97-98 (adopting Dillingham). The employees’ unfamiliarity with the 1968 Memorandum, either as of 1968 or at the present time, is therefore not dispositive. Finally, we note that the district court did not consider events subsequent to 1975, the most relevant period of time for purposes of determining the existence or maintenance of a plan. Without that consideration, the court’s Dillingham analysis cannot be said to be complete.
We will thus remand the case for further findings of fact and conclusions of law to be made after the presentation of any necessary additional evidence. If upon considering all the relevant evidence the district court determines that an employee benefit plan existed in 1982, the district court must then determine and quantify the benefits, if any, that the employees have under the plan and review the denial of those benefits by the appropriate standard of review.
VIII.
In their complaint, the employees also claimed benefits under a “Parity Plan.” They asserted that the company instituted a plan to pay benefits to nonunion employees in parity with union benefits. In a separate, declaratory judgment action initiated by Colt Industries, however, the district court granted Colt Industries declaratory relief, ruling that a “Parity Plan” did not exist. See Colt Indus. v. Frenn, No. 86-2642 (W.D.Pa. dated Dec. 23, 1988) (order granting Colt Industries, Inc. declaratory judgment on Count III of its complaint seeking declaration that a Parity Plan did not exist). The employees did not appeal that ruling. Because the employees did not appeal, the district court’s ruling that a Parity Plan did not exist was a final judgment on the merits.
This is the same issue now presented here. The employees do not dispute that they were parties to the earlier litigation and had a full and fair opportunity to litigate the issue in the prior action. The defendants properly raised collateral estop-pel as an affirmative defense, and so the employees are barred from relitigating the issue once again. See R. at 105 (answer containing affirmative defense); Temple University v. White, 941 F.2d 201, 212 (3d Cir.1991) (holding that collateral estoppel bars relitigation of an issue when (1) an identical issue was decided in a prior adjudication for which (2) a final judgment on the merits exists against (3) a party to the prior litigation who had (4) a full and fair opportunity to litigate the issues), cert. denied, — U.S. -, 112 S.Ct. 873, 116 L.Ed.2d 778 (1992). On remand the district court should dismiss the Parity Plan claim on the merits.
IX.
Finally, the employees contend that they are entitled to a jury trial on the issue of fraud because the various companies intentionally misrepresented the availability of shutdown benefits in order to induce employees to leave union jobs or to remain at work. In this lawsuit, however, the employees never joined any of the companies. The sole defendants are the Informal Plan and t’ ? Parity Plan. Because those persons who might have misrepresented benefits are not parties to this litigation, we need not address whether a claim of employee benefits fraud may be brought against a plan’s sponsor or fiduciary under ERISA or state law. Because a plan specifies the benefits available, a fortiori it cannot misdescribe those benefits and therefore cannot be liable for intentionally misdescribing them. If benefits are unclear or if descriptions conflict under a plan, participants have a cause of action under ERISA to clarify those benefits. See 29 U.S.C. § 1132. Thus the employees’ claim for punitive damages against an ERISA plan is not cognizable. On remand the district court should dismiss the fraud claim against the defendant Informal Plan on the merits.
X.
For the foregoing reasons, we will vacate the district court’s dismissal of the complaint for lack of subject matter jurisdiction. On remand, the district court should dismiss on the merits both Count II, alleging the existence of a Parity Plan, and Count III, seeking punitive damages. Furthermore, we will remand for any necessary presentation of further evidence, after which the district court will determine— under the standards ahdlprocedures articulated in Parts VI and VII(B) of this opinion — whether an informal employee benefit plan existed in 1982 and, if so, what benefits, if any, the employees may recover.
If, after the presentation of any additional, relevant evidence, the employees have failed to prove either the existence of an employee benefit plan or any other necessary element of their claim, the district court, on motion, should find facts specially and separately state conclusions of law pursuant to Rule 52(a) before entering judgment on the merits.
. It appears that Crucible's Formal Plan defined this term as some fraction of a yearly salary.
. Former Rule 41(b), which was in effect until December 1, 1991, provides:
Involuntary dismissal: effect thereof. — For failure of the plaintiff to prosecute or to comply with these rules or any order of court, a defendant may move for dismissal of an action or of any claim against the defendant. After the plaintiff, in an action tried by the court without a jury, has completed the presentation of evidence, the defendant, without waiving the right to offer evidence in the event the motion is not granted, may move for a dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief. The court as trier of the facts may then determine them and render judgment against the plaintiff or may decline to render any judgment until the close of all the evidence. If the court renders judgment on the merits against the plaintiff, the court shall make findings as provided in Rule 52(a). Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction, for improper venue, or for fail: ure to join a party under Rule 19, operates as an adjudication upon the merits.
. We review that conclusion infra.
. In Williams v. Wright, 927 F.2d 1540 (11th Cir.1991), the court, citing Dillingham, held that a letter to a single employee was an employee benefit plan, even though the employer’s general assets were the source of financing and the administrative procedures were simple. Id. at 1544-45.
In Brown v. Ampco-Pittsburgh Corp., 876 F.2d 546 (6th Cir.1989), an employer’s promulgation of severance guidelines created an ERISA plan, even though affected employees had not known of the guidelines. Id. at 55.1. The court reasoned that it would be antithetical to ERISA’s purposes to allow an employer to create an employee benefit plan and then deny benefits on the ground that it never communicated the plan (a violation of ERISA’s disclosure requirements). Id.
The Court of Appeals for the Ninth Circuit has held that an oral promise to pay severance pay may be a welfare benefit plan under the Dillingham standard. Scott v. Gulf Oil Corp., 754 F.2d 1499, 1504 (9th Cir.1985). It has also held that a confidential policy was an ERISA plan in spite of the employer’s concealment of the policy and in spite of an absence of payment mechanisms. Blau v. Del Monte Corp., 748 F.2d 1348 (9th Cir.), cert. denied, 474 U.S. 865, 106 S.Ct. 183, 88 L.Ed.2d 152 (1984); see also Gilbert v. Burlington Indus., Inc., 765 F.2d 320 (2d Cir.1985) (unfunded severance pay policy is ERISA plan and therefore governed by federal, not state, law), aff’d without opinion, 477 U.S. 901, 106 S.Ct. 3267, 91 L.Ed.2d 558 (1986); Holland v. Burlington Indus., Inc., 772 F.2d 1140 (4th Cir.1985) (same facts and holding as Gilbert), aff’d without opinion, 477 U.S. 901, 106 S.Ct. 3267, 91 L.Ed.2d 559 (1986).
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 labor case brought under § 301 of the Labor-Management Relations Act of 1947, 29 U.S.C. § 185, Western Electric Company asks us to set aside the award of an arbitration panel in favor of the Communication Equipment Workers (the Union). The dispute arose out of the Company’s grading of the job of Twisting Machine Operator pursuant to its Job Evaluation Plan, which was adopted by reference into the collective bargaining agreement in force at the time. Under the Job Evaluation Plan, non-supervisory, hourly-rated jobs are assigned a grade based upon eleven attributes, including required education and experience, working conditions, responsibility for the work of others, and unavoidable hazards. The extent to which each of these attributes is present in a given job is indicated by a degree rating of from 1st to 5th. Each of the eleven attributes with its degree is assigned a point value, the points are added up to obtain a total job score, and based upon that score the job is graded on a scale of 32-41. The higher the grade, the higher the rate of pay.
In May 1971, Western Electric evaluated the job of Twisting Machine Operator, scored it at 189 points, and assigned it to grade 34 (183-209 points). A few months later, in January 1972, the Union filed a grievance, contending that the job rating should be increased to grade 35 (210-236 points). Specifically, the Union alleged that Twisting Machine Operator was underrated with respect to the attributes physical demand, responsibility for the work of others, working conditions, and unavoidable hazards. The grievance proceeded to arbitration, and a majority of the three-member panel agreed that the disputed job should be upgraded to grade 35. At the same time, it awarded one year’s back pay to incumbent twisting machine operators, as authorized by the collective bargaining agreement. Points were increased by the panel for the attributes responsibility for the work of others, unavoidable hazards, and working conditions. This appeal from the district court’s affirmance of the arbitration award concerns the latter two attributes only, the point increases for both of which are essential to achieve the necessary total score to upgrade the job. We affirm.
Mindful of the limited reviewing role permitted us by the Supreme Court’s familiar Steelworkers Trilogy, Western Electric first argues that, in its treatment of the attribute unavoidable hazards, the arbitration panel acted contrary to the express terms of the collective bargaining agreement by disregarding a published “Interpretation” of the Job Evaluation Plan that was made binding by the contract. One of the bases upon which the arbitration panel increased the degree rating of unavoidable hazards was employees’ exposure to risk of hearing impairment. However, a “Code of Interpretations” of the Job Evaluation Plan, published by the Company in 1967 and based on long-standing practices prior to that time, stated that “no evaluation consideration will be given for exposure to hearing impairment” because of the availability of protective devices. Because the applicable collective bargaining agreement, negotiated in 1972, required the Company to “continue as heretofore its administration of the job evaluation plan currently in effect,” Western Electric contends that the arbitrators were not free to disregard the above Interpretation. The principle of administrative res judicata is also invoked by Western Electric. It takes the position that a 1970 decision of Chief Judge Northrop involving these parties and construing the same contractual language at issue here required reliance on the Code of Interpretations in administering the evaluation plan. Communications Equipment Workers, Inc., v. Western Electric Company, 320 F.Supp. 1277 (D.Md.1970), aff’d. per curiam, 65 L.C. ¶ 11,771 (4th Cir. 1971).
The difficulty with Western Electric’s position is that the risk of hearing impairment was only one of three independent grounds relied upon by the arbitrators in increasing the rating of unavoidable hazards from 2nd to 3rd degree. The Company does not dispute the arbitrators’ findings of fact that flying wire and lock-nuts in the work environment pose significant dangers of harm to twisting machine operators, nor does it assert that these findings are insufficient to support the arbitrators’ decision. The hazards of flying wire and lock-nuts were relied upon by the arbitration panel, and in neither instance was the panel required to refer to the Code of Interpretations. Therefore, notwithstanding the Company’s expressed desire for a holding on the res judicata or like effect of Judge Northrop’s 1970 decision, we can only say that, assuming without deciding the correctness of Western Electric’s interpretation, it still cannot prevail. We note the district court specifically mentioned such alternate reasons in its opinion.
With respect to the attribute working conditions, which was upgraded from 2nd to 4th degree by the arbitration panel on the basis of excessive noise in the workplace, Western Electric’s complaint focuses on the burden of proof the panel required the Company to sustain. The conclusions of the neutral chairman of the panel contain the statement, “I believe it was incumbent upon the Company to demonstrate without a shadow of a doubt that it properly rated this attribute.”
While there may be some question whether in the ordinary case the standard of proof applied by an arbitrator is properly within our reviewing role, and more especially the extent of our reviewing authority, see General Drivers, Helpers and Truck Terminal Employees v. Sears, Roebuck & Co., 535 F.2d 1072 (8th Cir. 1976); Amalgamated Meat Cutters v. Neuhoff Packers, Inc., 481 F.2d 817 (5th Cir. 1973), we would beSfetfiiss if we did not express our disapproval of the “shadow of a doubt” standard that was apparently applied here. The imposition of a burden that in many, if not most, cases is simply impossible to sustain by either side can hardly be said to square with a fair system of dispute resolution.
Nevertheless, assuming the error, we do not think it was fatal because the arbitrators had before them sufficient undisputed facts upon which to reach the same result under any standard of proof. Under the evaluation plan, the existence of noise is a permissible factor in upgrading the attribute of working conditions. Moreover, the Union and the Company have agreed upon an objective set of procedures to apply in evaluating shop noise which involve the use of sound meters. Without delving unduly into the intricacies of these procedures, three sets of readings were taken with respect to the twisting machines, one in February 1972, one in January 1973, and one in June 1973. The first two sets of readings supported the Company’s evaluation, but in both cases the readings were incomplete, suggesting that proper procedures had not been followed, although there was testimony that all required readings had in fact been taken. The June 1973 reading, on the other hand, supported the Union’s evaluation, as is not seriously disputed by the Company. The arbitrators therefore had before them uncontradicted evidence, taken from the most recent sound readings, of noise levels sufficient to support their decision. Even if the panel had believed that all three sets of readings had been conducted in accordance with proper procedures, it would still have been entitled to upgrade the degree rating in reliance on the June 1973 figures. Where, as here, we have ascertained that there are some facts to support an arbitration award, Communications Equipment Workers, supra, 320 F.Supp. at 1280, and that the arbitrators have not exceeded the scope of the parties’ submission to them, Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 598, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960), our reviewing role in the context presented here is at an end.
We have examined the assignments of error pertaining to the district court’s denial of attorneys’ fees and interest, and find them to be without merit. See Alyeska Pipeline Co. v. Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975), and Art. II, para. 10, of the collective bargaining agreement.
The judgment of the district court will accordingly be affirmed although our reasoning is somewhat different from that of the district court, see Securities and Exchange Commission v. Chenery Corp., 318 U.S. 80, 88, 63 S.Ct. 454, 87 L.Ed. 626 (1943).
AFFIRMED.
. The collective bargaining agreement applicable to this case was effective from August 28, 1971 to August 27, 1974.
. Steelworkers v. American Mfg. Co., 363 U.S. 564, 80 S.Ct. 1343, 4 L.Ed.2d 1403 (1960); Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960); Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960). Basically, these cases restrict the role of reviewing courts to ascertaining whether the arbitrator exceeded the scope of the parties’ submission. Once this is determined, courts may not inquire further into the merits of the dispute. Of course, the arbitrator’s role is one of interpretation; he may not alter the unambiguous meaning of the contract. Textile Workers v. American Thread Co., 291 F.2d 894 (4th Cir. 1961).
. This applies in the rating of the unavoidable hazard category, not to that of working conditions.
. We note in this connection that the back pay award authorized by Article 14 of the collective bargaining agreement reaches back only one year prior to the date of the award, which was in 1975. Therefore, Western Electric will not be liable for back pay for the period in which the sound meter readings disclosed a lesser noise problem than was found by the arbitrators to exist.
. The opinion of the district court is reported at 409 F.Supp. 161 (D.Md.1976).
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.
WOLLMAN, Circuit Judge.
Vesta I. Williams appeals from the district court’s order denying her motion for summary judgment and granting the motion of the Secretary of Health and Human Services for summary judgment. We affirm.
I.
Williams was sixty years of age at the time of the benefits hearing and had sold Avon products through December of 1985. She has a history of a nervous condition, for which she has taken Ativan since 1963. She was diagnosed in 1980 with esophagitis and in 1987 with gastric ulcers and duoden-itis. These conditions have responded to medication and have not recurred. In December of 1987, Williams underwent a hysterectomy for in situ carcinoma of the endometrium. Williams takes progesterone, which she claims is to prevent the recurrence of the cancer, but which is a medication commonly prescribed to postmenopausal women to prevent adverse symptoms of menopause.
Williams applied for disability benefits in 1988, alleging that she was disabled from chronic and acute anxiety, gastric ulcers, cancer of the uterus, and side effects from her “cancer medication.” Her initial application was denied because she was not insured as of the date she claimed the disability began. She amended her income tax returns and was then determined to have additional quarters of eligibility for disability benefits. Upon reconsideration of her application, Williams was determined not to have a condition severe enough to be disabling.
Williams then requested a hearing before an administrative law judge (AU). The AU found that Williams’ impairment “resulted in only slight abnormality which ha[d] minimal effect on her physical or mental ability to perform basic work-related activities.” In making this finding, the AU took into account Williams’ work record, her daily activities, and her functional restrictions, as well as her complaints of pain, including precipitating and aggravating factors and the dosage, effectiveness, and side effects of pain medication. The AU concluded that because Williams’ cancer was cured and because Williams remained active and able to care for herself and her home, had not sought treatment for any mental condition, and took no prescription medication for pain, her complaints of incapacitating fatigue and nervousness were not supported by the evidence.
Williams’ request for a review of the AU’s decision was denied by the Appeals Council. Thus, the AU’s decision is the final decision of the Secretary. Williams then appealed to the district court, which referred the matter to a magistrate judge. The magistrate judge recommended that the AU’s decision be upheld. The district court adopted the magistrate’s recommendation, denying Williams’ motion for summary judgment and granting the Secretary’s motion for summary judgment. Williams now appeals to this court, claiming that the decision of the AU is not supported by substantial evidence.
II.
The Social Security Act provides for payment of insurance benefits to persons who have contributed to the program and who suffer from a physical or mental disability. 42 U.S.C. § 423(a)(1)(D). A “disability” is the “inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment.” Id., § 423(d)(1)(A). The disability must last for a continuous period of at least twelve months or be expected to result in death. Id. An individual is under a disability only if the impairments “are of such severity that [s]he is not only unable to do [her] previous work but cannot, considering [her] age, education, and work experience, engage in any other kind of substantial gainful work.” Id., § 423(d)(2)(A).
The Secretary has established a five-step process for determining whether a person is disabled. See 20 C.F.R. § 404.1520. First, the Secretary determines whether an applicant for disability benefits is engaged in “substantial gainful activity.” Id., § 404.1520(b). If the answer is yes, the person is not disabled and benefits are denied; if no, the Secretary moves on to step two in the determination. It was at this step in the process that Williams was denied benefits.
At this step, the claimant bears the initial burden of proof to demonstrate that she is unable to perform her past relevant work, part of which is demonstrating a “severe” impairment. See Conley v. Bowen, 781 F.2d 143, 146 (8th Cir.1986); McCoy v. Schweiker, 683 F.2d 1138, 1146-47 (8th Cir.1982). To show a severe impairment, she must show that she has “any impairment or combination of impairments which significantly limits [the applicant’s] physical or mental ability to do basic work activities.” 20 C.F.R. § 404.1520(c). If not, the applicant does not have a severe impairment and benefits are denied. The ability to do basic work activities is defined as “the abilities and aptitudes necessary to do most jobs.” Id., § 404.1521(b). Examples include physical functions such as walking, standing, sitting, lifting, pushing, pulling, reaching, carrying, or handling; capacities for seeing, hearing, and speaking; understanding, carrying out, and remembering simple instructions; use of judgment; responding appropriately to supervision, co workers and usual work situations; and dealing with changes in a routine work setting. Id.
Step two of this process has been upheld as a valid exercise of the Secretary’s power. Bowen v. Yuckert, 482 U.S. 137, 153, 107 S.Ct. 2287, 2297, 96 L.Ed.2d 119 (1987) (“The severity regulation increases the efficiency and reliability of the evaluation process by identifying at an early stage those claimants whose medical impairments are so slight that it is unlikely they would be found to be disabled even if their age, education, and experience were taken into account.”).
We will uphold the Secretary’s decision if it is supported by substantial evidence on the record as a whole. 42 U.S.C. § 405(g); Whitehouse v. Sullivan, 949 F.2d 1005 (8th. Cir.1991). “Substantial evidence is that which a reasonable mind might accept as adequate to support the Secretary’s conclusion,” Whitehouse, 949 F.2d at 1007 (citing Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 1427, 28 L.Ed.2d 842 (1971)), and “[w]e may not reverse ‘merely because substantial evidence would have supported an opposite decision.’ ” Id. (quoting Baker v. Heckler, 730 F.2d 1147, 1150 (8th Cir.1984)).
III.
The AU determined that Williams’ impairments did not significantly limit her physical or mental ability to do basic work activities. He applied the examples given in section 404.1521(b) and found that Williams could drive, read, watch television, visit and entertain friends, attend church, shop, do laundry and care for the house with her husband’s help, and cook meals. He found that Williams’ anxiety was situational and had not required counseling, psychiatric treatment or hospitalization, and that Williams had taken Ativan so long that it “probably has minimal effect.” He further found that her alleged weakness and trembling had similarly required no treatment, that Williams took progesterone to prevent menopausal symptoms, and that Williams claimed disability because her husband had retired and she was no longer motivated to work.
We find substantial evidence in the record to support the AU’s decision. There is no record of treatment for anxiety save a twenty-eight year history of taking Ativan, a mild anti-anxiety agent. Williams takes no prescription pain medications, and the medication which she claims to take to prevent recurrence of the cancer is commonly prescribed to prevent menopausal symptoms in those women who have had their ovaries removed during a hysterectomy. Williams’ gastric symptoms are controlled by medication. She was told by all of her doctors that she need not return on any regular basis, but that she should return as needed.
Accordingly, the judgment of the district court is affirmed.
.The Honorable George F. Gunn, United States District Judge for the Eastern District of Missouri.
. This is a localized cancer of the mucous membrane in the inner layer of the wall of the uterus.
. This includes both women who experience menopause due to natural aging of the reproductive system and women who experience menopause after surgical removal of the ovaries.
. The Honorable Robert D. Kingsland, United States Magistrate Judge for the Eastern District of Missouri.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
SPARKS, Circuit Judge
(after stating the facts as above).
Appellant contends that the court erred in entering the restraining order because: (1) The note, assignment of wages, and notice of such assignment, under the law of Illinois, created a lien on the wages of bankrupt after adjudication, when and as such wages were earned, and that lien was not discharge-able in bankruptey; (2) the wages included in the restraining order constituted no part of bankrupt’s estate, and appellant had instituted no suit of any kind for their recovery prior to the issuance of the order, nor had it made any threat to collect the same; (3) .the circuit court of Cook county had assumed jurisdiction of the siTbjeet matter of the restraining order and of the parties prior to the issuance of the order, and the district court had no authority under the bankruptey act to issue it.
It is not denied that the decisions of the Supreme Court of Illinois hold that an assignment of future wages made more than four months prior to adjudication in bankruptcy to secure any indebtedness creates a lien on such wages. Mallin v. Wenham, 209 Ill. 252, 70 N. E. 564, 65 L. R. A. 602, 101 Am. St. Rep. 233; Monarch Discount Co. v. Chesapeake & Ohio Ry. Co., 285 Ill. 233, 120 N. E. 743. If this doctrine is to be considered as controlling this court in the instant case, then of course appellant’s first contention is correct; but appellee on the other hand contends: (1) That the decisions of the state courts are not binding on the federal courts in the determination of what is property under the Bankruptcy Act; and (2) that the decisions of the Illinois court are contrary to the weight of reason and authority of federal and other state courts which hold that wages to be earned in the future are not property upon which a lien may attach.
Future wages are conditional in their nature, being dependent upon performance of the services to be rendered. It follow# therefore that an assignment given against such wages cannot create a legal lien since there is no property in being at the time the assignment is given. The lien must therefore be an equitable one which cannot attach until the property comes into being. If in the meantime the debt has been discharged by the action in bankruptcy, the lien falls. Appellant argues that this court is precluded from holding thus by reason of the Illinois decisions to the contrary which it asserts are binding upon this court. Those decisions constitute a local definition of principles applying to a situation which is not limited to this state, but which has arisen in many of the states. The decisions do not depend upon statutory law, but upon the local interpretation of general law. Further, since bankruptey is itself an equitable proceeding as is the interpretation of an equitable lien, we think this court is not bound by the decisions of the state court under the principles laid down in Swift v. Tyson, 16 Pet. 1, 18, 10 L. Ed. 865, and Guffey v. Smith, 237 U. S. 101, 114, 35 S. Ct. 526, 59 L. Ed. 856.
While we find no ease in which the Supreme Court has passed on the specific question involved in the instant ease, nevertheless it has in several cases laid down certain broad principles regarding the interpretation of the Bankruptcy Act which we think control our decision here. In Board of Trade v. Johnson, 264 U. S. 1, 44 S. Ct. 232, 234, 68 L. Ed. 533, it said,
“Of course, where the Bankrupt Law deals with property rights which are regulated by the state law, the federal courts in bankruptcy will follow the state courts; but when the language of Congress indicates a policy requiring a broader construction of the statute than the state decisions would give it, federal courts cannot be concluded by them. Board of Trade v. Weston, 156 C. C. A. 112, 243 F. 332.”
In the Weston Case just cited, the court said,
“Now, it would be strange if the dominant grant to Congress to legislate upon bankruptcy and insolvency, and which, when exercised, supersedes state legislation respecting these matters, should nevertheless be subordinate to the right of each state to determine what is or shall be property, subject to the terms of the Bankruptcy Act.”
In Williams v. U. S. Fidelity & Guaranty Co., 236 U. S. 549, 35 S. Ct. 289, 290, 59 L. Ed. 713, the court said,
“It is the purpose of the'Bankrupt Act [11 USCA] to convert the assets of the bankrupt into cash for distribution among creditors, and then to relieve the honest debtor from the weight of oppressive indebtedness, and permit him to start afresh free from the obligations and responsibilities. ® * * And nothing is better settled than that statutes should be sensibly construed, with a view to effectuating the legislative intent.”
In Re Voorhees (D. C.) 41 F.(2d) 81, 85, an Ohio statute as to assignment of wages was held not controlling in bankruptcy proceedings, and the court said,
“It seems to us that any state law which attempted to create a lien upon such property or earnings so as to be effective and operative after the discharge of the bankrupt would be construed by the federal courts to be ineffective for that purpose. * * * It seems to us that the purpose of the Bankruptcy Act is plain, and that any device, whether an assignment, * * * or what not, would be ineffectual against its purpose to give the bankrupt a new start.”
The weight of authority supports appellee’s contention that wages to be earned in the future are not property upon which a lien may attach prior to their existence. A different rule, however, was enunciated in Mallin v. Wenham, 209 Ill. 252, 70 N. E. 564, 65 L. R. A. 602, 101 Am. St. Rep. 233, and Citizens’ Loan Ass’n v. Boston & M. Ry. Co., 196 Mass. 528, 82 N. E. 696, 14 L. R. A. (N. S.) 1025, 124 Am. St. Rep. 584, 13 Ann. Cas. 365. With the rule and the reasoning therein announced we are not in accord. This being true we hold that appellant, at the time of the adjudication in bankruptcy, had no lien upon the bankrupt’s wages which had not at that time been earned, nor upon such wages as and when they were earned.
It may he conceded, as contended by appellant, that the wages included in the restraining order constituted no part of the bankrupt’s estate at the time of the adjudication. That estate, and none other, the court was hound to administer; hut it does not follow from this admission that the bankruptcy court is not interested in the protection of the bankrupt’s subsequent estate. Indeed, quite the converse is true, and constitutes the primary purpose of the bankruptcy enactment. That the bankruptcy court has plenary power to award that protection by injunction we think there can be no doubt, otherwise the effect of the Bankruptcy Act oftentimes might be destroyed. 11 USCA § 11, subd. 15; Seaboard Small Loan Corp. v. Ottinger, supra; In re Fellows (D. C.) 43 F. (2d) 122; In re Voorhees, supra; In re Swofford Bros. (D. C.) ISO F. 549; In re Home Discount Co., supra.
Appellant’s contention that prior to the restraining order there were no actions or threats on its part relative to the enforcement of its alleged lien sufficient to authorize or warrant the issue of the order is without merit. Its service of notice of the assignment upon the employer and its answer to the interpleader were sufficient to warrant the court’s action in that respect.
Decree affirmed.
“But, admitting the doctrine to he fully settled in New York, it* remains to be considered, whether it is obligatory upon this court, if it differs from the principles established in the general commercial law. It is observable, that the courts of New York do not found their decisions upon this point, upon any local statute, or positive, fixed or ancient local usage; but they deduce the doctrine from the general principles of commercial law. It is, however, contended, that the 34th section of the judiciary act of 1783 [28 USCA § 725] *• * * furnishes a rule obligatory upon this court to follow the decisions of the state tribunals in all cases to which they apply. That section provides ‘that the laws of the several states, except where the constitution, treaties or statutes of the United States shall otherwise require or provide, shall be regarded as rules of decision, in trials at common law, in the courts of the United States, in cases where they apply.’ In order to maintain the argument, it is essential * * ” to hold, that the word ‘laws,’ in this section, includes within the scope of its meaning, the decisions of the local tribunals. In the ordinary use of language, it will hardly be contended that the decisions of courts constitute laws. They are, at most, only evidence of what the laws are, and are not, of themselves, laws. They are often re-examined, reversed and qualified by the courts themselves, whenever they are found to be either defective, or ill-founded, or otherwise incorrect. The laws of a state are more usually understood to mean the rules and enactments promulgated by the legislative authority thereof, or long-established local customs having the force of laws. In all the various cases
* * * this court have uniformly supposed, that the true interpretation * * * limited its application to state laws, strictly local * * * and to rights and titles to things having a permanent locality, such as the rights and titles to real estate, and other matters immovable and intra-territorial in their nature and character. It never has been supposed by us, that the section did apply, or was designed to apply, to questions of a more general nature, not at all dependent upon local statutes,
* * * as, for example, to the construction of ordinary contracts or other written instruments, and especially to questions of general commercial law, where the state tribunals are called upon to perform the like functions as ourselves, that is, to ascertain, upon general reasoning and legal analogies, what is the true exposition of the contract or instrument, or what is the just rule furnished by the principles of commercial law to govern the case.
* * ¥ Undoubtedly, the decisions of the local tribunals upon such subjects are entitled to, and will receive, the most deliberate attention and respect of this court; but they cannot furnish positive* rules, or conclusive authority, by which our own judgments are to be bound up and governed.”
Guffey v. Smith, 237 U. S. 101, 35 S. Ct. 526, 530, 69 Li. Ed. 856. “ * By the legislation of Congress and repeated decisions of this court it has long been settled that the remedies afforded and modes of proceeding pursued in the Federal courts, sitting as courts of equity, are not determined by local laws or rules of decision, but by general principles, rules and usages of equity having uniform operation in those courts wherever sitting. v ‘Wherever a case in equity may arise and be determined, under the judicial power of the United States, the same principles of equity must be applied to it, and it is for the courts of the United States, and for this court in the last resort, to decide what those principles are, and to apply such of them, to each particular case as they may find justly applicable. Neves v. Scott; 13 How. 268, 14 L. Ed. 140.”
Seaboard Small Loan Corporation v. Ottinger (C. C. A.) 50 F. (2d) 856, 77 A. L. R. 956 ; In re West (D. C.) 128 F. 205; In re Karns (D. C.) 148 F. 143; In re Ludeke (D. C.) 171 F. 292; In re Home Discount Co. (D. C.) 147 F. 538; In re Lineberry (D. C.) 183 F. 338; In re Voorhees (D. C.) 41 F.(2d) 81; In re Fellows (D. C.) 43 F.(2d) 122; In re Potts (D. C.) 54 F. (2d) 144; Levi v. Loevenhart, 138 Ky. 133, 127 S. W. 748, 30 L. R. A. (N. S.) 375, 137 Am. St. Rep. 377; Leitch v. No. Pac. Ry. Co., 95 Minn. 35, 103 N. W. 704, 5 Ann. Cas. 63; Rate v. American Smelting & Refining Co., 56 Mont. 277, 184 P. 478; Hupp v. Union Pac. Ry. Co., 99 Neb. 654, 157 N. W. 343, L. R. A. 1916E, 247; Rowe v. Public Finance Co., 37 Ohio App. 133, 174 N. E. 164. See also 1 Collier on Bankruptcy (13th Ed.) 600, and 7 Corpus Juris, p. 411.
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.
In the report of the special master filed in this case, exceptions were filed by both parties, and, on hearing before the court, all the exceptions were dismissed and the report confirmed. From the judgment and decree so entered, both parties appealed. After full consideration of the cases, we are of opinion that both appeals should be dismissed; the appellant in each case to pay the costs of such appeal. .
In the appeal of John Cumming, Jr., he is directed to pay the costs accruing before the master in his reclamation proceedings and counsel fees in the sum of $-. Subject to this modification, the judgment and decree of the court below is affirmed. In case the parties do not, before the mandate goes down, agree on the amount of such fee, then and in that event the fixation of the fee will be made by the court below.
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:
Petitioners were found deportable by an Immigration Judge for having entered the United States in 1977 without inspection, in violation of § 241(a)(2) of the Immigration and Nationality Act, 8 U.S.C. § 1251(a)(2). Petitioners moved to reopen the proceedings but their motion was denied by the Immigration Judge and the Board of Immigration Appeals affirmed. Petitioners now seek review of the Board’s decision under § 106(a) of the Act, 8 U.S.C. § 1105a(a). We affirm.
Petitioners first illegally entered the United States in 1973 and settled in Idaho. On September 4, 1977, they were apprehended. Petitioners were subsequently found deportable and allowed to depart the United States voluntarily. They left on November 16, 1977, but on November 25, 1977, they reentered the United States without inspection. On March 13, 1978, they were again apprehended. At their deportation hearing on May 11, 1978, petitioners admitted that they had illegally entered and were subject to deportation. They were found deportable and did not appeal. They subsequently moved to reopen the proceedings, and the Immigration Judge denied that motion on February 26, 1979. The Board affirmed on April 18, 1979.
Petitioners contend here as they did below that they are entitled to relief by reason of an injunction issued by the United States District Court of the Northern District of Illinois in Silva v. Levi, No. 76-C4268 (N.D.Ill. Oct. 10, 1978) rev’d sub nom. Silva v. Bell, 605 F.2d 978 (7th Cir. 1979). That injunction barred deportation of any western hemisphere alien entering the United States before March 11, 1977, who had been granted a priority date for the issuance of an immigration visa between July 1, 1968, and December 31, 1976.
The Silva injunction by its own terms cannot apply to the present deportation proceedings which are based upon an illegal entry in November 1977, some eight months after Silva’s cutoff of March 11, 1977. Petitioners accordingly direct their attack upon their prior deportation which was based upon an illegal entry in 1973. The validity of that proceeding, however, is not properly before us. This court has consistently held that an alien cannot collaterally attack an earlier exclusion or deportation at a subsequent deportation hearing, in the absence of a gross miscarriage of justice at the prior proceedings. Hernandez—Almanza v. United States Department of Justice, 547 F.2d 100, 102 (9th Cir. 1976); Mondragon v. Ilchert, No. 78-3051 (9th Cir. Jan. 25, 1980); Burr v. Immigration & Naturalization Service, 350 F.2d 87 (9th Cir. 1965), cert. denied, 383 U.S. 915, 86 S.Ct. 905, 15 L.Ed.2d 669 (1966). No gross miscarriage of justice is alleged here. Moreover, § 106(c) of the Immigration and Nationality Act, 8 U.S.C. § 1105a(c) provides:
An order of deportation or of exclusion shall not be reviewed by any court if the alien has not exhausted the administrative remedies available to him as of right under the immigration laws and regulations or if he has departed from the United States after the issuance of the order.
Petitioners did not appeal the 1977 deportation decision, and voluntarily departed the United States on November 16, 1977. They consequently waived judicial review of that determination and cannot attack it now. Hernandez—Almanza, 547 F.2d at 103; Favela v. Immigration & Naturalization Service, 420 F.2d 575 (9th Cir. 1969), cert. denied, 398 U.S. 910, 90 S.Ct. 1705, 26 L.Ed.2d 70 (1970).
Even if petitioners were able successfully to attack their 1977 deportation, they would not be entitled to a reversal of the Board’s order in this case. The current proceedings base the deportability of petitioners on their illegal entry in November 1977. That entry is a deportable offense in its own right whether or not the prior deportation was subject to the defects alleged by petitioners. Hernandez-Almanza, 547 F.2d at 102; Mondragon v. Ilchert, No. 78-3051 (9th Cir. Jan. 25, 1980).
Petitioners have failed to show a prima facie entitlement to relief. The Board’s decision not to reopen the deportation proceedings was not an abuse of discretion. See Wang v. Immigration & Naturalization Service, 622 F.2d 1341, 1345 (9th Cir. 1980) (en banc); Villena v. Immigration & Naturalization Service, 622 F.2d 1352, 1358-59 (9th Cir. 1980) (en banc). The order of the Board is affirmed.
. The injunction began as a temporary restraining order entered on April 1, 1977. Silva v. Levi, No. 76-C4268 (N.D.Ill. Apr. 1. 1977).
. Petitioners never had been granted a priority date so as to bring them within the terms of the Silva injunction. They claim that they ought to have been granted one, a contention that the Government denies. In view of our disposition, we need not resolve that controversy, nor need we address the question whether we have jurisdiction to enforce another court’s injunction upon review of a deportation order.
. The rule against collateral attack in a civil deportation proceeding is to be distinguished from the rule applicable to a criminal prosecution for reentering the United States after deportation, in violation of § 276 of the Act, 8 U.S.C. § 1326. In the latter instance, the prior deportation is an element of the crime, and this court has permitted it to be collaterally attacked. United States v. Gasca-Kraft, 522 F.2d 149 (9th Cir. 1975); United States v. Barraza-Leon, 575 F.2d 218 (9th Cir. 1978); United States v. Caideron-Medina, 591 F.2d 529 (9th Cir. 1979); see United States v. Calles-Pineda, 627 F.2d 976 (9th Cir. 1980).
. We do not deal here with a motion to reopen the defective deportation proceeding, itself on grounds of gross procedural irregularity. See Mendez v. Immigration & Naturalization Service, 563 F.2d 956 (9th Cir. 1977).
. Petitioners also included in their motion to reopen a suggestion that they might have been eligible for suspension of deportation. No factual support for that bare allegation was offered, and the contention was not pursued here.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
FIELD, Circuit Judge:
This appeal presents the question whether the retention of an overriding royalty interest incident to the assignment of certain oil and gas leases constitutes an “economic interest” which subjects the initial lump sum payments to ordinary income treatment rather than capital gains consideration.
In 1959 A. T. Carr leased 1,194 acres of oil and gas lands in Doddridge County, West Virginia, for one dollar per acre. In 1960 the appellee, James T. Cox, entered into an informal agreement with Carr under which he would contribute $2,000 for the development of a well in exchange for a half interest in all of the leases. Spurred by successful drilling operations on adjacent land, the partnership assigned ten leases to various companies for $180,125 in 1963 and $115,000 in 1964. Cox and Carr shared the proceeds equally, and the partnership retained a %sth overriding royalty interest of the %th working interest in each of the ten leasehold assignments. Additionally, the partnership retained a ^th working interest, subject to the reserved overriding royalty interest, in one lease.
Cox treated his share of the profits as a long-term capital gain on his 1963 and 1964 tax returns. The Commissioner of Internal Revenue viewed the profits as ordinary income subject to a depletion allowance and assessed deficiencies of $12,156.17 plus $1,776.72 interest for 1963 and $5,556.63 plus $478.70 interest for 1964. Cox paid the deficiencies and sought a refund which was denied. He then instituted this action pursuant to 28 U.S.C. § 1346(a)(1) for recovery of the alleged overpayment. The district court granted judgment in favor of Cox and the government appeals.
The test for determining what is an economic interest first appeared in Palmer v. Bender, 287 U.S. 551, 53 S.Ct. 225, 77 L.Ed. 489 (1933), and is now found in Treas.Reg. § 1.611-1(b)(1)(1960):
“An economic interest is possessed in every case in which the taxpayer has acquired by investment any interest in mineral in place * * * and secures, by any form of legal relationship, income derived from the extrac-
tion of the mineral * * * to which he must look for a return of his capital.”
The district court held the lump sum payments were subject to capital gains treatment because they were not dependent upon the extraction or production of oil and therefore did not fall within the scope of the treasury regulation. The record, however, does not support this bifurcated view of the transaction. Each of the ten leases assigned by the partnership is inextricably bound by a reserve clause which grants the partnership a Y&th overriding royalty interest, and in one of the ten leases, a %th working interest, subject to the reserved overriding royalty interest of the %th working interest. Accordingly, income from the royalty interests is tied directly to oil and gas production.
Assuming, however, that the two lump sum payments here in question were independent of the retained royalty interests, substantial authority denies them the benefit of capital gain treatment. In Burnet v. Harmel, 287 U.S. 103, 53 S.Ct. 74, 77 L.Ed. 199 (1932), the issue was whether a lump sum bonus paid the lessor under an oil and gas lease, which reserved the usual royalty, was to be treated as capital gain or ordinary income. The Court put all portions of the transaction into one category, viewing the bonus as anticipatory royalty which should be treated as ordinary income. In Herring v. Commissioner, 293 U.S. 322, 55 S.Ct. 179, 79 L.Ed. 389 (1934), the Court held that the depletion allowance was applicable to advance royalties and bonuses received by a lessor upon the execution of an oil and gas lease even though there were no wells on the property and no production during the taxable year. Finally, in Commissioner v. P. G. Lake, Inc., 356 U.S. 260, 78 S.Ct. 691, 2 L.Ed.2d 743 (1958), the Court decided that the consideration received for the assignment of an “oil payment right” carved out of a larger mineral interest (whether a royalty interest or a working interest) was taxable as ordinary income, subject to a depletion deduction, and not as a capital gain. The Court reasoned that “[t]he lump sum consideration seems essentially a substitute for what would otherwise be received at a future time as ordinary income.” 356 U.S., supra, at 265.
In reaching the conclusion that Cox did not retain an economic interest the court below made no reference to the foregoing decisions, but relied primarily on Helvering v. Elbe Oil Land Co., 303 U.S. 372, 58 S.Ct. 621, 82 L.Ed. 904 (1938), and Commissioner v. Remer, 260 F.2d 337 (8 Cir. 1958). We find, however, that Elbe has been considerably diluted by subsequent decisions and is of little precedential persuasiveness. In Elbe, the taxpayer sold all of its interest in certain oil and gas properties in consideration of a large initial lump sum payment, four substantial deferred payments which were payable without regard to production, and a residual interest in the net profits from production and operation of the properties. The Court denied the taxpayer a depletion deduction computed on the cash payments, holding that the transaction was an absolute sale of the taxpayer’s interest in the property. With reference to the taxpayer’s participation in the net profits, the Court stated that it was “unable to conclude that the provision for this additional payment qualified in any way the effect of the transaction as an absolute sale or was other than a personal covenant of the [purchaser].” 303 U.S., supra, at 375.
Eight years after Elbe, in Burton-Sutton Oil Co., Inc. v. Commissioner of Internal Revenue, 328 U.S. 25, 66 S.Ct. 861, 90 L.Ed. 1062 (1946), the Court concluded that where the assignor of certain oil rights retained an interest in the net operating profits, the transaction was not a sale but rather an assignment “with a reservation in the assignor of an economic interest in the oil.” Id., at 37. The Court attempted to distinguish rather than overrule its decision in Elbe, concluding that “the holding of Elbe should not be extended to the facts of this agreement.” Id., at 36. In Commissioner of Internal Revenue v. Southwest Exploration Co., 350 U.S. 308, 76 S.Ct. 395, 100 L.Ed. 347 (1956), the Court again declined to follow Elbe, holding that the retention of a share of net profits was an economic interest in the oil in place which entitled the taxpayer to the depletion allowance. The moribund state of Elbe was recognized by the Tenth Circuit in Commissioner of Internal Revenue v. Pickard, 401 F.2d 615 (1968), with the observation that “[t]he Supreme Court in Burton-Sutton appears to have limited Elbe to its particular facts, as did Comm’r. v. Southwest Exploration Co. * * Id., at 616.
Similarly, the Eighth Circuit’s decision in Commissioner v. Remer, supra, which involved the sale of “stockpiled iron ore mining leases” and was decided largely on the basis of Elbe, has been limited to its particular facts. See Wood v. United States, 377 F.2d 300 (5 Cir.), cert. denied 389 U.S. 977, 88 S.Ct. 465, 19 L.Ed.2d 472 (1967); Rabiner v. Bacon, 373 F.2d 537 (8 Cir. 1967).
To accept the taxpayer’s contention that the reserve clause should be divorced from the alleged fractional sale of a capital asset would place us in the situation which confronted the Tenth Circuit in United States v. White, 311 F.2d 399 (1962), overruled 401 F.2d 610 (10 Cir. 1968). In White the taxpayers received a payment of $175,000 plus a ten per cent royalty of the gross value of all uranium mined from the property. In its initial opinion the court held that the lump sum payment was part of the consideration paid for the sale of the minerals and was properly treated as a capital gain since the taxpayers had retained no economic interest in the minerals in place. Six years later the same taxpayers sought to have the royalty payments taxed at capital gain rates rather than ordinary income. Sitting in banc, the court found that the absence of a total price plus the continued participation by the taxpayers in the mineral production made the transaction a lease and not a sale thereby subjecting the royalty payments to ordinary income treatment. In overruling its prior decision the court stated:
“As will be hereinafter developed the transaction must be examined as a whole and, under the decisions of the Supreme Court, put into one category. It is tempting to divide the transaction into several steps with different tax consequences, but this cannot be done. The tax category into which the entire transaction must be placed is that of a lease.” 401 F.2d, supra, at 611.
We conclude that in the transactions before us Cox retained an economic interest in the oil and gas which requires that the lump sum payments be taxed as ordinary income subject to the depletion allowance and not as capital gains. Accordingly, the judgment of the district court is reversed and the case remanded with instructions to enter judgment in favor of the government.
Reversed and remanded.
. A royalty interest is a right to receive a specified percentage of all oil and gas produced during the lease. 3B Mertens, Law of Federal Income Taxation, § 22.37 at 329 (1973). If the owner of an oil and gas lease transfers it to another operator, retaining a share of the production, usually Yl^th, free of expense other than severance tax, this retained interest is called an overriding royalty. It differs from a landowner’s royalty in that it stems from the lease and terminates with the lease. Acquisition of Oil and Gas Properties, 21 Oil & Gas Tax Q. 1, 10 (L. Fiske ed. 1972).
. An oil and gas lease ordinarily conveys the entire mineral interest less' any royalty interest retained by the lessor. The owner of the lease is said to own the “working interest” because he has the right to develop and produce the minerals. Commissioner v. P. G. Lake, Inc., 356 U.S. 260, 261 n. 1, 78 S.Ct. 691, 692, 2 L.Ed.2d 743 (1958).
. A net profits interest is a share of gross production measured by net profits from operation of the property. Like the overriding royalty it is created from the working interest, and the net profits interest differs from other production-measured payments in that it represents a fractional share of the profit of the operating company, rather than a fractional share of the minerals themselves as produced. Comment, Sale or Lease: Capital Gain or Ordinary Income Subject to Depletion in Mineral Transactions, 32 La.L.Rev. 417, 424 n. 30 (1972).
. In a separate opinion, Mr. Justice Frankfurter criticized the “gossamer” distinctions drawn by the majority between Elbe and Burton-Sutton, “which hardly can be held in the mind longer than it takes to state them * * *.” 328 U.S. at 38.
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.
MALETZ, Senior Judge.
Plaintiffs appeal from the district court’s entry of summary judgment for defendants in a contract and ERISA action. For the reasons that follow, the judgment below is affirmed in part and reversed and remanded in part.
I. Background
The action arises from a so-called “spinoff” transaction, in which defendant Healthco, Inc. (Healthco) sold the assets and liabilities of its Medical Division to Foster Medical Distribution Corporation (Foster) — which is not a party to this action — for approximately $28 million. The sale agreement, which is dated December 31, 1980, provided (1) that employees of Healthco’s Medical Division would become employees of Foster and (2) that defendants Healthco and its employees’ pension plan (Healthco Plan) would transfer pension assets and liabilities applicable to these employees to plaintiff Foster Medical Corporation Employees’ Pension Plan (Foster Plan). Plaintiffs-appellants — the Foster Plan and its Administrative Committee— contend that the pension funds transferred by defendants were insufficient to fulfill their contractual and statutory obligations.
More specifically, in September 1981, defendants-appellees, Healthco and the Healthco Plan, transferred funds in the amount of $1,132,642 to the Foster Plan. As of December 31, 1980, the Healthco Plan’s assets were $6,330,076, while its liabilities were only $5,073,846, leaving a surplus, or “overfunding,” of $1,256,230. Plaintiffs’ primary claim is that they were entitled to a pro rata share of this surplus, amounting to approximately $260,000. This entitlement, they maintain, arises under (1) the December 31, 1980 agreement and (2) the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461 (1982). In addition, plaintiffs claim that defendants are obligated to pay them the sum of $37,104 pursuant to a provision of the sale agreement known as the “full funding warranty,” which required Healthco to “fully fund the Health-co Plan Benefits of all the [Medical] Division’s employees.”
The district court — which had before it plaintiffs’ motion for partial summary judgment on the issue of liability and defendants’ motion for summary judgment on all issues — held, in an unpublished memorandum and order, that the Healthco defendants had fully satisfied their obligations and therefore entered summary judgment in their favor. This appeal by plaintiffs followed.
The focus of the parties’ dispute is section X of the December 1980 agreement, which deals with transfer of pension funds. It provides:
Employees of the Division are covered by the “Amended and Restated Healthco Employee’s Pension Plan” (the “Healthco Plan”). The Healthco Plan also covers other employees of the Seller and its subsidiaries. The Seller agrees that, at the request of the Purchaser, it will cooperate in transferring the portion of the assets and liabilities of the Healthco Plan which are attributable to employees of the Division to a new retirement plan (or retirement plans) established by the Purchaser; provided, however, that the Seller shall not be so required to transfer assets or liabilities of the Healthco Plan to the extent prohibited by the Employee Retirement Income Security Act of 1974 or the Healthco Plan (notwithstanding any amendments thereto designed to carry out the intent of this Section X). The Purchaser agrees that each employee of the Division as to whom assets are transferred shall be entitled to receive a benefit (referred to as his “Healthco Plan Benefit”) under the new plan in respect of his service with the Seller which is at least equal to the benefit he would have been entitled to receive under the Healthco Plan in respect of such service, and the Seller represents and warrants that the assets so transferred will (under the actuarial assumptions used by the Healthco Plan on December 31, 1979) fully fund the Healthco Plan Benefits of all the Division’s employees. (Emphasis added.)
II. Contentions of the Parties
Plaintiffs-appellants contend that the district court erred (1) in failing to consider whether Healthco satisfied section X’s warranty that the assets transferred would “fully fund the Healthco Plan Benefits” of the employees; (2) in holding that no part of the Healthco Plan’s surplus was “attributable to” Medical Division employees; and (3) in failing to consider whether Healthco’s refusal to transfer any portion of the Healthco Plan’s surplus violated fiduciary duties under ERISA. In particular, plaintiffs argue (1) that the assets transferred fell $37,104 short of satisfying the full funding warranty; (2) that section X, in using the phrase “attributable to,” required defendants to transfer a pro rata share of the Healthco Plan’s surplus, in the amount of approximately $260,000, over and above the amount necessary to satisfy the full funding warranty; and (3) that Healthco’s refusal to transfer such a pro rata share also violated a fiduciary duty.
Defendants respond (1) that plaintiffs’ allegation of a $37,104 shortfall was not timely asserted; (2) that “attributable to” means no more than the amount necessary to fully fund the defined benefits; and (3) that Healthco violated no fiduciary duty.
III. The Full Funding Warranty
The district court’s memorandum did not specifically address plaintiffs’ contention that the sum transferred by Healthco was $37,104 short of satisfying section X’s full funding warranty. Indeed, the court assumed that plaintiffs were satisfied that the $1,132,642 transferred was sufficient “to ‘fully fund’ liabilities.” Plaintiffs argue, to the contrary, that defendants breached the full funding warranty and that the court failed to consider the issue.
Defendants point out that the full funding claim was raised for the first time when plaintiffs filed an opposition to defendants’ motion for summary judgment. In support of their contention that the complaint, which was dated March 11, 1983, failed to raise the full funding issue, defendants point to a June 17, 1983 letter to Healthco, in which Foster demanded payment of $37,104 and indicated a willingness to “include the amount in our legal procedures.” According to Healthco, plaintiffs’ omission in the complaint of a claim for $37,104, coupled with their failure to amend the complaint after the June 17 letter, indicates that the full funding claim was never raised and barred the district court from considering the issue.
For their part, plaintiffs emphasize that the complaint alleged that defendants breached section X of the agreement and their fiduciary duties under ERISA by failing to transfer all assets of the Healthco Plan “attributable to” employees of the Medical Division. Although plaintiffs read more into the words “attributable to” than the district court did, they argue that the district court’s understanding of the phrase proves, a fortiori, that the complaint raised the full funding claim. In this respect, while plaintiffs argued to the district court that the phrase “attributable to” indicated an entitlement to a pro rata share of the plan’s surplus, the court read the phrase more narrowly and found that the only issue raised by the phrase was whether pension liabilities were fully funded. Without abandoning their argument that “attributable to” has significance over and above the full funding issue, plaintiffs accept the district court’s conclusion that, at a minimum, the phrase mandates compliance with the full funding warranty. Thus, in plaintiffs’ view, their request that the district court enforce the mandate of “attributable to” necessarily encompassed a request that the court enforce the full funding warranty.
It is true that plaintiffs could have articulated their full funding claim more clearly. Nevertheless, we conclude that the issue is raised implicitly in the complaint and may be gleaned from a reading of its allegations in conjunction with plaintiffs’ opposition to defendants’ motion for summary judgment. Under modern procedural rules, “[a]ll pleadings shall be so construed as to do substantial justice.” Fed.R.Civ.P. 8(f). Since pleadings are to be construed liberally, Hildebrand v. Honeywell, Inc., 622 F.2d 179, 181 (5th Cir.1980), “precision of pleading no longer can be an absolute determinant of either liability or remedy.” DeCosta v. Columbia Broadcasting Sys., 520 F.2d 499, 510 (1st Cir.1975), cert. denied, 423 U.S. 1073, 96 S.Ct. 856, 47 L.Ed.2d 83 (1976). What is more, considering that the claim was explicitly raised in plaintiffs’ opposition papers, defendants can scarcely claim surprise or prejudice. See Peter Kiewit Sons’ Co. v. Summit Constr. Co., 422 F.2d 242, 271 (8th Cir.1969). Cf. Hanson v. Hoffmann, 628 F.2d 42, 53 n. 11 (D.C.Cir.1980) (so long as defendant is not prejudiced, plaintiff is not bound by legal theory on which he originally relied).
Substantively, the record shows a genuine conflict of material fact on the full funding claim and, therefore, summary judgment on the claim was inappropriate. See Hahn v. Sargent, 523 F.2d 461, 464 (1st Cir.1975), cert. denied, 425 U.S. 904, 96 S.Ct. 1495, 47 L.Ed.2d 754 (1976). Accord, e.g., Emery v. Merrimack Valley Wood Prods., Inc:, 701 F.2d 985, 990-91 (1st Cir.1983); Maiorana v. MacDonald, 596 F.2d 1072, 1076 (1st Cir.1979). Thus, to this extent, the district court’s grant of summary judgment is reversed and the full funding claim is remanded for further proceedings.
IV. Assets “Attributable To” Medical Division Employees
Plaintiffs read section X, insofar as it provides for transfer of pension funds “attributable to” Medical Division employees, as giving rise to two related claims: (1) that defendants breached the December 31, 1980 agreement by refusing to transfer to plaintiffs a pro rata share of the Healthco Plan’s surplus, and (2) that this refusal also constituted a breach of a fiduciary duty under ERISA. The district court rejected this reading and held that the phrase “attributable to” referred only to the full funding warranty and conferred no right to a pro rata share of the surplus. The court’s memorandum stated:
Those assets properly “attributable to” these employees are only amounts sufficient to fund the accrued benefit, that is, an amount sufficient to fund the employees’ pensions commencing at normal retirement age. Although Healthco's employer contributions in excess of the accrued benefit might eventually have been used to meet its employer obligations, these funds have not yet been “attributed to” any employee.
The court further observed that transfer of a share of the surplus would not increase employee benefits, since the Health-co Plan was a defined benefit plan under ERISA, i.e., a plan that provides for fixed benefits not subject to fluctuation. See ERISA § 3(35), 29 U.S.C. § 1002(35) (1982), See also International Brotherhood of Teamsters v. Daniel, 439 U.S. 551, 554 n. 3, 99 S.Ct. 790, 794 n. 3, 58 L.Ed.2d 808 (1979) (“Because the Fund made the same payments to each employee who qualified for a pension and retired at the same age, rather than establishing an individual account for each employee tied to the amount of employer contributions attributable to his period of service, the plan provided a ‘defined benefit.’ ”). The court pointed out that only Foster would benefit by a transfer of assets over and above the full funding requirement and concluded that “[s]uch a result is not mandated by the clear language of Section X.”
In our view, however, section X is not clear and unambiguous. For we believe that the requirement of that section that the Healthco Plan transfer funds “attributable to” Medical Division employees is susceptible of two plausible readings. It may be seen merely as an explanation of the full funding warranty that follows, or as a separate entitlement to transfer of a pro rata share of the surplus. Neither reading is compelled by the language of section X or the other provisions of the agreement.
By its terms, the agreement “shall be governed by and construed in accordance with the laws of the State of New York applicable in the case of agreements made and to be entirely performed within such State.” Sec. XIX(H). Under New York law, parol evidence is admissible to determine the meaning of ambiguous contractual language. See Aireo Alloys Div., Aireo Inc. v. Niagara Mohawk Power Corp., 76 A.D.2d 68, 77, 430 N.Y.S.2d 179, 184 (4th Dep’t 1980); 22 N.Y.Jur.2d, Contracts § 195 (1982).
To resolve the ambiguity in section X, defendants, in support of their motion for summary judgment, filed with the district court an affidavit by Richard Kenney, Vice President of Finance and Administration of Healthco. Kenney’s salient allegations were (1) that, during negotiations with Foster, the tentative purchase price for the Medical Division was adjusted on a dollar-for-dollar basis, with the parties intending that Foster pay for each asset it acquired; (2) that the parties agreed that the sum to be transferred to the Foster Plan would be “only the amount necessary to meet Healthco’s liability for the accrued employee benefit for which the employer was responsible under the Healthco Plan”; and (3) that neither Healthco nor Foster intended the transfer to be any larger than the amount necessary to fund accrued employee benefits.
Plaintiffs have pointed to nothing in their papers opposing defendants’ motion for summary judgment that contradicts Ken-ney’s assertions. Indeed, in their memorandum of law opposing defendants’ motion for summary judgment, plaintiffs argued that Kenney’s affidavit was improper parol evidence but offered no substantive evidence to challenge his allegations. The only indication that plaintiffs disputed Ken-ney appeared in a footnote to their memorandum of law, where plaintiffs requested leave to submit supplemental affidavits that would contradict some of Kenney’s assertions, should the court find his affidavit relevant.
Kenney’s explanation of the intent behind section X is consistent with other provisions of the agreement, which enumerate in detail those assets to be transferred. It is also consistent with the detailed balance sheet prepared during negotiation of the agreement. Given these considerations, it is apparent that the parties to the agreement intended that Foster pay for each asset it acquired and that the surplus in the Healthco Plan not be included in their calculations.
In these circumstances, plaintiffs have failed to establish the existence of a genuine issue of material fact. Under the case law:
To be considered “genuine” for Rule 56 purposes a material issue must be established by “sufficient evidence supporting the claimed factual dispute ... to require a jury or judge to resolve the parties’ differing versions of the truth at trial.” [Citation omitted.] The evidence manifesting the dispute must be “substantial”, [citation omitted] going beyond the allegations of the complaint [citation omitted].
Hahn v. Sargent, 523 F.2d 461, 464 (1st Cir.1975), cert. denied, 425 U.S. 904, 96 S.Ct. 1495, 47 L.Ed.2d 754 (1976). The oblique offer of proof in plaintiffs’ footnote fails the test of rule 56(e), which provides in part:
When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him. [Emphasis added.]
See First Nat’l Bank of Arizona v. Cities Serv. Co., 391 U.S. 253, 289-90, 88 S.Ct. 1575, 1592-93, 20 L.Ed.2d 569 (1968) (refusing to disregard rule 56(e) in antitrust action where plaintiff failed to provide “significant probative evidence” supporting the complaint); Soar v. National Football League Players’ Ass’n, 550 F.2d 1287, 1289 n. 4 (1st Cir.1977). (refusing to deny summary judgment on the basis of vague supposition that evidence might be produced at trial); Salgado v. Piedmont Capital Corp., 534 F.Supp. 938, 944 (D.P.R.1981) (“The rule means what it says.”). Accordingly, we agree with the district court’s conclusion that section X did not obligate Healthco to transfer any pension funds beyond those necessary to finance the employees’ accrued benefits.
Plaintiffs have argued further that the district court relied on an erroneous factual premise, namely, that the surplus was traceable entirely to employer contributions. Whether or not the court indeed relied on this premise, and whether or not this premise is true, are irrelevant. For the Kenney affidavit and the surrounding circumstances explain the intent of the parties.
Finally, plaintiffs’ ERISA claims are without merit. Plaintiffs characterize defendants as fiduciaries and cite ERISA § 404(a)(1), 29 U.S.C. § 1104(a)(1), and Winpisinger v. Aurora Corp. of Illinois, Precision Castings Div., 456 F.Supp. 559, 566 (N.D.Ohio 1978), for the proposition that fiduciaries may not prefer employees who would remain under the coverage of the Healthco Plan over those who would become participants in the Foster Plan. But, having been fixed, the pension benefits of Medical Division employees are not subject to increase, even should plaintiffs recover a pro rata share of the Healthco Plan’s surplus. As long as the Foster Plan is fully funded, the employees are fully protected and will receive their defined benefits. Similarly, employees remaining under coverage of the Healthco Plan will enjoy no increase in their defined benefits by virtue of the surplus. In short, neither group of employees is preferred over the other and hence defendants have breached no fiduciary duty.
V. Conclusion
For the foregoing reasons, the judgment of the district court is affirmed in part and reversed and remanded in part.
Affirmed in part and reversed and remanded in part.
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.
WADDILL, Circuit Judge.
These two causes grow out of proceedings to liquidate the affairs of the Liberty National' Bank of South Carolina, at Columbia, and were argued together in this court, and will be disposed of in one opinion.
The Liberty National Bank of South Carolina, at Columbia, hereinafter referred to as 'the Liberty Bank, filed its bill and amended bill in equity in the first-named cause in the court below, praying that the action of the Comptroller of the Currency, named as a defendant therein, in appointing the eodefendant, Malcolm S. McConihe receiver of said bank, be declared void, and that the attempted levy and collection of an assessment on the shareholders of said bank by the defendants, in their official capacity, be enjoined and restrained. The bill briefly alleged that the Liberty Bank had entered into voluntary liquidation under contract with the National Loan & Exchange Bank of Columbia (hereinafter referred to as the Exchange Bank), which latter bank was to act as liquidator of the former, assuming to pay certain liabilities, and to be reimbursed by the Liberty Bank for any deficit.
The original contract between the two banks was regularly entered into on the 23d of October, 1923, and pursuant to a subsequent resolution of the board of directors, and by agreement between the banks clause 6 was added thereto. By the agreement thus entered into, the Liberty Bank transferred all of the assets of every kind of the bank to the Exchange Bank, the Exchange Bank guaranteeing payment to the depositors of the Liberty Bank of the amount of their deposits therein, and also other obligations of the Liberty Bank for bills payable and rediscounts at the close of business on the 22d day of October, 1923, as shown by Exhibit A attached to the contract, with a proviso that the Exchange Bank did not guarantee any liability of said Liberty Bank to its stockholders, or any other liabilities of said Liberty Bank except those thereinbefore set forth. Under this contract the Exchange Bank at once possessed itself of all the assets and effects of the Liberty Bank, including its banking house, and proceeded to administer and liquidate the assets' of the bank as rapidly as in its-judgment was deemed advisable and advantageous, and it was provided that, after reimbursing itself for all expenses, not, however, to include commissions to the Exchange Bank (the latter bank making no charge for its services in the administration and liquidation of the affairs of the Liberty Bank and collecting and converting its assets into cash), together with all the advancements made on account of said Liberty Bank, and of all indebtedness of the Liberty Bank to the Exchange Bank of every character, and that the residue of the assets of said Liberty Bank should be turned over to it for distribution among its stockholders.
Provision also was made for the liquidation and winding up of the affairs of the Liberty Bank by and under the supervision and direction of the Exchange Bank, but the Liberty Bank reserved the right, through its appropriate committees and representatives, to consult and advise daily with the Exchange Bank as to the administration and liquidation of the assets of the Liberty Bank, and also reserved the right to direct in writing the proper disposition of certain of its bills receivable and ehoses in action as it might be advised to, and the books of the Exchange Bank were to be open to the inspection of a representative of the Liberty Bank. It was ‘further provided that the Exchange Bank should not be liable to the Liberty Bank for any losses in connection with the liquidation and collection of the assets of the latter bank conveyed and transferred to it, except such as arose from gross negligence on its part or its agents. The Liberty Bank stipulated that it would save harmless the Exchange Bank from and against any and all losses, should there., be any, which the Exchange Bank might sustain on account of the failure to realize from the assets and property of the Liberty Bank sufficient to reimburse the Exchange Bank for all amounts which it might expend in carrying out the provisions of the contract, and upon final completion of the liquidation to pay any such deficiency to said Exchange Bank.
The bill further charged that the .Comptroller was cognizant of and approved the ’contract of liquidation, and that thereafter the Exchange Bank, not having lived up to its contract, sought to have the Comptroller assume jurisdiction of the affairs of the Liberty Bank, and to appoint a receiver to take charge, which the Comptroller at first refused to do, but subsequently did, and ordered an assessment of $250,000 against the share- . holders of the Liberty Bank for the purpose of meeting its obligations, when the amount so due, in addition to the indebtedness ascertained by the Comptroller in favor of the Exchange Bank, to wit, $453,008.10, was not in excess of $6,000. The Liberty Bank also denied its liability to the Exchange Bank for the sum so adjudged against it, as it did the power of the Comptroller to make such' adjudication and assessment against shareholders, and insisted that such adjudication and assessment could only be made by a court of competent jurisdiction having authority to wind up the affairs and assess shareholders in insolvent national banks in liquidation.
On the filing of the bill, the court awarded a rule against the defendants to show cause of July 27th why the interlocutory injunction should not be issued as prayed for, whereupon the defendant Comptroller of the Currency specially appeared for the purpose of contesting the jurisdiction of the court. The said defendant Comptroller and his codefendant, the receiver, upon the court’s overruling the plea to the jurisdiction, each moved the court to dismiss the bill for lack of equity, and the receiver duly made return to the said rule, showing his appointment and what he had done thereunder, with affidavits and records in support thereof. From said report it appears that assets came into his hands as follows:
Good ........................ $ 138,453.93
Doubtful ..................... 63,980.69
Worthless .................... 844,719.48
■Total.....................$1,047,154.10
From the first two items, the receiver hoped to realize $164,865.68. The receiver denied that his appointment was because of solicitation or importunity of the Exchange Bank, but was solely the result of a long and careful investigation and examination by the Comptroller of the affairs of the Liberty Bank, and, having become satisfied of its insolvency, the receiver was appointed, and the Comptroller thereafter directed the assessment of the shareholders to cover the indebtedness of the Liberty Bank.
On the 28th of July, the court, having overruled the objection to the jurisdiction of the court, entered an .order declining to enjoin the Comptroller from exercising the pow-° ers conferred upon him by law, and denied the injunction asked for to restrain the receiver from proceeding with the collection of the shareholders’ assessments theretofore ordered by the Comptroller. From this action the appeal in the first-named cause, No. 2558, was taken.
On the 4th of August, 1926, the Liberty _ Bank applied to the District Court of the United States for an order enjoining and restraining the defendants from further proceeding to enforce and collect the assessment previously made against the shareholders of the Liberty Bank, pending the appeal in the first cause, which was granted, and from this last-named order an appeal was taken by the Comptroller of the Currency and the receiver theretofore appointed by him for the Liberty Bank, which constitutes the last named cause No. 2569, and the two will be considered in the order named.
Case No. 2558 involves a general consideration of the National Bank Act, particularly as respects the power and authority of the Comptroller of the Currency to appoint receivers for insolvent national banks, and assess shareholders in such institutions after liqidation proceedings have been inaugurated by the bank. The Liberty Bank insists that the right of the Comptroller to appoint a receiver only exists prior to the liquidation proceedings, and thereafter receivers are appointed and shareholders assessed not by the Comptroller, but by a court of equity of competent jurisdiction.
Whatever may have been the law prior to the amendment of the National Bank Act of June 30, 1876, 19 JStat. 63, it would seem since that date there should be but little trouble to meet and dispose of the questions presented in this record. Section 1 of the act (Comp. St. § 9826) provides “* * * Whenever the Comptroller shall become satisfied of the insolvency of a national banking association, he may, after due examination of its affairs, * * * appoint a receiver, who shall proceed to close up such association, and enforce the personal liability of its shareholders, as provided in section fifty-two hundred and thirty-four [Rev. St. § 5234, now Comp. St. § 9821] of said statutes.”
Section 2 of the act of 1876 (Comp. St. § 9807) provides that, when any national banking association’shall have gone into (voluntary) liquidation under the provisions of section 5220, R. S. (Comp. St. § 9806), the individual liability of shareholders provided for by R. S. § 5151 (Comp. St. § 9689) may be enforced by any creditor, by a bill in the nature of a creditor’s bill in the District Court of the district in which the association may have been located.
Section 3 of the act of 1876 (Comp. St. § 9827) provides that, when the Comptroller has appointed a receiver and shall have paid the creditors in full and redeemed the circulating notes, then a meeting of the shareholders shall be called who shall decide whether the liquidation shall be completed by the receiver or an agent appointed by the shareholders.
It will be observed that by the first section of the amended act (which it may be said in passing is one of far reaching importance to the national government and the public, and in which the Comptroller of the Currency is granted almost imperialistic powers) there is placed apparently no limitation to what he may do when the proper conditions arise for the exercise of the authority and discretion reposed in him. In a word, whenever he becomes, after due examination of its affairs^ satisfied of the insolvency of a national banking association, he may appoint a receiver, who shall proceed to close up the business of such association, and enforce the personal liability against shareholders as prescribed by law. This act can have but one meaning, and having regard to the importance of its subject-matter, and the delicate duties to be performed, positive and quick action, when found necessary, is contemplated looking to the winding up and closing of insolvent national banks. The convenience of large numbers of the public perhaps affected by what is to be done, and the serious disturbance of business conditions liable to be involved, would seem to justify and warrant this grant of power to an official of the dignity and importance of the Comptroller of the Currency. The third section of the amended act gives further color to this view, in that it provides that when creditors, through the Comptroller’s receiver, have been paid in full, and the bank’s circulating notes redeemed, the institution shall be returned to the control of its stockholders.
Conceding that the second section of the amendatory act of 1876, on which the relief sought by the Liberty Bank is largely based, may give color to the claim made, in that it provides that when a national banking association shall have gone into voluntary liquidation, the individual liability of shareholders (Rev. Stat. § 5151; Comp. St. § 9689) may be enforced by any creditor by a bill in the nature of a creditor’s bill in the District Court of the district in which the association is located. But we have no such ease here, and no proceedings have been instituted, or any receiver asked for, and we believe we are not called upon to pass on the relative powers and authority of the Comptroller and the courts, in an insolvency proceeding against a bank in liquidation under section 2 of the amended act. To accept the Liberty Bank’s contention would be in effect to take away from the Comptroller of the Currency authority to act in the proper winding up of all insolvent national banking institutions, by the mere act or attempted act of those in charge ■of such institutions to inaugurate liquidation proceedings. This surely could not have been the purpose of the act, and to give it such an interpretation would not only do violence to its manifest meaning, but weaken the whole national banking system, and bring about a ■condition of uncertainty and chaos in connection with this most important branch of the government’s business.
Ample authority will be found to make clear the purposes of the National Banking Act, and to fully and clearly show the power and authority of those charged with its administration, especially that of the Comptroller of the Currency. His jurisdiction in respect to all matters properly within his discretion is exclusive, and he is in respect thereto in no manner amenable to any court, nor is his action subject to review therein.
“The bank is not considered as a private corporation, whose principal object is individual trade and individual profit; but as a public corporation, created for public and national purposes.” Chief Justice Marshall, in Osborn v. United States Bank, 9 Wheat. 860, 6 L. Ed. 204.
“Our conclusions, upon principle and authority, are that Congress, having power to create a system of national banks, is the judge as to the extent of the powers which should be conferred upon such banks, and has the sole power to regulate and control the exercise of their operations; that Congress has directly dealt with the subject of insolvency of such banks by giving control to the Secretary of the Treasury and the Comptroller of the Currency, who are authorized to suspend the operations of the banks and appoint receivers thereof when they become insolvent, or when they fail to make good any impairment of capital.” Mr. Justice Shiras, in Easton v. Iowa, 188 U. S. 238, 23 S. Ct. 293, 47 L. Ed. 452.
“The receiver is the instrument of the Comptroller. He is appointed by the Comptroller, and the power of appointment carries with it the power of removal. It is for the Comptroller to decide when it is necessary to institute proceedings against the stockholders to enforce their personal liability, and whether the whole or a part, and if only a part, how much, shall be collected. These questions are referred to his judgment and discretion, and his determination is conclusive. The stockholders cannot controvert it. It is not to be questioned in the litigation that may ensue. He may make it at such time as he may deem proper, and upon such data as shall be satisfactory to him.” Mr. Justice Swayne in Kennedy v. Gibson, 75 U. S. (8 Wall.) 505, 19 L. Ed. 476.
The decisions of the Comptroller of the Currency are not subject to collateral attack, nor is his assessment against shareholders, and the amount thereof open to review; but, on the contrary, neither the bank nor the shareholders, clearly in the absence of fraud charged and proved, are entitled to a judicial determination of any question involved in his decision either as to the solvency, the sum due creditors and the amount of assessments as ordered, such matters one and all being exclusively within the judgment and discretion of therComptroller, and as to which he acts in a quasi judicial capacity. Kennedy v. Gibson, supra, 75 U. S. 498, 19 L. Ed. 476; Casey v. Galli, 94 U. S. 673, 24 L. Ed. 168; United States v. Knox, 102 U. S. (12 Otto) 422, 26 L. Ed. 216; Richmond v. Irons, 121 U. S. 27, 7 S. Ct. 788, 30 L. Ed. 864; Schrader v. Bank, 133 U. S. 67, 10 S. Ct. 238, 33 L. Ed. 564; Bushnell v. Leland, 164 U. S. 684, 17 S. Ct. 209, 41 L. Ed. 598; Hightower v. Bank, 263 U. S. 351, 44 S. Ct. 123, 68 L. Ed. 334; Deweese v. Smith (8th C. C. A.) 106 F. 438, 66 L. R. A. 971.
Moreover, upon the Comptroller appointing a receiver of a national bank, the receiver takes possession of the assets of the bank, and assumes control of its operation, not as agent of the bank, but as an officer of the United States. He executes bond to the United States for the faithful performance of his duties, and pays to the Treasurer of the United States the moneys collected, and makes to the Comptroller under whose supervision and control he disburses the funds to the credit of the insolvent bank, a full report of his acts and doings in the premises. In re Chetwood, Pet’r, 165 U. S. 443, 458, 17 S. Ct. 385, 41 L. Ed. 782; United States v. Weitzel, 246 U. S. 533, 38 S. Ct. 381, 62 L. Ed. 872, and eases cited in each opinion.
Coming to the consideration of the second case, No. 2569, it is confined within a comparatively narrow compass, and really involves the question of the right to appeal from an order refusing to grant an injunction. What court should exercise this power — that is, the court that declined the injunction, or the one to which the appeal is proposed to be taken, and what is the authority of courts acting in such circumstances ? The relief asked is based upon a written motion made by the parties who failed to secure an injunction, to preserve the status quo, and stay the proceedings sought to be enjoined.
Whatever the proposed action may be termed technically, at least it is but an application to grant an appeal from an order refusing an injunction, which in effect seeks to stay or enjoin the doing of something when nothing has been done. The novelty of this situation would seem to be a sufficient answer to the same, save that the statute (Judicial Code, 1911, § 129, with amendments Rose’s Fed. Pro. Sees. [3d Ed.] § 612, Hopkins’ Judicial Code [2d Ed.] §■ 129), in terms provide for such an appeal. Provision for appeals from orders refusing injunctions was apparently first made by Act Feb. 18, 1895 (28 Stat. 666). By subsequent Act of June 6, 1900 (31 Stat. 660), and a still later Act of April 14, 1906 (34 Stat. 116), the provision for appeals from orders refusing injunctions was omitted, and next appeared in Judicial Code 1911, § 129 (36 Stat. 1134 [Comp. St. § 1121]), and has remained substantially as at present, though this section has several times been amended.
Just the proper procedure for taking appeals from orders refusing to grant injunc< tions, and whether the same should be granted by the trial or the appellate courts, has brought about some divergence of views on the subject. In the railroad tax eases from North Carolina, the District Court sought to afford the relief granted by postponing the day on which the order declining the injunction should have effect, leaving a reasonable time to apply to the Supreme Court for an appeal, if such action should be thought proper. Southern Railway Co. and Other Railroads v. Watts et al., 259 U. S. 576, 42 S. Ct. 585, 66 L. Ed. 1071. The Supreme Court concluded that as it was a matter of which the District Court was advised, and that tribunal was not, the District Court should act upon the application. The case was proceeded with on that theory, the District Court allowing the appeal, which operated in effect to grant the injunction originally asked for, by suspending the collection of the taxes involved pending decision on the merits, and the action of the lower court was subsequently affirmed.
The precise conditions were recently before the Supreme Court in the case of Virginian Railway Co. v. United States, and United States v. Virginian Railway Co., 47 S. Ct. 222, 71 L. Ed. —, decided December 13, 1926, and in the latter case, the District Court took the same action that it did in the North Carolina tax cases; that is, granted the appeal from an order declining an injunction. The Supreme Court quite fully reviewed the whole subject of procedure, and held that that court and the District Court alike had the right to grant or refuse the appeal, and that in the particular ease it should have been refused, and not granted, especially as the effect of granting the same operated not only to secure the relief that had been denied on the application for injunction, but because it stayed the enforcement of the order of the Interstate Commerce Commission, which had received the sanction of the District Court by declining the injunction.
This decision in the Virginian Railway Cases seems conclusive of this case, as there is nothing peculiar in the circumstances here that calls for the granting of the relief sought in the circumstances. The Comptroller of the Currency had issued an order to proceed with the winding up of the affairs of the insolvent bank, by appointing a receiver and ordering the necessary assessment against the shareholders of the bank, and, the District Court having declined to enjoin this action because of the authority vested in the Comptroller, there was no reason why the court’s action and that of the Comptroller in such circumstances should be stayed.
We are not prepared to say that there may not be cases in which the stay should be had, and the appeal granted, but we assume the decision in the Virginian Railway Co. Cases to mean that at least there should be special or unusual conditions making such course proper and necessary at the stage the same was asked for here. Hence we hold that the granting of an appeal from the order refusing the injunction, in the circumstances, was an unwise exercise of the discretion reposed in the court. .
Case No. 2558 — Decree affirmed as to matter appealed from.
Case No. 2569 — Decree reversed as to matter appealed 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.
OPINION OF THE COURT
GIBBONS, Circuit Judge.
Plaintiff, Chrysler Corporation (Chrysler), appeals and defendants, federal government officials, cross-appeal from a final judgment of the district court in an action for injunctive and declaratory relief aimed at preventing public disclosure of certain documents furnished by Chrysler to federal governmental agencies. The action was originally prompted by the decision of the defendants to honor a request by third parties for public disclosure of the contested documents under the Freedom of Information Act (FOIA). The district court, after a trial de novo, permanently enjoined public disclosure of certain portions of the contested documents, but denied the full range of injunctive relief requested by Chrysler, and also denied its request for a declaratory judgment that any future disclosure of similar documents would violate federal law. Chrysler appeals from the denial of the full declaratory and injunctive relief it requested. The federal government defendants in their cross-appeal originally contended (1) that Chrysler has no right to judicial review of an agency decision to disclose information requested by third parties under the FOIA; (2) that even if judicial review is available, the scope of review is limited to that defined in the Administrative Procedure Act and does not include a trial de novo; and (3) that even if a trial de novo was proper, the district court erred in enjoining disclosure of portions of the contested documents. After the government’s initial brief was filed in this court, the Solicitor General, in a petition for a writ of certiorari to review the decision of the Fourth Circuit in Westinghouse Elec. Corp. v. Schlesinger, 542 F.2d 1190 (4th Cir. 1976), cert. denied sub nom., Brown v. Westinghouse Elec. Corp., 431 U.S. 924, 97 S.Ct. 2199, 53 L.Ed.2d 239 (1977), took the position that the exceptions to judicial review listed in 5 U.S.C. § 701 were inapplicable to so-called reverse FOIA actions and that Pub.L.No. 94-574, 90 Stat. 2721, eliminated federal sovereign immunity as a bar to such review. We have been advised by the Justice Department that it is now the government’s position that judicial review is available to parties objecting to disclosure of information under the FOIA, but that the Administrative Procedure Act controls our scope of review. Chrysler contended in the district court, and continues to urge here, that any disclosure of the contested documents was prohibited by several federal statutes to which specific reference will be made hereafter and by the due process clause of the fifth amendment. It maintained in the district court, and urges here, that a trial de novo was proper. Because we are in substantial agreement with the government’s present position, we vacate the judgment of the district court and remand for further proceedings.
I
THE REGULATORY FRAMEWORK
Chrysler is a government contractor. As a condition of its doing business with the government it is required by an Executive Order, and regulations promulgated thereunder by the Secretary of Labor, to employ and treat all employees without regard to race, color, religion, sex, or national origin and to take affirmative action to eliminate discrimination in employment. In order to monitor compliance with these requirements, federal regulations require that every government contractor or subcontractor with fifty or more employees and a contract valued at $50,000 or more prepare and file an annual Employer Information Report, known as an EEO-1 report. The EEO-1 report contains data on the number of women and minority group members employed. Contractors must also prepare and make available for inspection by appropriate federal agencies an Affirmative Action Program (AAP), providing detailed information on their past and projected employment of women and minority group members. The AAP must contain a “utilization analysis” which describes the occupational levels of minority personnel employed by the contractor and “goals and time tables” by which opportunities for minority group members can be improved. The failure of a contractor to comply with the Executive Order and regulations can result in the cancellation, termination, or suspension of existing contracts and debarment from future awards.
The Secretary of Labor has delegated administrative responsibility for the enforcement of the Executive Order to the Director of the Office of Federal Contract Compliance' (OFCC). The Director of OFCC has designated various federal agencies as “compliance agencies.” These compliance agencies have primary responsibility for assuring adherence to the Executive Order by contractors within certain geographic areas or industrial classifications. In Chrysler’s case the Defense Supply Agency of the Department of Defense (DSA) is the designated compliance agency. As part of its monitoring duties DSA has conducted “compliance reviews” of Chrysler’s employment practices. These reviews consist of an examination of Chrysler’s EEO-1 and AAP documents and on site inspections of its facilities. Compliance reviews result in a compliance review report (CRR), setting forth information supplied by the contractor, an analysis of his performance, and recommendations for sanctions or corrective measures. DSA is also responsible for investigation and resolution of complaints of violations of the Executive Order and must file a “complaint investigation report” (CIR) with OFCC within sixty days of the receipt of a complaint.
Regulations promulgated by the Secretary of Labor contain rules providing for access by the public to information in the records of OFCC or its various compliance agencies.
These regulations implement 5 U.S.C. § 552, the Freedom of Information Act and supplement the policy and regulations of the Department of Labor, 29 C.F.R. Part 70. It is the policy of the OFCC to disclose information to the public and to cooperate with other public agencies as well as private parties seeking to eliminate discrimination in employment..
41 C.F.R. § 60-40.1. Consistent with the general policy of disclosure to aid in eliminating employment discrimination, the regulations provide:
Upon the request of any person for identifiable records obtained or generated pursuant to Executive Order 11246 (as amended) such records shall be made available for inspection and copying, notwithstanding the applicability of the exemption from mandatory disclosure set forth in 5 U.S.C. 552 subsection (b), if it is determined that the requested inspection or copying furthers the public interest and does not impede any of the functions of the OFCC or the Compliance Agencies except in the case of records disclosure of which is prohibited by law.
41 C.F.R. 60-40.2(a). Thus the regulations contain a blanket waiver of any authority the government might have to resist disclosure of any information which falls into one of the nine categories of information which are exempt from mandatory disclosure under the FOIA. OFCC’s regulations also provide that.. all contract compliance documents within the custody of the OFCC and the Compliance Agencies shall be disclosed upon request unless specifically prohibited by law or as limited elsewhere herein.” 41 C.F.R. § 60-40.2(b). This blanket and mandatory disclosure requirement with respect to compliance documents is qualified in 41 C.F.R. § 60-40.3(a), which lists six categories of documents or parts thereof which “are exempt from mandatory disclosure by the OFCC and the compliance agencies, and should be withheld if it is determined that the requested information does not further the public interest and might impede the discharge of any of the functions of the OFCC or the Compliance Agencies.” Thus, even information within these six categories may be disclosed if OFCC determines that such disclosure is in the public interest and does not impede the discharge of the functions of OFCC or its compliance agencies. Finally, 41 C.F.R. §.60-40.4 provides that EEO-1 reports shall be disclosed, even though the same forms are furnished to the Equal Employment Opportunity Commission (EEOC) and EEOC is statutorily prohibited from disclosing EEO-1 reports in its possession.
The contested documents in this case include Chrysler’s EEO-1 reports and information which falls under three of the six exempt categories defined in 41 C.F.R. § 60-40.3(a), namely: (1) those parts of Chrysler’s AAP’s which contain confidential commercial information indicating that a contractor plans major changes or shifts in his personnel requirements not yet publicly disclosed, (2) those parts of Chrysler’s AAP’s which set forth staffing patterns and pay scales the release of which would injure the business or financial position of the contractor, and (3) compliance investigation files and related documents to the extent that such information constitutes trade secrets and confidential commercial or financial information.
II
THE AGENCY PROCEEDINGS
On May 14, 1975, DSA notified Chrysler that third parties had requested under the FOIA the disclosure of the 1974 AAP of Chrysler’s Newark, Delaware, assembly plant and the October 1974 CIR for that facility. Chrysler, on May 23, 1975, objected to the requested disclosure of the AAP, relying on the FOIA exemptions and OFCC disclosure regulations. It also requested a copy of the October 1974 CIR, which it had never seen, so that it could determine which parts of it should be treated as confidential. On May 30, 1975, DSA notified Chrysler that it had determined that the Newark AAP and CIR were subject to disclosure under the FOIA and OFCC disclosure rules, that Chrysler would not be furnished with a copy of the CIR prior to disclosure, and that both documents would be disclosed on June 4, 1975.
On July 1, 1975, DSA notified Chrysler that it had received a request under the FOIA for disclosure of the AAP and CRR for Chrysler’s Hamtramck, Michigan, assembly plant. The July 1 notice indicated that under the recent amendments to the FOIA, Pub.L. No. 93-502, 5 U.S.C. § 552(a)(6)(A)(i), DSA was required to make a substantive decision on release of these documents within ten working days of receipt of the request and for that reason could not await the results of an appeal to OFCC under 41 C.F.R. § W-GOA^d) The DSA letter suggested that any comments Chrysler wished 'to make should be made promptly. Chrysler, by letters dated July 3 and July 11, 1975, objected to the disclosure of the documents relating to its Hamtramck plant, contending that both the AAP and CRR were exempt from disclosure under the FOIA and also that disclosure of certain information contained in the AAP, including EEO-1 data, was prohibited by 18 U.S.C. § 1905, by § 709(e) of the Civil Rights Act of 1964,42 U.S.C. § 2000e-8(e), and by 44 U.S.C. § 3508. Chrysler’s letter also requested a copy of the Hamtramck CRR, which it had never seen. On July 18, 1975, DSA replied in part:
Full consideration has been given by this agency to your comments and objections. Nevertheless, a determination has been made to release both the Affirmative Action Plan and the Compliance Review Report to the requester, subject to the exceptions noted in the attached list for the reasons given therein. Your assertions of competitive harm were unsupported by any showing of the likelihood of such harm, and only in one context would we agree to the existence of such a likelihood without such a showing. This is reflected in the first ten exceptions on the attached list.
This decision may be appealed to the Office of Federal Contract Compliance,
Washington, D. C., 20210, within 10 days, per 41 C.F.R. 60-60.4. However, due to the time constraints imposed by the recent amendments to the Act (Public Law 93-502), we cannot wait for the results of such an appeal. Accordingly, the subject documents, with deletions as noted in the attached list, will be released 5 ■working days after your receipt of this letter.
(JA-100). The July 18 letter also made clear DSA’s position that neither 18 U.S.C. § 1905,42 U.S.C. § 2000e-8(e), nor 44 U.S.C. § 3508 applied to any part of the AAP, report, including the EEO-1 data.
Ill
THE DISTRICT COURT PROCEEDINGS
Faced with the DSA determination that the FOIA, as amended, prohibited the agency from withholding disclosure while Chrysler exhausted an administrative appeal to OFCC, Chrysler commenced this action in the district court on June 4, 1975. The initial complaint, which was filed before Chrysler learned of the request for disclosure of the Hamtramck documents, only sought injunctive relief against disclosure of the documents relating to the Newark, Delaware plant and a declaratory judgment that public disclosure of any similar documents was prohibited by law. The district court issued a temporary restraining order which prohibited disclosure of the Newark plant documents and which required the defendants to give Chrysler five days notice prior to the release of any similar documents relating to any of its other facilities. When DSA notified Chrysler of its intention to release the Hamtramck plant documents, it amended the complaint to refer to those documents and obtained from the district court temporary relief covering them as well.
Chrysler’s amended complaint contained three counts. First, Chrysler charged that disclosure of any portion of its AAP’s, EEO-l’s, CIR’s, or CRR’s relating to any of its facilities would be unlawful under exemptions (b)(3)(4)(5) and (7) of the FOIA, 5 U.S.C. § 552(b)(3)(4)(5) and (7), under 42 U.S.C. § 2000e-8(e), under 18 U.S.C. § 1905, and under 44 U.S.C. § 3508. Second, it alleged that such disclosure would be an abuse of agency discretion since it would be contrary to 41 C.F.R. § 60-40.3(a) and 29 C.F.R. §§ 70.21, 70.-22, 70.24, and 70.31. Third, it contended that the POIA and OFCC disclosure rules as applied to Chrysler violate due process in that they afford no meaningful right to be heard initially or on appeal before disclosure of Chrysler’s confidential information. By a stipulation and consent order the pendente lite restraints were continued until final hearing. In its pre-trial papers the government defendants objected to the court’s jurisdiction and to the holding of an evidentiary hearing. The court reserved decision on these objections until a decision on the merits. Trial on the merits was held on August 25 and 26, 1975, and thereafter the parties filed a detailed “Stipulation of Facts and Issues.”
The district court’s opinion correctly holds that there is subject matter jurisdiction under 28 U.S.C. § 1331(a). On the merits the court found that part of the information the agency proposed to release, described generically as the “manning tables,” was confidential commercial information, the release of which could cause Chrysler substantial competitive harm. On the basis of this finding the court con-eluded that the manning tables constituted information falling within exemption (b)(4) of the FOIA and was therefore exempt from its mandatory disclosure provisions. The court then reasoned that since the manning tables constituted exempt information under the FOIA, whether DSA possessed the power to disclose these documents was to be determined by reference to other federal disclosure statutes, apart from the FOIA. Thus the court rejected Chrysler’s argument that the FOIA creates a so-called reverse FOIA cause of action based on the theory that Congress, by exempting certain information from mandatory disclosure, intended to prohibit absolutely all agency disclosure of such exempt information under any circumstances. Instead, the court held that 18 U.S.C. § 1905, a criminal statute, made it a crime for a government employee to disclose the manning tables. Observing that the Secretary of Labor, on the authority of 5 U.S.C. § 301, a general statute providing for the use and custody of government records, promulgated 29 C.F.R. § 70.21(a), which forbids disclosure of confidential information the release of which would violate 18 U.S.C. § 1905, the court concluded that DSA was acting in violation of its own regulations and contrary to law. Thus, it construed what it held to be DSA’s governing regulation as consistent with 18 U.S.C. § 1905. It issued the injunction appealed from on the authority of 5 U.S.C. § 706(2)(A) to prevent agency action “not in accordance with law.” The court also held that 42 U.S.C. § 2000e-8(e) was inapplicable and rejected Chrysler’s due process contentions.
IV
DISCUSSION
This case is one of a burgeoning number growing out of the conflict between the demands of federal regulatory agencies, as a necessary by-product of their regulatory activities, for the submission by private businesses of detailed financial, commercial and employee information, which would not voluntarily be disclosed to competitors, and the public access to most information in federal agency files which is mandated by the FOIA. It is, however, the first occasion which requires this Court to consider a reverse FOIA case, in which a corporate plaintiff (the submitter) seeks to enjoin an agency from disclosing submitter-generated business information The case presents several important issues about agency management of such information, about agency discretion to disclose information in the public interest, about submitter rights prior to disclosure, and about the availability of remedies for the prevention of disclosure.
The FOIA requires agencies to disclose upon request any information not falling within one of nine specifically exempted categories. The arguments of Chrysler and other corporate submitters seeking to prevent disclosure break down into three broad categories. First, Chrysler and others have urged that the FOIA itself both prohibits agency disclosure of information falling within any of the nine exemptions and affords an implied cause of action for injunctive or declaratory relief to prevent such disclosure. Second, they have claimed that even if the FOIA does not prohibit agency disclosure of exempt FOIA information, other statutes, such as 18 U.S.C. § 1905 and 42 U.S.C. § 2000e-8(e) do so and afford an implied cause of action. Third, they contend that disclosure of submitter-generated business information that is exempt under the FOIA or protected by some other federal statute or regulation is an abuse of agency discretion subject to judicial review under the Administrative Procedure Act at the behest of a submitter adversely affected by such agency action. The first two categories would afford relief in the form of a trial de novo, while in the third judicial review would be limited to that available under 5 U.S.C. § 706. The posture of this appeal and cross-appeal requires that we address each theory on which a reverse FOIA action could be founded.
A. The Freedom of Information Act
The FOIA expressly creates a cause of action in favor of requesters of information to enjoin federal agencies from withholding information. It does not by its terms provide a cause of action for submitters of information to prevent disclosure. But while there is no express provision for an action by submitters, the FOIA’s nine categories of exempt information reveal a Congressional concern that disclosure of certain information might injure interests in privacy or confidentiality which may be as important as the public’s right to general access to agency information. The fourth FOIA exemption, for example, covers “trade secrets and commercial or financial information obtained from a person and privileged or confidential.” There is ample Congressional history suggesting that Congress sought to afford some protection of submitters’ interest in the confidentiality of such information. Moreover we recognize that disclosure of submitter information is qualitatively different from disclosure of data directly relating to government operations and that the interest in privacy appears stronger with respect to the former than the latter. But while the Congressional concern over confidentiality of submitter information is clear, an intention to make mandatory the non-disclosure of exempt information is less so, and the evidence of an intent to create a submitter cause of action is practically non-existent.
Among the circuits which have considered the issue, the District of Columbia and the Fifth Circuits have held that the FOIA exemptions are permissive and do not mandate agency withholding of exempt information. The Fourth Circuit has held that the exemptions mandate non-disclosure. The Ninth Circuit, while first holding that the exemptions are mandatory, on rehearing withdrew that part of its opinion as premature. The closest the Supreme Court has come to addressing the issue is the statement in E. P. A. v. Mink, 410 U.S. 73, 80, 93 S.Ct. 827, 832, 35 L.Ed.2d 119 (1973), that the FOIA exemptions represent “the congressional determination of the types of information that the Executive Branch must have the option to keep confidential, if it so chooses.” In our view, none of the opinions referred to contains a complete analysis of the myriad problems presented in reverse FOIA cases.
We conclude that Congress in the FOIA intended neither that the exemptions make non-disclosure mandatory, nor that they provide the predicate for an implied cause of action. The two questions are interdependent, since it would obviously be difficult to imply a cause of action under the FOIA to bar government officials from releasing information the disclosure of which Congress intended to leave to agency discretion or other federal disclosure statutes. Both the plain language of § 552(b) and the Congressional reports and debates suggest that no more was intended than a discretionary exception to the general mandatory duty of disclosure. Nor can we ignore the contrast between the FOIA’s express grant of a cause of action for requesters of information and its silence respecting submitter relief. Moreover, we note that when Congress in the Privacy Act of 1974 decided to create a civil cause of action to enjoin agency disclosure of FOIA exempt information, it did so explicitly. See 5 U.S.C. § 552a(g)(l) (Supp. V 1975). But only private persons, not business entities, were afforded this protection. Finally, we think that judicial reconstruction of the statute to imply from the exemptions either a mandatory duty of non-disclosure or a cause of action to prevent disclosure would be inconsistent with the basic purpose of the FOIA, which was not to afford confidentiality, but to overcome restrictive agency interpretations of the original public information section of the Administrative Procedure Act. The general philosophy reflected in the FOIA is that of full agency disclosure to provide the public with speedy access to relevant information. Recognizing an implied cause of action to prevent agency disclosure of exempt FOIA information would, we think, be inconsistent with that general philosophy, since it would place in the hands of interested submitters of information, rather than those of presumably disinterested governmental officials, the authority to take steps which might impede the dissemination of information of public importance. Thus we hold that the FOIA’s language, legislative history, and philosophy of full disclosure bar a construction of the Act which mandates agency withholding of exempt information or recognizes an implied cause of action to prevent the disclosure of such information.
B. Other Non-Disclosure Statutes
Although we conclude that the FOIA does not limit the discretionary power of federal agencies to disclose exempt FOIA information, we recognize that the exercise of this discretionary authority may be prohibited, or substantially curtailed, by other federal non-disclosure statutes. See FAA Administrator v. Robertson, supra, 422 U.S. at 264-66, 95 S.Ct. 2140. Chrysler contends that, apart from the FOIA, at least three non-disclosure statutes prohibit DSA from releasing the contested documents. Our consideration of that contention requires, with respect to each statute, the same dual inquiry we made respecting the FOIA: (1) does the statute forbid disclosure of the documents in issue; and (2) if so, can a private cause of action be implied from it.
1. 18 U.S.C. § 1905.
The statute on which Chrysler and most other reverse FOIA plaintiffs place principal reliance is 18 U.S.C. § 1905. On its face, this broadly worded criminal statute encompasses virtually every category of business information likely to be in the files of any federal agency. However, in Westinghouse Elec. Corp. v. Nuclear Regulatory Commission, supra, we noted that § 1905’s broad non-disclosure prohibitions apply only to disclosures “not authorized by law” and held that information disclosed pursuant to a validly enacted agency regulation is authorized by law. Chrysler urges that in Westinghouse we erred, that an agency regulation does not have the force of law for purposes of § 1905, and that only specific Congressional statutes can authorize the release of information covered by § 1905. Moreover, it urges that even assuming the correctness of Westinghouse, disclosures pursuant to the OFCC disclosure regulations are not authorized by law for purposes of § 1905, because these regulations were adopted under the authority of 5 U.S.C. § 301 and because Congress intended that § 301 not be used to limit the scope of § 1905.
While our discussion of the scope of the “not authorized by law” qualification to § 1905 in Westinghouse was not extended, we are confident that the holding is correct. In Westinghouse we found authority for the promulgation of the Nuclear Regulatory Commission’s disclosure regulations in that agency’s Congressionally enacted enabling act. That holding was consistent with those of the Supreme Court in cases involving the disclosure of information by other federal agencies. Though OFCC has no statutory enabling act, it is authorized to promulgate disclosure regulations under the so-called housekeeping statute, 5 U.S.C. § 301, which provides in part:
The head of an executive department or military department may prescribe regulations for the custody, use, and preservation of its records, papers, and property. This section does not authorize withholding information from the public or limiting the availability of records to the public.
Section 301 can be traced to the Act of July 27, 1789, Ch. 4, § 4, 1 Stat. 28, dealing with records of the State Department, and the Act of August 7,1789, Ch. 7, § 4,1 Stat. 49, dealing with records of the War Department. Various housekeeping statutes were collected and codified in 1874, and, as codified, granted authority to prescribe disclosure regulations. The present version, and in particular the last sentence, was enacted in 1958. The legislative history makes clear that the addition of the last sentence was aimed at stopping agencies from relying on the housekeeping statute as authority to deny the requests of citizens for information.
In Non-Resident Taxpayers Ass’n v. Municipality of Philadelphia, 478 F.2d 456 (3d Cir. 1973), we held that § 301 authorized a Bureau of the Budget circular that instructs executive departments to furnish information to state and local taxing authorities regarding compensation paid to federal employees. Such a disclosure, absent the regulation, would clearly conflict with the broad language of § 1905. Thus, although we did not expressly address § 1905 in Non-Resident Taxpayers Ass’n, the holding is consistent with our conclusion in Westinghouse, that disclosures pursuant to validly adopted agency regulations are not subject to the strictures of § 1905.
We have been referred to no legislative history suggesting that § 1905, a 1948 codification of a group of statutes applicable to specific agencies was intended to limit the longstanding rulemaking authority under the 1874 codification of the housekeeping statute. Nor do we attach to the statement of Congressman Moss, respecting the 1958 amendment to the housekeeping statute (adding the last sentence of § 301), the same significance as did the District of Columbia Circuit in Charles River Park “A”, Inc. v. Department of HUD, supra, 519 F.2d at 942-43. Relying on Congressman Moss’ statement that the 1958 amendment “does not affect the confidential status of infor'mation given to the government and carefully detailed in Title 18, United States Code, Section 1905.,”, that court concluded that “§ 301 does not authorize regulations limiting the scope of § 1905.” In doing so, however, the court took the statement out of context. Congressman Moss only stated that the amendment would not affect the confidential status of information covered by § 1905. He did not say that the amendment eliminated disclosure authority existing since 1789 or that it eliminated the “authorized by law” qualification in § 1905. Such an interpretation of the 1958 amendment is totally at odds with its central purpose — the elimination of governmental secrecy — as it would transmogrify § 1905 into a weapon for those parties who advocate government secrecy. Thus we adhere to the position we took in NonResident Taxpayers Ass’n, that § 301 is a separate source of agency authority for the promulgation of disclosure regulations and that disclosures pursuant to such regulations are authorized by law and immune from the prohibitions of § 1905. Since the OFCC disclosure regulations are valid under § 301, all disclosures pursuant to those regulations are authorized by law and therefore not subject to § 1905.
Since we find authority for the promulgation of the OFCC disclosure regulations in § 301, we need not consider whether the FOIA itself, properly construed, is an independent source of authority for the promulgation of disclosure regulations for exempt information. Nor need we decide whether, absent § 301, Executive Order 11246, which confers authority on the Secretary of-Labor to adopt “such rules and regulations... as he deems necessary to achieve the' purposes of the order”, is a separate source of authority for such promulgation. Our deferment of these grounds for sustaining the regulations should not be considered an expression of doubt as to these sources of authority, but only of confidence in our prior § 301 holding.
Even if we were incorrect in the Westinghouse holding that agency regulations are laws for purposes of the qualification to § 1905, we would, in any event, réject the proposition that § 1905, would serve as a predicate for a private civil cause of action. Recent pronouncements of the Supreme Court have severely limited' the circumstances in which a federal court may imply a private cause of action from a federal statute. Whatever the merits of this trend, the decisions bind us. Here the criminal statute provides for a fine of not more than $1000, imprisonment for not more than a year, and automatic removal from office upon conviction. The adequacy of these penalties would seem to assure the achievement of the Congressional objectives underlying § 1905. The very breadth of the prohibitions in § 1905 militates against opening the courts to civil suits which may involve substantial problems of construction. Moreover, as we hold hereafter, there is an available remedy under the Administrative Procedure Act, in which judicial review will be enlightened by agency interpretation. We do not believe we can properly imply a cause of action, and thus the right to a trial de novo, from § 1905.
2. 42 U.S.C. § 2000e-8(e)
Section 709(e) of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-8(e), is a criminal statute making it unlawful
for any officer or employee of [EEOC] to make public in any manner whatever any information obtained by [EEOC] pursuant to its authority under this section prior to the institution of any proceeding under this subchapter involving such information.
Like § 1905, the maximum fine is $1000 and the maximum imprisonment one year. And, as with § 1905 and the FOIA, we must determine both whether the prohibition in § 709(e) applies and, if it does, whether a private cause of action for its enforcement may be implied. By its terms § 709(e) applies only to employees of EEOC and only to information obtained by that agency on its own statutory authority. Since it is a criminal statute, ordinary rules of construction would seem to preclude its application, at least in a criminal enforcement context, to officers or employees of a different agency or to information obtained by a different agency under that agency’s separate authority. Two circuits have concluded that OFCC compliance agencies are not governed by the § 709(e) prohibition. Chrysler argues that those cases were wrongly decided, first, because OFCC and EEOC are performing identical antidiscrimination functions and, second, because the EEO-1 reports are filed initially with the Joint Reporting Committee, which it describes as the alter ego of EEOC.
It has long since been settled in this circuit that the federal government’s anti-discrimination effort directed at government contractors rests upon a different authority and even serves a different, though complementary, purpose than the efforts of EEOC. The Executive Order program antedated the passage of Title VII, and Congress has rejected proposals to transfer the Executive Order functions of OFCC to EEOC. The two agencies function independently, and we decline the invitation to disregard that independence in order to read § 709(e) as applicable to OFCC compliance agencies such as DSA.
The argument that the Joint Reporting Committee (JRC) is the alter ego of EEOC and that all EEO-1 forms filed with JRC must therefore fall within § 709(e) is no more persuasive. The JRC is a consequence of the 1972 amendments to Title VII which established the Equal Employment Opportunity Coordinating Council, 42 U.S.C. § 2000e-14. The Coordinating Council is responsible for, among other things, implementing inter-agency agreements to eliminate duplication among the operations, functions, and jurisdictions of various federal agencies enforcing federal antidiscrim-ination employment policies. JRC was organized by the Coordinating Council to streamline the collection of employment discrimination information and to distribute it, without the necessity for multiple filings, to the separate agencies involved. It is clear that JRC is the agent of several enforcement authorities. Nevertheless, nothing in 42 U.S.C. § 2000e-14 or in the implementing regulations which created JRC suggests an intention to extend the applicability of § 709(e) to federal employees outside EEOC or to information possessed by other agencies on their own authority.
Even assuming the applicability of § 709(e) to DSA, we are no more persuaded that a private cause of action can be implied from this criminal statute than from § 1905. The same reasons for our rejection of a private cause of action implied from § 1905 apply to § 709(e), and we will not repeat them. Chrysler’s argument for a right to a trial de novo based on § 709(e) of Title VII is rejected.
3. 44 U.S.C. § 3508
Section 423 of the Federal Reports Act of 1942, now codified as 44 U.S.C. § 3508, provides:
(a) If information obtained in confidence by a Federal agency is released by that agency to another Federal agency, all the provisions of law including penalties which relate to the unlawful disclosure of information apply to the officers and employees of the agency to which information is released to the same extent and in the same manner as the provisions apply to the officers and employees of the agency which originally obtained the information. The officers and employees of the agency to which the information is released, in addition, shall be subject to the same provisions of law, including penalties, relating to the unlawful disclosure of information as if the information had been collected directly by that agency.
(b) Information obtained by a Federal agency from a person under this chapter may be released to another Federal agency only—
(1) in the form of statistical totals or summaries; or
(2) if the information as supplied by persons to a Federal agency had not, at the time of collection, been declared by that agency or by a superior authority to be confidential; or
(3) when the persons supplying the information consent to the release of it to a second agency by the agency to which the information was originally supplied; or
(4) when the Federal agency to, which another Federal agency releases the information has authority to collect the information itself and the authority is supported by legal provision for criminal penalties against persons failing to supply the information.
Chrysler argues that by virtue of the second sentence in § 3508(a) the employees of DSA are subject to the criminal provisions of § 709(e) of Title VII, even though that criminal statute would otherwise be applicable only to EEOC employees. This argument, however, assumes that DSA obtained the information in question from EEOC. Clearly that is not the case with respect to the AAP’s, the CIR’s, or the CRR’s. Though DSA and EEOC both obtain Chrysler’s EEO-1 reports from the JRC, in the preceding subsection we rejected Chrysler’s contention that the JRC is an alter ego of EEOC, rather than a collection agent of both EEOC and OFCC. Since DSA did not obtain the EEO-1 reports from EEOC but, instead, obtained this information on its own behalf in the first instance, § 3508(a) does not apply. Sears, Roebuck & Co. v. GSA, 166 U.S.App.D.C. 194, 509 F.2d 527, 529 (1974). Nor may Chrysler argue that the provisions of § 3508(b) prohibit DSA from publicly disclosing the contested documents, since this subsection only governs inter-agency transfers of information and is not applicable to agency decisions to disclose information to the general public.
We hold that § 3508 is entirely inapplicable to the case before us. Whether this statute, which contains no sanctions, would support an implied private cause of action to prevent inter-agency transfers of information in violation of its terms is a question of some difficulty, which we do not here decide.
C. The Administrative Procedure Act
The government first took the position that there could be no judicial review, on behalf of a submitter, of an agency decision to release information requested by third parties under the FOIA. It now concedes that judicial review pursuant to the Administrative Procedure Act (APA) is available because a submitter may be “[a] person suffering legal wrong because of agency action... within the meaning of a relevant statute.” In light of that concession there is no need to expound at length on the reasons why we agree with those courts which have held that the APA provides
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.
JOINER, Senior District Judge.
Plaintiffs are non-union salaried employees who worked in defendants’ LaVergne, Tennessee tire plant (“the plant”) at the time of the plant’s sale to Bridgestone Tire and Rubber Company (“Bridgestone”). Plaintiffs brought this action pursuant to the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001 et seq., to recover, on account of the sale, reduction in force (“RIF”) termination pay under defendants’ termination pay plan. The district court granted defendants’ motion for summary judgment based on the ground that defendants’ determination that no RIF occurred upon the sale which would entitle plaintiffs to benefits was not arbitrary or capricious, 616 F.Supp. 409 (D.C.Tenn. 1985). Plaintiff appeals from this determination. The district court also held that defendants may become responsible for future benefits should Bridgestone terminate any plaintiff under circumstances that would constitute a RIF under the plan. Defendants cross-appeal from this decision.
I.
Firestone’s company-wide termination pay policy was set forth in its Salaried Personnel Manual (“SPM”) and Handbook for Salaried Employees (“the Handbook”). The SPM is a comprehensive and confidential document that was distributed only to personnel managers and senior executives, though relevant portions were made available to employees upon request. The Handbook was distributed to all salaried employees. The Handbook stated the employees were entitled to termination pay if they were released from the company because of a RIF. The SPM described a RIF as a termination when “necessary to eliminate a position because of reduced workload or due to economic necessity.” According to the SPM, the goal of this termination pay was to minimize “the economic and mental stress of terminated employees ... between release from Firestone and securing other employment.”
Defendants interpreted this plan to mean that if a plant was sold as an ongoing concern, no benefits would be paid. On the other hand, if a plant was not sold as such, and even if the purchaser eventually did decide to hire employees back, benefits would still be paid. Defendants explained that this “presumption of unemployment” was less expensive than the alternative of investigating each employee to see if they had been re-employed, and did not cause as much ill will with employees. Consistent with this policy, Firestone sold two plants (in Conover, North Carolina, and Arlington, Texas) not as ongoing concerns, and in each case RIF benefits were paid. Similarly, in a sale of a plant in Romeo, Michigan, only one-half of the employees could be guaranteed jobs with the purchaser, and the other one-half received RIF benefits. The only aberration dealt with the sale of the Newport, Tennessee, Firestone plant as an ongoing concern, where a one-time Service Recognition Award was paid to all employees. According to defendants, this was done to compensate the employees for the fact that the purchaser provided few benefits, and had no pension plan.
The terms of the LaVergne sale were spelled out in a seventy-five page agreement that dealt with the transfer of the plant and the continuing employment of the plant employees. The agreement explicitly stated that Firestone would not terminate any employees before the sale, and Bridge-stone would employ every plant employee. In order to meet its commitment of maintaining the plant work force, Firestone adopted a policy of not permitting transfers of plant employees to other Firestone locations. In addition, due to its interpretation of its termination pay plan as described above, employees who accepted employment with Bridgestone did not receive severance pay due to a lack of unemployment, while those who chose not to accept such employment were treated as having resigned, and would therefore be ineligible for severance pay. Pursuant to this agreement, the plant was sold as an ongoing concern on January 10, 1983, for $55,-000,000.
Plaintiffs filed the present case on January 12, 1983, alleging that defendants’ interpretation of the termination pay plan was arbitrary and capricious, and was therefore in violation of ERISA. After the filing of cross-motions for summary judgment pursuant to Fed.R.Civ.P. 56(b), the district court granted defendants’ motion on August 6, 1985. The district court began by noting that the SPM would not be heavily relied on, as its contents had not been communicated to the employees in accordance with the dictates of ERISA. In a similar vein, the district court noted that, by defendants’ own admission, Firestone had not complied with the disclosure requirements of ERISA with regard to the termination pay plan in general, but that this noncompliance was not so severe or intentional as to constitute arbitrary and capricious conduct on defendant’s part.
The district court then turned to the language of ERISA, and observed that ERISA did not provide for the vesting of employee welfare benefit plans, and that this “silence” constituted a “gap” which had to be filled by federal common law. The district court determined that plaintiffs had a binding contractual right to termination pay, with the offer being the description of the plan in the Handbook, and the acceptance being plaintiffs continuing to work for Firestone. As such, the district court concluded that plaintiffs’ entitlement to these benefits was vested, and that if Bridge-stone terminated any plaintiff in the future under circumstances that constituted a RIF under the plan, defendants would be responsible for benefits. However, the court also concluded that given defendants’ past practices, it was not improper for them to deny benefit payments at the time of the plant sale, as plaintiffs were not yet unemployed, therefore no RIF had occurred.
II.
On appeal, plaintiffs contend that defendants’ interpretation of the termination pay plan is arbitrary and capricious for two major reasons. First, plaintiffs argue that defendants’ construction of the plan has not been uniform, and the distinction defendants make between ongoing and non-ongoing concern sales is merely a “smoke screen” for inconsistency, as is demonstrated by the Newport sale. Second, plaintiffs contend that defendants have read in unemployment as a prerequisite for benefits, yet no such requirement can be found in the wording of the plan. As a result, plaintiffs argue that defendants’ approach is not consistent with a fair reading of the termination pay plan. Defendants respond that unemployment as a prerequisite is a reasonable interpretation, as the stated policy behind the plan is to decrease the trauma of unemployment. Defendants also argue that this interpretation is consistent with past readings of the plan, specifically pointing to the Conover and Arlington plant sales.
The district court granted summary judgment pursuant to Fed.R.Civ.P. 56(b) and will be affirmed only if it is determined that the record, taken as a whole, could not lead a rational trier of fact to find for the non-moving party. Matsushita Electric Industries Co., Ltd., v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). In this context, all inferences from the facts must be viewed in a light most favorable to the non-moving party. Id. However, the movant need not present evidence to negate every aspect of the non-movant’s claim, they need only support their own claim that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986).
In reviewing the decisions of plan administrators under ERISA; the appropriate standard of review is whether the decision was arbitrary, capricious, or in bad faith. Rhoton v. Central States Pension Fund, 717 F.2d 988, 989 (6th Cir.1983); Blakeman v. Mead Containers, 779 F.2d 1146, 1149 (6th Cir.1985); Cook v. Pension Plan For Salaried Employees, 801 F.2d 865, 870 (6th Cir.1986). While plaintiffs argue for more of a de novo standard, this approach has been rejected in favor of the arbitrary or capricious standard, which adequately protects the interests of employees with respect to employment benefits covered by ERISA. See Crews v. Central States Pension Fund, 788 F.2d 332, 336 (6th Cir.1986).
A reading of past cases dealing with similarly-worded termination pay plans reveals that courts have come out both ways on the issue of whether unemployment is a prerequisite for termination pay, with an important factor often being how the employer had interpreted the plan at issue in the past. In the instant case, an examination of Firestone’s past interpretation and application of the plan indicates that their present interpretation is consistent. An analysis of the Conover, Arlington, and Romeo plant sales demonstrates that regardless of whether a particular employee is employed by the plant purchaser or not, no termination benefits are paid when a plant is not sold as an ongoing concern. The only exception to this approach seems to be the Newport sale, but this court agrees with the district court that the Newport sale was a special case, and that the circumstances which lead to an exception being made are not present here. Consequently, based on consistency of interpretation, it cannot be said that defendants’ interpretation of the plan in this instance was arbitrary or capricious.
Defendants’ interpretation of the termination pay plan is also consistent with a fair reading of the plan, which as recognized by plaintiffs, is always an important consideration when judging the actions of an administrator of an ERISA plan. Blau v. Del Monte Corp., supra, 1354; Blakeman v. Mead Containers, supra, 1150. In analyzing plans such as the one at issue, courts have often held that unemployment should be a prerequisite for benefits, as severance pay is generally intended to tide an employee over while seeking a new job, and should be considered more of an unemployment benefit. Sly v. PR Mallory & Co. Inc., supra, 1211; Jung v. FMC, supra, 713; Holland v. Burlington Ind., Inc., supra, 1149. This is certainly appropriate in the instant case, as the SPM states that the goal of the plan is to reduce the stress of terminated employees between the time of their release and securing other employment. This court believes that it is a fair reading of the plan to require unemployment as a prerequisite to finding that a RIF occurred which justifies the payment of termination pay.
Accordingly, because there is no question that a RIF did not occur in this case, the district court was correct in holding that defendants’ interpretation and application of the plan to plaintiffs was not arbitrary or capricious.
III.
In their cross-appeal, defendants argue that the district court erred in holding that plaintiffs’ entitlement to termination pay was vested under ERISA. Initially, defendants claim that the fact that ERISA specifically provides for the vesting of pension benefits, but not for employee welfare benefit plans, is an intentional omission which indicates that Congress did not intend for such plans to be vested. It is not a gap, they argue, that requires federal common law interpretation. Defendants then go on to argue that the analysis of the district court that the gap should be filled by a contract analysis has been recently rejected by this court in In re White Farm Equipment Co., 788 F.2d 1186 (6th Cir. 1986). Plaintiffs take the same position the district court did, arguing that the contract approach is appropriate, and that the termination pay plan is the result of a bargained-for exchange.
This court will not address this issue, as it is not properly before us, nor was it properly before the district court. The jurisdiction of federal courts is limited by Article III of the United States Constitution to consideration of actual cases and controversies, therefore federal courts are not permitted to render advisory opinions. Princeton University v. Schmid, 455 U.S. 100, 102, 102 S.Ct. 867, 868, 70 L.Ed.2d 855 (1982); Big Rivers Electric Corp. v. Environmental Protection Agency, 523 F.2d 16, 19 (6th Cir.1975), cert. denied, 425 U.S. 934, 96 S.Ct. 1663, 48 L.Ed.2d 175 (1976). The vesting question was not mentioned in the complaint, nor by any party in a motion for summary judgment, and was therefore never before the district court. As such, there was no actual vesting case or controversy for the district court to rule on, so the district court rendered an advisory opinion. This action was clearly improper, and must be vacated.
IY.
The decision of the district court granting defendants’ motion for summary judgment is AFFIRMED except for that part which holds that plaintiffs’ entitlement to termination pay is vested. As to that part of the district court’s decision, it is VACATED.
RYAN, Circuit Judge, concurs in the result and the court’s judgment.
. The plan is funded entirely by Firestone, and applies to non-union employees. Union employees subject to collective bargaining agreements have separate termination pay rights under those agreements.
. A sale as an ongoing concern is where there is a contractual agreement that all employees of the seller will be employed by the purchaser.
. The denial of severance benefits at the plant saved Firestone approximately $2,500,000.
. The plant employees left work on Friday working for Firestone, and when they returned to work on the following Monday, they were working for Bridgestone. In the two years following the sale, only two former Firestone employees had been terminated, and both were terminated for cause.
. The district court concluded that the termination pay plan constituted an employee welfare benefit plan for the purposes of ERISA, and this conclusion is not disputed on appeal.
. According to the district court, defendants would be responsible for benefits accrued up to the date of the plant sale to Bridgestone.
. The district court distinguished the Newport sale, stating that while Bridgestone did not offer termination pay, the benefits it did offer were comparable to those offered by Firestone, and were much better than those offered by the purchaser in the Newport case.
. For cases holding that unemployment is a prerequisite to entitlement to termination pay, see, Sly v. PR Mallory & Co., Inc., 712 F.2d 1209, 1213 (7th Cir.1983); Jung v. FMC, 755 F.2d 708, 713 (9th Cir.1985); Holland v. Burlington Ind., Inc., 772 F.2d 1140, 1145 (4th Cir.1985), aff’d, - U.S. -, 106 S.Ct. 3267, 91 L.Ed.2d 559 (1986); Blakeman v. Mead Containers, supra, 1151. For cases reaching an opposite conclusion, see Blau v. Del Monte Corp., 748 F.2d 1348, 1356 (9th Cir.1984), cert. denied, 474 U.S. 865, 106 S.Ct. 183, 88 L.Ed.2d 152 (1985); Anderson v. CIBA-Geigy Corp., 759 F.2d 1518, 1521 (11th Cir.1985), cert. denied, 474 U.S. 995, 106 S.Ct. 410, 88 L.Ed.2d 360 (1985); Harris v. Pullman Standard, Inc., 809 F.2d 1495 (11th Cir.1987).
. This is not to say that an employer may not, if it so desires, provide severance pay without the presence of unemployment, as Firestone does with employees at plants not sold as ongoing concerns. If such an approach is taken, the main concern will then be that the approach is consistently followed in similar cases, and as the above discussion indicates, that consistency is present here.
. Plaintiffs argue that this court should not rely on the SPM for any analysis, because it was not properly disseminated to Firestone employees. While it is true that the SPM was not appropriately distributed to all employees, it would be elevating form over substance not to consider the clear intent of the termination pay plan as expressed in the SPM.
. Harris v. Pullman Standard, Inc., 809 F.2d 1495 (11th Cir.1987), submitted by plaintiffs after the instant case was argued, is distinguishable. First, unlike the instant plan language, the severance pay plan language in Harris more strongly suggested that unemployment was not a prerequisite to termination pay. 809 F.2d at 1498, 1499. Second, in Harris the plan administrator’s interpretation of the severance pay plan was not consistent with its past practices, 809 F.2d at 1499, while here, defendants have consistently interpreted the plan.
. See 29 U.S.C. § 1051(1); McBarron v. S & T Industries, 771 F.2d 94, 97 (6th Cir.1985).
. If this court reviewed the district court’s decision, it is likely that it would be reversed in light of In re White Farm Equipment Co., 788 F.2d 1186, 1192-1192 (6th Cir.1986), which rejects the district court’s contract analysis.
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.
McKAY, Circuit Judge.
Plaintiff brought this action alleging breach of contract and patent infringement. After plaintiff presented its evidence to the jury, the trial court directed verdicts in favor of the defendant on both counts. Defendant sought leave to file a motion for costs and attorney’s fees. The motion was denied. Plaintiff appeals from a final judgment entered on the directed verdicts and defendant cross-appeals on the attorney’s fees issue.
In 1969, plaintiff, Dataq, began developing an electronic gasoline dispensing system for use in service stations. In the summer of 1969, defendant, Tokheim Corporation, a large manufacturer of gasoline pumps, became interested in acquiring the plaintiff corporation. The parties entered into an agreement, dated August 29, 1969, whereby the plaintiff was to disclose confidential information regarding the development of its electronic gasoline dispensing system. The purpose of the agreement was to allow the defendant to evaluate the development information and the potential acquisition of the plaintiff. The agreement was to terminate upon occurrence of a number of conditions, which are not at issue here, or on August 1, 1971. While the agreement was in effect, the parties continued to exchange information and the plaintiff continued to develop the gasoline dispensing system. The parties never reached an agreement as to defendant’s acquisition of the plaintiff.
On September 20, 1973, the plaintiff applied for.a patent on its dispensing system. The patent was subsequently granted. However, in September 1972, the defendant had begun marketing its own gasoline dispensing system and by the early 1980’s had introduced a total of three models. Plaintiff brought this action alleging that the defendant developed its systems by utilizing the confidential information disclosed pursuant to the August 29, 1969, agreement and that this use of the disclosed information violated the terms of the agreement. Plaintiff also alleged that the systems developed by defendant infringe on plaintiff’s patent.
STANDARD OF REVIEW
The standard for reviewing a directed verdict is whether there is a genuine issue of material fact to be resolved by the trier of fact. Black, Sivalls & Bryson, Inc. v. Keystone Steel Fabrication, Inc., 584 F.2d 946, 951 (10th Cir.1978). A verdict should “be directed where both the facts and the inferences to be drawn from the facts point so strongly in favor of one party that the court believes that reasonable men could not come to a different conclusion.” Id. (quoting 5A Moore’s Federal Practice 1 50.02[1] (2d ed. 1977)). As we concluded in Black, in light of these exacting standards, directed verdicts should be granted cautiously and sparingly. Id. In applying this standard, we must view the evidence in the light most favorable to the party against whom the verdict was directed. We must give that party the benefit of all inferences which the evidence fairly supports, even though contrary inferences could reasonably be drawn. Id.
CONTRACT CLAIM
Under Oklahoma law, an action for breach of a written contract must be brought within five years of the date the cause of action accrues. Okla.Stat.Ann. tit. 12 § 95 (West Supp.1983). A cause of action accrues when the party owning it has a legal right to sue, see Sherwood Forest No. 2, Corp. v. City of Norman, 632 P.2d 368, 370 (Okl.1980), and is intended to run against those who are neglectful of their rights and fail to use reasonable and proper diligence in enforcing them. Seitz v. Jones, 370 P.2d 300, 302 (Okl.1961); see also, Equilease Corp. v. State Federal Savings and Loan Association, 647 F.2d 1069, 1073 (10th Cir.1981).
The confidentiality agreement herein, terminated, by its own terms, on August 1, 1971. Plaintiff filed its complaint on September 29, 1978. Finding that there was no genuine issue of material fact as to whether the statute of limitations had been tolled, the trial court directed a verdict against the plaintiff on its contract claim because the plaintiff did not bring this action within five years of August 1, 1971.
Plaintiff argues on appeal that it did present evidence sufficient to raise a genuine issue of material fact as to whether the statute of limitations had been tolled, and therefore the trial court erred in directing a verdict in defendant’s favor. Plaintiff contends that the statute of limitations may be tolled several ways. We need not address each of the theories plaintiff raises since under any of the theories, the statute is only tolled until plaintiff knew or, in the exercise of reasonable diligence, should have known of the breach. Redwine v. Baptist Medical Center, 679 P.2d 1293 (Okl.1983) (reprinted at 54 Okla. Bar J. 1272, 1273 (1983)); see also, Flowers v. Stanley, 316 P.2d 840, 846 (Okl.1957). Viewing the evidence in the light most favorable to the plaintiff, we have reviewed the record and conclude that the trial court properly directed a verdict in favor of the defendant on plaintiffs contract claim. The evidence produced at trial and any inferences fairly drawn from it clearly supports the trial court’s findings that the plaintiff was aware that “something may have been amiss concerning the Defendant’s obligations under the confidentiality agreement” by November of 1972. Record, vol. 2, at 618. Thus, if there was any tolling of the statute after the contract expired on August 1, 1971, the statute was tolled only until November 1972. Plaintiff did not bring its action until almost six years after November 1972.
PATENT INFRINGEMENT CLAIM
Title 35 U.S.C. § 102(b) (1976) provides that a person is entitled to a patent unless “the invention was ... on sale in this country, more than one year prior to the date of the application for patent in the United States ____” The trial court directed a verdict against plaintiff on its patent infringement claim because the court found that plaintiff’s dispensing system was “on sale” prior to the one-year period. The court also found that the plaintiff failed to present evidence sufficient for submission to a jury to bring plaintiff’s device within the experimental use exception to section 102(b). Record, vol. 2, at 620; see McCullough Tool Co. v. Well Surveys, Inc., 343 F.2d 381, 393-94 (10th Cir.1965), cert. denied, 385 U.S. 990, 87 S.Ct. 601, 17 L.Ed.2d 451 (1966). Thus, the trial court found that plaintiff’s patent was invalid and therefore there was no infringement issue for the jury to decide.
The issue on appeal is whether the trial court erred in directing a verdict that plaintiff’s dispensing system was “on sale” pri- or to one year before the patent application was filed. We need not reach a determination of the trial court’s ruling on the experimental use exception if the device was not “on sale.” See Manufacturing Research Corp. v. Graybar Electric Co., 679 F.2d 1355, 1362 (11th Cir.1982).
The alleged “sale” in this action is plaintiff’s acceptance of a purchase order from an Oklahoma corporation, which is not a party to these proceedings. The purchase order was accepted by plaintiff on August 20, 1972, one year and twenty-one days prior to plaintiff filing the patent application. At the time plaintiff accepted the purchase order, the dispensing system in question had been developed to the point where circuit diagrams had been drawn and “tapings” prepared. The “tapings” consisted of adhesive tapes mounted on flat sheets of plastic. The tapes corresponded to the connections shown in the circuit diagrams. After the purchase order was accepted, the tapings were shipped to a firm which converted them to photographic negatives, and then converted the negatives into printed circuit boards. After the circuit boards were completed, plaintiff still had to physically insert electronic chips into the holes in the boards and solder the chips to connectors. After that, plaintiff had to test the unit in laboratory conditions before connecting it with on-site hardware. Plaintiff presented evidence that until a prototype was built and tested, it did not know whether the system would work.
This court has never considered the stage of development which an invention must have reached before it can be “on sale.” After carefully reviewing the case-law in other circuits, we adopt the test applied in Poole v. Mossinghoff, 214 U.S.P.Q. (BNA) 506 (D.D.C.1982). In Poole, Chief Judge Markey of the United States Court of Customs and Patent Appeals, sitting by designation, set out a test for determining if a device is “on sale.” “Whether an invention is ‘on sale’ is primarily a matter of the inventor’s intent.” Id. at 509. The inventor must have a present intent to sell, and must communicate that intent to a prospective purchaser to elicit a sale and not for some other reason. Id. Further, the Poole court held that the contract in that case was insufficient in itself
to establish a placing of the invention “on sale” because, at the time it was negotiated, the invention was not a “reality,” that is, it had not been reduced to practice and was not beyond the state of experimentation____ Indeed, it had not been and may never have been successfully developed.
Id. (citation omitted). We are satisfied that Poole provides an analytically sound test which accommodates the interests of both the inventor and the public.
Viewing the evidence and the inferences which it fairly supports in the light most favorable to the plaintiff, we find that the trial court improperly directed a verdict against plaintiff on the patent infringement issue. A careful review of the record leaves us persuaded that under the Poole test, plaintiff raised a genuine issue of material fact as to whether its gasoline dispensing system had been “reduced to practice” prior to one year before the patent application was filed, thus raising a genuine issue of material fact as to whether the system was “on salé” before the critical date.
ATTORNEY’S FEES
The defendant cross-appeals, challenging the trial court’s order denying defendant leave to file a Bill of Costs and Motion for Attorney’s Fees. The defendant seeks an award of attorney’s fees and costs on three grounds: (1) under 35 U.S.C. § 285 (1976); (2) under Fed.R.Civ.P. 37(a)(4); and (3) under Fed.R.Civ.P. 54(d).
Title 35 U.S.C. § 285 provides that in exceptional cases a court “may award reasonable attorney fees to the prevailing party,” in patent suits. Our conclusion that the trial court improperly granted a directed verdict in favor of the defendant defeats defendant’s position as a prevailing party on the patent claim. Thus, defendant’s claim for attorney’s fees under section 285 is moot.
Defendant also challenges the trial court’s refusal to accept its motion under Fed.R.Civ.P. 37(a)(4). Rule 37(a)(4) provides for an award of expenses, including attorney’s fees, incurred in a motion to compel discovery. Under certain circumstances, the rule provides for an award in favor of the moving party if the motion is granted, and against the moving party if the motion is denied. Here, the plaintiff voluntarily withdrew its motion to compel discovery. The court neither granted nor denied the motion. The defendant contends that because the plaintiff withdrew the motion, defendant is entitled to an award of attorney’s fees and costs incurred in defending against the motion. However, the rule simply does not provide for an award under such circumstances.
Local Rule 7(e) of the Northern District of Oklahoma provides that a prevailing party in a civil action must file a verified bill of costs within ten days of the entry of judgment. N.D.Okla.R. 7(e). The defendant did not file its motion for costs within ten days of the entry of judgment. In White v. New Hampshire Department of Employment Security, 455 U.S. 445, 102 S.Ct. 1162, 71 L.Ed.2d 325 (1982), the Supreme Court held that a request for attorney’s fees under 42 U.S.C. § 1988, was not a motion to alter or amend a judgment and was therefore not subject to the ten-day timeliness standard of Fed.R.Civ.P. 59(e). The Court specifically noted that district courts are “free to adopt local rules establishing standards for timely filing of requests for costs ____” Id. at 454, 102 S.Ct. at 1168. Defendant’s motion for costs was untimely under the local rules and the district court properly refused to consider it.
The defendant argues that it is not barred by the ten-day rule because plaintiff’s notice of appeal, filed on the same date judgment was entered, divested the district court of jurisdiction to consider a motion for costs. Defendant-Appellee’s Brief at 46-50. This argument has already been effectively resolved against the defendant. See Cox v. Flood, 683 F.2d 330 (10th Cir.1982).
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
"Reduction to practice” is a widely recognized factor for determining when an invention is completed under section 102(b). See Stewart-Warner Corp. v. City of Pontiac, 717 F.2d 269, 273 (6th Cir.1983); Digital Equip. Corp. v. Diamond, 653 F.2d 701, 718 (1st Cir.1981); CTS Corp. v. Piher Int'l Corp., 527 F.2d 95, 103 (7th Cir.1975); Timely Prod. Corp. v. Arron, 523 F.2d 288, 302 (2d Cir.1975); In Re Yarn Processing Litig., 498 F.2d 271, 277 (5th Cir.1974).
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.
STEPHEN H. ANDERSON, Circuit Judge.
In this diversity action, American Federal Savings appeals from an award of damages to Jerry Caven for breach of contract. We reverse. Timothy Wayne & Associates appeals from a directed verdict in favor of American Federal Savings in the same action. We affirm.
I.
In 1972, American Federal Savings and Loan Association of Colorado (“American Federal”) agreed to finance the purchase of real estate and the construction of apartments in Pueblo, Colorado. The borrower executed a loan agreement with American Federal, subject to a contemporaneous Deed of Trust that included the following provision regarding transfer of ownership of the property:
“In the event the property securing this loan or any portion thereof is proposed to be sold or conveyed or becomes the subject of any agreement to sell prior to the maturity hereof, the proposed transferee shall be subject to the prior approval of the holder. In such event, the holder shall be provided with documentation to include, but not limited to, copies of: purchase or transfer agreement; management agreement, if any; financial and income statements of the proposed transferee, and a report on the credit standing of the proposed transferee from an approved professional credit reporting agency. The holder shall review the documentation to ascertain transferee’s management skills (or skills of a professional manager to be retained by transferee), credit worthiness and ability to repay this Deed of Trust in accordance with the terms and provisions contained herein. Holder shall have the right to approve any such proposed transferee; however, approval shall not be unreasonably withheld. If, however, such approval is withheld, but not unreasonably, and the transfer, sale or conveyance is nevertheless consummated, the entire indebtedness shall immediately become due and payable at the option of the holder. In any event, no such transfer shall be permitted until construction is completed and a certifícate of occupancy issued.”
R.Vol. I at 11 (emphasis added).
In July, 1977, Jerry Caven purchased the apartments and assumed the American Federal loan, subject to the original Deed of Trust. At the time of the purchase the Deed of Trust was supplemented by a modification agreement between Caven and American Federal. The modification agreement altered the interest rates on the underlying promissory note, provided for a late payment charge and included the following provision under the heading “Transfer of Ownership:”
“If there shall be any change in the ownership of said premises without the written consent of the Association being first obtained, the entire indebtedness secured hereby shall become due and payable at the option of the Association. If the Association consents to such change of ownership, then the current transfer fee shall be due and payable to the association.”
R.Vol. I at 14 (emphasis added). The modification agreement also included the following provision, as the final paragraph:
“This agreement is supplementary to said Note and Deed of Trust. All of the provisions of the Note and Deed of Trust, including the right to declare the principal and accrued interest due for any cause specified therein, shall remain in full force and effect except as specifically herein modified. ...”
R.Vol. I at 14 (emphasis added).
In 1982, Caven sought to sell the apartments. He retained Timothy Wayne & Associates (“Wayne”), the intervenor plaintiff below, as brokers. On August 18, 1982, Caven entered into a contract with Donald Macy and Donald Egan to sell the apartments for a purchase price of $3,160,-000.00. Caven forwarded the contract and financial information concerning the potential purchasers to American Federal. American Federal responded by (1) requesting more detailed financial information, and (2) demanding a substantial increase in the interest rates. Caven countered by arguing that American Federal had no right to increase the interest rate. American Federal disputed that argument and stated that it would not consent to any assumption of the loan and required that the loan be liquidated when the property was sold. As a result, Macy and Egan withdrew from the contract. Caven subsequently sold the apartments on a cash basis to another purchaser for $2,800,000.00 and instituted this diversity action against American Federal for breach of contract. Wayne intervened as a plaintiff alleging breach of contract and tortious interference with contract, claiming as damages his lost commission on the aborted sale to Macy and Egan.
Prior to trial, Caven and American Federal both moved for summary judgment based on their interpretations of the language in the Deed of Trust and modification agreement. Caven argued that the modification agreement did not “specifically modify” the language of the Deed of Trust, and that American Federal had no power to condition an assumption of the loan on an increase in interest rates. American Federal argued that the provision in the modification agreement was an “absolute due on sale clause” that replaced the earlier provision and gave American Federal the power to disapprove an assumption of the loan for any reason.
The district court below granted partial summary judgment to Caven, holding that the language in the modification agreement did not specifically modify “either the procedural aspects of how the information shall be presented to [American Federal], nor the fact that approval shall not be [unreasonably withheld. It specifically does not affect those provisions.” R.Vol. IV at 6.
Trial proceeded to a jury to determine whether American Federal had complied with the provisions of the Deed of Trust. Caven’s breach of contract claim went to the jury and the jury returned a verdict in Caven’s favor for $300,000.00. The trial court granted American Federal’s motion for a directed verdict against Wayne, holding that, under Colorado law, he could not succeed on the interference with contract claim. American Federal appeals from the trial court’s partial summary judgment for Caven, from the judgment entered for Ca-ven, and from the denial of its motion for judgment notwithstanding the verdict. Wayne appeals from the directed verdict against him.
II.
We turn first to the partial summary judgment granted to Caven. “When reviewing a grant of summary judgment, this court must examine the record to determine whether any genuine issue of material fact pertinent to the ruling remains and, if not, whether the substantive law was correctly applied.” Franks v. Nimmo, 796 F.2d 1230, 1235 (10th Cir.1986) (citations omitted). The parties do not dispute the material facts, thus we are left to determine if the district court correctly applied the substantive law. “In reviewing the trial court’s construction of the contract, it should be noted that ordinarily the construction of a contract is a question of law for the court.” Resort Car Rental Sys., Inc. v. Chuck Ruwart Chevrolet, Inc., 519 F.2d 317, 320 (10th Cir.1975). See also Union Rural Elec. Ass’n, Inc. v. Public Util. Comm., 661 P.2d 247, 251 (Colo.1983) (“Interpretation of contract language is generally a question of law.”); Stroh-Mc Investments v. Bowens, 725 P.2d 33, 34 (Colo.Ct.App.1986) (“Interpretation of the language of a contract is a question of law for the court.”). In reviewing a question of law, we are not bound by the district court’s conclusions. See Energy Oils, Inc. v. Montana Power Co., 626 F.2d 731, 734 (9th Cir.1980); C. Wright and A. Miller, Federal Practice and Procedure, Civil § 2588, at 750 (1971) (“the interpretation and the construction of written contracts are matters of law and freely reviewable as such”). See also Reynolds v. Farber, 40 Colo.App. 467, 577 P.2d 318, 320 (1978) (“Since the construction of a written instrument is a question of law, this court is not bound by the trial court’s interpretation.”).
In this diversity action, we look initially to Colorado law for guidance in interpreting this contract. The parties cite a variety of rules and principles of contract construction used in Colorado. No decision by the Colorado courts directs us to only one permissible conclusion in the interpretation of the specific language of this contract. However, we find certain principles helpful. First, where “the language used is plain, clear, and no absurdity is involved, we must declare and enforce the instrument as written.” Fuller & Co. v. Mountain States Investment Builders, 37 Colo.App. 201, 546 P.2d 977, 980 (1975). Second, “[w]e must adopt a construction of the agreement that will give effect to all of its provisions.” Union Rural, 661 P.2d at 252. See also Oriental Refining Co. v. Hollenbeck, 125 Colo. 77, 240 P.2d 913, 916 (1952) (“each and every part and portion of a contract is to be given effect, if possible”). Finally, the parties have not cited, nor have we found, any clear statement of the Colorado courts on the effect of a modification agreement, but we believe the following statement by the Utah Supreme Court correctly states general contract law relating to modification agreements:
“It is well-settled law that the parties to a contract may, by mutual consent, alter all or any portion of that contract by agreeing upon a modification thereof. Where such a modification is agreed upon, the terms thereof govern the rights and obligations of the parties under the contract, and any pre-modification contractual rights which conflict with the terms of the contract as modified must be deemed waived or excused.”
Rapp v. Mountain States Telephone and Telegraph Co., 606 P.2d 1189, 1191 (Utah 1980) (footnotes omitted). This same principle was stated by the District of Columbia Court of Appeals in Egan v. McNamara, 467 A.2d 733, 740 (D.C.1983): “a contract containing a term inconsistent with a term of an earlier contract between the same parties regarding the same subject matter should be interpreted to rescind the inconsistent term in the earlier contract.” We believe that the Colorado Supreme Court would apply those general principles.
With those principles in mind, we turn to the language of the modification agreement. The terms of that agreement are plain. “If there shall be any change in the ownership ... without the written consent of [American Federal] being first obtained, the entire indebtedness secured hereby shall become due and payable at the option of [American Federal].” R.Vol. I at 14 (emphasis added). The modification agreement includes no conditions or limitations on American Federal’s right to disapprove an assumption of the loan. In our view, this language “specifically modifies” the procedural requirements and the limitation of the Deed of Trust providing that approval of the transferee may not be “unreasonably withheld.”
In addition to the plain language of the agreement, we find two arguments persuasive. First, the parties executed a modification agreement. We assume that they wanted to change the prior terms of their contract. See South Florida Beverage Corp. v. Figueredo, 409 So.2d 490, 496 (Fla.Dist.Ct.App.1981) (“It may be presumed, however, than an amendment to an agreement is designed to serve some useful function, and its existence is strong evidence, therefore, that the contract was changed from what the parties believed and intended was provided before.”), cert. denied, 459 U.S. 881, 103 S.Ct. 178, 74 L.Ed.2d 146 (1982). The interpretation urged by Caven, and adopted by the district court, adds nothing to the terms of the original Deed of Trust and renders the cited portion of the modification agreement meaningless. We do not believe the parties intended to adopt modifying language without any force. The second argument is closely related. Under Colorado law, we are urged to give effect to all provisions of a contract. Union Rural, 661 P.2d at 252. This principle is violated by an interpretation of the agreement that renders the transfer of ownership provisions in the modification agreement without effect. Thus, we face conflicting provisions in the original contract and modification. We choose to enforce the provision in the later agreement, which is by its very nature, intended to modify the earlier agreement. Accordingly, we conclude that American Federal had the absolute right and power to call the loan to Caven due and payable upon any transfer, and it was entitled to a summary judgment to that effect.
III.
Colorado recognizes the tort of intentional interference with contractual relations. Memorial Gardens, Inc. v. Olympian Sales & Management Consultants, Inc., 690 P.2d 207, 210 (Colo.1984). At trial, Wayne argued that American Federal induced Macy and Egan to breach the purchase contract with Caven, resulting in the loss of a real estate commission to Wayne.
Colorado relies on the provisions of the Restatement (Second) of Torts §§ 766, 767 (1977) to define the elements of that tort. Trimble v. City and County of Denver, 697 P.2d 716, 725-26 (Colo.1985); Memorial Gardens, 690 P.2d at 210. Specifically, the Colorado Supreme Court has held that a party may not be held liable for the intentional interference with contractual relations unless that party’s conduct was “improper.” Trimble, 697 P.2d at 726; Memorial Gardens, 690 P.2d at 210.
At the close of the trial below, the district court granted American Federal’s motion for a directed verdict against Wayne, holding that, as a matter of law, Wayne was unable to show that American Federal’s actions were improper. Normally, we would review the directed verdict viewing the evidence and all reasonable inferences that can be drawn from that evidence most favorably to the non-moving party. See Brown v. Reardon, 770 F.2d 896, 902 (10th Cir.1985). In this case, however, we have already determined that American Federal had an absolute right to insist on an increase in the interest rate under the terms of the modification agreement. That decision renders Wayne’s claim and appeal moot. For under Colorado law, “[n]o liability attaches [for intentionally interfering with contractual relations] where the act claimed to have caused the breach is undertaken in the exercise of an absolute right, that being conduct which the actor has a definite legal right to engage in without qualification.” Radiology Professional Corp. v. Trinidad Area Health Ass’n, Inc., 39 Colo.App. 100, 565 P.2d 952, 954 (1977) (citation omitted).
The district court’s orders granting partial summary judgment for Caven, denying summary judgment for American Federal, and denying American Federal’s motion for judgment notwithstanding the verdict are REVERSED. The district court’s order granting a directed verdict against Wayne is AFFIRMED.
. In 1980, the parties signed a second modification agreement. American Federal extended the payment dates on a personal loan to Caven, and in return, Caven agreed to an increase in the interest rate on the underlying loan. For purposes of this dispute, the relevant language of the second agreement is identical and this opinion will reference only one "modification agreement."
. On appeal, Caven advances several creative interpretations of the provision designed to give it an effect consistent with the Deed of Trust. For example, we are urged to read it as a “gap filling" provision, effective only in the case where the borrower transfers the property without notice to the lender. We have considered this, and other arguments, carefully and find that the plain language of the agreement cannot support the reading urged by Caven.
. Restatement (Second) of Torts § 767 (1977) specifies the factors to be considered in determining whether an actor’s conduct in intentionally interfering with a contract is improper:
(a) the nature of the actor’s conduct,
(b) the actor’s motive,
(c) the interests of the other with which the actor's conduct interferes,
(d) the interests sought to be advanced by the actor,
(e) the social interests in protecting the freedom of action of the actor and the contractual interests of the other,
(f) the proximity or remoteness of the actor’s conduct to the interference and
(g) the relations between the parties.
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.
SOPER, Circuit Judge.
This suit against the Atlantic Coast Line Railroad Company and the Southern Railway Company was brought by the Executor of the estate of a conductor employed by the Southern, who' was killed by a train of the A.C.L. in attempting to cross its tracks at 4:30 A.M. on December 21, 1952, at Hardeeville, South Carolina. This suit against A.C.L. claimed damages for wrongful death and was brought under the Lord Campbell’s Act of South Carolina, §§ 10-1951 and 10-1952 of the South Carolina Code of 1952. The suit against Southern on the same cause of action was brought under the Federal Employers’ Liability Act, 45 U.S.C.A. § 51, since the deceased was engaged in the performance of his duties as its employee when he was killed. At the conclusion of the plaintiff’s evidence at the trial in the District Court both defendants moved for directed verdicts in their behalf but the District Judge overruled the motions in order to afford the plaintiff the opportunity to cross-examine the defendants’ witnesses. Similar motions were made at the end of the defendants’ evidence and were then granted, the Judge being of the opinion that the sole cause of the accident was the action of the deceased in trying to cross the railroad tracks when he knew that a rapidly moving train was approaching.
The scene of the accident was a small wayside station of A.C.L. at Hardeeville, which was maintained by A.C.L. but was used by both railroads since the Southern makes use of the tracks of A.C.L. from this point south to Jacksonville, Florida. The station building had a frontage of 90 feet and a depth of 25 feet. Two tracks of A.C.L. ran north and south close to its west side. The easternmost rail of the northbound track was located 16% feet from the station and the west rail of the southbound track 35 feet therefrom. A single track of the Southern was located 31 feet west of the westernmost rail of A.C.L., and the distance from Southern’s track to the northbound track of A.C.L., on which the man was killed, was 44 feet 4 inches. The intervening space between the tracks of the two railroads was a park-like area with some growing trees and shrubbery. This area was maintained by A.C.L. but the Southern had the right to put the property and its appurtenances in good condition if A.C.L. failed to perform this duty but had never requested A.C.L. to remove the trees and shrubbery between the tracks. The station was in the charge of a lever telegraph operator of A.C.L. who regulated the movement of the trains at this point for both railroads.
The accident occurred when an A.C.L. express train going north on the track nearest the station at something more than 70 miles per hour passed a motionless Southern train which was headed south and had come to a stop at the station on its own track a few moments before. The station master had had 2 minutes previous notice of the arrival of the Southern train and about 8 minutes notice of the arrival of the A.C.L. train, which was not scheduled to stop at the station, and had given it the green light to go through without reducing speed. In the meantime the station master, in accordance with a rule of his railroad, which required the movement of the train to be protected under such conditions, had supervised the crossing of the A.C.L. tracks by three persons who had come to meet a deaf and dumb child, the only person to arrive on the Southern train. These persons had crossed and were standing alongside the Southern train when the A.C.L. train came through.
The Southern train was in charge of Anthony A. Rahner, the conductor who was killed. He was 69 years of age and had been employed by the Southern for more than 40 years. Upon the arrival of his train he and his flagman alighted on the ground. Rahner instructed the flagman to warn the porter of the train not to let the defective child be run over. At that moment the A.C.L. express was not more than 30 seconds away; and the flagman, standing on the ground, heard its warning signal and the great noise of its three diesel engines and 15 cars, and saw the reflection of its double headlights as it rushed towards the station.
It was the duty of the deceased conductor to cross from his train over the main line of the A.C.L. to the station to deliver mail and receive a clearance order permitting his train to proceed. After speaking to the flagman he walked a short distance ahead to the baggage car of his train, took some mail from the man in charge and started towards the station, and while he was still in the park-like area he broke into a run in an evident attempt to cross the tracks of the A.C.L. train but was hit and killed before he could cross the northbound track on which the express was running. The flagman saw him run across the park-like area but because of the shrubbery lost sight of him before he reached the A.C.L. tracks and was struck. This account of the accident was given by the flagman, a witness for the plaintiff. It was supported by the testimony of the baggage man on the Southern train, a witness for the defendant, who was standing in the door of the baggage car and handed the mail to his conductor and then watched him run across the intervening space of the A.C.L. tracks until he was hit by the train. This witness testified that he also was aware that the express train was approaching. The engineer on the A.C.L. express was on the right side of the leading diesel and did not see the conductor, but the brakeman on the left side caught sight of the man an instant before he was struck.
Upon this state of the record the appellant contends that the Southern was guilty of negligence because it failed to furnish Rahner a safe place to work, in that it permitted the trees and shrubbery to remain in the intervening space knowing that Rahner was obliged to cross the A.C.L. tracks in the performance of his duties without special notice of the approach of trains. It is pointed out that the Southern train was behind its schedule and that it was the duty of the conductor to go to the station as quickly as possible for his clearance in order to expedite the movement, and it is said that it is reasonable to infer that in this instance his view was obscured by the shrubbery so that he was unaware of the danger until it was too late.
The undisputed evidence in the case is to the contrary. Rahner was a trainman of many years experience, familiar with the conditions existing at the station. He had been on the same run for more than three years and had taken his train through on many previous occasions. He knew that high speed A.C.L. trains passed through the station and that southbound Southern trains stopped at the station to permit A.C.L. trains to pass. He showed his awareness of the oncoming train that morning by warning his flagman to look out for the child. Even more significant is the evidence that, in common with other railroad men present, he actually knew that the train was rushing toward the station from the thunderous noise of the engines and cars and the flashing of the headlights. Furthermore, the growth between the tracks could not have contributed to the catastrophe, as is shown by the uncontradicted evidence of witnesses on both sides. The photographs submitted by the plaintiff show that the trees and shrubbery did not grow immediately alongside the A.C.L. tracks and there was ample space, not less than 25 feet, between the trees and the tracks within which a train approaching the station from the south could be seen for more than a mile.
The appellant also rests its case upon the statutory rule, 45 U.S.C.A. § 53, that, under the Federal Employers’ Liability Act, contributory negligence of a plaintiff employee does not bar recovery for injuries but merely goes to the diminution of the damages. It is said that even if the deceased was negligent in running upon the A.C.L. tracks as described, there was negligence on the part of both railroads in allowing the train to pass through that station at high speed while a Southern train was standing at the station to receive and discharge passengers, although the station operator had previous knowledge that both trains were about to arrive.
That there was an element of danger in such a situation is obvious but it does not follow that the operation was negligent. It is common knowledge that through trains customarily pass small wayside stations without stopping or slowing down; and the custom was recognized in a rule of the A.C.L. which provided that trains and engines must run at reduced speed in passing a train receiving or discharging passengers at a station, and that trains must not pass between such a train and the platform at which passengers are being received or discharged, except where proper safeguards are provided or the movement is properly protected. The evidence shows that under this rule it became the duty of the station operator to watch over and supervise the movement of passengers across the A.C.L. tracks upon the approach of a through train and that the operator performed this duty on this occasion. No evidence was offered to show that this practice was considered by experienced railroad men, or by anyone, to be negligent or improper. No one at the station that morning was actually exposed to danger except the most experienced railroad man present, and he only because of his own conduct. As the District Judge held, the passing of the train created a condition of which the deceased was well aware but refused to recognize, and hence it must be held that his death was not due to the great speed of the train but to his own voluntary act. See Hartley v. Atlantic Coast Line R. Co., 5 Cir., 194 F.2d 590; Chesapeake & Ohio R. Co. v. Burton, 4 Cir., 217 F.2d 471; Moore v. Southern Ry. Co., 163 S.C. 342, 161 S.E. 525, reversed 284 U.S. 581, 52 S.Ct. 38, 76 L.Ed. 503; Wolfe v. Hen-wood, 8 Cir., 162 F.2d 998; Murray v. Atlantic Coast Line R. Co., 4 Cir., 233 F.2d 214; Atlantic Coast Line R. Co. v. Glenn, 4 Cir., 198 F.2d 232; New York C. & St. L. R. Co. v. Boulden, 7 Cir., 63 F.2d 917; Drawdy v. Atlantic Coast Line R. Co., 75 S.C. 308, 55 S.E. 444.
The same considerations apply in the case against A.C.L. and, in addition, it has the defense of contributory negligence on the part of the deceased, which is conclusively established. It is contended that negligence on the part of the A.C.L. was shown because the evidence as to whether the bell of the engine was rung as the train neared the station is somewhat uncertain; but this is immaterial, for it is certain that the ringing of the bell would have added nothing to the warning which the deceased was given by the noise and lights of the approaching train.
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.
BREYER, Circuit Judge.
This court first considered this case three years ago. See Berman v. Provencher, 614 F.2d 823 (1st Cir.1980) (Provencher I). In an opinion that criticized the bankruptcy court’s decision, the state of the record, and the parties’ briefs, we wrote that the bankrupt Provenchers had improperly failed to disclose to the trustee Berman one of their important assets — namely, an equitable interest in a corporation called Ramblewood Associates, Inc. (Ramblewood). Ramblewood apparently served as a Provencher alter ego. The Provenchers had deposited in a Ramblewood bank account money that rightfully belonged to the bankruptcy estate and had used that money to help buy land and build a house for themselves. The trustee, not the Provenchers, was entitled to that money.
In our earlier opinion, we decided three points of law. First, we held that the trustee’s action to recover the improperly withheld funds was not barred by the statute of limitations. We noted that in December 1972 the Provenchers gave the trustee an income tax return listing earned income from Ramblewood and that the trustee did not bring this suit until January 1975. Nevertheless, we wrote that given the Provenchers’ misstatements and concealment, the two-year statute of limitations in § 11(e) of the former Bankruptcy Act, 11 U.S.C. § 29(e) (1976), superseded by Bankruptcy Code, Pub.L. No. 95-598, 92 Stat. 2549 (1978), did not bar the action. Second, we rejected the trustee’s claim to the entire property. We noted that in buying the land and building the house, estate funds had been commingled with the Provenchers’ own funds; we held that the trustee was therefore entitled to some but not all of the real property. Third, we gave explicit directions about how to proceed on remand. We stated that the trustee could either assert a lien against the house for the amount of the estate money invested in it or “to the extent that [the trustee] can follow the [estate] funds into the real estate, ... he may claim the proportionate share of the real estate attributable thereto.” Provencher I, 614 F.2d at 825.
On remand, despite these explicit holdings, the parties again became embroiled in complex arguments. For one thing, the parties strongly contested whether each of the many items of value (e.g., checks, cash, labor provided in kind) that went into the creation of the house properly belonged to the estate or were earned by (or given to) the Provenchers after the filing of the bankruptcy petition. The bankruptcy judge eventually decided that 47.9 percent of the property investment (not attributable to the mortgages on the property) had been contributed by the trustee. For another thing, the trustee asked the bankruptcy judge to convey his interest (i.e., 47.9 percent) to him directly in the form of an undivided interest in the property. Instead, the bankruptcy judge valued the house at $70,000 and gave the trustee a money judgment equal to approximately 47.9 percent of this amount less the face value of the outstanding mortgage. In doing so, the bankruptcy court appears in effect to have partitioned the property and to have used only the Provenchers’ testimony to determine its value. (The trustee presented no appraisal evidence.) Finally, the parties contested several more minor matters, such as whether the Provenchers owed the trustee rent and whether the trustee should be assessed for a fraction of the Provenchers’ mortgage payments.
The district court affirmed the judgment of the bankruptcy court, and both parties appeal from that judgment. The trustee challenges the bankruptcy court’s decision on nearly every point. The Provenchers seek to reargue their statute of limitations claim. And, many of the points raised are better suited for decision by an accountant than a judge. Nonetheless, to expedite this litigation, we shall decide as many of the issues as possible.
1- We deal first with the most important point of law: the trustee says that he was entitled to an undivided interest in the real property rather than a money judgment reflecting the value of the property. The trustee is correct. This court in Provencher I explicitly stated that the trustee, if he chose, could “claim the proportionate share of the real estate.” See Provencher I, 614 F.2d at 825. We did not say he could claim only a proportionate share of the “value” of the real estate. This statement is the “law of the case.” Cf. Cochran v. M & M Transportation Co., 110 F.2d 519, 521-22 (1st Cir.1940); IB Moore’s Federal Practice If 0.404 (1965). Moreover, in our previous opinion we followed the analysis of Professor Scott, which we explicitly cited. See 5 A. Scott, The Law of Trusts (3d ed. 1967). We described the trustee’s rights as Professor Scott and the Restatement describe the rights of an innocent party against a “conscious wrongdoer” who uses commingled funds to buy property, see Restatement of Restitution § 202 (1937); 5 A. Scott, supra, at § 508. In such a situation, the innocent party can choose either to enforce a lien on the property for the value of the estate’s funds or to enforce a constructive trust on the property. This is a virtually universal rule as described in 5 A. Scott, supra, at § 516, and the Restatement of Restitution § 210. It is supported by prominent authorities. See, e.g., Primeau v. Granfield, 184 F. 480 (S.D.N.Y.) (L. Hand, J.), rev’d on other grounds, 193 F. 911 (2d Cir.1911), cert. denied, 225 U.S. 708, 32 S.Ct. 889, 56 L.Ed. 1267 (1912); Ames, Following Misappropriated Property into its Product, 19 Harv.L.Rev. 511, 511-12 (1906); see also, e.g., Sears v. Grover, 116 N.J.Eq. 111, 172 A. 525, 527 (1934); G & M Motor Co. v. Thompson, 567 P.2d 80, 83-84 (Okl. 1977); Mace v. Young, 231 S.W.2d 722, 726 (Tex.Civ.App.1950), writ of error dismissed or refused. Given the compelling criticism of the only Massachusetts authority we have found to the contrary, Bresnihan v. Sheehan, 125 Mass. 11, 13 (1878), and the failure of the Massachusetts courts to cite Bresnihan since 1947, we believe, even were it not the “law of the case”, that this universal rule applies in Massachusetts as well. See Mason v. American Emery Wheel Works, 241 F.2d 906, 909 (1st Cir.) (“A decision may become so overloaded with illogical exceptions that by erosion of time it may lose its persuasive or binding force even in the inferior courts of the same jurisdiction.”), cert. denied, 355 U.S. 815, 78 S.Ct. 17, 2 L.Ed.2d 32 (1957).
Further, Professor Scott explains precisely how courts treat property held subject to a constructive trust. The holders of the property, here the Provenchers, have “an equitable duty to convey it” to the beneficiary, here the trustee. 5 A. Scott, supra, at § 462 (emphasis added); see Loring v. Baker, 329 Mass. 63, 66-67, 106 N.E.2d 434 (1952); Berry v. Kyes, 304 Mass. 56, 59, 22 N.E.2d 622 (1939); Restatement of Restitution § 160; 1 G. Palmer, The Law of Restitution § 1.3 (1978). The trustee as beneficiary is entitled to an undivided share of the property equivalent to the proportion which his funds bore to the total amount (other than mortgage loans) used by the Provenchers to buy the house. See Restatement of Restitution § 210; 5 A. Scott, supra, at § 516. The trustee would be entitled to the entire property only if the Provenehers had used solely estate funds (or estate funds plus borrowed funds) to buy the property — not the case here. See Restatement of Restitution § 210 comment f; 5 A. Scott, supra, at § 516.2. Where, as in this case, the holder used commingled funds to buy the property subject to a mortgage, according to the authorities we cited the beneficiary of the constructive trust (here the trustee in bankruptcy) may take title to a proportionate share of the entire property, subject to the mortgage. See Sears v. Grover, supra; 5 A. Scott, supra, at § 516.2.
On remand, however, the bankruptcy court not only determined the parties’ relative interests in the property, it went on to award a money judgment to the trustee against his will. In doing so the court acted contrary to the authority just cited. And, if it was doing so by virtue of some inherent power to partition real property among owners of undivided interests, we believe it erred. For one thing, the parties had not formally petitioned for a partition of the property. For another thing, this case arose under the Bankruptcy Act of 1898 which, unlike the present Bankruptcy Code of 1978, contains no provision for partition or a partition-like remedy. Cf. Bankruptcy Code § 363, 11 U.S.C.A. § 363 (1979). To the contrary, considerable authority suggests that bankruptcy courts lacked this power under the old Act. Some courts held that partition was not within the administrative functions of the bankruptcy court. See First National Bank of Chicago v. Chicago Title & Trust Co., 198 U.S. 280, 25 S.Ct. 693, 49 L.Ed. 1051 (1905) (contest over title to property not administrative matter); Bardes v. Hawarden Bank, 178 U.S. 524, 532, 20 S.Ct. 1000, 1003, 44 L.Ed. 1175 (1900) (same); In re Victor, 218 F.Supp. 218, 220 (S.D.Ill.1963) (trustee with undivided interest in property may “have a partition of the real estate by a proceeding in an appropriate state court” if division is necessary to obtain fair value for his interest); Harlin v. American Trust Co., 67 Ind.App. 213, 119 N.E. 20, 23 (1918) (partition is a “controversy arising out of the settlement of the estate” rather than a “proceeding in bankruptcy” and therefore state courts rather than bankruptcy courts have jurisdiction). Other courts suggested that a bankruptcy court in a case like the one at bar would not have the requisite possession of the property. See In re American Southern Publishing Co., 426 F.2d 160 (5th Cir.) (property not in constructive possession of bankruptcy court even though held by bankrupt’s agent, where bank had veto power over disposition of the property), cert. denied, 400 U.S. 903, 91 S.Ct. 141, 27 L.Ed.2d 140 (1970); In re Victor, supra (suggesting that partition action be brought in state court where trustee obtained undivided interest in house through bankrupt husband, and husband and nonbankrupt wife owned the property in joint tenancy — despite exclusive summary jurisdiction of the bankruptcy court if property were in the possession of the court); Harlin v. American Trust Co., supra (partition allowed in state court where trustee obtained undivided interest in house through bankrupt husband, and husband and nonbankrupt wife owned the property as tenants in common). And, we doubt that the trustee here has consented to jurisdiction to partition. Cf. 2 Collier on Bankruptcy § 23.08[1] n. 7 (14th ed. 1974) (consent is not jurisdictional basis under § 2 of the Bankruptcy Act “as to a claim asserted by strangers to the proceedings over a matter in no way connected with the administration or distribution of the bankrupt estate.”) Nor have we found any other authority suggesting that the 1898 Bankruptcy Act empowers a bankruptcy court exercising summary jurisdiction (as it is here), see Bankruptcy Act § 2, 11 U.S.C. § 11, to partition this property.
Furthermore, we see no reason to make new law by allowing partition in this case. Massachusetts has a perfectly adequate procedure for partition. See Mass.Gen.Laws Ann. ch. 241, §§ 1-37. Indeed, that procedure will protect the parties’ rights far more completely than the procedure the bankruptcy court followed here. As the former Bankruptcy Act is rapidly becoming obsolete, as this issue was not briefed by the parties, and as our previous opinion stands as the law of this case, we see no need to explore this subject further. We hold that the bankruptcy court should require the Provenchers to provide the trustee with an undivided interest in the property. The trustee is, in effect, the Provenchers’ landlord as to that interest. If such an arrangement proves impractical, the parties are free to seek partition in the state courts.
2. We next consider the trustee’s attacks on the bankruptcy court’s determination of the relative size of the parties’ interests in the property. The court found that the Provenchers’ property was the result of an investment (other than borrowed funds) of $23,163.62. Of this amount, $11,-106.22, or 47.9 percent, came from Ramble-wood and belonged to the trustee. The remainder, $12,057.40, belonged to the Pro- - venchers since it derived from their post-petition resources. The court found that this latter sum consisted of $2,300 worth of Mr. Provencher’s labor, $2,907.40 of Mr. Provencher’s brothers’ labor, $2,250 worth of equipment provided by Interstate Plumbing, $300 worth of materials provided by Pioneer Valley Electrical, and $4,300 provided by the Provenchers’ children. The trustee challenges the court’s conclusions that these sums (other than the Pioneer Valley contribution) represented investments by the Provenchers.
First, the trustee argues that the court should not have counted the Provencher childrens’ money ($4,300) as an investment of the parents in determining the parents’ share of the property. The court found that this money initially belonged to the children, not the Provenchers or the estate. This finding is adequately supported, in part by testimony that the money was collected by the children over many years from birthday and other gifts. The trustee argues that the children loaned the money to their parents and that it should be treated as if it were a mortgage loan, i.e., treated as if it belonged to neither party. The law treats the mortgage loan as belonging to neither party, seepp. 570-71 supra, however, presumably in part because of the close relation of the loan to the property — property which belongs to both parties. We find nothing in Scott or the Restatement, nor does the trustee cite any authority, to suggest that a totally independent loan not secured by the property should be treated as if it were a mortgage loan. As long as the money did not belong to the estate, we are unable to find any reason why we should treat this money differently according to whether the Provenchers earned it, were given it, or independently borrowed it.
Second, the trustee attacks Interstate Plumbing’s gift to the Provenchers of heating, plumbing and air conditioning equipment valued at $2,250. He bases his attack on the admission by Mr. Provencher that although this equipment was “more or less a gift,” “a little part of it ... was a commission.” However, the bankruptcy judge cited other testimony tending to show that Interstate was likely to have “given” this equipment to a contractor like Mr. Provencher in hope of future favors, and we have no evidence that the “little part” to which Mr. Provencher referred as a “commission” was more than de minimis. The bankruptcy court’s disposition of the issue is not clearly erroneous. See In re Gross, 302 F.2d 338, 339 (8th Cir.1962) (“clearly erroneous” standard applies to findings of bankruptcy court); 9 C. Wright & A. Miller, Federal Practice and Procedure § 2573 (1971) (same).
Third, the trustee argues that the labor provided by Mr. Provencher was in fact compensated, either by Ramblewood funds not invested in the house or by mortgage money not invested in the house. The bankruptcy court, however, rejected this same argument and found that Mr. Provencher’s labor was uncompensated and thus an investment in kind in the property. We cannot say, from the record, that this finding is clearly erroneous.
The trustee makes several other, similar claims. He argues that the court was wrong to value the brothers’ uncompensated labor at $2,904; that this labor was “loaned” to the estate, not “given” to Provencher; that more mortgage funds were invested in the property than the court determined; that a $500 check from Interstate Plumbing belonged to the estate and was not an “advance” against future Provencher services; and that various other calculations by the court were wrong. Once again, he demands the entire property. Cf. Provencher I, 614 F.2d at 825. We have reviewed the record with the trustee’s arguments in mind. All of these claims boil down to attacks on findings of fact as “clearly erroneous,” and in no instance do we agree with the trustee that any such clear error exists. Instead, we believe the record adequately supports the bankruptcy court’s findings on these points.
3. We next turn to several adjustments that must be made because of our holding that the trustee is entitled to an undivided 47.9 percent interest in the property. First, the trustee is, as to this share, effectively the Provenchers’ landlord. Thus, unless the bankruptcy court finds on remand that the trustee waived the argument, the Provenchers must pay the trustee a reasonable rent. This rent will equal the fair rental value of the property during the years in question multiplied by 479. See Hossier State Bank of Indiana v. Gediga, 431 F.2d 751, 753-54 (7th Cir.1970); Restatement of Restitution § 159 comment a, illustration 1. Second, the trustee must pay the Provenchers 47.9 percent of the property taxes they have paid during the years in question. See Restatement of Restitution §§ 158 comment b, 177 comment c; 5 A. Scott, supra, at § 479.1. See generally Shell Oil Co. v. McKnight, 204 F.Supp. 159, 164 (E.D.Tex.1961), aff’d, 302 F.2d 731 (5th Cir.1962) (per curiam), cert. denied, 372 U.S. 968, 83 S.Ct. 1093, 10 L.Ed.2d 131 (1963); Cann v. Barry, 293 Mass. 313, 317-18, 199 N.E. 905 (1936). The trustee must also pay a fair share of the mortgage payments (principal plus interest) that the Provenchers have made. See Restatement of Restitution §§ 158 comment b, 177 comment c. To determine the fair share, the bankruptcy court will have to determine first what proportion of the borrowed money was used for the property (for the trustee need not contribute to the repayment of funds that the Provenchers did not invest in the property). If, for example, the Provenchers had borrowed $25,000 and used $20,000 for the property, the court should divide four-fifths of each mortgage payment between the Provenchers and the trustee. In such a case, the trustee would pay 47.9 percent of four-fifths of each mortgage payment. We leave it to the bankruptcy court to work out the details in its discretion.
4. The Provenchers again argue their statute of limitations claim before this court. We rejected that argument the last time this case was before us on appeal, and that rejection stands as the “law of the case.” The whole point of the “law of the case” doctrine is to prevent the sort of endless relitigation that is now before us.
We find no equities running in the Provenchers’ favor. They were fully aware of the importance of Ramblewood as an asset, yet they deliberately concealed its existence from the trustee and treated its funds as their own. As against these facts the Provenchers point to the fact that they listed some earned income from Ramblewood on a tax return that they sent to the trustee in December 1972, two years and one month before he filed suit. This latter fact is hardly enough to put the trustee on immediate notice. It certainly is not sufficient to invoke laches as against the trustee, see In re Thomas, 204 F.2d 788, 794-95 (7th Cir. 1953) an issue left open in Provencher I, 614 F.2d at 825 n. * — and it provides no reason from departing from the “law of the case” on the statute of limitations issue.
Vacated 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.
OAKES, Circuit Judge:
The case before us is a consolidation of two appeals and a petition for mandamus. One appeal and the petition relate to certain “temporary restraining orders” entered by the United States District Court for the Eastern District-of New York. The second appeal is from a preliminary injunction entered by the same court on January 18,1974.
The orders and injunction below were entered at the behest of the Securities and Exchange Commission in its suit to enjoin Glen-Arden Commodities, Inc., and Milbank Trading Co., Inc., together with certain individual officers and directors of these two closely related companies (the Glen-Arden defendants), from certain acts, practices and courses of conduct allegedly in violation of the Securities Act of 1933 and the Securities Exchange Act of 1934. On the merits, the question presented is essentially whether the Glen-Arden defendants were selling commodities consisting of casks of Scotch whisky, not subject to SEC regulation, or whether they were selling securities within the ambit of § 2(1) of the Securities Act, 15 U.S.C. § 77b (l) On August 23, 1973, the Commission sued the petitioners to enjoin them from conduct in violation of §§ 5(a), 5(c) and 17(a) of the Securities Act of 1933, as amended, 15 U.S.C. §§ 77e(a), 77e(c) and 77q(a), and §§ 10(b), 15(a) and 15(b) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b), 78o(a) and 78o(b), and Rule 10b-5 thereunder, 17' C.F.R. 240.10b-5. At the same time the suit was begun, the Commission served the Glen-Arden defendants with a motion for a preliminary injunction returnable September 21, 1973. After a number of procedural fits and starts, which included an extension of the return date on the preliminary injunction motion, a denial of a Commission request for a temporary restraining order, various postponements of evidentiary hearings and the filing of motions for summary judgment, the Glen-Arden defendants filed a notice of motion seeking to prevent the commencement of an evidentiary hearing pending the convening of a three-judge court to consider whether the term “investment contract” in the statutory definition of the term “security” in the federal securities laws was void for vagueness. 'This motion was filed although this court had ruled in SEC v. Brigadoon Scotch Distributing Co., 480 F.2d 1047, 1052 (2d Cir.1973), cert. denied, 415 U.S. 915, 94 S.Ct. 1410, 39 L.Ed.2d 469 (1974), that the argument was “untenable.” The district court on November 15, 1973, denied the motion to convene a three-judge panel and from this the defendants filed an application for a stay in the court of appeals. We heard the matter on November 16, 1973, treated the application as one for a writ of mandamus, and denied it from the bench (No. 73-2699). On that same day, the district court began its hearings on the SEC’s motion for a preliminary injunction. At the close of the day’s testimony the SEC again requested a temporary restraining order, and after oral argument the district court granted a temporary restraining order until the next hearing day, a week later.
On November 23, 1973, the hearing was continued and considerable testimony was heard from investor witnesses and approximately 40 documents were introduced into evidence, and again after the hearing the SEC requested and the court granted a temporary restraining order, this one “pending determination of the plaintiff Commission’s motion for injunctive relief.” The eviden-tiary hearing continued on November 30, 1973, and on December 5, 1973, the court granted another temporary restraining order pending determination of the SEC’s motion for injunctive relief. On December 10, 11, 17 and 18, 1973, hearings continued, despite the trial judge’s prediction that the case would be disposed of on November 23, and by that time almost 100 exhibits had been introduced and 800 pages of testimony taken. On December 18, after the final day of hearings, the court issued yet another self-styled “Temporary Restraining Order” which was to continue pending determination of the Commission’s motion for injunctive relief. This order, identical to those which preceded it, restrained defendants from, among other things, selling or offering for sale securities in the form of Scotch whisky warehouse receipts or any other securities of any other issuer in violation of the registration and anti-fraud provisions of the Securities Act and the Securities Exchange Act.
On January 10, 1974, the defendants filed this petition for mandamus regarding, and a notice of appeal from, the temporary restraining orders of November 23, December 5 and December 18, 1973 (“the orders”). The defendants sought a stay by this court of the orders in effect and a prompt and expedited hearing of the issue presented by the petition and other relief. Thereafter, on January 17, 1974, the district court issued an opinion containing findings of fact and conclusions of law and on January 18, 1974, signed a preliminary injunction restraining defendants from violating the applicable sections of the Acts involved. On January 21, 1974, the Glen-Arden defendants filed a notice of appeal from that preliminary injunction. Thereafter, on oral argument, we granted the motion of the defendants, consented to by the SEC, to consolidate this latter appeal with the appeal and petition for mandamus then before us. We denied, however, a motion by the Glen-Arden defendants to file an additional brief in the latest appeal in light of the delay that this would cause and in light of the fact that the merits were fully briefed on both sides in the papers in the initial appeal.
The temporary restraining orders, attacked by the Glen-Arden defendants in the first appeal and the petition for mandamus, by their own terms were effective only “pending determination of the motion for injunctive relief.” This presumably referred to the motion for a preliminary injunction which was before the court. Thus, inasmuch as the court has now rendered its decision on the preliminary injunction, the temporary restraining orders, whether valid or not when entered, have now lapsed and any decision on them would be moot.
Accordingly, then, we shall direct our attention to the appeal from 'the preliminary injunction of January 18, taking into account the findings of fact made by the district judge on the basis of the evidence presented. Essentially the facts may be stated as follows.
Milbank Trading Co., Inc. (Milbank), is a New York corporation and wholly owned subsidiary of First Credit Bank, Ltd., a Bahamian corporation. Glen-Arden Commodities, Inc. (Glen-Arden), which was known until early 1973 as Mil-bank Trading Co. of Connecticut, Inc., is a Connecticut corporation. Defendant Deeb is the president of Glen-Arden and was an officer of Milbank. Defendant Lamonica was a controlling person of Milbank and Milbank’s Scotch buyer as well as a stockholder and president of Scotch Exchange, Ltd., a Bahamian corporation which supplies Milbank with Scotch whisky. Defendant Weinstein is president of the First Credit Bank, Ltd., and president of Milbank as well as a stockholder and director of Scotch Exchange, Ltd. Defendant Loffman and defendant Losey were sales representatives for Glen-Arden, as is defendant Loeb, who also owns 10 per cent of Glen-Arden’s stock. Defendant Galioto is the vice president and secretary of Milbank.
Milbank began in February, 1967, to engage in the offer and sale of Scotch whisky warehouse receipts, which evidence ownership of casks of whisky stored in bonded warehouses in Great Britain. This was done apparently through a number of affiliated corporations including Glen-Arden and its predecessor. Milbank’s sales are effectuated through these affiliates. Mil-bank and Glen-Arden are essentially one in that Milbank supplies Glen-Arden with all its whisky at an agreed price, processes all of Glen-Arden’s paper work, refers customers to Glen-Arden and grants Glen-Arden exclusive sales rights in specified areas. Milbank performs á number of services for Glen-Arden customers including the payment of insurance and warehousing charges. The sales literature of the two companies is closely coordinated and in some cases virtually identical. In Dun & Bradstreet reports Glen-Arden refers to the fact that it is “closely affiliated” with Milbank, and there is evidence that Glen-Arden solicitations explaining the advantages of investment in whisky refer to how Milbank of New York’s customers have realized a profit.
As stated, Milbank obtains its inventory through the efforts of its buyer, defendant Lamonica, who purchases all of Milbank’s Scotch from the Bahamian corporation, Scotch Exchange, Ltd. While not perhaps material to the main point at issue, it is obvious that purchases through the related corporations have enabled the defendants substantially to mark up their whisky investments through a series of resales and to allocate a large portion of any total corporate profits to the books of foreign corporations. These Bahamian corporations have also been used to make offers to repurchase whisky from investors, thereby lending credence to the predictions of profit made by the salesmen. The salesmen also have referred to their connections in the Bahamas in that they can sell the investors’ whisky there in order to avoid federal taxes. ■
Glen-Arden conducts its representation through sales representatives whom it trains and pays on a commission basis; it also provides sales literature in the form of mailings and news or other releases.
There is no basic dispute for purposes hereof with the findings below that the defendants’ mode of operation was to recruit salesmen familiar with neither the Scotch whisky business nor investment practices and to provide them with a canned sales pitch along with sales literature and direct them to potential customers solicited through mass merchandising techniques such as newspaper advertisements and the indiscriminate use of mailing lists. The specific defendants Deeb, Loffman, Loeb and Losey appeared at various sales meetings during which salesmen were instructed to make certain assertions to induce the customers to invest in Scotch whisky warehouse receipts. These included :
1. Milbank’s expertise would be utilized in selecting the type and quality of Scotch whisky in casks to be purchased;
2. Customers could call Milbank and obtain current information about the Scotch whisky market;
3. Milbank would provide the cooperage of the whisky, that is to say, the storing of it in casks during its maturation period;
4. Milbank would provide two insurance policies to protect the investments;
5. When the customers wished to sell their whisky Milbank would assist them in making a sale without fee or commission;
6. Milbank would handle all administrative details; and
7. Customers could expect a doubling of the value of their investments in three to four years and further increments after that, primarily on the basis that Scotch whisky was a unique investment in that its value enhances merely with age and all of the supply is always sold, whereas in fact the evidence is that the value of Scotch is determined by the basic laws of supply and demand.
The documentation supplied to the Glen-Arden investors included an original sales order which set out the quantity of whisky purchased and the price paid for it; a confirmation evidencing the number of barrels of whisky purchased, the amount of whisky contained in each barrel, and the registration number for each barrel; a copy of the warehouse keeper’s records; transfer certificates issued by the distillery confirming transfer and registration of ownership to the purchasing investor; two insurance policies insuring generally against error or fraud by the warehouse keeper; and a form ordering the warehouse keeper to transfer ownership, which form includes the warranty of the signature of the new owner. The evidence showed that investors never contemplated taking actual physical possession of the whisky, but rather they paid a single price, e. g., $2.80 per gallon, with the understanding that Glen-Arden and Mil-bank would do all that was necessary to turn a profit for its investors. There was evidence from customers that they relied upon the expertise of defendants in the management of the investments and were not fully apprised of the risks involved in investments of Scotch, including fluctuations in price or difficulties in resale, particularly of the small quantities involved in terms of the investors’ purchases. The providing of cooperage and insurance and promised assistance in the liquidation of their investments was of the greatest importance to the investors who, according to their testimony, without them would not have purchased the warehouse receipts. There was evidence indicating that defendants and their agents made promises to prospective investors that the whisky purchased would double in value in four, triple in six, and perhaps even quadruple in eight years, but in any event would enhance in value day by day; in this regard, investors were not told that there was a substantial surplus of the production of grain whiskey in the late 1960’s which had severely depressed grain whiskey prices. Moreover, the defendants did not indicate to their customers that they were charging Scotch whisky prices considerably in excess of the prices charged by other brokers; Glen-Arden’s prices in early 1972 were $2.80 per unit as opposed to prices available elsewhere of between $1 and $1.50. According to defendant Deeb’s testimony, 1968 and 1969 investments in Scotch are now worth approximately $2 per unit. There was additional evidence from which it could be found that there were misrepresentations relative to the expertise of the defendants as to market conditions, prices and types and quality of Scotch investments. For example, defendants’ expert advice included a recommendation of the purchase of grain whiskey rather than what they called the “volatile malt.” 'Until recently, however, the defendants have never had experience in selling “volatile malt,” and there is other evidence that investments in malts have produced better returns than investments in grains. Investors were not told that there is no organized Scotch whisky market and that the small investors’ quantities are not interesting to most of the brokers.
The Glen-Arden defendants argue here that as a matter of law they were engaged in the'sale of commodities or certificates of. interest therein and, therefore, their activities are not within the regulatory authority of the SEC as found in the Securities Act of 1933 and the Securities Exchange Act of 1934. The point is argued that in 1934 the definition of the term “security” in § 2(1) of the Securities Act, 15 U.S.C. § 77b, was specifically amended, among other ways, to excise the phrase “certificate of interest in property, tangible or intangible,” which had originally been an example of a security. That phrase was removed in the 1934 amendments “as possibly involving too broad and uncertain application.” H.R.Rep.No.1838, 73d Cong., 2d Sess. 39 (1934). The appellants argue that what they were selling were “certificates of interest in [tangible] property” and that neither expressly nor inferentially can the statute, as amended, include either negotiable warehouse receipts or non-negotiable documents of title to specific identified casks, of bonded Scotch whisky in storage such as were sold by the appellants. In addition to its argument based on the legislative history, the appellants seek to have us find that its operation was equivalent to the selling of futures contracts, such as are made in commodities like wheat, soy beans, cocoa, sugar, tobacco, etc., which are not included in the coverage of the Securities Act. See McCurnin v. Kohlmeyer & Co., 340 F.Supp. 1338 (E.D.La.1972); Sinva, Inc. v. Merrill, Lynch, Pierce, Fenner & Smith, Inc., 253 F.Supp. 359 (S.D.N.Y.1966). To quote from appellants’ brief (p. 46), Congress “definitely did not intend ... to give the SEC statutory authority to regulate sales of any kind of fungible ‘commodity’ whether it be wheat, soy beans or Scotch whisby stored in barrels somewhere in Scotland and aging in bonded warehouses.”
Initially we note that, as we ourselves have been repeatedly enjoined by the Supreme Court, the federal securities laws are to be construed “not technically and restrictively, but flexibly to effectuate [their] remedial purposes.” SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 195, 84 S.Ct. 275, 285, 11 L.Ed.2d 237 (1963). See also Affiliated Ute Citizens v. United States, 406 U.S. 128, 151, 92 S.Ct. 1456, 31 L.Ed.2d 741 (1972); Tcherepnin v. Knight, 389 U.S. 332, 336, 88 S.Ct. 548, 19 L.Ed.2d 564 (1967). The mechanical and pedantic reading of the legislative history suggested to us by appellants would not be within that spirit of flexible construction. The mere fact that the words “certificate of interest in property, tangible or intangible,” were excised from the definition of a security on the basis that they were open to too broad interpretation does not support the notion that all certificates of interest in property were to be excluded from the coverage of the Act. In short, what is determinative is not what is left out of the definition of a security, but rather what is included.
The question therefore becomes whether the customers were in fact purchasing simply warehouse receipts, akin to a commodity future, or whether, in light of the economic reality and the totality of circumstances surrounding the sales here, the customers were making an investment, which in view of the appellants’ commitments and representations constituted an “investment contract” within the meaning of § 2(1) of the Securities Act, 15 U.S.C. § 77b(l). The Supreme Court has stated that the test whether a contract constitutes an investment contract within the Securities Act is “what character the instrument is given in commerce by the terms of the offer, the plan of distribution, and the economic inducements held out to the prospect.” SEC v. C. M. Joiner Leasing Corp., 320 U.S. 344, 352-353, 64 S.Ct. 120, 124, 88 L.Ed. 88 (1943) [quoted approvingly in SEC v. United Benefit Life Insurance Co., 387 U.S. 202, 211, 87 S.Ct. 1557, 18 L.Ed.2d 673 (1967)].
In Joiner the Court found that, while the definition of “security” in the Securities Act specifically included only fractional undivided interests in oil and gas rights and not specific parcels, the sale of specific parcels there was indeed a security or investment contract under § 2(1) of the Act, 15 U.S.C. § 77b(l). In doing so, the Court through Mr. Justice Jackson went to proof “outside the instrument itself,” 320 U.S. at 355, 64 S. Ct. at 120 to establish the conclusion that the defendants were not offering naked leasehold rights but rather were selling documents which offered the purchaser a chance of sharing in discovery values which might follow a current exploration enterprise. As the Court said, “Had the offer mailed by defendants omitted the economic inducements of the proposed and promised exploration well it would have been a quite different proposition.” 320 U.S. at 348, 64 S.Ct. at 122. It was “an economic interest in this well-drilling undertaking [that] . brought into being the instruments that defendants were selling and gave to the instruments most of their value and all of their lure.” 320 U.S. at 349, 64 S.Ct. at 122. As the Court held, at 351, 64 S.Ct. at 123,
the reach of the Act does not stop with the obvious and commonplace. Novel, uncommon, or irregular devices whatever they appear to be, are also reached if it be proved as [a] matter of fact that they were widely offered or dealt in under terms or courses of dealing which establish their character in commerce as “investment contracts,” or as “any interest or instrument commonly known as a security.”
Judged by the Joiner test there can be no question but that here the appellants were selling investment contracts. The defendants guaranteed services, they promised results. The economic inducements were in the nature of inducements to invest. The evidence below shows that investors put up their money not so much to secure casks of Scotch whisky but to participate in an enterprise which was virtually guaranteed to “double their money” in four years. It ill behooves appellants, after enticing their customers with fancy brochures touting their investment plan, now to claim there was no investment plan but the mere sale of an unadorned commodity. Even worse, it does violence to the facts.
Here the customer, unlike the commodity buyer, while purchasing actual tangible property, was upon the representations of appellants buying in addition services absolutely necessary to the turning of the promised profit. In short, it was a “package deal.” An investor was dependent upon appellants for the utilization of their “expertise in selecting the type and quality of Scotch whisky and casks to be purchased . ,” as found by the lower court. It is not as if they were buying simply X carloads of wheat or barley, a commitment to sell which could be supplied by the furnishing of any other carload of wheat or barley. Rather, the very investment made was in goods to be specifically selected by appellants. Appellants also represented that they.would handle all the necessary arrangements for warehousing the Scotch and insuring it. Finally, and probably most important to the customers, appellants represented that they would find buyers for the Scotch or buy it back themselves. This service, especially in light of the absence of a market for small quantities of Scotch, another distinguishing feature from the commodity analogy, was crucial to any customer’s hope to liquidate his investment.
This brings this scheme within the facts of a long line of cases where purported sales of tangible property, service contracts, or both were held to be investment contracts. See, e. g., SEC v. W. J. Howey Co., 328 U.S. 293, 66 S.Ct. 1100, 90 L.Ed. 1244 (1946); Continental Marketing Corp. v. SEC, 387 F.2d 466 (10th Cir.1967), cert denied, 391 U.S. 905, 88 S.Ct. 1655, 20 L.Ed.2d 419 (1968); Blackwell v. Bentsen, 203 F.2d 690 (5th Cir.1953), cert. dismissed, 347 U.S. 925, 74 S.Ct. 528, 98 L.Ed. 1078 (1954); SEC v. Lake Havasu Estates, 340 F. Supp. 1318 (D.Minn.1972); SEC v. Payne, 35 F.Supp. 873 (S.D.N.Y.1940). See also SEC v. Glenn v. Turner Enterprises, Inc., 474 F.2d 476, 481-482 (9th Cir.1973). There have been many other schemes, in short, where the public was led into buying what purported to be tangible items when in fact what was being sold was an investment entrusting the promoters with both the work and the expertise to make the tangible investment pay off This long-term construction placed upon an act of Congress is hardly one that we could disturb even if we wanted to, at this late date.
There is ample evidence in the record to justify the trial court’s decision that the SEC had clearly met its burden of showing probable success on the merits and that there was a likelihood of continued violations of the registration and anti-fraud provisions of the securities laws, thereby giving more than sufficient basis for entry of the order of preliminary injunction. Gulf & Western Industries, Inc. v. Great Atlantic & Pacific Tea Co., Inc., 476 F.2d 687, 692-693 (2d Cir.1973); Robert W. Stark, Inc. v. New York Stock Exchange, Inc., 466 F.2d 743, 744 (2d Cir. 1972); SEC v. Manor Nursing Centers, Inc., 458 F.2d 1082, 1100 (2d Cir.1972).
Order of preliminary injunction affirmed; petition for writ of mandamus denied; appeal from temporary restraining orders dismissed.
. § 77b. Definitions
When used in this subchapter, unless the context otherwise requires—
(1) The term “security” means any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, or, in general, any interest or instrument commonly known as a “security”, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.
. We note that while temporary restraining orders are normally not appealable, we would not be bound by the trial court’s characterization or even its conception of the orders. Belknap v. Leary, 427 F.2d 496, 498 (2d Cir. 1970) ; Grant v. United States, 282 F.2d 165, 167-168 (2d Cir. 1960). The distinguishing characteristics of a temporary restraining order under Fed.R.Civ.P. 65(b) are “its availability as an ex parte remedy, and its propensity to self-destruct after twenty days, at the outside.” Morning Telegraph v. Powers, 450 F.2d 97, 99 (2d Cir. 1971). These characteristics are not present here where both sides had ample opportunity to be heard and indeed were heard, and where the orders were extended well beyond 20 days without explanation therefor. See 7 Moore, Federal Practice 65.07, at 65-82. Rather the orders seem more characteristic of preliminary injunctions, which have no specific time limitation and which can be entered only after both sides have been heard.
We are not advised, nor do we know, why, in view of the fact that the court was hearing so much testimony and taking so many exhibits, it did not follow the often salutary and time-saving practice of consolidating the application for a preliminary injunction with the hearing on the merits relative to the final injunction, as permitted by Fed.R.Civ.P. 65(a)(2).
. Grain whiskey, also known as patent-still, is opposed to pot-still or malt whiskey; the grain whiskey is distilled from a fermented mash of barley malt and other, unmalted cereal grains. While some grain whiskey is sold as single or straight, generally speaking various grain whiskeys are blended with a number of other malt whiskeys for purposes of resale. See generally, 23 Encyclopedia Británica 477 et seq. (1972 ed.).
. Tlie 1934 amendments to the Securities Act, as the House Report said, were “intended to apply the Act to interests commonly known as ‘securities’ whether or not such interests are represented by any document or not [sic].”
. It may not be enough of an answer to appellants to say, as a connoisseur of Scotch might be tempted to say, that Scotch whis-ky is hardly fungible. We need not simply take judicial notice of the fact that the various Scotch whiskys vary with the type and character of the grain used for mash, with the form of distilling process, whether by pot-still or patent-still methods, with the quality and character of the water used or indeed with the character of fuel used in the kiln drying process, the smoke of which gives Scotch its special flavor. Nor need the appellants’ arguments be answered simply by saying that, far from being fungible, Scotch whisky differs markedly, by brand and distillery, by blend, by year of blend and by age. See generally 23 Encyclopedia Britanica 477 et seq. (1972 ed.). We can suggest, however, that merely by referring to Scotch as fungible appellants seem to belie their own expertise.
. For our purposes the definition of “security” in the Securities Exchange Act is “virtually identical.” Tcherepnin v. Knight, 389 U.S. 332, 335-336, 88 S.Ct. 548, 19 L.Ed.2d 564 (1967).
. The Scotch whisky investment game itself is not unknown to the SEC, and courts have uniformly found investment, contracts there involved. In Penfield Co. of California v. SEC, 143 F.2d 746 (9th Cir.), cert. denied, 323 U.S. 768, 65 S.Ct. 121, 89 L.Ed. 614 (1944), the promoters agreed to bottle whiskey represented by warehouse receipts, to sell the bottled whiskey and to pay the contract holders the proceeds less a commission. As the court said, 143 F.2d at 750, the term “investment contract” includes “agreements where ‘the purchasers [look] entirely to the efforts of the promoters to make their investment a profitable one,’ ” quoting Atherton v. United States, 128 F.2d 463, 465 (9th Cir. 1942). This analysis was approved in SEC v. W. J. Howey Co., 328 U.S. 293, 298-299, 66 S.Ct. 1100, 90 L.Ed. 1244 (1946). In Penfield the appellant pointed to its expertise in knowing when whiskey might age and be bottled and pointed to tbe expectations of profit in terms of the whiskey receipt holder receiving double the amount he would by a sale of the hulk whiskey; there, too, the contract holders did not have the facilities to take the whiskey and dispose of it.
Even more recent cases involving whiskey where courts found investment contracts include SEC v. Haffenden-Rimar International, Inc., 362 E.Supp. 323 (E.D.Va.1973), appeal pending, where the investors relied solely upon the advice of the defendants in selecting, buying, storing, trading and selling the Scotch represented by their warehouse receipts, and SEC v. M. A. Lundy Associates, 362 F.Supp. 226, 236 et seq. (D.R.I. 1973), where the defendants sold warehouse receipts for casks of malt whiskey under a plan virtually identical to that here.
. Appellants’ argument that the district court should not have heard any evidence of fraud is also absurd because in determining whether or not to grant preliminary relief the district court was bound to consider whether or not there was a likelihood of success on the merits. Moreover, many of the facts necessary to demonstrate that the contracts were securities involved the inducements and representations made to engender sales, facts closely related to any claim of fraud.
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.
DUNIWAY, Circuit Judge.
The government appeals from the granting of a motion to suppress evidence, following the granting of a mistrial. (18 U.S.C. § 1404) Page was indicted for violating 21 U.S.C.A. § 174, and the motion was directed to certain narcotics found by government agents during a search of his home. The court below heard the motion upon Page’s affidavit and upon the oral testimony of Page and of four of the agents. It then ruled that, as a matter of law, it was bound to grant the motion under the decision of this court in Channel v. United States, 1960, 9 Cir., 285 F.2d 217, and the cases therein cited, particularly Higgins v. United States, 1954, 93 U.S.App.D.C. 340, 209 F.2d 819. We ordered a hearing en banc to consider whether Channel should be overruled, as the government contends. We conclude that the order must be reversed, but that Channel should not be overruled.
The court below assumed, without deciding, “that the testimony of the government witnesses is to be accepted and the testimony of the defendant rejected”. This being the nature of the ruling, we set forth the evidence in the light most favorable to the government.
At about 11:00 A.M., four narcotics agents arrived at Page’s home in San Francisco. They had some reason to believe that he was engaged in the narcotics traffic, but not enough to constitute probable cause for his arrest, and they had neither a search warrant nor a warrant for his arrest. Two of the agents, Cain and Campbell, knew that Page had a dog, and refused to go into the house until the dog was in a place where it could not get at them. Another agent, Wilkins, rang Page’s doorbell. Page answered; Wilkins identified himself as a narcotics agent, showed his badge, said he would like to talk to Page, and asked to come in; Page said “surely”, and let Wilkins in. The fourth agent, Feldman, seeing Wilkins go in, opened an adjoining door and entered the garage, but made no search there.
Once inside, Wilkins asked Page to put his dog, a large German Shepherd, in the bathroom, saying that he had other agents with him and they were afraid of the dog. This was done. Cain and Campbell then entered and were greeted by Page. Wilkins let Feldman come in by way of steps leading into the house from the garage. One or more of the agents then told Page that they had reason to believe he was trafficking in narcotics. They asked him “if he minded if we looked around.” Page denied that he was in the narcotics traffic, and said he had “nothing here”, “nothing to hide”, and that the agents were “welcome to look”, “to go right ahead and search the whole place”. Feldman told Page that he was not required to consent to a search, and Page said, “go ahead and search, I’ve nothing here”. The search proceeded, and the narcotics in question were found. There was other evidence which, if believed, would support a finding that Page did not consent. We do not set it out because the court, in its ruling, assumed that such evidence should be rejected.
The question presented is, does the evidence, viewed most favorably to the government, require a decision, as a matter of law, that the search was illegal and therefore a violation of Page’s rights under the Fourth Amendment to the United States Constitution? We are of the opinion that it does not. The question is one of fact, for the trial court to resolve.
We have no reservations as to the importance of maintaining the protection afforded to the citizen by the Fourth Amendment. As the Supreme Court said in Gouled v. United States, 255 U.S. 298, at 304, 41 S.Ct. 261, at 263, 65 L.Ed. 647:
“It has been repeatedly decided that these Amendments [the Fourth and Fifth] should receive a liberal construction, so as to prevent stealthy encroachment upon or ‘gradual depreciation’ of the rights secured by them, by imperceptible practice of courts or by well-intentioned but mistakenly overzealous executive officers.”
See also Johnson v. Zerbst, 304 U.S. 458, 464, 58 S.Ct. 1019, 82 L.Ed. 1461. There are dozens of pronouncements to the same effect.
Nevertheless, it has been long established that one can validly consent to a search, even though the consent be given while the defendant is in custody. (United States v. Mitchell, 1944, 322 U.S. 65, 64 S.Ct. 896, 88 L.Ed. 1140; cf. Davis v. United States, 1946, 328 U.S. 582, 593, 66 S.Ct. 1256, 90 L.Ed. 1453; Zap v. United States, 1946, 328 U.S. 624, 628, 66 S.Ct. 1277, 90 L.Ed. 1477; cf. Bram v. United States, 168 U.S. 532, at pp. 549, 557, 558, 18 S.Ct. 183, 42 L.Ed. 568).
Whether such consent has been given is, in the first instance, a question of fact for the trial court. (See Rule 41(e), Rules of Criminal Procedure, 18 U.S.C.: “The judge shall receive evidence on any issue of fact necessary to the decision of the motion [to suppress]”; Crosby v. United States, 5 Cir., 1956, 231 F.2d 679, 681; Patterson v. United States, 5 Cir., 1950, 183 F.2d 687, 689; Ford v. United States, 9 Cir., 1926, 10 F.2d 339, 346; Steele v. United States, 1925, 267 U.S. 505, 511, 45 S.Ct. 417, 69 L.Ed. 761; United States v. Mitchell, supra; cf. Gila Valley G. & N. Ry. Co. v. Hall, 232 U.S. 94, 103, 34 S.Ct. 229, 58 L.Ed. 521; Rios v. United States, 364 U.S. 253, 262, 80 S.Ct. 1431, 4 L.Ed.2d 1688; Kovach v. United States, 6 Cir., 1931, 53 F.2d 639). In Marsh v. United States, 2 Cir., 1928, 29 F.2d 172, Judge Learned Hand stated the rule at p. 173:
“The circumstances made the trooper’s story somewhat doubtful, and an easy complaisance in any plausible tale may deprive defendants of their constitutional rights. This caution we are not, however, ourselves in a position to exercise, because, except in plain cases, we cannot tell from the cold record where the truth lies. For the future we take this occasion to press upon the District Judges that they search the testimony in such cases with care, remembering that the protection of defendants must in most cases rest finally with them.”
Because of the importance of preserving .constitutional rights, various rules have been stated for the guidance of the trial judge in determining whether consent to the search was in fact given. The government must prove that consent was given. It must show that there was no duress or coercion, express or implied. The consent must be “unequivocal and specific” and “freely and intelligently given”. There must be convincing evidence that defendant has waived his rights. There must be clear and positive testimony. “ ‘Courts indulge every reasonable presumption against waiver’ of fundamental constitutional rights”. Coercion is implicit in situations where consent is obtained under color of the badge, and the government must show that there was no coercion in fact. The government’s burden is greater where consent is claimed to have been given while the defendant is under arrest.
It is still true, however, that it is the trial judge who hears the witnesses and who must pass upon their credibility. We sometimes tend to forget that the testimony of a witness, presented to us in a cold record, may make an impression upon us directly contrary to that which we would have received had we seen and heard that witness. It ought not to be assumed that United States District Judges are any less determined to preserve constitutional rights than we are. They, too, are sworn to uphold the Constitution. That they do, in fact, take seriously their obligations to protect the constitutional rights of defendants in cases such as this is demonstrated by the many reported opinions in which they have dealt with such questions, some of which we cite in the margin.
Many decisions of the other Courts of Appeals sustain the trial court’s finding that there was consent to a search, even though the consent was obtained under authority of the badge, or while defendant was under arrest.
This court has repeatedly sustained a finding that there was consent, under somewhat comparable circumstances. (Raine v. United States, 1924, 9 Cir., 299 F. 407; Giacolone v. United States, 1926, 9 Cir., 13 F.2d 110; Waxman v. United States, 1926, 9 Cir., 12 F.2d 775; Poetter v. United States, 1929, 9 Cir., 31 F.2d 438). In certain eases where there was much less evidence of consent than here, we have held against a finding of consent. (Herter v. United States, 1928, 9 Cir., 27 F.2d 521; Farris v. United States, 1928, 9 Cir., 24 F.2d 639). Other courts have also done so. (Ray v. United States, 5 Cir., 1936, 84 F.2d 654; Cofer v. United States, 5 Cir., 1930, 37 F.2d 677; Rigby v. United States, 1957, 101 U.S.App.D.C. 178, 247 F.2d 584; Waldron v. United States, 1955, 95 U.S.App.D.C. 66, 219 F.2d 37; Dukes v. United States, 4 Cir., 1921, 275 F. 142).
In reviewing the trial court’s determination, we apply the “clearly erroneous” rule, by analogy to Rule 52(a) F.R.Civ.P., 28 U.S.C., as elucidated in United States v. United States Gypsum Co., 1947, 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746, as follows:
“A finding is ‘clearly erroneous’ when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.”
The Criminal Code (Title 18 U.S.C.) and the Federal Rules of Criminal Procedure are silent upon the question as to whether the “clearly erroneous” rule or the “substantial evidence” rule, applicable to jury trials, should be applied in a criminal case when we review a decision of the judge who has received conflicting evidence -as to the admissibility of evidence. (As to the substantial evidence rule, see Blassingame v. United States, 9 Cir., 1958, 254 F.2d 309; United States v. Owen, 7 Cir., 1956, 231 F.2d 831; United States v. Tutino, 2 Cir., 1959, 269 F.2d 488, 491). We choose the “clearly erroneous” rule.
Rule 26, F.R.Crim.Proc. provides : “The admissibility of evidence * * * shall be governed * * * by the principles of the common law as they may be interpreted by the courts of the United States in the light of reason and experience.” Rule 57(b) provides: “If no procedure is specifically prescribed by rule, the court may proceed in any lawful manner not inconsistent with these rules or- with any applicable statute”. We think that these rules leave us free to choose. Generally, although not invariably, the same rules govern the admissibility of evidence in both civil and criminal trials. Moreover, the important constitutional rights here involved make the “clearly erroneous” rule, which does not circumscribe our authority so narrowly, peculiarly appropriate. We applied that rule in Gilbert v. United States, 9 Cir., 1961, 291 F.2d 586, 588, note 3. (See also Lowrey v. United States, 8 Cir., 1947, 161 F.2d 30, 34; United States v. Abel, 2 Cir., 1958, 258 F.2d 485, affirmed, 362 U.S. 217, 984, 80 S.Ct. 683, 4 L.Ed.2d 668).
Channel v. United States, supra, 9 Cir., 285 F.2d 217, 1960, is the case relied upon by Page, and the case which the judge felt bound to follow. There are substantial factual differences between this case and Channel. There, Federal narcotics agents, displaying firearms, arrested Channel in a Los Angeles parking lot at 11:00 A.M. He was handcuffed, taken to the Bureau office, and questioned. Two of the agents testified, in substance, that while Channel was being questioned, he said that he had no narcotics in his apartment and that the agents were welcome to go there and search it. They also said that Channel told them from whom to get the keys which they used to effect entrance. Channel’s testimony was to the contrary. The court below found that the consent was genuine. This court reversed, relying upon Judd v. United States, 89 U.S.App.D.C. 64, 190 F.2d 649 and Higgins v. United States, 93 U.S.App.D.C. 340, 209 F.2d 819. It distinguished United States v. Mitchell, 322 U.S. 65, 64 S.Ct. 896, 88 L.Ed. 1140; United States v. MacLeod, 7 Cir., 207 F.2d 853, and Ruhl v. United States, 10 Cir., 148 F.2d 173.
Channel stands for nothing more than the application of the “clearly erroneous” rule to the facts before the court in that case. It does not purport to lay down any rule of law to the effect that a consent to a search obtained “under authority of the badge” is necessarily an unreal consent. Nor does it disregard the special weight to be given to the determination of the trial judge when he is called upon to determine the credibility of witnesses whom he has seen and heard but we have not. We construe the decisions cited in Channel as standing for no more than Channel stands for, and we express no opinion as to whether we would decide each of them the same way. Each case necessarily depends upon its own facts. The mere fact that a particular panel of this court may feel that another panel, in a prior decision, was mistaken in holding that a finding was “clearly erroneous” is not a basis for convening the court in bank and overruling the prior decision.
In the present case, the court did not exercise its fact-finding functions; rather it, in effect, sustained a “demurrer to the evidence”. In this it erred. However, nothing in this opinion is to be taken as any indication that we think that the court should find either that there was or that there was not consent in this case. We only hold that it is for the court to make such determination as it deems appropriate, either upon the record as now made or upon taking further testimony, if it desires to do so.
We conclude that the question before the court below was one of fact, not one of law. The order is reversed, and the trial court is directed to take such further proceedings upon the motion as are not inconsistent with this opinion.
. Judd v. United States, 1951, 89 U.S.App.D.C. 64, 190 F.2d 649, 651; Nelson v. United States, 1953, 93 U.S.App.D.C. 14, 208 F.2d 505; Kovach v. United States, 6 Cir., 1931, 53 F.2d 639.
. Judd v. United States, supra, note 1; Nelson v. United States, supra, note 1.
. Judd v. United States, supra, note 1; Nelson v. United States, supra, note 1; Kovach v. United States, supra, note 1.
. Judd v. United States, supra, note 1; Nelson v. United States, supra, note 1; Catalanotte v. United States, 6 Cir., 1953, 208 F.2d 264; Gibson v. United States, 1945, 80 U.S.App.D.C. 81, 149 F.2d 381.
. Judd v. United States, supra, note 1; Nelson v. United States, supra, note 1.
. Johnson v. Zerbst, 304 U.S. 458, 464, 58 S.Ct. 1019, 82 L.Ed. 1461.
. Nelson v. United States, supra, note 1.
. Judd v. United States, supra, note 1.
. United States v. Abrams, D.C.Vt., 1916, 230 F. 313; In re Tri State Coal & Coke Co., D.C.W.D., Pa.1918, 253 F. 605; United States v. Marquette, D.C.N.D.Cal., 1920, 271 F. 120; United States v. Slusser, D.C.W.D.Ohio, 1921, 270 F. 818; United States v. Kelih, D.C.S.D.Ill., 1921, 272 F. 484; United States v. Lydecker, D.C.W.D.N.Y., 1921, 275 F. 976; United States v. Williams, D.C.Mont., 1924, 295 F. 219; In re Lobosco, D.C. E.D.Pa., 1926, 11 F.2d 892; United States v. Kozan, D.C.E.D.N.Y., 1930, 37 F.2d 415; United States v. Marra, D.C.N.D.N.Y., 1930, 40 F.2d 271; United States v. McCunn, D.C.S.D.N.Y., 1930, 40 F.2d 295; United States v. Baldocci, D.C.S.D. Cal., 1930, 42 F.2d 567; United States v. Ruffner, D.C.Md., 1931, 51 F.2d 579; United States v. Hoffenberg, D.C.E.D.N.Y., 1938, 24 F.Supp. 989; United States v. Novero, D.C.E.D.Mo., 1944, 58 F.Supp. 275; Application of Fried, D.C.S.D.N.Y., 1946, 68 F.Supp. 961; United States v. Alberti, D.C.S.D.N.Y., 1953, 120 F.Supp. 171; United States v. Minor, D.C.E.D. Okla., 1953, 117 F.Supp. 697; United States v. Guerrina, D.C.E.D.Pa., 1953, 112 F.Supp. 126; United States v. Reckis, D.C.Mass., 1954, 119 F.Supp. 687; United States v. Gross, D.C.S.D.N.Y., 1956, 137 F.Supp. 244; United States v. Ong Soon Sing, D.C.S.D.N.Y., 1957, 149 F.Supp. 267; United States v. Wallace, D.C.D.C., 1958, 160 F.Supp. 859; United States v. Martin, D.C.S.D.N.Y., 1959, 176 F.Supp. 262.
. Dillon v. United States, 2 Cir., 1921, 279 F. 639; Marsh v. United States, 2 Cir., 1928, 29 F.2d 172; United States v. Bianco, 2 Cir., 1938, 96 F.2d 97; United States v. Adelman, 2 Cir., 1939, 107 F.2d 497; In re Fried, 2 Cir., 1947, 161 F.2d 453; United States v. MacLeod, 7 Cir., 1953, 207 F.2d 853 (a case factually quite similar to the case at bar); United States v. Perez, 2 Cir., 1957, 242 F.2d 867; United States v. Dornblut, 2 Cir., 1958, 261 F.2d 949 (another case quite similar to ours); United States v. Burgos, 2 Cir., 1959, 269 F.2d 763; United States v. Sclafani, 2 Cir., 1959, 265 F.2d 408; Anderson v. United States, 5 Cir., 1958, 255 F.2d 96; Gatterdam v. United States, 6 Cir., 1925, 5 F.2d 673; Windsor v. United States, 6 Cir., 1923, 286 F. 51; Schutte v. United States, 6 Cir., 1927, 21 F.2d 830; Kovach v. United States, 6 Cir., 1931, 53 F.2d 639; United States v. Ziemer, 7 Cir., 1961, 291 F.2d 100; Shores v. United States, 8 Cir., 1949, 174 F.2d 838; Honig v. United States, 8 Cir., 1953, 208 F.2d 916; cf. Bowles v. Beatrice Creamery Co., 10 Cir., 1944, 146 F.2d 774; Ruhl v. United States, 10 Cir., 1945, 148 F.2d 173; Thomas v. United States, 10 Cir., 1946, 154 F.2d 365; Brainard v. United States, 1955, 95 U.S.App.D.C. 121, 220 F.2d 384; Mallory v. United States, 1956, 98 U.S.App.D.C. 406, 236 F.2d 701.
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.
These cross appeals arise under the Federal Tort Claims Act, 28 U.S.C. § 1346(b), for injuries sustained as a result of shock suffered by plaintiff-appellant when she witnessed her four year old son being struck and killed by a United States mail truck. The district court denied the government’s motion to dismiss, holding that, under the laws of Rhode Island, a mother foreseeably in the vicinity of her child, may recover damages for such injuries, although she suffered no direct physical impact nor, was she in the zone of danger. D’Ambra v. United States, 354 F.Supp. 810 (D.R.I.1973). The government appeals from this decision as well as from the award of $10,000 plus medical expenses, which it claims was excessive. The plaintiff-appellant also appeals, arguing that the award was so inadequate and contrary to the weight of evidence as to be erroneous, and that the district court erred in denying plaintiff-appellant’s motion for leave to amend the complaint by increasing the ad damnum.
The stipulated facts are the findings from a prior trial of negligence on the part of the mail truck driver, freedom from contributory negligence on the part of plaintiff-appellant and her deceased son, and the eyewitness status of plaintiff-appellant, who was not in the “zone of danger” at the time of the accident. It is undisputed, in addition, that, prior to the accident, plaintiff-appellant was in good health, slept well, and reputed to be a calm person, and was fairly cheerful and happy. Since the accident she has suffered a loss of appetite, has had trouble sleeping, with nightmares of the accident, and has had difficulty holding her newborn twins, who remind her of her deceased son. After five visits to a psychiatrist, she felt that no one could help her, and rejected further treatment. Her psychiatrist diagnosed the condition as “psychoneurosis, depression type”, and characterized her withdrawal from treatment as a manifestation of her psychoneurosis. He testified that viewing the accident would have been sufficient to cause the condition, and would bring about a more intense and prolonged mental effect than would have resulted had plaintiff-appellant simply heard about the accident. His testimony was corroborated by another doctor who responded to hypothetical questions. Neither doctor was able to specify the difference in severity resulting from witnessing as distinguished from simply hearing of the accident. There was general agreement that plaintiff-appellant’s condition was produced by both the witnessing of the accident and the death of the child.
Taking advantage of the new certification procedure adopted by the Supreme Court of Rhode Island in Sup. Ct.R. 6, we certified the basic liability question to that court. In a thoughtful and comprehensive opinion, Joseph A. D’Ambra v. United States, 338 A.2d 524, issued on May 21, 1975, the court held that “a nonnegligent mother, who although suffering no physical impact suffers serious mental and emotional harm accompanied by physical symptoms from actually witnessing the death of her non-negligent minor child as a direct result of the defendant’s negligence, may maintain an action for negligent infliction of emotional distress, despite the fact that she herself was never in physical danger.” (at p. 531.) The denial of the motion to dismiss must therefore be affirmed.
The only remaining issues are the cross challenges to the size of the damage award. The government contends that damages for plaintiff-appellant’s psychological condition, caused by witnessing the accident, are too speculative to warrant an award. The government argues, first, that a significant part of the psychological condition resulted from bereavement over the loss of the child — a condition both limitless in scope and capable of spurious claims. Yet two doctors testified that witnessing the accident probably increased the trauma for plaintiff-appellant. Although Rhode Island does not have a rule for burden of proof on such apportionment, we do not believe that, where the injury is indivisible, the Rhode Island courts would allow a tortfeasor’s mere allegation of another cause to relieve him from all liability, particularly where the tortfeasor is responsible for both causes. The Rhode Island court acknowledged this problem, at 529, and by implication placed major reliance on the trier to make a reasonable assessment.
The government’s second line of argument is that, even if damages could be apportioned for the psychological condition resulting from the shock of witnessing the accident, such damages are in themselves too speculative to warrant a specific valuation. Yet merely calling it a “psychological condition” does not mean that the attendant physical symptoms are incapable of objective determination. As the Rhode Island court said in D’Ambra, supra,
“There are obstacles inherent in the rendering of justice on the basis of complex and often conflicting testimony from medical experts especially where the situation is fraught with emotional appeal. It may be noted, however, that comparable problems of proof have been faced and overcome in the area of intentional torts, see Bedard v. Notre Dame Hosp., 89 R.I. 195, 151 A.2d 690, supra, and where a plaintiff is suing for psychological injuries resulting from fears for her own safety. See Simone v. Rhode Island Co., 28 R.I. 186, 66 A. 202 (1907).
‘In the difficult cases, we must look to the quality and genuineness of proof, and rely to an extent on the contemporary sophistication of the medical profession and the ability of the court and jury to weed out the dishonest claims.’ Battalla v. State, 10 N.Y.2d 237, 219 N.Y.S.2d 34, 176 N.E.2d 729 (1961), quoted with approval by Tobin v. Grossman, 24 N.Y.2d 609, 301 N.Y.S.2d 554, 249 N.E.2d 419 (1969); see also Prosser, Torts § 54 (4th ed. 1971); Comment: Negligently Inflicted Mental Distress: The Case for an Independent Tort, 59 Geo.L.Rev. 1237 (1970-71).” at 530.
The trial court appears to have taken the doctor’s opinion as to length of necessary future treatments as a basis for computing the $10,000 in damages. The government contends that this figure is too high, since the plaintiff-appellant brought upon herself the prolongation of necessary treatment by rejecting treatment during the year following the accident. We emphasize, however, that the damage figure which the district court arrived at is merely an approximation for the present scope of appellant’s injuries, for which the government is responsible, rather than compensation for estimated future costs of treatment. The doctor who treated plaintiff-appellant during the year following the accident testified that her rejection of treatment was a normal manifestation of her psychoneurotic state at that time. As such, the present scope of her injuries is in line with the expected consequences of the accident.
Plaintiff-appellant argues, on the other hand, that because the district court relied upon the doctor’s opinion as to the length of necessary future treatment, the approximate cost of that future treatment should have been included in the computation of medical expenses, in addition to the $84 for medical expenses already incurred, and the $10,000 for “pain and suffering.” But examination of the record reveals that the doctor testified that the length of required future treatment was “highly speculative”. He estimated two or three years, although his response indicated that the necessary length of time could be far less than that, or far longer. Moreover, he testified that he would “recommend” such treatment to plaintiff-appellant. Given plaintiff-appellant’s rejection of treatment in the past, it seems highly uncertain whether these expenses would ever be incurred. Under these conditions, we cannot say that the district court abused its discretion in finding the costs of these future treatments too speculative to be properly included within medical expenses.
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.
HUTCHESON, Circuit Judge.
The suit was against two defendants, appellant and one Corbett, for infringing use of a “new and useful improvement in a moving target adapted for use in shooting galleries and similar places where target practice is carried on”, and for the damages and profits resulting therefrom. Appellant, through some oversight not explained in the record, defaulted, and there was an interlocutory decree and injunction and a reference to a special master to ascertain gains and profits and damages. Appellant, learning of the reference, appeared by counsel in the proceedings before the master.
The master found that the damages and profits could only be estimated from a fair preponderance of the testimony, that the damages in their nature were not as susceptible of proof as the profits were, and that the profits were not susceptible of exact mathematical calculation or determination with reasonable certainty. He awarded nominal damages of $1 only. On the issue of profits (though, on his findings, appellant and Corbett were not partners but mere co-infringers, and of the income from the shooting gallery where the infringed device was being used, appellant received only 40 percent of 60 percent), he found the defendants were in the position of joint tort-feasors and were, therefore, jointly liable to plaintiffs for all the profits attributable to the use of the infringed device in the aggregate sum of $12,390.54. Of the opinion that plaintiff was entitled under the statute, 35 U.S.C.A. § 70, to have the profits trebled, he so found and recommended. The district judge rejected the master’s recommendation for trebling profits but accepted his findings and recommendations on actual damages and profits, and entered a decree accordingly.
Appellant is here insisting (1) that the profits were wrongfully found, and (2) that it may not be charged with more of the profits than it actually received. Appellee by his cross-appeal assigns error on the refusal to treble the profits. There is no dispute about what the infringed device used was or that it was a mere improvement over other devices of the same general nature. It was for a moving target for use in target practice, the utility and advantage of which as claimed by plaintiff in his patent, consisted “in providing a mechanism whereby the moving targets travel about vertical axes so that the depth of the tank may be considerably reduced, and in practice this depth has been reduced to six inches. Such a change in structure makes the arrangement more practicable and adaptable for use in places where a deeper tank could not be used”. All claims of the patent are definitely limited to the target conveyor traveling in a horizontal plane as distinguished from the target conveyor traveling in a vertical plane as in the admittedly old duck-moving-over-the-water-in-a-tank target discussed in the introduction to the patent specification. What plaintiff invented, and all that he got his patent for in 1937, was an improvement in a moving target having as a novel feature thereof a conveyor which operates in a horizontal instead of a vertical plane and all of the claims of his patent contain limitations to that specifically new duck-moving mechanism. Plaintiff does not claim to have invented moving targets for target practice; they were and have long been well known. In the second sentence of his patent, he very correctly says: “The use of moving targets for target practice is well known, and moving targets customarily are moved on an endless conveyor chain or belt which travels about horizontal axes”. The patent drawings show a tank of water and depict target moving mechanisms so arranged that the ducks appear to be swimming over the water and are capable of being knocked over into it when struck by bullets. Mattson did not invent these things. Indeed, in describing his invention, he says: “An innovation recently introduced is the use of a tank of water with the moving mechanism so arranged that the targets, which are generally formed to simulate ducks or other water fowls, appear to be swimming over the water and when the target is struck, the plate simulating the fowl will be knocked over into the water.”
Thus the only elements and features of the patented apparatus that shooting gallery marksmen would be interested in, the tank of water and ducks appearing to swim over it and dropping into it when struck by bullets are old in the art. In order to charge defendants with profits received from the use of his device, it was plaintiff’s burden to show “the advantage, that is the saving, which the defendant derived from using the plaintiff’s invention over what he could derive from using any other process or thing which was known prior to that invention.” “The other process or thing mentioned in the rule is called the standard of comparison in the case.” Plaintiff wholly failed to sustain that burden. Indeed, he offered no proof from which the profits derived from the use of the invention could be determined. His proof was limited to proof of receipts from the shooting gallery, aided by proof which the -master thought sufficient, of the amount of those receipts which were derived from customers who shot at the moving duck pond targets alone. In awarding profits on the basis of that proof, and wholly ignoring the standard of comparison, the master, under a complete misapprehension as to the rule, thought and said that the case was like, and to that extent ruled by, Westinghouse Electric Mfg. Co. v. Wagner, 225 U. S. 604, 32 S.Ct. 691, 56 L.Ed. 1222, 41 L. R.A.,N.S., 653, and Decker v. Smith, D. C., 225 F. 776. In the first place those cases had to do with profits from sales and not from use, and were governed by a wholly different rule. In the second place, the facts of those cases were wholly different from the facts of this. The theory upon which profits from infringing uses are recovered is the equitable one that no person should unjustly .enrich himself from his wrong of practicing infringement, and that he will be held as trustee of the profits which he derived from such wrongful use. The one who invokes this principle should be prepared to prove the unjust enrichment. It was plaintiff’s duty to show that by using his device, defendant made profits which it would not have made if it had used other devices open to it. There is no evidence in the record that any more customers were drawn to the duck gallery by the use of plaintiff’s device than would have come if older devices had been used. Neither is there any proof that because of the convenience of its form defendant saved costs and expenses in moving the equipment about or otherwise profited therefrom. In short, the case is entirely devoid of proof upon which a just estimate of profits could be made, and the judgment must be reversed for want of such proof, and the cause remanded for trial anew.
While, because of the complete reversal on this ground, it is not necessary from the standpoint of the disposition of this appeal to decide the second question presented or the cross-appeal, we think it proper, in view of another trial, to do so. For the reasons above stated, that an award of profits does not proceed upon the theory of reparation or punishment but upon the equitable principle that one who has received an unjust enrichment should be made to disgorge that which he received, the judgment against appellant for profits, admittedly not received by it, was wrong. Nothing more was proven or found than that the defendants were joint tort-feasors, that is, co-infringers that each was a party to, and derived benefits from, the infringement. In patent cases it is well settled that co-infringers, unless they are partners, are severally accountable only for the profits each has received. Here there was no proof or finding that appellant and his coinfringer were partners. Indeed, the proof negatived this relation. There was no sharing of expenses, none of the losses. There was only a payment by Corbett to appellant of a percentage of the gross profits received not from the use of the infringing device as such but from the concessions as a whole.
As to the cross-appeal for treble profits, it is sufficient to say that their dis-allowance was not error. The statute invoked does not require it, merely allows, increase of damages in the discretion of the court, and nothing is presented to show that that discretion has been abused. But a second and more fundamental reason is that the basis for such an allowance must be found, if at all, in the statute. 35 U.S. C.A. § 70. An examination of it shows that, throughout, it draws a clear distinction between profits and damages and that the provision relied on for trebling the recovery is precisely limited to recoveries for damages, New England Fibre Blanket Co. v. Portland Telegram, 9 Cir., 61 F.2d 648; Yesbera v. Hardesty Mfg. Co., 6 Cir., 166 F. 120; Overman Cushion Tire Co. v. Goodyear Tire & Rubber Co., 2 Cir., 66 F. 2d 361. The judgment is reversed, and the cause is remanded for further and not inconsistent proceedings.
“2. During the period involved herein the Defendants were engaged together in the traveling show or carnival business playing or operating in various cities throughout the United States and Canada, generally for weekly engagements at or near some city. The Royal American Shows is a trade name for one of the several carnival shows owned or operated by the defendant, Amusement Corporation of America. The general plan of operation consisted of an arrangement whereby the Amusement Corporation of America furnished or secured space or show grounds from various civic and fair associations and others. The Defendant corporation arranged for housing, feeding and transportation of their own equipment and employees together with the equipment and employees of the various units which made up generally the entire show business of the defendant Amusement Corporation of America on some basis not disclosed by this record.
“3. In the instant case the defendant, William Corbett, operated a shooting gallery as part and parcel of the Royal American Shows. The defendant, Corbett, furnished the equipment of his particular shooting gallery, paid for the ammunition and his help in connection with the operation of the shooting gallery out of 60% of the gross income from the shooting gallery involved herein and turned over daily to the defendant, Amusement Corporation of America 40% of the gross intake or gross profits received from the operation of which is termed as short-range and long-range target gallery.
“4. The short-range gallery consisted of some sort of device where patrons of the Royal American Shows shot 22 calibre rifles at a close-up target for prizes. The long-range targets consisted mainly of stationary and movable targets including the moving duck-pond targets involved in this-, ease, at the same ground space but a greater distance from the place of firing than, the short-range targets, so that at all times the frontage of the shooting gallery-remained the same. The patrons of the-Royal American Shows shot at these more-distant targets for amusement only and as-, an exhibition and development of skill for-the price or charge of 25 cents per gun. load consisting of 12 or 15 twenty-two-short cartridges and apparently no money •or other prizes were given or awarded to-the customers for skill in connection with shooting at any of the long-range targets.. For that reason the profits from the long-range targets are easier calculated than the profits of the short-range targets. The-moving duck-pond targets which this Court has held to he an infringement of the-plaintifi’s patented device sat on the ground and below and as a part of the other long-range targets in the unit of' Royal American Shows operated by the defendant, Corbett, and took up no additional space laterally or horizontally and very little space vertically.
“5. By a fair preponderance of the testimony the Master finds that the infringing duck-pond targets were operated by the defendants in their show business wherever and whenever the long-range targets were used except in Canada and a few other places in the United States where long-range targets were prohibited by law or ordinance. The plaintiff proved from the daily bookkeeping records of the defendant, Amusement Corporation of America, their exact 40% take from the operation of the shooting gallery operated by Corbett as one of the units of their show or carnival aggregated $9,292.15 for the days when the said shooting gallery used the long-range targets during said almost three year period. The plaintiff introduced testimony of persons skilled and acquainted with the operation of this particular shooting gallery and others which proved to the satisfaction of the Master that when the long and short-range targets were in operation approximately two-thirds of the persons or patrons who shot at these targets shot at the moving duckpond targets because of their greater attractiveness to the public. By the plaintiff’s own testimony it is admitted that the ammunition used in this class of shooting gallery was bought during the period for approximately $30.00 per case of 10,000 cartridges, making each gun load of ammunition consisting of twelve to fifteen shots cost no more than four and one-half cents for which the defendant charged the public twenty-five cents per gun load including the use of the small 22-calibre rifle.
“6. The Master therefore finds that from the gross profit taken in by the defendants only 20% should be deducted as expense for ammunition and for wear and tear and replacement of fire arms. The defendants evidently had some other expenses but failed or refused to itemize their other overhead expenses in connection with this shooting gallery unit of the Royal American Shows and it appears' that neither of the defendants kept any such books which would show any overhead expense which could or should be allocated to the operation, management or transportation of the moving duck-pond target device which is the subject of this controversy, nor did they attempt to do so.
“7. Based upon a fair preponderance of the testimony in this cause the Master finds that the moving duck-pond targets involved herein caused neither of the defendants any appreciable additional expense over and above the fixed cost of the operation, management and transportation of the balance of the movable and immovable targets comprising the shooting gallery show of the Royal American Shows. Because of its mechanism and juxtaposition in relation to the other targets the moving duck-pond targets involved herein occupied little or no extra ground space than that required by the remaining targets. The gross profits or intake from the moving duck-pond targets were substantially clear profit to the defendants save and except 20% allowance for ammunition and rifle maintenance, all of which came out of Corbett’s 60% share.
* * * *
“9. After hearing the testimony in this case, hearing oral argument of Counsel and reading their briefs and citations of authority, the Master finds and recommends that the defendants, William Cor-bett and the Amusement Corporation of America, are in the position of joint tort-feasors in the use of the infringing device involved and are jointly liable to the plaintiff patentee, Bernard G. Mattson for their infringement and their participation in the use of and profits of the infringement.”
“10. From a fair preponderance of the testimony the Master also finds that the defendants jointly took and received a profit from the infringing device over the period mentioned in the interlocutory order of this Court in the aggregate sum of twelve thousand three hundred eighty-nine and fifty-four one-hundredths ($12,-389.54) dollars which they hold as trustees ex-maleficio for the use and benefit of the plaintiff and treble said damages amounts to thirty-seven thousand one hundred sixty-eight and sixty-two one hundredths ($37,168.62) dollars.”
Walker on Patents — Deller’s Ed. Vol. 3, p. 2206 et seq.; Klooster’s “Patent Accounting”, pp. 395, 435 and, 495; O’Neal v. San Jose Canning Co., 9 Cir., 33 F.2d 892; National Carbon Co. v. Richards & Co., 2 Cir., 85 F.2d 490; Mevs v. Conover, 125 U.S. 144 note, 131 U.S.Append. cxlii, 8 S.Ct. 898 note, 23 L.E'd. 100S; Cambria Iron Co. v. Carnegie Steel Co., 3 Cir., 224 F. 947; Dunkley Co. v. Central California Canneries Co., 9 Cir., 7 F.2d 972.
Sammons v. Colonial Press, 1 Cir., 126 F.2d 341; Elizabeth v. Nicholson Pavement Co., 97 U.S. 126, 24 L.Ed. 1000; International Radio Tel. Co. v. Atlantic Communication Co., 2 Cir., 290 F. 698.
“And upon such evidence and all other evidence in the record, the court may adjudge and decree the payment by the defendant to the complainant of a reasonable sum as profits or general damages for the infringement. The court shall have the same power to increase such damages, in its discretion, as is given to increase the damages found by verdicts in actions in the nature of actions of trespass upon the case.”
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
OPINION OF THE COURT
PER CURIAM:
Before us are cross-appeals from a judgment of the district court granting partial relief sought under the Civil Rights Act, 42 U.S.C.A. § 1983 by inmates of a state prison who are followers of The Honorable Elijah Muhammad, often called Muslims or Black Muslims, a sect of the Islamic religion. The district court ordered the prison officials to permit collective religious services conducted by accredited ministers of their faith, “so long as the doctrines espoused by the ministers are identical to those Minister [Jeremiah] Shabazz testified to during the court proceedings.”
The court found it was not mandatory that the prison authorities make available Muslim periodicals and books requested by the plaintiffs because these writings “could be interpreted as an endorsement of a concept that whites generally and prison authorities should be defied by Muslim prisoners even when legal orders or demands are made.” The court explained that “such a view is not an appropriate interpretation of Black religious Muslim doctrine * * * Since the literature could be subject to inferences urging such defiances if not interpreted by a trained Muslim minister, I rule that it is not mandatory that the prison authorities make available to prisoners the writings.” The court specifically found that “in the hands of the inmate who is not fully informed of the Black Muslim doctrine * * * the literature could constitute a ‘clear and present danger of a breach of prison security or discipline or some other substantial interference with the orderly function of the institution. Long v. Parker, 3 Cir., 390 F.2d 816, 820, 822.’ ” Knuckles v. Prasse, 302 F.Supp. 1036, 1058, 1059 (Ed.Pa.1969). This same reasoning apparently governed its decision relating to the wearing of medals.
Similarly, we will not disturb the two conclusions that the plaintiffs had been subjected to “cruel and unusual punishment” for two and one-half days. We reject the appeal of the prison authorities grounded on the argument of insufficient evidence and the plaintiff-appellants’ argument that the court erred in not finding that the conditions persisted beyond this limited time, and that they were entitled to money damages as a matter of law.
This court has previously said in Gittlemacker v. Prasse, 428 F.2d 1, 4 (3 Cir. 1970): “To determine with precision, those rights which follow an inmate into prison involves a process of weighing and balancing conflicting interests.” We conclude that The Honorable A. Leon Higginbotham, Jr., the trial judge, approached his task of striking this proper balance with outstanding sensitivity, understanding and perception. The district court demonstrated an awareness that “[i]n the case of a prisoner, the determination of what constitutes an actionable claim may become difficult since imprisonment unavoidably results in the forfeiture of certain rights and privileges commonly exercised in a free society.” Gittlemacker v. Prasse, supra, at 3.
The district court succinctly posited the problem:
But a prison is not a private dwelling and a cell row is not a public highway. Thus plaintiffs’ freedoms and rights must be analyzed in the realistic context of the prison situation where plaintiffs desire to exercise them. 302 F.Supp. at 1047.
Guided by these principles, we turn to the argument advanced by the inmate-appellants, which suggests an inconsistency between the court’s conclusion that Eighth Amendment rights were denied them for two and one-half days and its refusal to award monetary damages. We do not find these conclusions incompatible. The complaint was a combination of counts in law and in equity. The district court treated this particular issue as one sounding in equity, setting forth in conclusion 7: “Plaintiffs were subjected to cruel and unusual punishment, but since it does not appear that this practice has been or will be continued, injunctive relief is DENIED.” 302 F.Supp. at 1062.
Accordingly, after considering all the arguments advanced by the cross-appellants, we will affirm the judgment of the district court.
Judge Seitz concurs in the result except that were he in the district court he would have assessed at least nominal damages against the defendants legally responsible for the conditions found to constitute cruel and unusual punishment. See Basista v. Weir, 340 F.2d 74, 87 (3d Cir. 1965).
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.
Appellee-defendant, Lippert Bros., Inc., had the prime contract for the construction of an abbey at Atchison, Kansas, and made a subcontract with appellant-plaintiff, J. T. Majors & Sons, Inc., for the masonry work. Majors completed performance and brought suit alleging nonpayment for certain work done. Jurisdiction is based on diversity of citizenship.
The first claim relates to the cleaning of interior masonry and the second claim to the cleaning of exterior masonry. As to each of these claims the trial court directed a verdict in favor of defendant Lippert. The third claim covering the alteration of anchor holes was submitted to the jury which allowed the plaintiff a recovery of $4,322.73. As to this claim Lippert through a third-party complaint asserted that the liability, if any, was that of Forburger Company, Inc. After verdict, the court on its own motion reduced the recovery to $1,688.80 and entered judgment for that amount. The issues under the third-party complaint were settled by agreement. The fourth claim involved the pointing of terrazzo and the jury allowed recovery. Here also there was a third-party complaint, this time alleging that the liability was that of Advance Terrazzo Co., Inc., and a settlement was made by agreement.
Majors has appealed from the actions of the trial court in directing a verdict as to claims one and two and in reducing the jury verdict on claim three. Lip-pert filed a cross-appeal contending that there should be no recovery on the third claim but subsequently moved to dismiss that cross-appeal.
The first two claims, which present the question of whether Majors is entitled to be paid for cleaning masonry, may be considered together. The subcontract provided that Majors, the subcontractor, was “to furnish labor to install masonry work as follows.” The itemization which follows contains 12 items with unit prices covering various types of brick, stone, tile, glass blocks, and granite. No reference is made to cleaning. The subcontract contains the common provision requiring extra work or changes to be agreed to in writing. The subcontractor agreed to be bound by all terms and conditions of the general contract. The specifications made a part of the prime contract had two provisions relating to cleaning.
Before the execution of the subcontract the prime contractor had laid about 18,000 brick and between 4,000 and 4,500 feet of split-faced stone. The subcontractor cleaned this brick and stone as well as all masonry laid by it. The basis of its first two claims is that the subcontract required Majors to “install” but not to “clean,” and that the cleaning was done by it under an oral agreement with the prime contractor’s construction foreman. Lippert contends that the term “install” includes cleaning, that the construction superintendent had no authority to make any oral contract with Majors, and that the provisions of the subcontract requiring agreements for extra work or changes to be in writing precludes any such oral agreement.
Majors, asserting that the subcontract had a latent ambiguity, offered evidence of precontract conversations tending to show an intent not to include cleaning. The court held that the contract was not ambiguous and rejected the offer. Majors also offered testimony as to the technical meaning of the term “install.” This was received together with rebutting evidence with the result that there was a confusing conflict from which the conclusion can be reasonably drawn that when masonry work is covered by a lump sum contract cleaning is included but when it is a unit contract cleaning is not included unless specified.
Here we have a subcontract itemizing the work and providing for compensation on a unit basis. The reference to the general contract is unimportant. The obligation on the prime contractor to clean does not automatically fall on the subcontractor.
It is significant that Majors cleaned the brick and cut stone that had been laid by the prime contractor before the execution of the subcontract. No possible interpretation of the itemizations contained in the subcontract required it to do so. The testimony of an official for Lippert that payment for such work was made under “negotiated” quantities is far from convincing.
In the circumstances of this case it cannot be said with certainty what the parties meant by the use of the word “install.” The subcontract is ambiguous as the intention of the parties cannot be ascertained therefrom. In such a situation “the background against which the contract was executed and the circumstances attending its execution should be taken into consideration as an aid to the ascertainment of such intent.” The trial court erred in rejecting the evidence as to the preliminary negotiations between the parties. While the interpretation of contractual language is a question of law, in a situation such as this where meaning depends on extrinsic evidence, there may result a material conflict or the possibility of more than one reasonable inference, either of which could present a question of fact rather than law. We are unable to say whether on retrial such a factual issue will be presented.
The trial court directed a verdict as to claims one and two on the ground that there was no showing of authority in Lippert’s construction superintendent to contract with Majors for the cleaning. The record shows that such superintendent, who had no superior officer in Kansas, hired, fired, directed, and paid the workers on the job. He ordered and. paid for certain supplies but his check-writing authority was limited. A vice-president of Lippert testified that the superintendent had no authority to bind Lippert either orally or in writing. The superintendent admittedly kept a record of the time spent by Majors in the cleaning operations but did not keep such records in regard to other work done by Majors. An offer of Majors to prove its oral contract with the superintendent for the cleaning was rejected on the ground that there was no proof of his authority to bind Lippert.
An official of Majors testified that the superintendent was “in full charge” and was “the man we had to go to for everything.” Lippert knew that the cleaning work was being done as its vice-president testified that the cleaning of the brick and stone laid before Majors went on the job was paid for by “negotiated” quantities. Lippert did not notify Majors of any limitation on the superintendent’s authority. Lippert has acknowledged liability under the superintendent’s oral agreement for the alteration of the anchor holes. Certainly the evidence is sufficient to justify the reasonable inference that the superintendent had authority to bind his principal. The question of authority of an agent is ordinarily one of fact.
Lippert insists that even assuming such authority the provisions of the subcontract precluding oral agreements for extra work or changes has the controlling effect of preventing recovery. Such a provision is valid but in the absence of the applicability of any statute of frauds it may be waived, modified or rescinded by a subsequent oral contract. While an intent to waive, modify or rescind must, be shown, that may be inferred from the actions of the parties. The conduct of Lippert was such as to permit the reasonable inference that it intended to waive or modify the contract provision on which it now relies. The question of intent is usually one of fact.
It is settled law in Kansas that a principal cannot receive and retain the benefits of a transaction, and at the same time deny the authority of the agent to enter into that transaction. In the instant case Lippert knowingly permitted Majors to clean the masonry and accepted the benefits arising therefrom. If the subcontract did not require Majors to do that work, then the questions of waiver of the pertinent provisions of the written contract, apparent authority of the superintendent, existence and terms of an oral contract for cleaning, estoppel, ratification, and unjust enrichment may be pertinent. We can resolve none of them on the record now before us.
The third claim related to the alteration of the anchor holes. The evidence was that in the construction of a stone wall of the type involved each stone must be fastened in the wall by means of metal rods. These rods are of two types known as “anchors” and “cramps.” The stones made available to Majors had holes for these rods but they were too small and were improperly shaped for the rods which were furnished. Majors was required to alter the holes so that the rods would fit. The difference between the parties is in the number of holes that had to be altered.
The president of Majors testified that an average of three holes had to be altered on each of over 3,000 pieces of stone. The work was valued on a time basis plus certain overhead charges. Majors submitted an itemized bill to Lippert in the amount of $4,432.78. The jury returned a verdict on this claim in favor of Majors for $4,322.73. After the return of the verdict Lippert moved orally for judgment notwithstanding the verdict. There ensued a colloquy among ■court and counsel which added nothing to the clarification of any issue. The court announced an intent to reduce the verdict. Majors’ counsel then objected and asked time either to remit or to move for a new trial. This was denied. The court ordered that the verdict was reduced to $1,688.80. No ruling was made on Lippert’s oral motion. Thereafter each party moved for a new trial and each motion was denied. Lippert filed a cross-appeal on the recovery on this claim and has now moved to dismiss that cross-appeal. This eliminates any necessity for consideration of its motion for judgment notwithstanding the verdict.
The trial court apparently was impressed by the facts that the third claim of the complaint referred only to anchors and the defense testimony was that 3,800 anchors were supplied for the job. The reduction was on the basis that recovery had to be limited to the amount which would compensate for the alteration of one hole per anchor.
The third claim sought unliquidated damages for breach of contract. It is the function of the jury, and not the prerogative of the court, to determine the amount of damage and the determination of the jury, if based on substantial evidence or reasonable inference therefrom, must be upheld in the absence of an error of law or a showing of passion or prejudice.
The third claim alleged oral employment for work in “cutting and straightening anchor holes on stone.” Lippert contends that this limits recovery to work done on anchor holes. The validity of such argument depends on the difference between a cramp and an anchor. Each is a device to hold a block of stone in place. A witness for Majors stated that a cramp “is just an anchor.” The stone foreman for Majors testified as to the necessity for alteration of the holes for both cramps and anchors. The record shows that about 2,600 cramps and 3,800 anchors were used. There is nothing to indicate that Lippert was misled by the reference to anchors in the complaint. The query is not how many anchors or cramps were used but how many holes had to be altered. As to this the evidence for Majors was that there were about 3,000 stones on which an average of three holes each had to be altered.
The peremptory action of the trial court in reducing the verdict was improper. There was no claim of error of law or of passion and prejudice. If the court felt that the verdict was excessive the proper procedure was to afford the plaintiff an opportunity to make a remittitur if it desired and if it did not choose to do so, to grant a new trial. But the circumstances in this case did not justify even that action, There was substantial evidence to sustain the verdict and no errors of law occurred in the submission of the issue to the jury. The verdict must be reinstated, and judgment entered in accordance therewith.
Forburger Company, Inc., a third-party defendant below, has filed a motion to dismiss the appeal as to it. The motion is not in order and cannot be considered as neither the appeal nor the cross-appeal designate Forburger as a party. The motion of Lippert to dismiss the cross-appeal is granted. As to the first and second claims set out in the complaint the judgment is reversed for further proceedings in accordance with the views stated herein. The judgment on the third claim is reversed with directions to enter judgment in conformity with the verdict of the jury. The judgment on the fourth claim is not questioned and is accordingly affirmed. Costs will be assessed against the appellee.
. Hereinafter referred to as Lippert or as prime contractor.
. ■ Hereinafter referred to as Majors or as subcontractor.
. The provision is: “No extra work or changes under this contract will be recognized or paid for unless agreed to in writing by the Contractor [Lippert] before the work is done or the changes made. No oral agreements will be made by either party.”
. As to stone work it provided: “The face of all stone work shall be cleaned upon completion, an approved cleaning compound being used. Acid shall not be used on cut stone work.” The requirement as to brick work was: “All brick work shall be thoroughly cleaned and pointed as directed by the Architect.”
. Moore v. Jones, 10 Cir., 215 F.2d 719, 721, and Kansas authorities there cited.
. United States v. Nickel, 10 Cir., 243 F.2d 924, 925.
. Hawkins v. Frick-Reid Supply Corporation, 5 Cir., 154 F.2d 88, 89; 17 C.J.S. Contracts, § 617, p. 1284. Cf. Brown & Co. v. McGran, 14 Pet. 479, 493, 39 U.S. 479, 493, 10 L.Ed. 550; S. S. Kresge Co. v. Sears, 1 Cir., 87 F.2d 135, 140, 110 A.L.R. 583, certiorari denied 300 U.S. 670, 57 S.Ct. 512, 81 L.Ed. 876; United States v. Northern Pac. Ry. Co., 8 Cir., 188 F.2d 277, 280.
. While Lippert may recognize liability under the one oral contract and deny liability in another instance on the ground of lack of authority, the acceptance of liability in one instance certainly affects reasonable belief in authority in another instance.
. American Nat. Bank of Sapulpa, Okl. v. Bartlett, 10 Cir., 40 F.2d 21, 22.
. See annotation in 66 A.L.R. 649, 662. Kansas follows this rule. See Bailey v. Norton, 178 Kan. 104, 283 P.2d 400, 403-405, citing 17 C.J.S. Contracts § 371(3), p. 850, and 9 Am.Jur. Building and Construction Contracts § 23, pp. 17-18.
. Welton v. 40 East Oak St. Bldg. Corporation, 7 Cir., 70 F.2d 377, 378, certiorari denied Chicago Title & Trust Co. v. Welton, 293 U.S. 590, 55 S.Ct. 105, 79 L.Ed. 685; 88 C.J.S. Trial § 219, p. 502.
. Bank of Lakin v. National Bank of Commerce of Kansas City, 57 Kan. 183, 45 P. 587. Sea also Adrian v. Elmer, 178 Kan. 242. 284 P.2d 599, 603; Sinclair Kefming Co. v. Vaughn, 135 Kan. 82, 9 P.2d 995, 996; Sheldon Petroleum Co. v. Empire Gas & Fuel Co., 112 Kan. 73, 209 P. 826, 830; Isaacs v. Jackson Motor Co., 108 Kan. 17, 193 P. 1081, 1082.
. Lippert attempts to make much of an error in this bill. Such error was in a simple and obvious arithmetical computation. No one was misled or prejudiced by it.
. There were disputes as to both the number of altered holes and as to the cost of alteration per hole.
. U.S.Const. Amend. 7; Walker v. New Mexico and Southern Pacific Railroad Company, 165 U.S. 593, 596, 17 S.Ct. 421, 41 L.Ed. 837; Slocum v. New York Life Insurance Co., 228 U.S. 364, 385-386, 33 S.Ct. 523, 57 L.Ed. 879; Dimick v. Schiedt, 293 U.S. 474, 486, 55 S.Ct. 296, 79 L.Ed. 603.
. Webster’s New International Dictionary, 2d Ed., defines the word anchor as used in building thus: “A device, as a metal tie, for giving stability to one part of a structure by making it fast to another, as a beam to a wall, one wall to another, or (in this case specif, called cramp or cramp iron) a stone facing, as an ashlar, to rough masonry behind it.” The same dictionary defines cramp as: “A device, usually of iron bent at the ends or of dovetail form, used to hold together blocks of stone, timbers, etc.”
. Kennon v. Gilmer, 131 U.S. 22, 29, 9 S.Ct. 696, 33 L.Ed. 110; Bucher v. Krause, 7 Cir., 200 F.2d 570, 588. Cf. Neese v. Southern Railway Co., 350 U.S. 77, 76 S.Ct. 131, 100 L.Ed. 60.
. Readnour v. Commercial Standard Insurance Company, 10 Cir., 253 F.2d 907, 908.
. 28 U.S.C. § 2106; Marshall’s U. S. Auto Supply v. Cashman, 10 Cir., 111 F.2d 140, 141; Standard Oil Company v. Brown, 5 Cir., 238 F.2d 54, 56; Pettingill v. Fuller, 2 Cir., 107 F.2d 933, 936; Finn v. American Fire & Casualty Co., 5 Cir., 207 F.2d 113, 115; Moore’s Federal Practice 2d Ed. Vol. 6, § 59.15 (3), p. 3904.
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:
Dr. John P. Davis and his son, Paul M. Davis (collectively referred to as “the Davises”), appeal from an adverse summary judgment order dismissing their claims. The Davises claimed that A.G. Edwards & Sons (Edwards) and Lloyd Tiller engaged in churning of their securities account. The Davises asserted claims under § 10b of the Securities and Exchange Act of 1934, 15 U.S.C. § 78(j)(b) (Securities Act), the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. (RICO), and Louisiana law. Edwards and Tiller filed motions for summary judgment and for sanctions under Fed.R.Civ.P. 11, asserting that the Davises and their counsel filed these claims in bad faith.
The district court held that the statute of limitations period had expired on the Davis-es’ RICO and Securities Act claims, dismissed without prejudice their pendant state claims and rejected the Rule 11 motion of Edwards and Tiller. We affirm the district court as to the Securities Act claim and the Rule 11 motion. A recent Supreme Court decision, however, requires us to vacate the court’s decision relating to the RICO claim. Because it must further consider the RICO claim, the district court should also reconsider its dismissal of the pendant state claims.
I. Background
According to the pleadings, John and Paul Davis each opened accounts with Edwards in July 1979, investing over $300,000 in “daily accumulation funds.” The broker for these accounts was Edwards’ employee, Tiller. After the Davises’ securities portfolio had declined in value to some $65,000, the Davises ordered Edwards to close their accounts in July or August 1983. Edwards promptly and fully complied.
On September 13 and September 20, 1985, Dr. Davis and his son each filed a separate but nearly identical complaint against Edwards and Tiller, alleging that the defendants had “engaged in the manipulative and fraudulent practice of excessive and objectionable trade, i.e., churning.” The complaint stated that this churning occurred throughout 1980, 1981, 1982 and most of 1983, and that it violated the Securities Act. On October 21 and October 25, 1985, each Davis amended his complaint to assert a RICO claim and pendant state claims that alleged a breach of contract and unjust enrichment. These amended and superseding complaints also named as parties unspecified and then unknown defendants, who were supervisors of Tiller.
On December 18,1985, Edwards and Tiller filed motions for summary judgment, and on January 9, 1986, they filed motions for sanctions under Rule 11. Both motions urged that the statute of limitations had run on all of the Davises’ claims. The district court granted the motion for summary judgment, but denied the motion for sanctions. Davis v. A.G. Edwards & Sons, Inc., 635 F.Supp. 707 (W.D.La.1986). The Davises appeal the summary judgment decision, and Edwards and Tiller appeal the Rule 11 decision.
II. Securities Act Claim
We have held, and the parties agree, that the limitations period governing Securities Act claims is governed by Louisiana’s two year statute of limitations, found in La.R.S. 51:714. Dupuy v. Dupuy, 551 F.2d 1005, 1023-24 n. 31 (5th Cir.), cert. denied, 434 U.S. 911, 98 S.Ct. 312, 54 L.Ed.2d 197 (1977). While the proper limitations period is borrowed from state law, when the period commences is governed by federal law. Vigman v. Community National Bank & Trust Co., 635 F.2d 455, 458-59 (5th Cir.1981); Azalea Meats, Inc. v. Muscat, 386 F.2d 5, 8 (5th Cir.1967); see Rawlings v. Ray, 312 U.S. 96, 61 S.Ct. 473, 85 L.Ed. 605 (1941).
Under federal law, the limitations period begins to run when “the aggrieved party has either knowledge of the violation or notice of facts which, in the exercise of due diligence, would have led to actual knowledge” of the violation. Vigman, 635 F.2d at 459 (citations omitted). It is plain that this requisite “knowledge ... which an aggrieved party must have for ... commencing the statute of limitations is merely that of ‘the facts forming the basis of this cause of action’ ... not that of the existence of the cause of action itself.” Id. (quoting Azalea Meats, 386 F.2d at 9) (emphasis in original).
The Davises concede that they ordered Edwards to close their accounts in August 1983. In their original and amended complaints, the Davises alleged that they closed their accounts, “as a result of Defendants’ excessive and objectionable trading practices.” Thus, the Davises in effect admit in their pleadings that, when they closed their accounts, they were cognizant of the facts upon which their Securities Act claim was predicated.
The Davises contend, however, that there is a genuine issue of material fact as to when they knew of the facts giving rise to this cause of action. In a later affidavit, Dr. Davis stated that he did not suspect Edwards, Tiller or any of Edwards’ other employees of wrongdoing until January of 1984, when Dr. Davis allegedly discovered that Tiller had “lied” to him regarding a transaction. Dr. Davis' statement in the affidavit certainly conflicts with the Davis-es’ earlier statements in their complaints.
But this factual dispute does not render summary judgment inappropriate. Irrespective of which document contains the more accurate account, the Davises are bound by the admissions in their pleadings, and thus no factual issue can be evoked by comparing their pleadings with Dr. Davis’ affidavit. “[FJactual assertions in pleadings are ... judicial admissions conclusively binding on the party that made them.” White v. ARCO/Polymers, 720 F.2d 1391, 1396 (5th Cir.1983) (citations and footnote omitted) (emphasis added). Facts that are admitted in the pleadings “are no longer at issue.” Ferguson v. Neighborhood Housing Services, Inc., 780 F.2d 549, 551 (6th Cir.1986). Therefore, as the district court found, the Davises’ knowledge of the “objectionable trading practices” in August 1983 triggered the limitations period. The Davises did not file a complaint until more than two years thereafter, and their complaint is untimely.
III. RICO State of Limitations
When Congress enacted RICO, it did not provide a statute of limitations period. The district court, thoughtfully applying the analysis required by Wilson v. Garcia, 471 U.S. 261, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985), determined that the proper state analogue was contained in Louisiana’s one year limitations statute for delictual actions. La.Civ.Code 3492. Thus, because plaintiffs filed the complaint alleging a RICO violation in October 1985, and because the limitations period commenced in August 1983 (or even crediting Dr. Davis’ assertion in the affidavit, in January 1984), the district court held that the limitations period had run.
The Supreme Court, however, now instructs that all civil RICO claims are governed by the four year limitations period contained in the Clayton Act, 15 U.S.C. § 15(b). Agency Holding Corp. v. Malley-Duff & Associates, Inc., — U.S.-, 107 S.Ct. 2759, 97 L.Ed.2d 121 (1987). Edwards and Tiller assert that the limitations period began to run on December 30, 1981. The superseding complaints containing the RICO claims were filed in October of 1985. Thus, even assuming arguendo the validity of Edwards’ and Tillers’ assertion, the Davises filed their RICO complaints within the required four years. Their RICO claims are timely.
IV. Rule 11 Sanctions
Edwards moved for sanctions under Rule 11, claiming that the Davises’ complaint was frivolous and aimed at obtaining a “nuisance settlement.” The district court denied their Rule 11 motion because the “prescriptive period underlying a ... RICO action is ... unsettled” and because, “although plaintiffs’ assertions are inconsistent, counsel’s advocacy of plaintiffs’ position is ... made in good faith.” 635 F.Supp. at 707. Having carefully examined the record, the arguments of counsel, and the applicable law, we readily affirm the district court’s reasoning and conclusion.
Conclusion
The district court determined that it lacked jurisdiction over the Davises’ pendant state claims, because the limitations period on their federal claims had run. Because we now hold that the RICO claim was filed in a timely fashion, the district court should reconsider the propriety of asserting pendant jurisdiction over these state claims. The decision is thus AFFIRMED in part, VACATED in part and REMANDED.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
When this case was here before, the judgment was reversed and the cause remanded for further proceedings consistent with the opinion rendered. Boh v. Pan American Petroleum Corporation, 5 Cir., 128 F.2d 864. The further proceedings in the lower court and the judgment entered were in strict conformity with the opinion and mandate of this Court.
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
RICH, Judge:
These suits were brought by Rath Packing Company (hereinafter “Rath”) to enjoin the enforcement of certain California statutes and regulations pertaining to the labeling by weight of packaged foods at retail, and for a declaration that the federal Wholesome Meat Act of 1967, 21 U.S.C. § 601 et seq., and a regulation promulgated thereunder, 9 CFR 317.2(h)(2), preempt these California statutes and regulations. They were consolidated for decision in the district court and on appeal.
Rath is a nation-wide processor and seller of meat products, including bacon, and maintains a meat-packing establishment at Vernon, California, which is subject to federal inspection under the Wholesome Meat Act and 9 CFR 302.1 as an establishment in which “any products of * * * carcasses of livestock are * * * prepared for transportation or sale as articles of commerce, which are intended for use as human food.” Becker and Jones are the Directors of the Departments of Weights and Measures of Los Angeles and Riverside Counties, California, respectively. They are responsible for the actual enforcement of the State weights and measures laws in their counties. Intervenor Christensen is the Director of Agriculture of the State of California.
Jurisdiction in the district court was based on 28 U.S.C. § 1331(a), as it was alleged that a case or controversy arising under the laws of the United States involving more than $10,000 was presented. We have jurisdiction of this appeal under 28 U.S.C. § 1291.
The district court, in a memorandum and order reported at 357 F.Supp. 529 (C.D.Cal.1973), granted in part the relief requested, and all parties appealed the determinations adverse to them.
This case is a companion to General Mills, Inc., et al. v. Jones, 530 F.2d 1317, decided concurrently herewith. Much of the discussion in this opinion is applicable to the General Mills case as well.
Background
This case concerns the packaging and weighing of bacon. In order to understand the issues, a brief description of the properties of bacon and how it is packed and weighed is necessary.
The weighing and packaging of bacon at the Rath plant takes place under internal Rath procedures which have been submitted to an official of the United States Department of Agriculture (USDA). After the pickled and smoked pork bellies come from the bacon press, where they are squared into uniform rectangular shapes, they are sliced by a machine, which distributes the slices in “drafts” of approximately one pound weight. An operator places each draft on an insert, or “tux”, board, which is a hardboard coated either with wax or with polyethylene. The drafts are then passed to a scaling station, where they are weighed and the operator either adds or removes bacon to bring the weight within a predetermined target limit. After scaling the bacon is passed to a tux overwrap machine, which inserts the bacon into a carton and seals it. This carton is not hermetically sealed and the bacon in it does lose some moisture to the atmosphere over time. Although Rath now does use some hermetically sealed bacon containers, this packing method is agreed to be in accordance with good distribution practices. Once the bacon is weighed at the scaling station, it is not weighed again before it leaves the Rath plant, an average of 4 days, never more than 8 or 9 days, later. In determining the pass zone Rath follows the USD A procedure of subtracting from the actual weight of the draft and the tux board on which it lies the weight of a dry tux board. This method uses a “dry tare.” There is no evidence that Rath has violated federal weight standards in any way.
The federal program for regulation of net weight labeling of meat and meat food products exists in part under the Wholesome Meat Act of 1967, supra. The Act added the concept of “misbrand-ing” to the prior federal meat inspection laws. 21 U.S.C. § 601(n) provides in relevant part:
(n) The term “misbranded” shall apply to any carcass, part thereof, meat or meat food product under one or more of the following circumstances:
* * * * * ^
(5) if in a package or other container unless it bears a label showing (A) the name and place of business of the manufacturer, packer, or distributor; and (B) an accurate statement of the quantity of the contents in terms of weight, measure, or numerical count: Provided, That under clause (B) of this sub-paragraph (5), reasonable variations may be permitted, and exemptions as to small packages may be established, by regulations prescribed by the Secretary [of Agriculture];
* * * * * *
In 9 CFR 317.2(h)(2) the Secretary purported to implement § 601(n)(5):
(2) The statement as it is shown on a label shall not be false or misleading and shall express an accurate statement of the quantity of contents of the container exclusive of wrappers and packing substances. Reasonable variations caused by loss or gain of moisture during the course of good distribution practices or by unavoidable deviations in good manufacturing practice will be recognized. Variations from stated quantity of contents shall not be unreasonably large.
In the supermarket the California inspectors employed a different weighing method, using a “wet tare.” The California procedure is set forth in detail in 4 Cal.Admin.Code ch. 8, subch. 2, Art. 5. Briefly, the California inspectors follow a twelve-step procedure set forth in Section 2933.3 of the regulations:
(1) determine the number of packages in the lot to be sampled;
(2) from a table in the regulation, determine the total package sample size (e. g., 15 packages out of a lot of 300);
(3) from the same table, determine the tare sample size (e. g., 2 packages out of a lot of 300);
(4) record the gross weight of each tare sample package;
(5) remove the usable contents from each tare sample, weigh the used, empty container, and compute the average tare Weight;
(6) weigh the remaining packages in the package sample and record their weights, determining the amount of error from labeled weight for each package;
(7) [not applicable to bacon];
(8) calculate the preliminary total error for the sample, and determine the arithmetical average error;
(9) calculate the range of error for each sub-group of the package sample;
(10) determine whether any unreasonable errors exist, and eliminate from further computations all samples whose errors exceed the preliminary average error in underweight situations by more than the amounts set forth in tables in the regulations; if the number of unreasonable errors exceeds a certain set figure for each sample size, further action, including the issuance of off-sale orders, may be undertaken.
(11) recalculate the total and average error of the sample excluding the unreasonable errors;
(12) “(a) If the total error as obtained from the sample is plus and is less than the value shown in Table III for the corresponding range and sample size, then a shortage may or may not exist, and additional samples may or may not be taken, depending upon the discretion of the weights and measures official. If no additional samples are taken then the procedures as set forth in the following sections shall govern the disposition of the lot.
“(b) If the total error obtained from the sample is less than the above-determined value, and the error is minus, then a shortage may or may not exist, and additional samples may or may not be taken, depending upon the discretion of the weights and measures official. If no additional samples are taken the lot shall be passed. If additional samples are taken then the procedures as set forth in the following sections shall govern the disposition of the lot.” [Sec. 2933.3.12.]
If an inspector cannot pass the lot based on this sampling technique or after retesting, he then may order the lot off-sale under the provisions of California Business and Professions Code § 12211:
Each sealer shall, from time to time, weigh or measure packages, containers or amounts of commodities sold, or in the process of delivery, in order to determine whether the same contain the quantity or amount represented and whether they are being sold in accordance with law.
# # * sif * #
Whenever a lot or package of any commodity is found to contain, through the procedures authorized herein, a less amount than that represented, the sealer shall in writing order same off sale and require that an accurate statement of quantity be placed on each such package or container before the same may be released for sale by the sealer in writing. The sealer may seize as evidence any package or container which is found to contain a less amount than that represented.
Evidence was adduced at the trial from various California officials, including Becker, that the county departments do not recognize variations in net weight that result from water loss during good distribution practice. Mr. Cervinka, a statistician employed by the California Department of Agriculture, testified on direct examination as an expert for Christensen that Art. 5 of the regulation, described above, is a statistically valid procedure. On cross-examination he indicated that Art. 5 does not make any distinction between products that lose water and those that do not, nor does it make provision for any weight reductions during the course of handling. On this and other evidence the district court concluded that Art. 5 uses “absolute” weight as determined by statistical methods as its measure of compliance and makes no reference in describing the steps of the weighing and calculating process to reasonable variations from label weight caused by “loss * * * of moisture during the course of good distribution practice.” The district court’s fact findings have substantial evidentia-ry support and are not clearly erroneous. F.R.Civ.P. 52(a). Becker, Christensen, and Jones do not urge error in the district court’s construction of Art. 5.
Procedural History
During the period September 1971 to March 1972 inspectors under the supervision of Becker and Jones visited supermarkets in Los Angeles and Riverside Counties and weighed packages of Rath bacon to determine compliance with the State statute and regulations concerning net weight labeling. Becker’s representatives ordered approximately 84 lots of bacon off sale for short weight; Jones ordered nearly 400 packages of Rath bacon off sale in the period September 29 to December 30, 1971, for the same reason.
On February 17, 1972, the Riverside County Counsel brought an action in the name of the People against Rath in the Superior Court for Riverside County for an injunction under Cal.Civ.Code § 3369 and for civil penalties under Cal.Bus. and Prof.Code § 17536, alleging that Rath had committed acts of unfair competition in violation of Cal.Bus. and Prof. Code § 17500 by distributing for sale in Riverside County supermarkets the packages of bacon that Jones’ representatives had ordered off sale. On March 1, 1972, the Los Angeles County Counsel filed a similar action against Rath in the Superior Court for Los Angeles County.
Rath removed both actions to federal district court within a week thereafter; but on March 20, 1972, the district court remanded the actions to the State courts, finding, at least with respect to the Riverside action, that there was no diversity of citizenship and that “[n]o substantial federal question is presented on the face of the pleadings.”
Meanwhile, on March 17, 1972, Rath filed two actions in federal district court, one against the People and Becker, the other against Jones. Rath requested declarations that the California statutes and regulations impose labeling standards on meat food products prepared by Rath that are in addition to or different than the standards of the Wholesome Meat Act of 1967, specifically 21 U.S.C. § 601(n)(5) and 9 CFR 317.2(h)(2) and that California could not impose weight labeling requirements on Rath meat food products after they left the Rath plant. Rath also requested injunctions against the enforcement by Becker and Jones of labeling requirements in addition to or different than those in the Act and against the ordering off-sale or otherwise preventing the sale of Rath products for failure of the products to bear an accurate label in terms of net weight after they have left Rath’s plant. Becker, Jones, and Christensen counterclaimed for the same relief sought by the State in the state court actions.
After the remands, on March 30, 1972, Rath answered the state court complaints and filed cross-complaints seeking the same relief, in virtually the same language, as Rath sought in federal court. In July 1972 Christensen intervened in both the state and federal court litigations.
Becker filed in the district court motions requesting the court either to abstain from deciding the federal court action or to stay the federal action pending final determinations in the state court actions. The district court denied these motions in May 1972. On November 14, 1972, the superior court in the Riverside action dismissed Rath’s cross-complaint; Rath appealed. On the very next day, Christensen and Becker moved the district court to dismiss Rath’s action or to stay it pending decision on Rath’s state appeal. The district court denied the motions, and this court, on Christensen and Becker’s petition for a writ of prohibition, declined to disturb the district court’s assumption of jurisdiction.
On April 3, 1973, the district court, after a trial on.the merits of Rath’s action against Becker and on cross-motion for summary judgment in the action against Jones, entered judgment declaring Cal.Bus. and Prof.Code § 12211 and 4 Cal.Admin.Code ch. 8, subch. 2, Art. 5 to be preempted by federal law and enjoining their enforcement. In the course of its Memorandum the court held that 9 CFR 317.2(h)(2) was invalid, and that thus the sole federal labeling standard was “accurate” weight. The court also held that accurate weight labeling standards could be applied to packages of meat and meat food products at the retail level. Cross-appeals were taken to this court.
The Riverside action continued, and in January 1974, while Rath’s first appeal was still pending in the California District Court of Appeal, the superior court entered summary judgment on the complaints of Jones and Christensen against Rath; Rath appealed again. In an unreported decision in April 1974 on Rath’s first appeal, the California appellate court reversed the dismissal of Rath’s cross-complaint against Jones, holding that the federal court’s judgment was res judicata on the issue of the validity of § 12211 and Art. 5 (to the extent that it implemented § 12211). On Rath’s second appeal, in December 1974, the appellate court reversed the grant of summary judgment on the complaints and remanded the case to the Riverside superior court for trial, holding that there existed issues of fact that required trial. People v. Rath Packing Company, 44 Cal. App.3d 56, 118 Cal.Rptr. 438 (1974). The appellate court also explained further the basis of its decision on Rath’s first appeal, holding that the effect of the federal court judgment was to preclude relitigation of the narrow issue of the preemption of § 12211, and its implementation in Art. 5, by the Wholesome Meat Act. The appellate court held, 118 Cal. Rptr. at 446 n.6, that Art. 5 is not unconstitutional.
Although the record does not contain any notice of the proceedings in the Los Angeles superior court action, we are informed by Rath’s reply brief that in February 1974 the Los Angeles court gave res judicata effect to the final judgment on the preemption issue and decided in Rath’s favor the issues of constitutionality and whether Becker’s ordering of Rath’s bacon off sale complied with state law. An appeal from this judgment is pending.
I.
Becker, Jones, and Christensen contend that the district court lacked jurisdiction of the subject matter before it, and, in the alternative, that the principles of abstention and comity required the court to stay its hand until the state court actions had proceeded to judgment. We reject both contentions.
A.
The question of subject matter jurisdiction may be raised by the parties at any time or by the court sua sponte. Clark v. Paul Gray, Inc., 306 U.S. 583, 59 S.Ct. 744, 83 L.Ed. 1001 (1938); F.R.Civ.P. 12(h)(3). Becker et al. first contend that the declaratory judgment actions brought by Rath are nothing more than attempts to get collateral review of the remands to state court of the actions brought against Rath by the People which Rath had removed to the district court. 28 U.S.C. § 1447, provides:
§ 1447. Procedure after removal generally.
(d) An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise * * *.
Their second contention is that Rath’s claim for declaratory and injunctive relief in the district court is in reality a defense to the state court actions, and, as such, cannot form a basis for federal question jurisdiction under 28 U.S.C. § 1331.
After the institution of Rath’s federal action Becker at al. presented these contentions to this court by way of a petition for a writ of prohibition, Becker et al. v. Real, No. 72-3037, which the court, ELY and HUFSTEDLER, Circuit Judges, denied. We find no reason to depart from that decision.
Federal question jurisdiction is determined by the federal district court solely from the face of plaintiff’s complaint. Gully v. First National Bank, 299 U.S. 109, 57 S.Ct. 96, 81 L.Ed. 70 (1936). Removability cannot be created by defendant pleading a counter-claim presenting a federal question under 28 U.S.C. § 1331. See 1 Barron & Holtzoff, Federal Practice and Procedure (Wright Ed.) § 102; United Artists Corp. v. Ancore Amusement Corp., 91 F.Supp. 132 (S.D.N.Y.1950). Thus, Rath’s answer and cross-complaint in the state court, raising its claim for declaratory and injunctive relief under federal law, were not before the district court when it remanded the state court actions and do not raise any issues necessarily adjudicated by the court in deciding to remand. The decision of the district court that the case does not invoke the federal jurisdiction and must be remanded precludes further litigation of the issue of the forum in which the removed case is to be litigated. Missouri Pacific Ry. Co. v. Fitzgerald, 160 U.S. 556, 583, 16 S.Ct. 389, 40 L.Ed. 536 (1896). The decision of the district court to remand has no bearing on the merits of the underlying claims. Since the district court did not make any decision with respect to the propriety of a federal forum for Rath’s claims, we cannot say that the maintenance of Rath’s claim in federal court works a circumvention of 28 U.S.C. § 1447(d). Cf. Chandler v. O’Bryan, 445 F.2d 1045, 1057 (10th Cir. 1971). Rath is not contending that the remand orders were erroneous, but only that it has a right to a federal forum for its alleged federal claims.
The argument that Rath’s claims are not within the federal question jurisdiction, it not being denied that there is no diversity of citizenship, takes its roots in the statement of the Supreme Court in Public Service Commission v. Wycoff, 344 U.S. 237, 248, 73 S.Ct. 236, 242, 97 L.Ed. 291 (1952):
Where the complaint in an action for declaratory judgment seeks in essence to assert a defense to an impending or threatened state court action, it is the character of the threatened action, and not of the defense, which will determine whether there is a federal-question jurisdiction in the District Court. If the cause of action, which the declaratory defendant threatens to assert, does not itself involve a claim under federal law, it is doubtful if a federal court may entertain an action for a declaratory judgment establishing a defense to that claim. This is dubious even though the declaratory complaint sets forth a claim of federal right, if that right is in reality in the nature of a defense to a threatened cause of action. Federal courts will not seize litigations from state courts merely because one, normally a defendant, goes to federal court to begin his federal-law defense before the state court begins the case under state law * * * (emphasis added [by the Court]).
The doubt that the Court expresses is still with us, e. g., C. Wright, Law of Federal Courts § 18, at 62 (2d Ed. 1970).
In order to appreciate the Wycoff case we must first look to the jurisdictional background of the Declaratory Judgment Act, 28 U.S.C. § 2201. The Act is procedural only, creating a new federal remedy without expanding the jurisdiction of the federal courts. Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 57 S.Ct. 461, 81 L.Ed. 617 (1937). “ ‘Jurisdiction’ means the kinds of issues which give right of entrance to federal courts.” Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671, 70 S.Ct. 876, 879, 94 L.Ed. 1194 (1950). The Wycoff “test” quoted supra has its origins in Tennessee v. Union & Planters’ Bank, 152 U.S. 454, 464, 14 S.Ct. 654, 657, 38 L.Ed. 511 (1894), where the Court said, “a suggestion of one party, that the other will or may set up a claim under the Constitution or laws of the United States, does not make the suit one arising under that Constitution or those laws.” Furthermore, the complaint of the declaratory plaintiff must present a federal question “unaided by anything alleged in anticipation of avoidance of defenses which it is thought the defendant may interpose.” Taylor v. Anderson, 234 U.S. 74, 75-76, 34 S.Ct. 724, 58 L.Ed. 1218 (1914).
In Wycoff the complainant brought an action for declaratory judgment against the Utah Public Service Commission, requesting a finding that the business conducted by complainant in carrying goods between points in Utah was interstate commerce (and thus not subject to regulation by the Commission). The principal concern of the Court was the nature of the controversy presented, 344 U.S. at 244, 73 S.Ct. at 240:
A multitude of rights and immunities may be predicated upon the premise that a business consists of interstate commerce. What are the specific ones in controversy? The record is silent and the counsel little more articulate. We may surmise that the purpose to be served by a declaratory judgment is ultimately the same as respondent’s explanation of the purposes of the injunction it originally asked, which is “to guard against the possibility that said Commission would attempt to prevent respondent from operating under its certificate from the Interstate Commerce Commission.” (Emphasis supplied [by the Court].)
From this the Court concluded that “this dispute has not matured to the point where we can see what, if any, concrete controversy will develop.” 344 U.S. at 245, 73 S.Ct. at 241. In the portion of Wycoff quoted three paragraphs above, the Court was applying its concern that the controversy was not ripe for adjudication by pointing out a declaratory plaintiff may not create a controversy by seeking to have a federal court adjudicate federal defenses he might assert in a proceeding before a state court or administrative tribunal which is not ripe, but which is merely threatened or impending.
In a case of actual controversy within its jurisdiction, except with respect to Federal taxes, any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. * * *. (Emphasis added.)
Another aspect of the matter was aired in Chandler v. O’Bryan, supra. O’Bryan brought a libel action in Oklahoma state court against Chandler, a United States District Judge, on statements made by Chandler to a newspaper accusing O’Bryan of bribing judges of the Oklahoma Supreme Court. Chandler removed the action to federal district court; but the district court held that the acts alleged in the complaint were not done in performance of Chandler’s official duties as a federal judge, nor were they done under color of judicial office, and remanded the case to the state court for lack of a federal question, there being no diversity of citizenship. It is settled that Chandler’s judicial immunity defense arises under federal law. Howard v. Lyons, 360 U.S. 593, 79 S.Ct. 1331, 3 L.Ed.2d 1454 (1959). A verdict for O’Bryan was returned in the state court. Chandler then filed a declaratory judgment action in federal court seeking to have the state libel judgment enjoined and expunged, alleging his federal judicial immunity claim. The district court granted relief to Chandler, 311 F.Supp. 1121 (W.D.Okl.1969), but the 10th Circuit (by a panel of three judges of the 8th Circuit) reversed.
The court found Wycoff directly applicable, and held that Chandler was seeking a separate federal adjudication of a matter which was “in reality in the nature of a defense” to the state court libel action, which was based solely on state libel law and raised no federal question itself. The action was dismissed for lack of federal jurisdiction.
The instant case is different. While it is true that judgment in Rath’s favor affects the results of the,Los Angeles and Riverside actions, we cannot say that Rath’s action is premature or that Rath’s claim is merely a defense to the state court actions. The ordering off-sale of Rath’s products in September 1971 and afterward and the upward adjustment of the pass range at the sealing station at Rath’s plant, increasing the overpack of bacon necessitated by California weighing procedures, it was stipulated below, caused Rath a loss of more than $10,000. The off-sale orders themselves are sufficient State action to create an actual controversy between Rath and the state weights and measures officials. See Lake Carriers’ Ass’n v. MacMullan, 406 U.S. 498, 508, 92 S.Ct. 1749, 32 L.Ed.2d 257 (1972). The present controversy was not created by the institution of the state court actions against Rath, but arose independently thereof by virtue of the off-sale orders.
Unlike Chandler, Rath’s claims have vitality in the absence of the litigation in state court; Rath had the right to a federal forum before the institution of the state court actions. Chandler’s federal claim was purely in the nature of a defense to the libel action. Brought without reference to the underlying state court proceeding, Chandler’s claim would be a useless gesture: no one would care whether Chandler acted under the protection accorded by the courts to his office if O’Bryan had refrained from suing him. That Rath’s claim is or can be the basis for a defense to the state court actions states a mere truism; the test is whether Rath has created a federal controversy where none existed or is seeking an adjudication of a claim which is essentially meaningful only when pleaded as a defense to the particular pending state court actions. We find neither factor present and consider that Rath has stated claims which are within the federal jurisdiction conferred on the district court by 28 U.S.C. § 1331.
The Commission has plainly indicated an intent to enforce the Act; and prohibition of the statute is so broad as to deny the United States the right to ship at reduced rates, unless the Commission first gives its approval. The case is, therefore, quite different from Public Service Commission of Utah v. Wycoff Co., 344 U.S. 237, 73 S.Ct. 236, 97 L.Ed. 291, where a carrier sought relief in a federal court against a state commission in order “to guard against the possibility,” id., 344 U.S. at page 244, 73 S.Ct. at page 240, that the Commission would assume jurisdiction. Here the statute limits transportation at reduced rates unless the Commission first gives approval. The controversy is present and concrete — whether the United States has the right to obtain transportation service at such rates as it may negotiate or whether it can do so only with state approval.
B.
We also hold that considerations of comity and abstention did not require the district court to relinquish jurisdiction.
Comity is a principle of long standing:
We live in the jurisdiction of two sovereignties, each having its own system of courts to declare and enforce its laws in. common territory. It would be impossible for such courts to fulfil their respective functions without embarrassing conflict unless rules were adopted by them to avoid it. The people for whose benefit these two systems are maintained are deeply interested that each system shall be effective and unhindered in its vindication of its laws. The situation requires, therefore, not only definite rules fixing the powers of the courts in cases of jurisdiction over the same persons and things in actual litigation, but also a spirit of reciprocal comity and mutual assistance to promote due and orderly procedure.
* * *• * * *
The chief rule which preserves our two systems of courts from actual conflict of jurisdiction is that the court which first takes the subject-matter of the litigation into its control, whether this be person or property, must be permitted to exhaust its remedy, to attain which it assumed control, before the other court shall attempt to take it for its purpose. Ponzi v. Fessenden, 258 U.S. 254, 259-60, 42 S.Ct. 309, 310, 66 L.Ed. 607 (1921).
This circuit has defined the rule of comity as “merely of recognizing exclusive jurisdiction in the court first acquiring jurisdiction of any action.” Gregg v. Winchester, 173 F.2d 512, 513 (9th Cir. 1949). Under these rules and in the present circumstances, the principle of comity does not suggest that the district court should have declined to hear Rath’s claims. The subject matter of the litigation before us consists of the federal questions raised by Rath in its complaint. These federal questions were first taken into the control of a court when Rath filed its complaint in the district court on March 17, 1972. No state court could have acquired jurisdiction over this subject matter until Rath answered and filed its cross-complaints in the state courts on March 30, 1972. Our conclusion is reinforced by the actions of the District Court of Appeal in the Riverside action twice giving res judicata effect to the federal district court judgment. If, as Becker and Christensen contend, the only matter preventing the first Riverside judgment, dismissing Rath’s cross-complaint against Jones, from being given preclusive effect as a final judgment is Cal.Code of Civ.Proc. § 1049, the California appellate court would not have directed the trial court to abandon its position and to follow the federal judgment, which, since it had been appealed, was just as “final” as the Riverside judgment if evaluated under California law. We do not see here the federal-state conflict that the comity doctrine seeks to avoid. The district court acquired jurisdiction over the federal question prior to the state courts, and very scrupulously avoided deciding even tangentially the constitutionality of the California statutes and regulations or whether the actions of the inspectors were in compliance with state law. The state courts have not questioned the right of the district court to take the action it did and held the federal judgment entitled to preclusive effect in the state courts on the particular issues litigated in the federal courts.
In applying the abstention doctrine a federal district court has discretion in declining to exercise or postponing the exercise of jurisdiction it already has in deference to a state court resolution of underlying issues of state law. Railroad Comm’n of Texas v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941). Abstention is appropriate only where the issue of state law is uncertain, Harman v. Forssenius, 380 U.S. 528, 85 S.Ct. 1177, 14 L.Ed.2d 50 (1965), and where “the delay and expense to which the application of the abstention doctrine inevitably gives rise” can be justified. England v. Board of Medical Examiners, 376 U.S. 411, 418, 84 S.Ct. 461, 11 L.Ed.2d 440 (1964). However, abstention is not automatic whenever a question of state law may be involved. As the Court said in Baggett v. Bullitt, 377 U.S. 360, 376-77, 84 S.Ct. 1316, 1326, 12 L.Ed.2d 377 (1964), a case in which the Court considered abstention to be unnecessary:
In the bulk of abstention cases in this Court, * * * the unsettled issue of state law principally concerned the applicability of the challenged statute to a certain person or a defined course of conduct, whose resolution in a particular manner would eliminate the constitutional issue and terminate the litigation.
This statement reflects the judicial policy of avoiding the adjudication of federal constitutional questions unless they are ripe and are squarely presented by the record.
“The basic question involved in [federal preemption] cases, however, is never one of interpretation of the Federal Constitution but inevitably one of comparing two statutes.” Swift & Co. v. Wickham, 382 U.S. 111, 120, 86 S.Ct. 258, 264, 15 L.Ed.2d 194 (1965). Thus we do not have a situation where a state law interpretation by a state court may eliminate a federal constitutional question. Cf. Reetz v. Bozanich, 397 U.S. 82, 90 S.Ct. 788, 25 L.Ed.2d 68 (1970). There is no contention by Becker, Jones, or Christensen that California law is unclear or ambiguous or that the construction of California law in the state courts will obviate a. decision on Rath’s federal preemption claim. The California statutes and regulations apply to Rath without question. We think this case is akin to Harman v. Forssenius, supra, in which the Court said: “If the state statute in question, although never interpreted by a state tribunal, is not fairly subject to an interpretation which will render unnecessary or substantially modify the federal * * * question, it is the duty of the federal court to exercise its properly invoked jurisdiction. Baggett v. Bullitt, 377 U.S. 360, 375-379 [84 S.Ct. 1316, 1324-1326, 12 L.Ed.2d 377].” We hold that the district court did not abuse its discretion in refusing to abstain.
An action is deemed to be pending from the time of its commencement until its final determination upon appeal, or until the time for appeal has passed, * * *.
II.
In holding 9 CFR 317.2(h)(2) invalid, the district court said:
[The section] is void for its inadequacy to set any recognizable standard upon which any individual may measure his conduct or his compliance with the law by which he must order his personal or business life. 357 F.Supp. at 534.
Rath alleges two bases of error: (1) the validity of the regulation was not put in issue by the parties below and should not have been considered by the district court; and (2) the district court erred on the merits of the issue.
Rule 16 of the Federal Rules of Civil Procedure provides that “[t]he court shall make an order * * * which limits the issues for trial to those not disposed of by admissions or agreements of counsel; and such order when entered controls the subsequent course of the action, unless modified at the trial to prevent manifest injustice.” [Emphasis added.] The pretrial order entered by the court with the consent of the parties in the Becker action does not name as an issue the validity of 9 CFR 317.2(h)(2); nor, for that matter, do the pleadings and motion papers in the Jones action. The first appearance of the issue in the Jones action was at the argument on the motions for summary judgment:
THE COURT: The question is, is the regulation, and that is (h)(1) and (2) and particularly (2), that is 317.2(h)(2), is it a valid regulation.
MR. KEIR [Counsel for Jones]: Well, we don’t challenge the validity of (h)(2).
THE COURT: You don’t? You don’t? I have some serious questions about it.
MR. KEIR: Maybe I should retract that for the record. Frankly, I hadn’t considered whether it is valid or not. I merely submit to the court, and this is the position we have taken right along, is that (h)(2) is an innocuous provision.
It was not until the close of the trial of the Becker action that the district judge requested argument on the issue, and by so doing put the issue before the parties.
Ordinarily, issues not squarely presented in the pleadings and motion papers or not preserved in the pretrial order are considered to have been eliminated from an action. See, e. g., L & E Co. v. United States ex rel. Kaiser Gypsum Co., 351 F.2d 880 (9th Cir. 1965); Fowler v. Crown Zellerbach Corp., 163 F.2d 773 (9th Cir. 1947); see also 3 Moore’s Federal Practice 1f 16.19. This is particularly true in a declaratory judgment action, where the court is called upon to adjud
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.
PER CURIAM:
A collision occurred in the Kill Van Kull between the M/S Philippine President Osmena, an ocean-going vessel, and Barge Red Star No. 70. The Barge, together with Barge Red Star No. 72 and Barge Red Star No. 73 were being towed by the Tug Catherine. The two first-named barges, loaded, were on the tug’s starboard side, one behind the other, and were held to have been damaged in the collision. The Osmena also suffered damage. No. 73, light, was on the tug’s port side and was not found to have been damaged.
The owners of the barges filed their libel against the tug and its owners and the Osmena and its operator. The owner and operator of the Osmena in a separate proceeding filed their libel against the tug and its owners.
The two proceedings were consolidated below and, after hearing, Judge Bonsai in a careful opinion held that the Tug Catherine was at fault and that her fault was the sole cause of the collision. Damages were awarded against the owners of the tug for the loss found to have been suffered by the owners of barges 70 and 72 and an award was made to the owner and operator of the Osmena for the damages occasioned to the Osmena.
The Catherine appeals in each case and the two appeals were consolidated for action in this court.
The barge owners cross-appealed in their case against the Catherine. They maintain that the damage award to them was inadequate, for the district court denied their claims to be recompensed for alleged business losses caused by the detention of the barges following the collision.
We agree with the results reached by the judge below and we affirm the judgment entered in the district court on Judge Bonsai’s 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.
MAGRUDER, Circuit Judge.
These three cases involve the same point and were heard together. They relate to claims by the plaintiff employees for the statutory overtime compensation.
Since the amount in controversy, exclusive of interest and costs, exceeds $5,000, this court has jurisdiction of the appeals. However, on such appeals we are admonished that we should not reverse the Supreme Court of Puerto Rico in a matter of local law unless that court’s determination is “inescapably wrong” or “patently erroneous.” Sancho Bonet v. Texas Co., 308 U.S. 463, 60 S.Ct. 349, 84 L.Ed. 401 (1940); De Castro v. Board of Commissioners, 322 U.S. 451, 64 S.Ct. 1121, 88 L.Ed. 1384 (1944).
There is no doubt that, as applied to the sugar industry in Puerto Rico, both the Federal Fair Labor Standards Act of 1938 and the Commonwealth laws are applicable to some extent, but the Supreme Court of Puerto Rico decided these cases solely by interpreting the provisions of the local laws. No question is raised by appellants as to the correctness of the decision of the court that these cases should be governed by the local laws, either because of 29 U.S.C.A. § 207(c),. providing that the overtime provisions of the federal statute are inapplicable to employees engaged in the processing of sugar cane into sugar, or because of the provisions of 29 U.S.C.A. § 218. At any rate the Supreme Court of Puerto Rico has held, in judgments rendered May 17, 1961, that the cases are governed by the principles laid down in Laborde v. Eastern Sugar Associates, 81 P.R.R. 468 (1959), also decided solely on the ground of the local law.
The courts of the United States have had enough trouble with the so-called Belo type of case, perhaps due to the lack of precision by the legislature in defining what is meant in § 207(a) by “regular rate” of pay. See Mitchell v. Brandtjen & Kluge, Inc., 228 F.2d 291 (C.A. 1st, 1955). We could not possibly hold that a determination by the Supreme Court of Puerto Rico on the matter of its local law is “inescapably wrong.”
Judgments will be entered affirming the judgments of the Supreme Court of Puerto Rico.
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.
In this consolidated case, appellant seeks reversal of two judgments which denied motions to vacate under 28 U.S. C. § 2255. The central issue before this court now is whether appellant’s plea of guilty was coerced because of the possibility of a jury-imposed death penalty under the Federal Kidnapping Act, 18 U.S.C. § 1201(a).
The settled rule is that a plea of guilty is void and subject to a § 2255 collateral attack when threats or promises divest it of the character of a voluntary act. When a coerced plea is the issue, all matters bearing on that allegation must be considered. When a case is in this posture, § 2255 requires a hearing on the issue unless the files, records, motions and transcripts conclusively show that appellant’s plea was voluntary; free from threat, promise or other coercion.
Numerous incidents, beginning with the plea and continuing through the second § 2255 motion, impress upon this Court the conclusion that the plea of April 9, 1962, was not in fact coerced by the threat of a jury-imposed death sentence; rather, we believe the coercion argument to be but a belated afterthought.
At arraignment time both Runge and his codefendant were represented by able court appointed counsel who advised each defendant to enter a plea of not guilty. Several days later, however, each defendant withdrew his former plea and pled guilty as charged under the Kidnapping and Dyer Acts. In the course of accepting appellant’s plea, it is apparent from the record that full compliance was had with Rule 11, F.R. Crim.P., 18 U.S.C.A. Furthermore, it is implicit in those proceedings that the court was satisfied that Runge was not encouraged to plead guilty because of the alleged threat inherent in a jury trial.
On April 11, 1968, appellant filed his first § 2255 motion, seeking relief on numerous grounds, including violations of Rules 5(a), (b), (c), 7, 9, 10, 21(b), 40(b), F.R.Crim.P.; violations of the 5th, 6th and 7th Amendments, U.S. Constitution; and violations of 18 U.S.C. § 3238. Nowhere in that motion is there any mention of a coerced plea. In fact, not until the sentencing court’s Memorandum and Order of April 18, did the question of a coerced plea and the case of United States v. Jackson, 390 U.S. 570, 88 S.Ct. 1209, 20 L.Ed.2d 138 (1968), arise. In that memorandum the court said it wished to be “fully advised as to all of the circumstances surrounding petitioner’s plea and sentence ** * * [so it could] determine the impact on that sentence of the decision of the Supreme Court of the United States in the case of United States v. Jackson * * The first time an allegation of coercion arose in behalf of appellant was in the June 4 Traverse written by Runge’s attorney in response to the District Attorney's Answer to the rule to show cause. Not until June 14, 1968, in a letter to Mr. Hackler, did appellant manifest a desire to use the new argument. Runge wrote: “ * * * Seeing as the Court saw fit to bring the Jackson v. United States, case in to my Motion. We would be quite foolish not to look into it, and it is my belief that I would qualify under the decision given by the Supreme Court.”
In an attempt to determine the necessity of an evidentiary hearing, a pretrial conference was held on July 10, 1968. Other than Runge’s own assertion that he was coerced into a guilty plea, there is no indication that the plea was made other than voluntarily. In fact, the record of the proceedings commands a contrary conclusion:
“MR. HACKLER (Runge’s Attorney) : If the Court please, as I understand our hearing this morning, we are to determine the necessity of a hearing and, as I read the cases on this matter, this boils down to a question of fact, whether there is a factual issue involved —or factual issues, involved that need to be presented to the Court. I have made some independent inquiry and investigation outside of the Court’s records. If I were to present — if we were to have a hearing, anything more than the affidavit on file in the record by Mr. Runge based on his statement that the — that he entered a plea to avoid the death penalty and to that extent the plea was involuntary and the other issues raised regarding how he came to be in the jurisdiction, I would not be able to present any other factual matters.
“I, just to review this matter, have made personal interview and telephone conversations with people involved in the prior hearing and the factual situation —on the factual situation I would not call any of those witnesses. So from that point of view, to be totally frank with the Court, I cannot present issues of fact other than is already in the record.”
This candid revelation by Runge’s attorney illustrates to our satisfaction that appellant’s mere denials of that which he has previously admitted, does not raise a substantial issue of fact within the meaning of . § 2255. Although an allegation of fact must ordinarily be accepted as true, it is not required where, as here, the allegation is contradicted by the files and records before the court. Putnam v. United States, 10 Cir., 337 F.2d 313 at 315. From the pre-trial conference of July 10, the court determined that a hearing was not required and entered findings of fact and conclusions of law denying the motion to vacate. In December, 1968, Runge filed a second § 2255 petition, singularly urging coercion in his guilty plea. This motion was denied on the grounds that it presented an issue identical to one on appeal under the initial § 2255 appeal. Both denials are appealed.
In order to be a beneficiary under the Jackson case, appellant reads it to say that prior to that decision, all who pled guilty while under a Federal Kidnapping Act charge, were, as a matter of law, coerced. That interpretation cannot fairly be attributed to that opinion, as we recognized in Brady v. United States, 404 F.2d 601. Rather, the coercive nature of the Act must be considered as but one element in a search to determine voluntariness.
Runge, just as Brady, seizes upon the language of Jackson stating, that since the “inevitable effect” of the death penalty provision of § 1201(a) was to needlessly encourage guilty pleas and jury trial waivers, all such pleas and waivers are ipso facto coerced when the fear of death is shown to be a factor in the plea. Our rejection of that interpretation of Jackson has been affirmed in Brady v. United States, 396 U.S. 809, 90 S.Ct. 86, 24 L.Ed.2d 63 (1970). Jackson did not hold § 1201(a) inherently coercive of guilty pleas; neither did it rule that all guilty pleas encouraged by fear of a possible death sentence are involuntary; nor did it hold that guilty pleas, so encouraged, are per se invalid. If a plea is “voluntarily” and “intelligently” made, it is valid. Brady v. United States, 397 U.S. 742, 90 S.Ct. 1463, 25 L.Ed.2d 747 (1970). See Parker v. North Carolina, 397 U.S. 790, 90 S.Ct. 1458, 25 L.Ed.2d 785 (1970); and McMann v. Richardson, 397 U.S. 759, 90 S.Ct. 1441, 25 L.Ed.2d 763 (1970).
The voluntary character of Runge’s plea must be resolved by considering all relevant circumstances surrounding it. Initially, as Brady decided, the fact that Runge may have withheld his guilty plea if there had been no death penalty provision in § 1201(a) is not absolute proof of coercion. There is no claim of impropriety on the part of law officers, the court or his counsel. And there is a total lack of evidence that Runge was “so gripped by fear of the death penalty or hope of leniency that he did not or could not, with the help of counsel, rationally weigh the advantages of going to trial against the advantages of pleading guilty.” Brady v. United States, 397 U.S. at 750, 90 S.Ct. at 1470. Our independent review of the record discloses no evidence of threats, misrepresentation or improper promises.
The record before us likewise supports the conclusion that Runge’s plea was intelligently made. Competent counsel advised him, he was made aware of the nature of the charges against him, and nothing indicated that he was incompetent or otherwise not in control of his mental faculties. It must be concluded upon the record that Runge intelligently admitted that he had kidnapped the victim and not released her unharmed.
Crow v. United States, 397 F.2d 284 (10th Cir. 1968) is a distinguishable case which does not require an evidentiary hearing in Runge’s case. In Crow, § 2255 relief was denied without a hearing principally because of the comprehensive questioning of the defendant, by the court, to determine the voluntariness of his plea. There, the § 2255 motion alleged a coercive threat which purportedly caused appellant to plead guilty. The trial court simply stated it could not “accept” such a threat as coercive, thereby permitting the existence of the threat to go undenied. The case was then remanded to determine whether the alleged coercion actually existed.
After the Runge § 2255 pre-trial, the court entered findings of fact and conclusions of law which specifically state that there was an absence of any coercion. The court said, “the files, records and transcripts herein conclusively show that this petitioner was not coerced or influenced in any manner and therefore he is not entitled to the relief requested.”
The difficulty of attempting to accurately disclose appellant’s subjective state of mind at plea time cannot be minimized. However, it is not an impossible task, and is an undertaking which must eventually be assumed in all cases such as this. If there was any evidence in the files of this case to warrant an evidentiary hearing, our decision would properly be stayed. But for us to deny such inquiry here would unnecessarily postpone it for another court. And, the straightforward disclosures of appellant’s lawyer convinces this court that a remand would be repetitious of the July 10, 1968, pre-trial conference.
Our own careful review of the entire record, files, motions and transcripts leads us to the same conclusion: When Runge entered his guilty plea, he did it voluntarily, knowingly and free from any statutory, court or otherwise imposed coercion. This conclusion is conclusively reflected in the entire case, and thereby did not require the court below to conduct an evidentiary hearing.
The remaining § 2255 allegations, all of which were dependent upon the foregoing, may be disposed of summarily. A plea of guilty waives all non-jurisdictional defects. See Tyler v. United States, 361 F.2d 862 (10th Cir. 1966); Jude v. United States, 262 F.2d 117, 118 (10th Cir. 1958). Allegations of improper removal from one district to another are not grounds for § 2255 relief. See Ragavage v. United States, 272 F.2d 196, 197 (5th Cir. 1959). Allegations of illegal arrest are insufficient grounds for attack under § 2255. Moreland v. United States, 347 F.2d 376 (10th Cir. 1965). And, an allegation of illegal detention prior to arraignment is not grounds for relief under § 2255, Semet v. United States, 369 F.2d 90 (10th Cir. 1966).
The denial of each of the § 2255 motions to vacate is affirmed.
. Machibroda v. United States, 368 U.S. 487, 82 S.Ct. 510, 7 L.Ed.2d 473 (1962); Crow v. United States, 397 F.2d 284 (10th Cir. 1968); Howell v. United States, 355 F.2d 173 (10th Cir. 1966); Putnam v. United States, 337 F.2d 313 (10th Cir. 1964).
. Brady v. United States, 404 F.2d 601 (10th Cir. 1968), aff’d 396 U.S. 809, 90 S.Ct. 86, 24 L.Ed.2d 63 (1970).
. Crow v. United States, 397 F.2d at 285; Howell v. United States, 355 F.2d at 174; Putnam v. United States, 337 F.2d at 315.
. “THE COURT: Of course, it should be entirely clear that the defendants understand their rights and that no action by the Court, hy the United States attorney or counsel for defendant or by anyone, has induced them to change their
position. The defendants should realize that they have the right to trial by jury and that only they can waive that right. It is entirely up to the defendants whether they desire to enter pleas of guilty to one or more counts of the indictment.
Now, the United States attorney and counsel for the defendants had mentioned to the Court the possibility that the defendants might desire to enter a plea of guilty. The charge in this case on Count 1 is a serious charge, of course, and the penalty upon conviction can be death if the verdict of the jury shall so recommend, or by imprisonment for any term of years or for life if the death penalty is not imposed.
Now, the practical effect of that is this: That the penalty of death can be imposed only by recommendation of the jury which returns a verdict of guilty if they should find the defendants or either
of them guilty. The Court could, of course, even on a plea of guilty, impanel a jury to determine the penalty only, and I am not going to make any statement here that might possibly be construed as any inducement to these defendants to enter a plea of guilty.
I did receive a letter from Hiss Smalley indicating that she did not desire that the death penalty be inflicted. I received also a letter from Miss Smalley’s father to the same effect, and my own view is that under these circumstances, if a plea of guilty is entered, that the Court would not be justified in impaneling a jury to determine the penalty, but I certainly want these defendants to understand before any further action is taken, I want to hear from them, themselves, that they do understand this situation.
Of course, it is up to them whether they withdraw their plea of not guilty .or not and enter a plea of guilty, but it must be crystal clear in the record and in the minds of all of us and in the minds particularly of these defendants, that no promise is held forth to them and that they themselves take the action voluntarily and with full knowledge of the situation.
:& * * * *
MR. HARDING: If Your Honor please, with respect to Robert Henry Runge, at this time the defendant would like leave of Court to withdraw the plea of not guilty to the several counts of the indictment entered on March 5, 1962, and to change those pleas at this time.
Prior to that, I would like to state for the record and for Your Honor and make a few comments in the form of questions to Mr. Runge.
Since I have been appointed to represent you in this matter, Mr. Runge, have you and I had the opportunity on several occasions to discuss the charges in the indictment and your wishes and desires with respect thereto?
DEPENDANT RUNGE: Yes, sir.
MR. HARDING: And we have gone over those matters on several occasions at some length, have we not?
DEPENDANT RUNGE: Yes, sir.
MR. HARDING: And on Wednesday of last week in the presence of your mother, Mrs. Muller, did we discuss the mater of the plea to this indictment or change in the plea to the counts of the indictment, for a period of about two hours?
DEPENDANT RUNGE: Yes, sir.
MR. HARDING: And as a result of our discussion of this matter, do you feel that you were fully informed by me of your several constitutional rights and the things that I, as your attorney, did recommend to you with respect to this matter?
DEPENDANT RUNGE: Yes, sir.
MR. HARDING: Were any promises or extenuating circumstances of any kind indicated by me in connection with this matter, as either might be coming from the district attorney or from 1-Iis Honor?
DEPENDANT RUNGE: No, sir.
MR. HARDING: And that if a plea of guilty were entered and made by you to any of the counts of the indictment, it would have to be based solely upon the information which I presented to you as your attorney and your own judgment and decision in the matter?
DEPENDANT RUNGE: Yes, sir.
MR. HARDING: Now, you have heard here Judge Stanley’s explanation of the receipt of the letters from Miss Smalley and her parents?
DEPENDANT RUNGE: Yes, sir.
MR. HARDING: The statements that His Honor has made in connection with that aspect of the matter. At this time you are asking the Court for leave to withdraw the pleas of not guilty to the three counts of the indictment and, as I understand it, you are now ready to enter a plea of guilty of your own free will without any coercion or any inducement whatever, to Counts 1 and 2 of the indictment, is that correct, sir?
DEPENDANT RUNGE: Yes, sir.
THE COURT: Counts 1 and 2?
MR. HARDING: I mean 1 and 3, Your Honor-, of the indictment.
S}C it*
THE COURT: Mr. Runge, I think that Mr. Harding has covered very fully the questions that I would have asked you, but I want it to be very clear in the record here that you understand that if you should withdraw your plea of not guilty to Counts 1 and 3 of the indictment and enter a plea of guilty to those counts, that you understand that by so doing you admit the facts alleged in these counts, waive your right to trial on the charge in each count and subject yourself to punishment within the limits fixed by law.
DEPENDANT RUNGE: Yes, sir.
THE COURT: And you do understand, do you, that the punishment prescribed for the offense charged in Count 1 of the indictment, that is, the kidnapping charge, that the punishment for that charge could be imprisonment for any term of years or for life?
DEPENDANT RUNGE: Yes, sir.
THE COURT: And with all that understanding and as a matter of your own choice, freely made, is it your desire to withdraw the plea of not guilty to Counts 1 and 3 and to enter a plea of guilty to those counts?
DEFENDANT RUNGE: Yes, sir.
* sfc * *
THE COURT: Mr. Runge, I’ll ask you, do you feel that your counsel, you originally had two, Mr. Smith was with you in this initially, was he not? Mr. Harding?
MR. HARDING: That is right, Your Honor.
THE COURT: Mr. Smith was relieved when he was appointed to office. Do you feel that Mr. Harding and Mr. Smith while he was so acting, have served your best interests throughout in this case?
DEFENDANT RUNGE: Yes, sir.
THE COURT: And do you feel that they have both served you capably and honestly and as you would want to be served under the circumstances?
DEFENDANT RUNGE: Yes, sir.”
. This Order granted leave for Runge to proceed in forma pauperis; appointed Mr. Hackler as appellant’s attorney; and ordered a rule to show cause to determine “whether or not under the decision in the case of United States v. Jackson the sentence under attack was validly imposed * *
. United States v. Jackson, 390 U.S. at 583, 88 S.Ct. at 1217. The Court elaborated in note 25: “So, too, in Griffin v. State of California, 380 U.S. 609, 85 S.Ct. 1229, 14 L.Ed.2d 106 the Court held that comment on a defendant’s failure to testify imposes an impermissible penalty on the exercise of the right to remain silent at trial. Yet it obviously does not follow that every defendant who ever testified at a pre-Griffin trial in a State where the prosecution could have commented upon his failure to do so is entitled to automatic reléase upon the theory that his testimony must be regarded as compelled.”
. Shelton v. United States, 246 F.2d 571, 572, n. 2 (5th Cir. 1957) (en banc), rev’d on confession of error on other grounds, 356 U.S. 26, 78 S.Ct. 563, 2 L.Ed.2d 579 (1958).
. E. g., Howell v. United States, 355 F.2d 173 (10th Cir. 1966); Putnam v. United States, 337 F.2d 313 (10th Cir. 1964).
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.
McLaughlin, circuit judge.
This is a civil suit brought by the United States under Sections 3490-3492 inclusive, and Section 5438 of the Revised Statutes, 31 U.S.C.A. §§ 231-233, 18 U.S.C.A. §§ 80, 82-86, to recover the forfeitures and double damages provided by Section 3490 for submitting false claims for materials supplied as a subcontractor on a Navy shipbuilding project. The government offered no evidence of actual damage at the trial and sought only to recover the statutory forfeitures. The case was tried without a jury. The District Judge found that the defendants had violated Section 3490 as to the sixteen contracts involved. He assessed the statutory penalty of $2,000 against the defendants on each of the contracts. From the judgment entered therein the defendants appeal. The government, claiming that each of the ninety purchase orders in the matter called for a separate forfeiture, cross appeals on that point.
The defendant, Charles F. Rohleder, is a building contractor in Philadelphia; the other defendants were employed by him as his agents and carried on with him the activities described below. Rohleder entered into subcontracts with the Cramp Shipbuilding Company, which was under contract with the Navy Department. This main contract between Cramp and the Navy, dated October 29, 1940 (designated NOD 1550), obligated Cramp to improve its shipyards in Philadelphia by the erection of “Emergency Plant Facilities” preparatory to the building of six light cruisers. The provisions of the contract were that the Cramp Company would, without profit to it, by itself or through contracts with others, make improvements of the value of about $12,000,000. Records and accounts of the project were to be kept by Cramp, and capital for carrying it on was obtained by arrangement with a number of banks. The Navy, represented by the Supervisor of Shipbuilding at the Cramp plant, had broad rights of inspection of work and records during and after construction. The Supervisor’s approval was required in advance for all plans, prices, subcontractors and subcontracts involved. At the completion of the work, a Final Cost Certificate would be presented by Cramp to the Navy, which would then reimburse the company from government funds at 1/60 per month.
On the same date as the main contract, Cramp entered into the first of sixteen subcontracts with Rohleder, eight of which are classed as principal and eight as extension of work projects. The ensuing fifteen were concluded at various times up to September 8, 1941, the date of the last one. These subcontracts were for the actual construction, required by NOD 1550, by Rohleder. They were on a cost-plus-fixed-fee basis, the estimated cost being $1,935,179 and the fixed fee being $63,003. All but two of the subcontracts expressly ■stated that the work involved was let under and was subject to NOD 1550. All but one of the subcontracts required purchases of $100 or over should be approved by Cramp before being placed. All of the subcontracts were approved about the time of execution by the Navy representative.
Before the execution of any of these subcontracts, an authorized Navy representative orally informed some of the Cramp officials that, in order to obtain the ■approval for purchase of material, there would have to be furnished to him in advance, three or more bids together with the vendor’s name and the price submitted by him. This requirement was reduced to memorandum form. The District Court found that the defendants were aware of this requirement and purported to comply with it in connection with purchase orders submitted in their contract work.
The vast majority of such orders submitted by defendants are not questioned. But ninety of them were found by the District Court to contain “three or more bids, one or more of which bids the defendants knew or had cause to know were false, fictitious, and not bona fide competitive bids.” The practice as to these of Roh-leder, the other defendants, or their subordinates, was to obtain from dealers bids higher than the one it was desired to have accepted, with the understanding that these bids were not seriously made on the part of the dealers. The ninety items so treated were included in work under all sixteen of the contracts. The bids involved were forwarded by Rohleder to the Cramp Company and approved without suspicion by it. They were sent to the Navy representative who upon inspection and in reliance on the facts presented gave the final approval, also without suspicion. Rohleder was then provided with copies of the correspondence between Cramp and the Navy, indicating the approved bid. This method was followed for each of the ninety items, and for each of them Rohleder was reimbursed by Cramp. In some instances, the material upon which the bids were given had been installed by Rohleder before the approval procedure got under way. The prices thus obtained were reflected in the Final Cost Certificate submitted by Cramp and paid by the United States through the Navy Department under the terms of NOD 1550.
The Court below also found that “No evidence of any damage suffered by the United States as a result of the alleged illegal acts was offered,” and that there “is no evidence * * * that the government would have saved any money had genuine * * * bids * * * been submitted.” It appears in the record that the defendants were acquitted of the related criminal action in 1943.
The defendants contend that there can be no recovery under Section 3490 unless actual damages, pecuniary or proprietary, are alleged and proved. They argued that as Section 5438 stood at the time it was incorporated into Section 3490, it required pecuniary loss in order that a conviction be sustained. The question is not wholly free from doubt. It is somewhat complicated by the circumstances that Section 5438 was amended in 1918 among other particulars not presently important by inclusion of the phrase “or for the purpose and with the intent of cheating or swindling or defrauding the Government of the United States.” United States v. Cohn, 270 U.S. 339, 46 S.Ct. 251, 70 L.Ed. 616, was decided under the 1918 amendment and the Supreme Court specially stressing the above amendment language held that actual loss to the government was necessary to sustain a conviction. Capone v. United States, 7 Cir., 51 F.2d 609, and United States ex rel. Starr v. Mulligan, 2 Cir., 59 F.2d 200, are much to the same effect.
Section 5438 was further amended in 1934. The important changes for our purposes were, the dropping of the above quoted part of the 1918 amendment and the addition of the clause “in any matter within the jurisdiction of any department or agency of the United States * * That last amendment was considered by the Second Circuit in United States v. Mellon, 96 F.2d 462, on the contention that there could be no violation of the statute without pecuniary loss to the government. The Court said 96 F.2d at page 463: “Before the amendment of 1934 the scope of the statute was, indeed, so limited. United States v. Cohn, 270 U.S. 339, 46 S.Ct. 251, 70 L.Ed. 616; United States ex rel. Starr v. Mulligan, 2 Cir., 59 F.2d 200.” It is particularly noted that the Court is there referring to Section 5438 with the 1918 “defrauding” phrase relied on in the Cohn opinion and not to the original Section 5438 as it was incorporated into Section 3490. Love v. Mantz, 8 Cir., 72 F.2d 631, does not answer the question either, as the Court there applied the rule of the above cases under the 1918 amendment to indicate that pecuniary loss was a vital element of the claim.
Closest to the.present situation is United States ex rel. Marcus v. Hess, 317 U.S. 537, 63 S.Ct. 379, 87 L.Ed. 443, rehearing denied 318 U.S. 799, 63 S.Ct. 756, 87 L.Ed. 1163. That was a civil suit by an informer under Sections 3490-3494, 31 U.S. C.A. §§ 231-235. The District Judge correctly held that it must rest on violations of Section 5438 as that section read when it was incorporated in Section 3490. United States v. Hess, D.C.W.D.Pa., 41 F.Supp. 197, 205. This is conceded by both sides in this appeal. In the Hess case, just as here, the government asked for forfeitures on items, among others,- for which no damage was shown. The District Judge said as to this, 41 F.Supp. at page 218: “The next reason urged by .defendants for a new trial is that the court erred in refusal of defendants’ 9th point, which reads as follows: '9. There can be no recovery of any penalty or ■ forfeiture on account of any project in which no actual damages have been shown.’ Section 3490, R.S., expressly provides for a penalty of $2,000, ‘and, in addition, double the amount of damages which the United States may have sustained.’ This makes it plain that regardless of damages sustained, the United States would still be entitled to recover the penalty. This point refers to instances where the United States withheld payments on account of the discovery of the fraud, so that no actual .damage was shown. However, that would not preclude the United States from recovery of the penalty prescribed by Section 3490, R.S.”
The judgment of the District Court including the forfeitures • allowed for eight projects as to which no damage had been proven was affirmed by the Supreme Court, supra. The no damage forfeitures were not referred to specifically in the opinion but the concluding paragraph thereof did say [317 U.S. 537, 63 S.Ct. 388], “We have examined the other contentions of the respondents and approve of the disposition of them by the courts below.” The petition for rehearing specially called the attention of the Court to the circumstances surrounding the particular eight projects; nevertheless the petition was denied as stated.
In view of the attitude toward just such claims as are before us, by the Supreme Court in the Hess litigation, we conclude that Section 3490 embracing Section 5438 as the latter was when incorporated into Section 3490, permits recovery of a forfeiture thereunder without actual damage being proven.
Defendants’ second point is that the defendant Rohleder-had no knowledge that the bids were-fictitious. It is not challenged by the defendants that in connection with many of the- ninety purchase orders the material had already been purchased or contracted for and actually used, prior to Rohleder’s sending in the supposedly competitive bids. A letter in evidence admittedly dictated by Rohleder but never mailed, as the Trial Judge said, “indicates that he was familiar with and had himself engaged in the practice of giving complimentary bids in order to comply with contract requirements for competitive bidding.” The Trial Court further said, “The bids were obtained by his [Rohleder’s] agents for his sole benefit and to the extent that their conduct imposes liability, he is answerable for it.” Defendants question this last quoted finding as not in accord with established principles of agency law but cite no cases to sustain the proposition. Under the circumstances the Court’s statement was proper. United States v. Van Riper, 3 Cir., 154 F.2d 492. Even without the agency inference there is sufficient evidence to warrant the District Judge deciding that Roh-leder knew the bids being submitted were not bona fide.
The defendants next urge that the Navy had no. authority to demand competitive bids. The main contract between the Navy and Cramp, Article 1, Section 3, Paragraph 5, provided: “Provided, however, that none of the items of the Emergency Plant facilities shall be acquired or constructed unless the approval of the Department (which for this purpose shall be represented by the Supervisor of Shipbuilding at the plant of the Contractor) shall have first been obtained to the plans and specifications therefor, the purchase price thereof, the subcontractor, supplying or constructing the same, and the terms of any subcontract made by the Contractor therefor.”
On October 28,1940, Lieutenant Bishop, acting for the Navy, requested competitive bids. The Navy-Cramp contract was entered into on October 29, 1940, and that, same day the first Cramp-Rohleder agreement was approved. While there was no competitive bidding clause in this or any of the later agreements, all but two of them contained statements that the work under them was subject to the Navy-Cramp contract. The procedure of submitting competitive bids was accepted by Rohleder and ostensibly followed by him throughout his work. There was no indication from him to the Navy or to Cramp that would in any way suggest otherwise. It was testified to that such method was fundamental Navy procedure. Considering the nature of the cost-plus-fee contract Rohleder had, the day to day differentiation in amounts of labor and materials required and the necessity that Rohleder’s prices had to be approved by the Supervisor of Shipbuilding under the terms of the parent agreement, we agree with the Trial.Judge that the Navy requirement of competitive bids was reasonable practice and within the scope of the above quoted paragraph of the Navy-Cramp agreement.
Defendants’ final point is devoted to excusable circumstances surrounding the undertaking. They refer to the tremendous time pressure, saying that such irregularities as existed were not caused by any ulterior motive but in the all prevailing effort to get the job accomplished. Undoubtedly this element was present. They refer to the defendant Rohleder having completed his part of the rehabilitation of the Cramp Shipyard speedily at three-fifths of the average overhead and to the satisfaction of all concerned. There is considerable force in these ássertions, but we cannot go along with the defendants when they designate the common sense Navy method of insisting on three genuine competitive bids as “red tape.” Nor can we condone the scheme of paying lip service to the requirement while secretly consumating the ninety purchase orders without actually obtaining such bids. There is testimony in the record that the Supervisor of Shipbuilding had the authority to and on occasion did waive the requirement for competitive bidding when the faots warranted it, but from all that appears no such request was ever made by the defendants.
The government cross appeal is concerned with the question of the number of forfeitures allowed! The District Court awarded the statutory forfeiture of two thousand dollars on each of the eight main contracts and on the eight subcontracts. The government insists that there should be a forfeiture declared on each of the ninety purchase orders. United States ex rel. Marcus v. Hess (supra) is also illuminating on this problem. In that case there were fifty-six distinct P.W.A. projects involved and many hundreds of false forms. On the judgment in favor of the plaintiff, the latter urged that the penalty attach not only to the fifty-six items but to each false affidavit certificate submitted by the defendants. The defendants argued that the entire fifty-six projects constituted but one act. The District Court found that each project was a single claim. The Supreme Court in its-opinion 317 U.S. at page 552, 63 S.Ct. at page 388, 87 L.Ed. 443, upheld this, saying: “The District Court concluded that the lump sum in damages should be assessed for each separate P.W.A. project. Petitioner does not object to this decision and we conclude that under the circumstances of this case each project can properly be counted separately.”
The government argues that in Hess the fraud was in the procurement of the contracts whereas in the situation confronting us the fraud arises from the means taken to obtain the approval of the Supervisor of Shipbuilding. That difference does exist but is not enough to avoid the impact of the Hess opinion. There the Supreme Court said 317 U.S. at page 552, 63 S.Ct. at page 388, 87 L.Ed. 443: “The incidence of fraud on each additional proj ect is as clearly individualized as is the theft of mail from separate bags in a post office.” Nor do we think that it can be fairly substantiated that the District Court in limiting the forfeiture to the sixteen contracts overlooked the second and third clauses of Section 5438. The fraud was committed with respect to the contracts. The purchase orders were part of those contracts and not definite projects in themselves. They are analogous to the great number of spurious forms in the Hess case which were absorbed into their respective projects. The grouping by the Trial Judge of the ninety purchase orders under their respective contracts generally corresponds to the distinctions made in United States ex rel. Marcus v. Hess, supra. It is reasonable and has a sound basis in the record.
Affirmed.
Section 3490 of the Revised Statutes, 12 Stat. 696, reads as follows: “See. 3490. Any person not in the military or naval forces of the United States, or in the militia called into or actually employed in the service of the United States, who shall do or commit any of the acts prohibited by any of the provisions of section fifty-four hundred and thirty-eight, Title ‘CRIMES,’ shall forfeit and pay to the United States the sum of two thousand dollars, and, in addition, double the amount of damages which the United States may have sustained by reason of the doing or committing such an act, together with the costs of the suit; and such forfeiture and damages shall be sued for in the same suit.-’
Section 5438 of the Revised Statutes, 12 Stat. 696, as it appeared at the time of its incorporation in Section 3490, reads as follows: “Sec. 5438. Every person who makes or causes to be made, or presents or causes to be presented, for payment or approval, to or by any person or officer in the civil, military, or naval service of the United States, any claim upon or against the Government of the United States, or any department or officer thereof, knowing such claim to be false, fictitious, or fraudulent, or who, for the purpose of obtaining or aiding to obtain the payment or approval of such claim, makes, uses, or causes to be made or used, any false bill, receipt, voucher, roll, account, claim, certificate, affidavit, or deposition, knowing the same to contain any fraudulent or fictitious statement or entry, or who enters into any agreement, combination, or conspiracy to defraud the Government of the United States, or any department or officer thereof, by obtaining or aiding to obtain the payment or allowance of any false or fraudulent claim, * * * every person so offending in any of the matters set forth in this section shall be imprisoned at hard labor for not less than one nor more than five years, or fined not less than one thousand nor more than five thousand dollars.”
In that one the amount was $200.
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.
VOGEL, Circuit Judge.
This action was commenced in Minnesota State District Court to quiet title to certain historical documents written in the main by William Clark, of the famed Lewis and Clark Expedition. The documents, herein referred to as the res, and whose whereabouts were unknown for approximately 150 years, were found in the attic of the St. Paul, Minnesota, home of a Mrs. Sophia V. H. Foster after her death in 1952. They were discovered in a desk formerly owned by General John Henry Hammond, Mrs. Foster’s father, who died in 1890. The First Trust Company of St. Paul brought the action originally as executor of the last will and testament of Mrs. Foster, naming the Minnesota Historical Society, the then custodian of the papers, and certain descendant and collateral relatives of Mrs. Foster as defendants. Some of the individual defendants claimed interests in the res through the estate of Mrs. Foster’s mother, Mrs. Sophia W. Hammond. The remaining individual defendants claim interests in the res directly through Mrs. Foster’s estate. The Minnesota Historical Society was named a defendant because it could claim a lien on the res for labor expended by it in collating and transcribing the contents of the 67 documents comprising the res. This claim of lien was duly asserted in the Society’s answer to the original complaint.
' After due notice, the United States intervened in the action, claiming paramount title to the res as- being a part of the work product of the Lewis and Clark Expedition. All of the parties agree that the res is a series of original writings on miscellaneous scraps of paper of various sizes and that they describe the Expedition’s winter encampment at Camp Dubois, hear the mouth of the Missouri River, within territorial United States in 1803-4 and a part of the Expedition’s subsequent exploratory journey upon the Missouri River in 1804-5. The documents are almost entirely in the handwriting of Captain Wil-. liam Clark, second in command to Captain Meriwether Lewis.'
- The case' was removed from the state court to the United States District Court-for the District of Minnesota on motion of the United States» By order of the District Court, a separate trial was first had on the sole issue of the government’s claim of paramount title to the res. In an erudite opinion and order, Chief Judge Nórdbye, before whom the case was tried without a jury, held that the documents in question were rough notes of Captain Clark, made by'.him for his personal use in subsequently preparing his own private diary and hence were not an official work product of the Lewis and Clark Expedition to which the United' States could claim paramount title. First Trust Co. of St. Paul v. Minnesota Historical Society, D.C.Minn., 1956, 146 F.Supp. 652. The United States has appealed to this court from the findings and judgment,- making all of the original parties to this action appellees herein.
If Clark’s-notes are the written records of a government officer executed in the discharge of his official duties, they are public -documents and ownership is in the United States. The government concedes that possession of the res by General Hammond and his heirs affords a presumption of ownership and that the burden of proof -is upon the government to establish a superior, title. Accordingly, if the government established that these were the written records of a public official made in the discharge of the duties of his office, the government should have prevailed. The court held that the government failed to carry its burden. Whether the District Court was clearly erroneous in so concluding is the only issue presented on this appeal. Other issues in the case await the outcome hereof,
• The exact nature and historical significance of the documents involved and the probable circumstances by which they came into the possession of the original parties to this action are fully explained in Judge Nordbye’s opinion. First Trust Co. of St. Paul v. Minnesota Historical Society, supra. It would be a needless duplication to attempt a complete redelineation of these numerous facts. They therefore will be referred to only to the extent necessary to reach a determination of this appeal.
On June 20, 1803, President Thomas Jefferson appointed Meriwether Lewis, an army captain on detached service, who was serving as Jefferson’s secretary, to command an expedition, the object of which was “ * * * to explore the Missouri river, & such principal stream of it, as, by it’s course & communication with the waters of the Pacific Ocean, may offer the most direct & practicable water communication across this continent, for tHe 'purposes of commerce.” Jefferson’s letter to Lewis set forth in minute detail further objects of the mission and directed the making and preserving of a record of observations and notes covering numerous subjects set forth therein. He instructed, among other things:
“Your observations are to be taken with great pains & accuracy, to be entered distinctly, & intelligibly for others as well as yourself, to comprehénd all the elements necessary, with the aid of the usual tables, to -fix the latitude and longitude of the places at which they were taken, & are to be rendered to the war office, for the purpose of having the calculations made concurrently by proper persons within the U. S. several copies of these, as well as your other notes, should be made at leisure times & put into the care of the most trustworthy of your attendants, to guard by multiplying them, against the accidental losses to which they will be exposed, a further guard would be that one of these copies be written on the paper of the birch, as less liable to injury from damp than common paper.” (7 Thwaites 248.)
The instructions contain no reference to others in the party keeping an official record, diary or notes. Jefferson directed Lewis to designate someone to succeed him to the command in case of Lewis’ death. Lewis’ successor was to be “invested with all the powers & authorities given to yourself”. Thereafter Lewis invited his friend William Clark to join him in the venture, where-from came the name now famous in American history as the Lewis and Clark Expedition. In addition to Lewis and Clark and Clark’s negro slave, the Expedition was made up of three sergeants, one corporal and 28 enlisted men, all members of the army and subject to military discipline. That this was an official expedition of the Government of the United States there can be no doubt.
The Expedition’s winter encampment at Camp Dubois extended from December 13, 1803, to May 14, 1804. During that period Clark kept rough notes pertaining to the activities of the members of the Expedition at Camp Dubois. Subsequent to the winter encampment, the Expedition moved up the Missouri River to the Mandan villages, near present Mandan and Bismarck, North Dakota, where it spent the winter of 1804-5. The Clark notes with which we are here concerned include those made at Camp Dubois and through the winter encampment at the Mandans until about April 3, 1805. His subsequent notes, now in private collections, are not involved herein. All of these notes were in the handwriting of Captain Clark, excepting a few lines in the handwriting of Captain Lewis and some three entries by unidentified persons. It is probable that during the winter encampment of 1804 and 1805 at the Mandans Clark transcribed the rough notes, ownership of which is in question here, into what Lewis referred to as “Capt. Clark’s private journal”. Lewis wrote to President Jefferson on April 7, 1805, and among other things stated:
“You will also receive herewith inclosed a part of Capt. Clark’s private journal, the other part you will find inclosed in a separate tin box. this journal (is in it’s original state, and of course incorrect, but it) will serve to give you the daily detales of our progress, and transactions. (Capt. Clark does not wish this journal exposed in it’s present state, but has no objection, that one or more copies of it be made by some confidential person under your direction, correcting it’s gramatical errors &c. indeed it is the wish of both of us, that two of those copies should be made, if convenient, and retained untill our return; in this state there is no objection to your submitting them to the perusal of the heads of the departments, or such others as you may think proper, a copy of this journal will assist me in compiling my own for publication after my return.) I shall dispatch a canoe with three, perhaps four persons, from the extreem navigable point of the Missouri, or the portage between this river, and the Columbia river, as either may first happen; by the return of this canoe, I shal send you my journal, and some one or two of the best of those kept by my men. I have sent a journal kept by one of the Sergeants, to Capt. Stoddard, my agent at St. Louis, in order as much as possible to multiply the chances of saving something, we have encouraged our men to keep journals, and seven of them do so, to whom in this respect we give every assistance in our power.” (7 Thwaites 318-19.)
The record indicates that Captain Lewis, as the leader of the Expedition, was keeping a record, apparently in accordance with Jefferson’s instruction. Clark’s notation in his diary of April 2, 1805, refers to the fact that they were .writing and preparing dispatches all day.
An examination of the 67 documents in question here indicates that while they do contain much data such as Jefferson requested Lewis to gather in his official record, they also carry a great many personal and private notations, including information about the receipt of newspapers or letters, details of personal illnesses, social engagements, and other such items as might not be expected to be found in notes of an official character or in an official record. Judge Nordbye found, at page 660 of 146 F.Supp.:
“Clark’s rough notes, with the exception of some daily entries made by Lewis and the incidental writings of others therein, are the efforts of a frontier-educated man to keep notes of the daily occurrences of the Expedition. And when Clark sent his journal or journals to the Presi-' dent at Lewis’ request, it seems quite obvious that they were fur-' nished to him for his own perusal and not as official documents of the Expedition. It was expected that in due time Lewis’ journal for that period would be completed.”
The trial court pointed out that a number of other members of the Expedition kept personal diaries or notes and observations and that the government made no claim to them whatsoever. Clark bought Sergeant Ordway’s journal when publication of the Lewis and Clark Expedition papers and documents was being furthered by him. The District Court found, 146 F.Supp. 652, 667:
“That he [Clark] intended to retain exclusively for himself not only the rough notes in controversy, but; no doubt much other material ac-, cumulated by him on the Expedition-seems evident. For instance, his^ journals and diaries of this Expedí-. tion from April 7 to July 3, 1805, September 11 to December 31, 1805, January 30 to April 3, 1806', and April 4 to June 6, 1806, as well as sundry notes of various kinds such as a first draft of entries from April 16 to 21, 1806, were found in 1903 by Thwaites in what now is known as the Clark-Voorhis Collection, all of which were then in the possession of Clark’s descendants.”
The District Court concluded that the documents in question were the private and personal writings of Captain Clark, unofficial in character and therefore not the work product of a government representative engaged in the performance of his duties.
As stated, the appeal here raises only one question: Was the trial court clearly erroneous in finding that the papers were written for Captain Clark’s private use only and that accordingly the government had not sustained the burden of proof establishing its claim to them ? Whatever view this court might take of the ownership of the Clark papers is not material to our decision in this case. We may not substitute our judgment for that of the finder of the facts. Rule 52(a) F.R.Civ.P., 28 U.S.C.A. The view of this court on the applicability of Rule 52(a) in non-jury or jury-waived cases is summarized in Commercial Standard Ins. Co. v. Maryland Cas. Co., 8 Cir., 1957, 248 F.2d 412, 416:
“ ‘In a nonjury case, this Court may not set aside a finding of fact of a trial court unless there is no substantial evidence to sustain it, unless it is against the clear weight of the evidence, or unless it was induced by an erroneous view of the law.’ Pendergrass v. New York Life Ins. Co., 8 Cir., 1950, 181 F.2d 136, 137; Cleo Syrup Corp. v. Coca-Cola, 8 Cir., 1943, 139 F.2d 416, 417, 418, 150 A.L.R. 1056, certiorari denied 1944, 321 U.S. 781, 64 S.Ct. 638, 88 L.Ed. 1074. See United States v. Springfield Fire & Marine Ins. Co., 8 Cir., 1953, 207 F.2d 935. See also Wright, The Doubtful Omniscience of Appellate Courts, 41 Minn.L.Rev. 751, 771 (1957).”'
We think that without additional reference it has already been demonstrated that Judge Nordbye’s conclusion as to the privacy of the Clark papers is based upon substantial evidence. It is patent from the record that Lewis thought the Clark “journals”, which may have been made from the rough notes in question here or may have been the notes themselves, were “private” and in sending them to President Jefferson gave him instructions as to limitations on their use which the President observed. Apparently then not only Clark himself but Lewis and Jefferson believed the papers to be the personal property of Captain Clark. In addition thereto, the character of the documents themselves, viewed in light of the fact that Captain Lewis, head of the Expedition, was making an official record, lend credence to the trial court’s view that they were private as opposed to official records.
There is some indication here that General Hammond, in whose desk the papers apparently remained for at least 60 years, and probably much longer, might have obtained them from the office of an Indian Agency with which Clark had at one time been connected, and the government argues that it, then, “ * * had a right to possession superior to that of the Hammonds who, it bears repeating, are unrelated and complete strangers to Clark.” The trial court very properly held:
“The position of the Government in claiming title to these papers in controversy upon the assumption that General Hammond wrongfully abstracted them from the Lawrence, Kansas, office in 1878, is too tenuous and speculative to provide a basis for a factual finding of title in the Government.”
We find that the conclusions of the trial court are based on substantial evidence, are not against the clear weight of the evidence, and were not induced by an erroneous view of the law.
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.
BAUER, Circuit Judge.
During the 1890’s the United States exercised eminent domain over lands held by the Commissioners of Highways of several Illinois towns to obtain land to construct the Illinois-Mississippi Canal. The condemnations were authorized by the River and Harbor Act. The condemnation decrees awarded the Commissioners $1.00 and required the United States to construct and forever maintain bridges across the Canal for use as public highways.
The United States opened the. Canal and 74 highway bridges in 1907. As early as 1938, the Government considered abandoning the Canal because it was obsolete. After several years of negotiations, the United States agreed to transfer title to the Canal to Illinois, and Illinois agreed to release the United States from any further obligation to maintain the Canal. The conveyance agreement was signed on December 14, I960, but actual transfer of title did not occur until August 1970. From 1945 until 1970 the United States performed only minimal custodial maintenance on the Canal bridges.
In 1974 plaintiff Commissioners of Highways filed this suit against the United States to enforce the 1890 condemnation decrees. The United States filed a third-party complaint against Illinois alleging that Illinois had released the United States from its obligation to maintain the bridges when it accepted title to the Canal in 1970. The parties submitted the case to the district court, the Honorable George N. Leigh-ton presiding, on an agreed statement of facts. The court entered final judgment on April 29, 1980. The district court found that the obligation to maintain the bridges across the Canal was a covenant running with the land. Comm’rs of Highways of Towns of Annawan, et al. v. United States, 466 F.Supp. 745, 763-64 (N.D.Ill.1979). The court held that Illinois became responsible to maintain the bridges when it accepted title to the Canal. The court further held, however, that transfer of title did not transfer the United States’ past due obligation to maintain the bridges from 1945 to 1970. Id. at 766-67. The court ordered the United States to pay $2,812,658 plus interest, the amount needed to put the bridges in the condition in which they should have been when the Canal was conveyed in 1970. Upon payment of the damage sum, the United States would be released from all future liability for maintenance of the bridges. Comm’rs of Highways of Towns of Annawan, et al. v. United States, No. 74 C 1861, slip op. at 12 (N.D.Ill. Apr. 29,1980).
Commissioners and the United States cross-appeal from the judgment of the district court. Commissioners claim that the district court erred in finding that the obligation to maintain the bridges is a covenant running with the land. Plaintiffs urge us to reverse this portion of the court’s judgment and hold the United States perpetually bound to comply with the 1890 condemnation decrees. The United States claims that Illinois assumed all of its obligations to maintain the bridges, both future and past, when it accepted title to the Canal and, thus, the district court erred in ordering the United States to pay the maintenance costs for repairs not performed between 1945 and 1970. The United States also claims that the court erred in awarding plaintiffs certain enumerated litigation costs. For the reasons discussed in this opinion, we affirm the judgment of the district court in part and reverse in part.
I
We address first the Commissioners’ claim that the district court erred in finding that the obligation to maintain the bridges, which was memorialized in the 1890 condemnation decrees, is a covenant running with the land. Commissioners argue that the obligation to maintain the bridges was the compensation for the taking of Commissioners’ land, and the United States’ attempt to avoid this obligation by transferring title to Illinois amounts to an uncompensated taking of the Commissioners’ property in violation of the Fifth Amendment.
We agree with Commissioners that the obligation to maintain the bridges is not a covenant running with the land. A covenant running with the land is a promise concerning the use and enjoyment of land agreed to by parties in privity. Leverich v. Roy, 402 Ill. 71, 73, 83 N.E.2d 335, 336 (1949); Purvis v. Shuman, 273 Ill. 286, 294-95, 112 N.E. 679, 682 (1916); Thompson on Real Property §§ 3152, 3155 (1962); Tiffany on Real Property § 851 (1939). “Strictly speaking, it is an agreement by deed to do or not to do some particular act.” Thompson on Real Property § 3150 (1962). The district court concluded that the obligation to maintain the bridges is a covenant running with the land merely because the obligation concerns the use and enjoyment of the Canal lands. Comm’rs of Highways of Towns of Annawan, et al. v. United States, 466 F.Supp. at 763. Whether a condition affects the use and enjoyment of the land, however, is only one of three necessary qualities of a covenant that runs with the land. In this case, the first necessary quality, an agreement by deed, is lacking for there is no agreement between the United States and the Commissioners to create a covenant. Rather, the obligation to maintain the bridges was imposed by the district court in the 1890 condemnation decrees, which are not agreements by deed. See Harris v. Commissioner, 340 U.S. 106, 110-12, 71 S.Ct. 181,183-84, 95 L.Ed. Ill (1950). Therefore, the obligation to maintain the bridges cannot properly be considered a covenant running with the land.
Although we find that the district court erred in concluding that the obligation to maintain the bridges is a covenant running with the land, we agree with the court’s conclusion that the United States is no longer bound by the terms of the condemnation decrees. In 1955 the Illinois General Assembly enacted legislation authorizing the Illinois Departments of Conservation and of Public Works and Buildings to accept title to the Canal from the United States. Ill.Rev.Stat., ch. 105, §§ 482a-482d. The legislation provided that the local municipal corporations responsible for maintaining the roads of which the Canal bridges are a part would be responsible for maintaining the bridges after the State accepted title. Id. at § 482d. In 1958 Congress amended the River and Harbor Act authorizing the United States to convey the Canal to Illinois. The Act decreed that upon transfer the United States would have “no further obligations” with respect to the Canal. On December 4, 1960, Illinois agreed to accept title to the Canal and release the United States from any further obligations with respect to the Canal. The United States quitclaimed the Canal to Illinois in August 1970. Upon Illinois’ acceptance of title, the United States’ obligation to maintain the Canal bridges ceased.
Commissioners claim that the conveyance agreement releasing the United States from its obligation to maintain the bridges deprives them of their property without just compensation. It is not clear whether the property to which plaintiffs’ argument refers is the land taken in 1890 or the Commissioners’ property interest in the United States’ duty to maintain the bridges. Regardless of on which property interest plaintiffs rely, their claim mischaracterizes the issue before us. The United States has. not deprived plaintiffs of any property without just compensation. Plaintiffs were compensated for the original taking by the decree awarding them $1.00 and requiring the United States to maintain the bridges across the Canal for the Commissioners’ benefit. Nor has the United States deprived plaintiffs of their property interest in perpetual maintenance of the bridges, for it is the State, not the United States, that has taken Commissioners’ property by releasing the United States from its obligation to maintain the bridges.
Commissions of Highways, which are legislatively created municipal corporations, Ill.Rev.Stat. ch. 121, §§ 6-107, 6-112, are creatures of the State, possessing only those powers and privileges which the State may choose to grant. Trenton v. New Jersey, 262 U.S. 182, 187, 43 S.Ct. 534, 536, 67 L.Ed. 937 (1923); Heffner v. Cass & Morgan Counties, 193 Ill. 439, 448, 62 N.E. 201, 204 (1901). “A [municipal corporation] is merely a department of the State, and the State may withhold, grant or withdraw powers and privileges as it sees fit. However great or small its sphere of action, it remains the creature of the State exercising and holding powers and privileges subject to the sovereign will.” Trenton v. New Jersey, 262 U.S. at 187, 43 S.Ct. at 536 (citation omitted).
As plaintiffs’ creator, the State retains the power to control the disposition and use of its creatures’ property. Hunter v. Pittsburgh, 207 U.S. 161, 28 S.Ct. 40, 52 L.Ed. 151 (1907); Worcester v. Worcester Consol. St. Ry. Co., 196 U.S. 539, 25 S.Ct. 327, 49 L.Ed. 591 (1905). See also Trenton v. New Jersey, 262 U.S. 182, 188, 43 S.Ct. 534, 537, 67 L.Ed. 937 (1923); Mount Pleasant v. Beckwith, 100 U.S. 514, 525, 25 L.Ed. 699 (1879); People v. Ill. Toll Highway Comm., 3 Ill.2d 218, 234, 120 N.E.2d 35, 44 (1954); Gasaway v. N. Branch Lake Fork Special Drainage Dist., 339 Ill. 103, 107, 170 N.E. 721, 723 (1930).
In Worcester v. Worcester Consol. St. Ry. Co., 196 U.S. 539, 25 S.Ct. 327, 49 L.Ed. 591 (1905), the City of Worcester complained that the State was unconstitutionally interfering with its property rights. Worcester Consolidated Street Railway had contracted with the City to repair and maintain City streets in exchange for use of City property. The state legislature passed an act releasing the railroad from its contractual obligation. The City sued the railroad, seeking to enforce the original contract terms. Worcester claimed that the state statute was void because it impaired an obligation of contract in violation of the Constitution and thus did not release the Railroad from its contractual duty to repair the City streets. Rejecting the City’s argument, the Supreme Court held that the statute released the Railroad from all further obligations to the City arising under the contract. The Court held that the State had “the same right to terminate [the contract] with the consent of the railroad company, that the City itself” had. 196 U.S. at 551-52, 25 S.Ct. at 330-31. The Court recognized that the contract created a property right in favor of the City but held that the property right was not absolute as against the state’s right to alter or abolish it. Id. at 552, 25 S.Ct. at 331. To hold otherwise, the Court noted, “would very largely diminish the right of the legislature to deal with its creature in public matters, in a manner which the legislature might regard as for the public welfare.” Id.
Similarly, in Hunter v. Pittsburgh, 207 U.S. 161, 28 S.Ct. 40, 52 L.Ed. 151 (1907), Pittsburgh claimed that the Pennsylvania General Assembly was depriving it of its property without due process of law. Id. at 177, 28 S.Ct. at 46. The General Assembly enacted legislation ordering Pittsburgh to consolidate with Allegheny, Pennsylvania. The Supreme Court held that the State’s taking of its municipalities’ property without their consent did not violate due process. Id. at 178-79, 28 S.Ct. at 46-47. The Supreme Court explained that:
[m]unieipal corporations are political subdivisions of the State, created as convenient agencies for exercising such of the governmental powers of the State as may be entrusted to them. For the purpose of executing these powers properly and efficiently they usually are given the power to acquire, hold, and manage personal and real property. The number, nature and duration of the powers conferred upon these corporations and the territory over which they shall be exercised rests in the absolute discretion of the State. . . . The State, therefore, at its pleasure may modify or withdraw all such powers, may take without compensation such property, hold it itself, or vest it in other agencies, expand or contract the territorial area, unite the whole or a part of it with another municipality, repeal the charter and destroy the corporation. All this may be done, conditionally or unconditionally, with or without the consent of the citizens, or even against their protest. In all these respects the State is supreme, and its legislative body, conforming its action to the state constitution, may do as it will, unrestrained by any provision of the Constitution of the United States.
Id. (emphasis added).
Nothing in the United States Constitution prohibits the State from taking its creatures’ property without providing compensation. Williams v. Mayor of Baltimore, 289 U.S. 36, 40, 53 S.Ct. 431, 432, 77 L.Ed. 1015 (1933); Hunter v. Pittsburgh, 207 U.S. at 161, 179, 28 S.Ct. at 40, 46 (1907). That is precisely what Illinois has done in this case. As the Supreme Court noted in Hunter v. Pittsburgh, Commissioners must look to the Illinois Constitution, not the United States Constitution, for relief in this case. Id. at 179, 28 S.Ct. at 46. If the statute imposing the duty to maintain the bridges on the Commissioners comports with the requirements of the Illinois Constitution, petitioners are without any remedy. Id. That question, however, is not before us. The question before this Court is whether the United States has deprived Commissioners of their property without just compensation. We find that the United States compensated Commissioners for the original taking by building and maintaining the bridges across the Canal. In 1970, Illinois released the United States from its continuing obligation to compensate Commissioners by maintaining the bridges when Illinois accepted title to the Canal pursuant to the terms of the conveyance agreement and the Illinois statute. Ill.Rev.Stat. ch. 105, §§ 482a-482d. We agree with the district court that after 1970 the United States had no duty to maintain the bridges across the Canal.
II
The United States in its cross-appeal claims that the district court erred in holding it liable for maintenance costs required to put the bridges in the condition in which they would have been in 1970 if the United States had maintained and repaired them between 1945 and 1970. The Government argues that its obligation to maintain the bridges, including past due maintenance, ceased when Illinois accepted conveyance of title in 1970. In support of its argument, the United States relies on clause 4 of the 1960 conveyance agreement which provides that upon Illinois’ acceptance of title the United States “shall have no further obligation with respect to the Canal,” and on the River and Harbor Act, incorporated by reference in the conveyance agreement, which states that “[ujpon such conveyance the United States shall have no further obligation with respect to the canal.”
The district court found that the United States was urging it to construe the conveyance agreement as an indemnity contract. Applying federal contract law principles, United States v. Seckinger, 397 U.S. 203, 209, 90 S.Ct. 880, 884, 25 L.Ed.2d 224 (1970); United States v. Allegheny, 322 U.S. 174, 183, 64 S.Ct. 908, 913, 88 L.Ed. 1209 (1944), the court opined that it should not infer that Illinois intended to indemnify the United States for past due maintenance unless a mutual intent to that effect appeared with clarity on the face of the contract. Any ambiguity in the contract concerning the parties’ intent should be construed against the drafter, the United States. Comm’rs of Highways of Towns of Annawan, et al. v. United States, No. 74 C 1861, slip op. at 3-4 (Apr. 29, 1980). The court held that the conveyance agreement was not an indemnity agreement and that the United States was liable for the costs of past due bridge maintenance. We agree.
The United States’ reliance on clause 4 of the 1960 conveyance agreement is misplaced for that agreement was modified by the parties on December 30, 1963. The language cited by the United States was stricken from the agreement. In the 1963 supplemental agreement, clause 4 provides that upon Illinois’ acceptance of title to the Canal, the United States will perform “any further work hereafter authorized . .. with funds made available through subsequent Federal legislation.” This later expression of the parties’ intent, memorialized in the modified contract, is controlling. In 1970 Congress amended the River and Harbor Act authorizing the United States to expend “an additional sum of $6,528,000 . . . for the repair, modification, and maintenance of bridges.” When the 1963 supplemental agreement and the River and Harbor Act appropriations are read in conjunction, it appears that both the United States and Illinois intended for the United States to retain some responsibility to repair the bridges. We find that the district court’s conclusion that the conveyance agreement did not indemnify the United States for past due maintenance is not clearly erroneous. United States v. United States Gypsum Co., 333 U.S. 364, 68 S.Ct. 525, 92 L.Ed. 746 (1948).
III
Finally, the United States claims that the district court erred in including attorney travel expenses and expert witness fees as costs against the United States. We agree.
Litigation costs may be taxed against the United States, 28 U.S.C. § 2412, but the award of costs is limited to those items enumerated in 28 U.S.C. § 1920. Attorney travel expenses are not among the listed items, and, thus, they are not recoverable. Wahl v. Carrier Mfg. Co., Inc., 511 F.2d 209, 217 (7th Cir. 1975); Kiefel v. Las Vegas Hacienda, Inc., 404 F.2d 1163, 1170 (7th Cir. 1968), cert. denied, 395 U.S. 908, 89 S.Ct. 1750, 23 L.Ed.2d 221, reh. denied, 395 U.S. 987, 89 S.Ct. 2128, 23 L.Ed.2d 776 (1969). Witness fees are among the items listed in 28 U.S.C. § 1920, but the amount of recovery is limited by 28 U.S.C. § 1821. The prevailing party is entitled to recover only $30 per day attendance allowance plus the amount of the witness’ travel and board expenses. 28 U.S.C. § 1821(b), (c), (d); Adams v. Carlson, 521 F.2d 168, 172 (7th Cir. 1975). See 28 U.S.C. § 2412(d)(2)(A) (effective Oct. 31, 1981; recovery of reasonable expert witness fees to be permitted). The district court erred in including $4,186.36 expert witness fees and $1,808.45 attorney travel expenses in the judgment for costs against the United States.
IV
For the reasons discussed in this opinion, the judgment of the district court is affirmed in part and reversed in part. We reverse only that part of the judgment assessing $1,808.45 attorney travel expenses and $4,186.36 expert witness fees against the United States. The parties are ordered to bear their own appeal costs.
AFFIRMED IN PART AND REVERSED IN PART.
. The factual history of this controversy is extensively discussed in the district court opinion. Comm’rs of Highways of Towns of Annawan, et al. v. United States, 466 F.Supp. 745 (N.D.Ill. 1979). We incorporate that portion of the opinion by reference.
. This agreement was subsequently amended on December 30, 1963, December 16, 1964, and April 27, 1971.
. Plaintiffs are Bureau, Henry, and Whiteside Counties and the Commissioners of Highways of the towns of Annawan, Alba, Atkinson, Colonia, Colona, Concord, Edford, Fairfield, Gold, Geneseo, Montmorency, Mineral, Tampico, and Wyanet. They are the successors in interest to the Commissioners involved in the 1890 condemnation actions.
. The district court dismissed without prejudice Commissioners’ pendant jurisdiction claim challenging the Illinois statute on state constitutional grounds. Comm’rs of Highways of Towns of Annawan, et al. v. United States, No. 74 C 1861, slip op. at 6 (N.D.Ill. Apr. 29, 1980). Commissioners have not appealed that portion of the district court judgment.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
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.
CLARK, Retired Associate Justice.
This appeal is the aftermath of a controversy between the several contractors, as well as the bonding company, arising out of the construction of three grade school buildings for School District No. 8 in Comanche County, Oklahoma. The prime contract for the construction work was awarded to Buckner and Moore. It subcontracted the mechanical work to J. C. Hester Co., Inc. (Hester) and the latter subcontracted the sheet metal work to the Maxwell Sheet Metal Contractors, Inc. (Maxwell), whose surety on its payment and performance bond was United States Fidelity and Guaranty Company (USF&G). On August 8, 1973, Maxwell and Universal Dynamic and Scientific Engineering, Inc. (UDS) assigned the Maxwell Sheet Metal contract to Liberty Mechanical and Electrical Contractors, Inc. (Liberty) and the latter proceeded to complete that work. However, Maxwell had already performed a large part of the installation and had incurred some material supply debts thereon which it had not paid. USF&G was called upon to pay these material suppliers and, after August 8, 1973, paid the same in the sum of $20,871.45 and then filed this suit upon those claims against Liberty, Maxwell, UDS and T. W. (Tony) Sidwell.
In the meanwhile, the School District had paid the prime contractor, Buckner and Moore, in full of its contract and the latter interpled in this suit paying $20,-602.00 into the registry of the court as the proceeds of the prime contract then remaining. USF&G then made claims to this fund by virtue of its subrogation rights under the liens of the unpaid material suppliers of Maxwell; but Liberty also claimed the' fund and filed a cross claim, including a plea, against T. W. (Tony) Sidwell alleging that in the event USF&G prevailed with reference to the funds paid into court that Sidwell was liable to it by reason of his wrongfully appropriating funds that Liberty paid soon after the time it was assigned the Maxwell subcontract for the express purpose of paying the materialmen’s claims. Sidwell was the managing corporate officer and director of Maxwell as well as UDS. Liberty’s claim against Sidwell was based on Oklahoma Statutory law. On trial before the court without a jury USF&G was held to be entitled to the funds paid into court, less a fee of $608.00 paid to Ralph Newcombe for the filing of the interpleader, and a judgment against Liberty, Sidwell, Maxwell and UDC, jointly and severally, was entered for USF&G in the sum of $20,-602.00. Judgment for Liberty was entered against Sidwell and by default against Maxwell and UDS for $20,602.00, jointly and severally.
Liberty raises several questions of law, including (1) that the claim of USF&G was not lienable under Oklahoma law; (2) that its plea of estoppel as to USF&G should have been sustained; and (3) that the fee to Newcombe should not have been paid from the funds in the registry of the court. As to Sidwell, Liberty claims that his appeal is untimely, while Sidwell asserts that Liberty neither pled nor proved fraud in the trial court and, therefore, cannot raise it here. In addition, Sidwell says that he was not liable to Liberty as a trustee.
We have concluded that the trial judge was correct in his appraisal of the case and, after careful consideration of the record and of the points and authorities submitted, affirm the judgment.
1. It was stipulated at trial that USF&G paid the material suppliers the sum of $20,871.45 after demand was made upon it. There can be no question but that under Oklahoma Law, USF&G is subrogated to the rights of the materialmen. The recent case of Mid-Continent Casualty Company v. First National Bank & Trust Company of Chickasha, 531 P.2d 1370 (Okl.1975), specifically holds that a surety on the bond of a public contractor “has an equity, under the doctrine of subrogation, in money retained . . . ” by reason of the contract, “for the payment of laborers and materialmen.” At p. 1374. Also see Fidelity National Bank of Oklahoma City v. United States Casualty Company, 191 Okl. 496, 131 P.2d 75 (1942). The cases cited by Liberty are inapposite. They are based on the proposition that liens do not lie against public property because “the seizure and sale of such property would interrupt and suspend the functions of government and would therefore be against public policy.” Hutchinson v. Krueger, 34 Okl. 23, 124 P. 591, 592 (1912). But USF&G makes no claim to any lien on public property. It merely seeks a prior right to the proceeds of a contract which have been paid to the general contractor by the School District. Furthermore, the USF&G also claims under 42 Okla.Stat. 152, as a subrogee. Here the District Court found that the claims of the materialmen were lienable under Section 152 and, as such, the proceeds held in trust by Buckner & Moore were held for the benefit of USF&G. We agree.
Nor is there any merit to Liberty’s claim that in ordering the funds in the registry of the court to be paid to USF&G that the court was entering an award of damages against Liberty. We believe that the court properly invoked its equity jurisdiction in rendering a declaratory judgment and in granting a money judgment where the funds have been paid into court for the specific purpose of determining who among the various claimants are entitled to the same. In so doing, the court renders a complete adjudication of the matter and the funds then before it by finding who is entitled to the funds and then ordering them paid accordingly. To hold otherwise would be to frustrate the very purpose of Congress in enacting the Declaratory Judgment Act.
2. Nor do we find any merit to Liberty’s claim of estoppel. It seems to argue that USF&G stood by and permitted it to complete the work under the Maxwell subcontract without advising that USF&G intended to and later had paid the materialmen suppliers. We note, however, that Liberty makes no claim that it was without knowledge of the payments to the suppliers by USF&G; nor does it allege that it had no means of ascertaining the real facts. Indeed, it knew of the outstanding debts of the suppliers and instead of applying sufficient of the funds it received from Hester to those debts paid the same to Maxwell who, at the instance of Sidwell, its managing officer, diverted them to other indebtedness. By this action Liberty precipitated the very problem it now tries to escape by a plea of estoppel. Nor is there any finding by the District Court of any concealment by USF&G of its payments to the suppliers. All that the District Court found in this regard was that USF&G preferred to have Liberty over Maxwell as a subcontractor on the job and that USF&G knew of the indemnity or hold harmless clause in the assignment from Maxwell to Liberty. Certainly the doctrine of estoppel requires much more than we have here. See Board of County Commissioners of Marshall County v. Snellgrave, 428 P.2d 272, 276 (Okl.1967); Wheeler v. Brock Co., 418 P.2d 693 (Okl.1966); Hillers v. Local Federal Savings and Loan Association, 232 P.2d 626 (Okl.1951). We might add, that at argument it was undemed that USF&G understood that unless it paid the suppliers the job would be closed down and that the taking over of the work of Maxwell by Liberty was all maneuvered by Sidwell and that all of the facts concerning the outstanding claims of the suppliers were well known to the parties involved.
3. Likewise the attack by Liberty on the allowance to Newcombe for $608.00 as his attorney fee in filing the interpleader has no merit. Buckner and Moore were stakeholders for the $20,-602.00 paid to it by the School District in final payment under the general contract. It was attempting to escape being brought into the controversy between its subcontractors and the bonding company and instead of holding the money itself, paid the same into court so that the court' might itself decide who was entitled to the funds. It followed the common practice in this regard and ordinarily a fund so deposited is chargeable with the reasonable fees incurred. There is no attack here on the reasonableness of Neweombe’s charge and we find the claim that the fees are not chargeable to the funds to be frivolous. See Moore’s Federal Practice, f 22.16(2); United States v. Chapman, 281 F.2d 862, 870-871 (10th Cir. 1960).
4. As to Sidwell’s appeal, we do not find it necessary to pass upon the timeliness of its filing and, therefore, pass to the merits. We find Sidwell’s claims frivolous. Oklahoma law is crystal clear on the point. The District Court found — and we find ample evidence in the record in support thereof— that Liberty, after it had been assigned the sub-contract of Maxwell, received certain funds from Hester for work done by Maxwell while it was performing the sub-contract. Liberty paid these funds to Maxwell. Sidwell, who was Chief Executive Officer of Maxwell, personally diverted the funds to the payment of other indebtedness of Maxwell rather than to the payment of the materialmen, which USF&G later paid. The funds thus diverted by Sidwell were implanted with a statutory trust requiring that they be paid to the materialmen. Indeed, the statute involved not only requires the corporation receiving such trust funds to pay them to the material-men but makes both it and “its managing officers . . . liable for the proper application of such trust funds.” 42 Okla.Stat. 153(2). Since Sidwell was at all times relevant here the Chief Executive Officer of Maxwell, its “managing officer,” and since he personally directed that the trust monies be diverted to other debts, Sidwell is personally responsible and the judgment against him was entirely proper. Sidwell seems to say that Liberty did not plead nor prove “fraud.” We find the pleading sufficient under the Oklahoma Statute whether it amounts to a charge of “fraud” or not. The funds were by statute trust funds and both Maxwell and its “managing officer” Sidwell were obligated to pay them to the materialmen. Failing so to do, both are liable to Liberty as well as to USF&G.
The judgment of the District Court is therefore
Affirmed.
. USF&G is a Maryland corporation; the remaining parties aré all residents of Oklahoma; the suit is, therefore, properly laid under the diversity jurisdiction of the District Court.
. The finding of fact in this regard is No. 7 and reads as follows:
“T. W. ‘Tony’ Sidwell was at all times the Chief Executive Officer of Maxwell Sheet Metal Contractors, Inc., and Universal Dynamic Scientific & Engineering Consulting, Inc., and he personally directed the payment of certain bills owing by these two companies after he received the money from Liberty Mechanical & Electrical Contractors, Inc. At the time he knew that the bills involved in this case and which were paid by the Plaintiff were due and outstanding and he held the sums as trustee under a statutory obligation to pay these bills in question, yet he devoted much of the money to other purposes and paid bills for some other corporations that are not involved in this case.”
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
GRONER, C. J.
The case is here on an appeal from an order dismissing appellant’s complaint. The dismissal was on the ground that the action is a suit against the United States, which have not consented to be sued. The proceeding was begun June 28, 1945, by Alice Martens Young, a citizen of Wisconsin, in her own right and in behalf of all other persons who were also stockholders in Miss-Wis Timber and Land Company (dissolved), a Wisconsin corporation. Stated shortly, the complaint .shows that Congress in March, 1911, passed the Weeks Act, under which the Secretary of Agriculture is authorized to locate and acquire, upon the recommendation of the National Forest Reservation Commission, cut-ovcr or denuded lands within watersheds of navigable streams in aid of navigation, or in promoting the growth of timber. Before acquisition, the Act requires the consent of the legislature of the state wherein the land is located. Appellant’s complaint says that in 1934 the Secretary decided to acquire, under provisions of the Act, lands in Mississippi owned by appellant and Miss-Wis Timber and Land Company, and notified appellant and the corporation that if no agreement of sale were made, condemnation would be begun to acquire the lands; that the parties thereupon executed options to the United States at agreed prices, reserving (as the Act permitted) all mineral rights appertaining to the property for a period of ten years. As a 'result of these options the United States acquired by purchase and condemnation some 17,000 acres of land from the corporation and some 15C0 acres from appellant, and paid therefor to appellant and the corporation the agreed or ascertained consideration of some $60,000 to the latter and about $5,000 to the former, and thereupon went into possession and have ever since occupied, used and controlled the lands. The object of the complaint is to annul the transaction and restore title and possession to appellant and the corporation, first, on the ground that the Weeks Act is unconstitutional, for the reason that the United States are. incapable of taking and holding lands in one of the states which are not acquired as incident to the control of navigation or for a specific purpose named in Section 8(17) of the Constitution; and second, that the consent of the Mississippi Legislature never having been obtained, no title passed nor could pass, constitutionally, to the United States.
Filed with the complaint, as part thereof, were copies of the deeds of conveyance made by the Lumber Company to the United States, copies of the condemnation judgments and a copy of Section 6058 of the Mississippi Code of 1930, wherein that State consents to the acquisition by the United States by purchase or gift of such land in Mississippi, as in the opinion of the Federal Government and the State Forestry Commission may be needed for the establishment of a national forest or forests or reclamation or colonization projects, but in which Act there is no requirement that the acquisition be in aid of commerce and navigation.
We have set out the position of appellant at length only because all of the several grounds on which her claim is based have been earnestly urged in the argument. But we are in agreement with the court below that since the action is clearly one against the United States, it was properly dismissed. Appellant, however, insists that the charge that the Weeks Act is unconstitutional goes to the very marrow of the case and should be decided before we reach the question whether the United States are indispensable parties. But we think the rule is definitely established otherwise, for the Supreme Court has said in Siler v. Louisville & Nashville R. Co., 1909, 213 U.S. 175, 193, 29 S.Ct. 451, 53 L.Ed. 753, that courts will not usually pass upon a constitutional question, although properly presented, if there is also present, — as is certainly true here, — some other ground upon which the case may be disposed of. And to this we properly may add the equally well established rule that neither will courts pass upon the constitutionality of a statute at the instance of one who has availed himself of its benefits. And that this is true of appellant her complaint shows beyond any question, for both she and the corporation dealt with the United States without protest, and received and for more than ten years have retained the proceeds of their bargain. But even if the two rules we have referred to were otherwise, we think we may say, in passing, that appellant’s position as to the unconstitutionality of the Weeks Act would have to be overruled, for appellant’s main contention raises a question that has been too long and too thoroughly settled now to justify discussion. In Cogges shall v. United States, one of the points raised was that the Government had no right to condemn lands for forest reservations where no question of the protection of navigable streams was involved. The Fourth Circuit Court of Appeals there stated that this contention could not be sustained. We think this is correct, for the statute has been in force nearly forty years, and under its provisions the United States have acquired title to thousands of acres of lands for the different national forests, and, so far as we are able to determine, no court has ever questioned its constitutionality, and Congress has for years appropriated and legislated generally on the subject. The allegation that Mississippi has not given its consent is negatived by the statute of that State which appellant includes as a part of her complaint. Its terms are even broader than Congress has required, and certainly appellant may not complain of this.
Accordingly, we pass to the question on which, as we have said, the case must be decided. Appellant’s action is against the Secretary of Agriculture and sundry of his subordinates, all in their official capacities. The relief prayed is that the court enjoin the Secretary and his subordinates from taking any steps to lease the lands in question, or to exercise any acts of ownership therein; that the Secretary, upon repayment by appellant of the purchase price, be ordered to quitclaim the lands to appellant and the dissolved corporation, or, in the alternative, that the court adjudge that title did not pass under the deeds of conveyance, or under the judgments in condemnation, and ultimately to hold that appellant and the corporation are legal owners of the lands, and entitled to an accounting from the United States of the use of the lands; that the Secretary and other codefendants be required to deliver up for cancellation the title deeds and to cooperate in correcting the record in the condemnation proceedings so that title to the lands shall be restored to appellant and the corporation. Appellant supports her demands in these respects principally on the basis of the doctrine announced by the Supreme Court in United States v. Lee, 1882, 106 U.S. 196, 1 S.Ct. 240, 27 L.Ed. 171.
That celebrated case, as later described by Mr. Justice Miller, was an action in ejectment, and in its essential character an action of trespass with power in the court to restore the possession to the plaintiff as part of the judgment. The defendants, two Army officers, set up their right of possession as officers of the United States, which the Supreme Court held to be unlawful — as it undoubtedly was — and therefore insufficient as a defense. Mr. Justice Miller further observes that the case did not “ * * * conclude the United States, as the opinion carefully stated, but held the officers liable as unauthorized trespassers, and turned them out of their unlawful possession.” That the result in that case was fair, just and right, we have no manner of doubt, bxxt that the facts in that case and this are vitally different is convincingly apparent, for it is obvious that in no sense can the United States or their officers be described as trespassers in the present case. Here, the United States are in possession as holders of the record title through the voluntary acts of appellant and the corporation. The unlawful possession, as appellant claims, is solely that the United States were without constitutional power to take title. But appellant has no greater right to challenge the transaction on that ground than a stranger. She relinquished her rights ten years ago, Alabama Power Co. v. Ickes, 1938, 302 U.S. 464, 479, 58 S.Ct. 300, 82 L.Ed. 374. But we think we need not rely on that principle, nor stop to weigh the factual differences between the Lee case and this, since we also think it is perfectly clear that whatever now remains of the doctrine in the Lee case has no applicability to the case at hand, for the rule in that case which appellant seeks to apply in this, — even on a state of facts more nearly akin to those in the Lee case — must, in the light of later decisions of the Supreme Court, be considered as no longer controlling. See Morrison v. Work, 1925, 266 U.S. 481, 45 S.Ct. 149, 69 L.Ed. 394; State of New Mexico v. Lane, 1917, 243 U.S. 52, 37 S.Ct. 348, 61 L.Ed. 588; State of Louisiana v. Garfield, 1908, 211 U.S. 70, 29 S.Ct. 31, 53 L.Ed. 92; Naganab v. Hitchcock, 1906, 202 U.S. 473, 26 S.Ct. 667, 50 L.Ed. 1113.
In State of Louisiana v. Garfield, the State instituted a suit against the Secretary of Interior to establish title to swamp lands in the possession of the United States and claimed to have been granted to the State, and to enjoin the Secretary from making any other disposition of them. In holding that the United States were indispensable parties and in dismissing the bill, the Court stated:
“ * * * The doubt is whether Louisiana has not now a good title by the lapse of five years since the approval and by the operation of that act.
“But that doubt cannot be resolved in this case. It raises questions of law and of fact upon which the United States would have to be heard. The United States fairly might argue that the statute of limitations was confined to patents, or was excluded by the act of 1871, [16 Stat. 430.] If it yielded those points, it still reasonably might maintain that a title could not be acquired under the statute by a mere void approval on paper, if the United States ever since had been in possession claiming title, as it claimed it earlier by the act of 1871. It might argue that, for equitable relief on the ground of title in the plaintiff, in the teeth of the last-named act, it would be necessary at least to allege that the state took and has held possession under the void grant. The United States might and undoubtedly would deny the fact of such possession, and that fact cannot be tried behind its back. It follows that the United States is a necessary party and that we have no jurisdiction of this suit.”
In Morrison v. Work, the Court, in a case involving claims against the United States, said :
“ * * * The claim of the United States is, at least, a substantial one. To interfere with its management and disposition of the lands or the funds by enjoining its officials, would interfere with the performance of governmental functions and vitally affect interests of the United States. It is, therefore an indispensable party to this suit. It was not joined as defendant. Nor could it have been, as Congress has not consented that it be sued.”
It is thus apparent that the United States are indispensable parties to this action. Since they have not consented to be sued, they cannot be made parties, and therefore the action was properly dismissed.
Affirmed.
36 Stat. 962, 16 U.S.C.A. § 513.
U.S.Const, art. I, § 8(17), which gives the Congress authority over “ * * * all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings
Ashwander v. Tennessee Valley Authority, 1936, 297 U.S. 288, 56 S.Ct. 466, 80 L.Ed. 688 (Opinion of Brandeis, J., concurring).
1938, 4 Cir., 95 F.2d 986, 989. See also United States v. Griffin, D.C.W.D. Va.1932, 58 F.2d 674, and United States v. Graham & Irvine, D.C.W.D.Va.1917, 250 F. 499.
Cunningham v. Macon & Brunswick R. Co., 1883, 109 U.S. 446, 452, 3 S.Ct. 292, 297, 609, 27 L.Ed. 992.
1908, 211 U.S. 70, 77, 78, 29 S.Ct. 31, 33, 53 L.Ed. 92.
1925, 266 U.S. 481, 485-486, 45 S.Ct. 149, 151, 69 L.Ed. 394.
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.
SETH, Chief Judge.
Southwest Community Health Services petitions for review of a decision of the National Labor Relations Board ordering it to bargain with a group of Ambulance Service employees. The petitioner is a nonprofit corporation which operates eleven hospitals in New Mexico including Presbyterian Hospital and Anna Kaseman Hospital, collectively referred to herein as the “Hospital”. The Board has filed a cross-petition for enforcement of its order.
In 1973, Bernalillo County Health Care Corporation acquired the assets of the Albuquerque Ambulance Service. BCHCC is governed by a Board of Directors divided equally between the Hospital and an unrelated medical care facility. The Board of Directors of BCHCC exercises no control over any of the terms and conditions of employment of the Ambulance Service employees. The BCHCC has delegated responsibility for the operation of the Ambulance Service to the Hospital. The Service has consistently been unprofitable; its losses are paid equally by petitioner and the unrelated hospital.
The Hospital employs approximately 2,300 persons including 54 nonprofessional Ambulance Service employees. The Ambulance Service employees receive specialized training and are certified by the State of New Mexico. Some of the employees administer emergency medical treatment, often in difficult working conditions. Others are ambulance drivers or dispatchers. The Service is not located in the Hospital and is not publicly identified with the Hospital.
The Hospital and the petitioner establish the wages and terms and conditions of employment for the Ambulance Service employees. The Ambulance Service employees are hired by the Hospital, are paid on the same wage scale as other Hospital employees, and have the same employee grievance procedure. Some Ambulance Service employees have transferred to jobs in the Hospital and some Hospital employees have transferred to positions in the Ambulance Service.
In January 1981, the UBC Southwestern Council of Industrial Workers, AFL-CIO, filed a petition seeking to represent all full-time and regular part-time paramedics, emergency medical technicians, emergency vehicle operators, patient transfer operators and dispatchers employed in the Service. The Board’s regional director found the requested unit to be appropriate and the Board affirmed his decision. The unit voted to retain the union as its exclusive bargaining representative. The petitioner refused to bargain with the union and unfair labor practice charges were filed alleging violations of sections 8(a)(5) and (1) of the National Labor Relations Act, 29 U.S.C. § 158(a)(5), (1). The Board granted the General Counsel’s motion for summary judgment on the charges and found the petitioner’s refusal to bargain constituted a violation of the Act. This petition for review and cross-petition for enforcement followed.
Our review of the Board’s choice of a bargaining unit is not bound by the standard of “arbitrary and without substantial support” usually given to the Board’s unit determinations. Beth Israel Hospital and Geriatric Center v. N.L.R.B., 688 F.2d 697 (10th Cir., 1982) (en banc). This case differs from the traditional standard because it involves a unit selection in a health care institution. Id. at 700. Congress has directed the N.L.R.B. to more rigorously justify its bargaining unit determination in the health care field because it feared frequent strikes and wage whipsawing. Id. Thus, Congress has admonished the Board to prevent a proliferation of bargaining units in the health care industry. S.Conf.Rep. No. 988, 93d Cong. 2d Sess., reprinted in [1974] U.S.Code Cong, and Admin.News 3946, 3959.
The standard for review in this case is whether the Board properly focused on the “ ‘disparity of interests between employee groups which would prohibit or inhibit fair representation of employee interests.’ ” Presbyterian/St. Luke’s Medical Center v. N.L.R.B., 653 F.2d 450, 457 (10th Cir., 1981), quoting N.L.R.B. v. St. Francis Hospital of Lynwood, 601 F.2d 404, 419 (9th Cir., 1979). The Board argues that our en banc decision in Beth Israel Hospital and Geriatric Center v. N.L.R.B., 688 F.2d 697, modified our opinion in Presbyterian/St. Luke’s. Though the panel decision in Presbyterian/St. Luke’s was not specifically before the en banc court, the Beth Israel decision necessarily affects the authority of the panel decision. 688 F.2d at 698. In Beth Israel, we reaffirmed three panel decisions which denied enforcement to Board determinations of bargaining units, and we addressed only the language in each panel opinion stating that the Board, when certifying bargaining units in the health care field, could not employ a presumption that shifts the burden of persuasion to the employer. Beth Israel Hospital and Geriatric Center v. N.L.R.B., 677 F.2d 1343 (10th Cir., 1981); St. Anthony Hospital Systems v. N.L.R.B., 655 F.2d 1028 (10th Cir., 1981); Presbyterian/St. Luke's Medical Center v. N.L.R.B., 653 F.2d 450 (10th Cir., 1981). There is no indication in the en banc Beth Israel opinion that we have backed away from or modified our use of the “disparity of interests” standard in hospital employee bargaining unit cases. We therefore apply that standard to the case at bar.
The “disparity of interests” standard requires that the Board determine not the similarities among the employees of the proposed bargaining unit, but instead examine the disparity of interests among employee classifications which would prevent a combination of groups of employees. See N.L.R.B. v. HMO International/California Medical Group Health Plan, Inc., 678 F.2d 806 (9th Cir., 1982); N.L.R.B. v. St. Francis Hospital of Lynwood, 601 F.2d 404 (9th Cir., 1979). The standard thus ensures compliance with the congressional mandate to avoid undue proliferation of bargaining units in the health care industry.
The regional director offered several justifications for certifying the unit: (1) the purposes and functions of the Ambulance Service is not directly related to traditional Hospital services and functions; (2) the Service’s employees work away from the Hospital; (3) the patients are transported to medical centers other than the Hospital; and (4) the ambulance crew members have work contact with emergency room personnel in many hospitals.
None of the director’s reasons specifies any justification for not including other potential groups in the bargaining unit. No other groups were considered and no distinctions were made. It may well be that the unit is appropriate, but we cannot determine that from the regional director’s and the Board’s decisions. We must therefore remand this case for consideration of the bargaining unit under the “disparity of interests” standard.
It is the judgment of this court that the petition for review is granted, the Board’s cross-petition to enforce is denied, and the case remanded to the Board.
IT IS SO ORDERED.
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.
SOPER, Circuit Judge.
Certificates of indebtedness were issued to depositors of the Baltimore Trust Company, an insolvent banking institution of the City of Baltimore, on August 4, 1933, in accordance with a plan of reorganization which became- effective on that date. The certificates represented the unpaid balances due the depositors, plus accrued interest. Consolidated Gas, Electric Light & Power Company of Baltimore, a Maryland corporation, received a certificate in the face amount of $1,031,094.48, which was subsequently reduced to $825,523.58 by a partial distribution of the bank’s assets. On November 12, 1935, the Gas Company sold and assigned the certificate for $257,-976.12 to the Federal Water Service Corporation, but no revenue stamps were affixed to the certificate or to any of the transfer papers. In January, 1938, the Commissioner of Internal Revenue made an assessment against the Gas Company in the amount of $330.24, representing the stamp tax alleged to be due on the trans fer; and on March 17, 1938, the Gas Company paid the tax and filed its claim for refund on the ground that the tax had been wrongfully collected. The claim was rejected and the pending suit was filed, resulting in a judgment for the taxpayer.
The statutes, under which the tax in suit was imposed, are § 800, Schedule A (1) of Title VIII of the Revenue Act of 1926, 44 Stat. 9, 99, 101, and the amendment thereof by § 724 of the Revenue Act of 1932, 47 Stat. 169, 274, 26 U.S.C.A. § 900 note. They are as follows:
Revenue Act of 1926, c. 27, 44 Stat. 99. 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.
* *
“Schedule A,- — Stamp Taxes
“1. Bonds of indebtedness: On all bonds, debentures, or certificates of indebtedness issued by any corporation, and all instruments, however termed, issued by any corporation with interest coupons or in registered form, known generally as corporate securities, on each $100 of face value or fraction thereof, 5 cents * * *.”
Revenue Act of 1932, c. 209, 47 Stat. 169:
“Sec. 724. Stamp Tax on Transfer of Bonds, etc.
“(a) Schedule A of Title VIII of the Revenue Act of 1926 is amended by adding at the end thereof a new subdivision to read as follows:
“9. Bonds, etc., sales or transfers. On all sales, or agreements to sell, or memoranda of sales or deliveries of, or transfers of legal title to any of the instruments mentioned or described in subdivision 1 and of a kind the issue of which is taxable thereunder, • whether made by any assignment in blank or by any delivery, or by any paper or agreement or memorandum or other evidence of transfer or sale * * ”
It is manifest from an examination of these sections that the instruments, whose transfer is taxable under the quoted section of the amendatory Act of 1932, are the kind of instruments whose issue is taxable under Schedule A(l) of the Act of 1926. We inquire, therefore, whether the certificates of indebtedness of the Baltimore Trust Company were taxable under the last mentioned section when they were issued as above described. It is stipulated that subsequent to the issuance of the certificates the Commissioner of Internal Revenue made an assessment upon the Trust Company on account of stamp taxes alleged to be due thereon under the statute; that the tax was paid on March 17, 1934 and a claim for refund was_ filed on November 9, 1936 on the ground that certificates of indebtedness issued by an insolvent bank are exempt from tax under § 22 of the Act of March 1, 1879, 20 Stat. 351, 12 U.S.C.A. § 570. This section provides in substance that no tax shall be assessed or collected or paid on account of any bank that has ceased to do business by reason of insolvency, which tax will diminish the assets necessary for th'e full payment of depositors. For a consideration of this statute, see United States v. Sterling, Receiver, 4 Cir., 106 F.2d 178. The Commissioner agreed to the refund after a review of the facts and the law contained in an opinion of January 4, 1937 of the Chief Counsel of the Bureau of Internal Revenue which is filed as part of the record in the pending case. The Chief Counsel reached the conclusion that the certificates of the Trust Company were not taxable because it had ceased to do business by reason of insolvency on March 17, 1934 when the certificates were issued. The refund was made on March 29, 1937. This action of the Commissioner, in our opinion, was a correct application of the statutory exemption provided by the Act of March 1, 1870 and thereby the freedom of the certificates from taxation at the time of issuance was established. It follows that the transfer of the certificates by the Gas Company on November 12, 1935 was not covered by § 724 of the Revenue Act of 1932 supra, which ■ imposes a stamp tax upon the transfer of only that kind of instrument which is subject to tax when issued.
Having reached this conclusion, it is unnecessary to consider the additional contention of the taxpayer, also made in United States v. Sterling, Receiver, supra, that certificates of indebtedness issued by an insolvent bank are not corporate securities in the common understanding of that term, and that only such instruments as are generally known as corporate securities or investment securities were intended to be taxed by the Revenue Acts of 1926 and 1932.
The judgment of the District Court is affirmed.
No attempt was made to collect the issue tax from the transferee of the bank because of the ruling contained in Cum. Bull. (1932) Vol. XI-2, p. 542 (S.T. 547) which states: “The conclusion has been reached that the taxes in question, although imposed on the transferee as well as the transferor, and on the grantee as well as the grantor, are without application where the transferor or grantor is relieved from liability therefor by § 22 of the Act of March 1, 1879. This conelusion is based on the view that the statutory provision referred to is remedial in character and is to be liberally construed. Its manifest purpose is to relieve depositors from the burden of the tax. To tax the transferee or grantee in such case would be in effect, through the shifting of the burden of the tax to the transferor or grantor, to tax the insolvent bank and thus defeat the purpose of the statute”.
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:
This is an appeal from a conviction for receipt of a firearm by a convicted felon under 18 U.S.C. § 922(h)(1). On appeal, the defendant asserts that the court committed reversible error in admitting testimony that the defendant on a prior occasion had been seen in possession of a gun. We agree with the defendant, and vacate the conviction and remand for a new trial.
On or about June 13,1981, the defendant, while driving his wife’s car, was stopped by police who had a warrant to search the defendant’s home for drugs. The police searched the trunk of the car and discovered a .38 caliber pistol and a .32 caliber pistol. At trial, the defendant testified that he did not know that either gun was in the trunk. The defendant further testified that the .38 caliber pistol belonged to a passenger in the car and the .32 caliber pistol belonged to his wife. On rebuttal in the order of proof at the trial, the prosecution put on evidence that the defendant had been seen in possession of a pistol some time during the first part of 1981, before June of that year. That pistol was not, however, one of the guns found in the car when the defendant was stopped in June 1981, and the .32 found in the car and the subject of count 2 of the indictment was the same .32 the defendant was charged with receiving in count .1, also in June 1981.
Evidence of other crimes or wrongs is not admissible for the purpose of proving that the defendant possesses a criminal character or otherwise had the propensity to commit the crime with which he is charged. Fed.R.Evid. 404(b). Lovely v. United States, 169 F.2d 386 (4th Cir.1948), is our leading case. If offered for certain other purposes, however, such evidence is admissible if the risk of undue prejudice is outweighed by its probative value. See, e.g., United States v. Masters, 622 F.2d 83, 86-87 (4th Cir.1980) (evidence admissible as a part of a complete conversation showing the context of the crime and the setting of the case); United States v. Sparks, 560 F.2d 1173, 1175 (4th Cir.1977) (evidence admissible to prove knowledge and intent); United States v. DiZenzo, 500 F.2d 263, 265 (4th Cir.1974) (evidence admissible to prove knowledge and intent); United States v. Samuel, 431 F.2d 610, 612 (4th Cir.1970), cert, denied, 401 U.S. 946, 91 S.Ct. 964, 28 L.Ed.2d 229 (1971) (evidence admissible to prove knowledge).
The government argues that the evidence at issue was admissible to show guilty knowledge on the part of the defendant. This argument, however, must be rejected. The possession by the defendant of a different gun on a previous occasion has no relevance to the issue of whether the defendant knew on the day he was stopped that the two pistols were in the trunk of his wife’s car, or that he knew that the chattel he received and was charged with in count 1 was a pistol. But the commission of the same bad act on a previous occasion is bound to have had the effect of tending to show that the defendant had the propensity to commit the crimes for which he was on trial.
We therefore conclude that it was error to admit the evidence. Moreover, because it cannot be said with fair assurance that the verdict “was not substantially swayed by the error, Kotteakos v. United States, 328 U.S. 750, 765, 66 S.Ct. 1239, 1248, 90 L.Ed. 1557 (1946), we must vacate the defendant’s conviction and remand for a new trial.
VACATED AND REMANDED.
. The defendant as a convicted felon was indicted in count 1 for receiving the .32 caliber pistol, under 18 U.S.C. § 922(h)(1), and for possession of both the .32 and a .38 caliber pistol, under 18 U.S.C.App. § 1202(a)(1). The jury found the defendant not guilty of possession of the .38, and the court set aside a verdict of guilty of possession of the .32 from which the government does not appeal, so the defendant stands convicted only of the receiving charge.
No issue is made of the search of the trunk of the car to which Tate apparently consented.
. The evidence was not offered to impeach the defendant who had testified that he had never possessed a gun; rather, the district court took the position that there was no issue of knowledge unless the defendant claimed an innocent explanation of the presence of the guns in the trunk of the car. Consistent with United States v. Ling, 581 F.2d 1118 (4th Cir.1978), no issue is made that the evidence was admissible for impeachment purposes.
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.
LINDLEY, Circuit Judge.
Ed Hughes Furniture Company, Inc., became a bankrupt in October, 1952. Plaintiff, H. H. Woodsmall Agency, Inc., filed its proof of secured claim on November 21, 1952. Thereafter, the Trustee in Bankruptcy filed his petition to disallow the claim as secured, which the Referee granted on October 1, 1953. Upon review, the District Court sustained the order. Thereupon, this appeal was prosecuted.
On February 8, 1952, the bankrupt was indebted to plaintiff for insurance premiums upon its stock of merchandise, in the sum of $2635.30. On that date, plaintiff loaned the bankrupt $15,000.00, taking therefor the debtor’s promissory note, deducting from the amount of the loan the sum of $2635.30 in full payment of its then due insurance premiums and paying the remainder to the bankrupt.
The note provided for monthly payments of $1,000.00, and acceleration of maturity in case of failure to pay any installment. To secure it, the bankrupt, simultaneously, executed a chattel mortgage upon all merchandise in its place of business at 317 East Washington Street, Indianapolis, Indiana, containing this provision: “said mortgagor agrees that in the event that there are any removals from said stock by reason of sale, same will be replaced with like or comparable merchandise so that said value shall at all times be maintained at Thirty five thousand Dollars ($35,-000.00) during the term of this agreement.” It included no other provision defining the duties, rights and privileges of the mortgagor with respect to the proceeds of sale of the merchandise.
The balance of the loan remaining after deducting the insurance premiums was deposited in the bank account of the bankrupt, as were proceeds from sales of merchandise from time to time thereafter. Out of the funds received on the note, the bankrupt paid the expenses of normal operation of its business, certain creditors and some installments on the purchase price of the business, which it had not yet fully paid for.
In July, 1952, plaintiff, claiming default on the part of the bankrupt, started foreclosure. On August 1, the two parties entered into an agreement providing that the suit remain in abeyance, and that the bankrupt make H. H. Woodsmall, individually, as escrow agent, certain payments. This it did, and these were applied on the mortgage, so that at the time of bankruptcy the debtor was indebted to plaintiff in the sum of $7,000.00.
After hearing the evidence, the Referee found, inter alia,, that the property covered by the mortgage was never “tagged” as to liens; that the bankrupt owned certain other merchandise stored in warehouses; that the proceeds of sales of merchandise purporting to be covered by the chattel mortgage, from February, 1952 to October 21, 1952, were used to pay operating expenses, including salary, and general indebtedness of the bankrupt; that there was no agreement between the mortgagor and mortgagee that the proceeds of sale of the property were to be “applied upon the mortgage debt”, or “subjected to the lien” thereof, or “used solely for the purpose” of paying the expenses of processing, marketing, or otherwise rendering merchantable or salablé the remaining property purporting to be covered by the mortgage; that after February 8, 1952, the bankrupt received proceeds from the sale of mortgaged property in sums in excess of the amount of the mortgage; that, at the time of the filing of the petition in bankruptcy, the bankrupt had as part of its inventory of salable merchandise some of its merchandise which was on hand February 1952, but that it was not possible to determine the amount and value thereof. The Referee concluded, as a matter of law, that plaintiff was not entitled to a secured claim, and filed a memorandum as to his conception of the controlling principles of the law, all of which was approved by the District Judge on review.
The validity of the chattel mortgage as against the creditors and the Trustee in Bankruptcy, who stands in the shoes of a judgment creditor armed with an execution, is to be determined from the Indiana Statutes. Section 5 of the Chattel Mortgage Act, Section 51-505, Burns’ Indiana Statutes, provides that any mortgage may validly include replacements of mortgaged property; Section 6, Section 51-506, Burns’ Indiana Statutes that a mortgage may validly provide that the mortgagor shall have the right to sell any of the mortgaged chattels “under the conditions stated in said mortgage”, if the proceeds are applied upon the mortgage debt or subjected to the lien of the mortgage. A further provision is that the mortgage will be valid if the proceeds are used solely for the purpose of paying for services of cultivating, harvesting, preparing for market, processing, marketing or otherwise preserving or rendering merchantable or salable the remaining property covered by the said mortgage. This last provision, however, we think, has no relevance to the issues before us.
This statute was passed in 1935. At an early date the Supreme Court had held, in Mobley v. Letts, 61 Ind. 11, that an arrangement whereby the mortgagor was allowed to remain in possession of a mortgaged stock of goods with power to sell the same, was presumed to be fraudulent if it lacked provision for the proper application of the proceeds of sale. The Indiana Legislature later amended the statute, and, accordingly, the earlier decision was overruled in McFadden v. Fritz, 90 Ind. 590, in which the court held that fraudulent intent cannot be presumed, but must be proved as a fact. In other words, the Indiana courts have not explicitly held any such mortgage valid but have decided that, prior to the amendment of 1935, in order to invalidate an instrument, the Fraudulent Conveyance Act, Burns’ Ann.St. § 33-409, required proof that the transaction was founded in fraud. The amendment of 1935 added the specific provisions we have mentioned. Whether it changed substantially the law existing prior thereto it seems unnecessary to decide. At all events it would seem clear that, in view of the express provisions of the statute which had not theretofore appeared in the Indiana laws, the amendment reflected a legislative intent to safeguard the dangers inherent in chattel mortgages upon stocks of merchandise by providing certain restrictions and limitations. At any rate, in In re Turley, 7 Cir., 92 F.2d 944, we held that, under the prior statute, in the absence of fraud, such a mortgage was valid. However, after commenting that it had been consistently held that in Indiana a mortgage containing an after-acquired property clause which permits the mortgagor to remain in possession and sell chattels in the course of business is not necessarily void, Judge Major added, 92 F.2d at page 946: “If an agreement exists, however, by which the mortgagor can sell the goods and divert the proceeds from the business or that the mortgagor did so with the knowledge of the mortgagee, then no valid lien attaches to after-acquired property.” (Citing Indiana cases.) (Emphasis supplied.) Under this holding, then, we have decided that, before the amendment, if there was an agreement by which the mortgagor could sell the goods and divert the proceeds from the mortgagee indiscriminately, no lien would attach to the after-acquired property. In Helms v. American Security Co. of Indiana, 216 Ind. 1, 22 N.E.2d 822, the 1935 statute was involved, but that case furnishes little light on the question before us, as the holding there was that such a mortgage was void as against an innocent purchaser from the mortgagor.
The Referee, in his memorandum, said that he was dealing with a chattel mortgage on a shifting stock of merchandise, where the mortgagor retained possession and had the right to sell and use the proceeds of sale; that such a transfer is ordinarily held invalid, citing In re Baumgartner, 7 Cir., 55 F.2d 1041, and Benedict v. Ratner, 268 U.S. 353, 45 S.Ct. 566, 69 L.Ed. 991; that, under the Indiana statute as amended, such a mortgage is valid provided the proceeds of the sale are applied upon the mortgage debt, or are subjected to the lien of the mortgage; that in the present case the mortgagor agreed that if there were any removals of merchandise, the same should be replaced with like or comparable merchandise, but that there was no provision in the instrument controlling disposition of the proceeds of sale. Consequently, he concluded that, under the mortgage, the bankrupt had the right to dispose of the goods and to apply the proceeds thereof to its own use without restriction, and that this was beyond the sanctions of the Indiana statute. He concluded, further, that, inasmuch as the mortgage did not conform to the requirements of Section 51-506 of the Indiana Act of 1935, it was voidable at the suit of the Trustee in Bankruptcy
After careful examination of the record and the Indiana Statute and authorities, although there is no Indiana decision directly in point upon the proper interpretation of the statute involved, we are of the opinion that the Referee and the Court properly decided the question presented. The amended statute explicitly limits the right of a mortgagee to a valid mortgage upon a stock of merchandise to instances where the mortgagor, by “the conditions stated in said mortgage” is obligated to apply the proceeds of sale upon the mortgage debt, or to subject the same to the lien of the mortgage. The mortgagee here has not brought itself within the mandate of this statute by prescribing the obligations of the mortgagor in “the conditions” of the mortgage. Rather, it has permitted the bankrupt to sell merchandise without having the proceeds applied upon the mortgage or without having provided that the proceeds of the sale be subjected to the mortgage. It made no such provision in its mortgage. From the cash it received, the bankrupt has paid part of the purchase price it owed to other persons; it has paid creditors; it has paid salaries and other running expenses of the business. The mortgage does not conform to the requirements of the statute.
In view of our conclusions, it is unnecessary to discuss other points.
The judgment is
Affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
OPINION OF THE COURT
MANSMANN, Circuit Judge.
In this contract matter we are asked to resolve a dispute which requires interpretation of the National Bituminous Coal Wage Agreements of 1981 and 1984. Specifically, we must determine whether the employer, Beth Energy Mines, Inc. (“Beth Energy”) and its predecessors are obligated, under the terms of the Agreements, to credit the Trustees of the United Mine Workers Pension Trust of 1950 and 1974 and Benefit Plan and Trust of 1950 and 1974 (“the Trustees” and “the Funds”) with contributions for lunch periods worked by Beth Energy employees. Because we find that the district court correctly concluded that resolution of this dispute is controlled by our decision in Connors v. Consolidation Coal Co., 866 F.2d 599 (3d Cir.1989), we will affirm the district court’s grant of summary judgment mandating contributions to the Funds. We also find that the district court correctly determined that certain of the Trustees’ claims are time-barred, and will, therefore, affirm the district court’s entry of partial summary judgment in favor of Beth Energy, limiting the Trustees’ recovery to those contributions due after March 11, 1984. Finally, we find no error in and will affirm the district court’s calculation of interest and damages.
I.
The historical facts are straightforward. On March 11, 1987, the Trustees of four collectively bargained employee benefit trust funds filed suit against Beth Energy under the Labor-Management Relations Act and the Employee Retirement Income Security Act in the United States District Court for the Eastern District of Pennsylvania. The Trustees alleged that Beth Energy and its predecessors had failed to make required contributions to the Funds for a period beginning in November, 1983. Specifically, the Trustees alleged that Beth Energy had violated the terms of the National Bituminous Coal Wage Agreements of 1981 and 1984 (“the Wage Agreements”) in failing to make contributions to the Funds for “worked lunch hours.” The Trustees contended that in addition to making contributions based upon a normal eight-hour workday, Beth Energy was required to make contributions to the Funds, on a cents per hour basis, for each 30 minute period worked by a miner in lieu of his regular, contractually mandated lunch break. The miner receives premium pay (IV2 times the normal hourly rate) for working through the lunch period.
In November, 1983, Beth Energy modified its method of accounting for worked lunch hours by moving them from an accounting category, “Hours 1,” to which the contribution obligation applied, to another category, “Hours 4,” for which it was not required to make contributions. The Trustees contended that this change in the method of accounting for worked lunch hours was first discovered by them in February or March, 1985, after the Funds audited the books of a Beth Energy predecessor, Beth Elkhorn Corporation. The Trustees objected to this change, arguing that Beth Energy’s revised accounting for worked lunch hours and the concommitant cessation of contributions to the Funds based upon these hours, violated the terms of the Wage Agreements. Relying primarily upon the same agreements, Beth Energy denied that it had any obligation to contribute to the Funds as a result of worked lunch hours.
In January, 1988, the parties filed cross-motions for summary judgment. On October 14, 1988, the district court determined that it would delay ruling on these motions pending our potentially dispositive decision in Consolidation Coal. Consolidation Coal, which involved the identical Funds and Wage Agreements, required that we determine whether another signatory to the Wage Agreements, Consolidation Coal, was required to make contributions to the Funds for worked lunch hours.
In our January 24, 1989 decision in Consolidation Coal, we held that the employer was obligated to make contributions to the Funds based on worked lunch hours. On March 13, 1989, the district court granted summary judgment in favor of the Trustees in the case now before us; finding Consolidation Coal to be controlling, the district court ruled that Beth Energy was required to base its contributions to the Funds, in part, on worked lunch hours.
Having concluded that contributions were required, the district court gave separate consideration to a motion for partial summary judgment filed by Beth Energy on the issue of limitations. In that motion, Beth Energy contended that all claims for worked lunch hour contributions arising prior to March 11, 1984 were barred by the applicable three-year statute of limitations. The court rejected the Trustees’ claim that the limitations period was subject to equitable tolling and granted Beth Energy’s motion.
In setting the total amount of contributions owed to the Funds, the district court denied Beth Energy’s motion to reduce the award by an amount equal to the interest and liquidated damages which had continued to mount in the days pending our decision in Consolidation Coal and during an extension of time for discovery.
The final order was entered on October 10, 1989, and these cross appeals followed. Beth Energy appeals the determination that it is liable to the Funds for worked lunch hours and challenges the district court’s calculation of interest and liquidated damages. The Trustees appeal the district court’s refusal to apply the doctrine of equitable tolling in order to stay the applicable statute of limitations.
II.
Our resolution of the issues raised on appeal requires that we look first to the district court’s determination that Beth Energy was, in fact, required to make contributions to the Funds on the basis of lunch hours worked. Our review of the grant of summary judgment on this issue is plenary. Goodman v. Mead Johnson and Co., 534 F.2d 566, 573 (3d Cir.1976), cert. denied, 429 U.S. 1038, 97 S.Ct. 732, 50 L.Ed.2d 748 (1977).
In concluding that the terms of the Wage Agreements required that Beth Energy contribute to the Funds for worked lunch hours, the district court relied primarily on our decision in Consolidation Coal. There we were called upon by the same Funds, referencing the same Wage Agreements, to decide the same issue as that presented here. We concluded there that Consolidated Coal, another signatory to the Agreement, was required to “make contributions to the employee benefit trust fund for ‘worked lunch hours’.” 866 F.2d at 600. Despite the fact that this matter involves a different signatory, we find that the district court’s reliance upon Consolidation Coal was well-placed and that much of the reasoning of Consolidation Coal is applicable in this litigation.
Here, as it was in Consolidation Coal, our first point of reference in determining how the parties intended to treat worked lunch hours for purposes of contributions to the Funds must be the Agreements themselves. Mellon Bank, N.A. v. Aetna Business Credit, Inc., 619 F.2d 1001 (3d Cir.1980). Both parties rely on Articles IV and XX of the 1984 Agreement in support of their worked lunch hours position.
Article IV(b)(l) defines the concept of “work day” within the meaning of the Wage Agreement:
For all inside Employees, a work day of eight (8) hours from portal-to-portal which means collar to collar or bank-to-bank is established including a staggered thirty (30) minutes for lunch, and without any intermission or suspension of operation throughout the day. For inside day workers these eight (8) hours per day and forty (40) hours per week shall be paid for at time and one-half.
App. at 67a.
Article XX of the 1984 Agreement is also relevant as it creates and defines the employer’s obligation to make contributions to the Funds on the basis of hours worked. Section (d)(l)(vii) of this Article provides, in pertinent part:
[H]ours of work for purposes of Employer contributions to the plans and trusts described in this Article shall include all hours worked, or fractions thereof, by Employees in a classified job covered by this Agreement. Hours actually worked for which a premium pay of any type is provided shall be treated for purposes of Employer contributions to the Trusts as though worked on a straight time basis.
App. at 77a.
Construing these provisions in Consolidation Coal, we concluded that in failing to make Fund contributions for worked lunch hours, the employer had failed “to account for the miner’s contractual entitlement to a half-hour lunch period during which he is not required to work,” and that,
“[WJhen an employer requests a miner to forego his contractual right to a lunch period, the employer cannot expect to gain the extra one-half hour of employee productivity without the concurrent responsibility to contribute to that employee’s pension and health funds.”
This outcome is consonant with the provisions of the wage agreements and with industry practice.
866 F.2d at 602 (footnotes omitted).
While the Trustees argue that our interpretation of the Wage Agreements in Consolidation Coal is determinative of the worked lunch hours issue, Beth Energy contends that a number of factors remove this case from the reach of Consolidation Coal. Beth Energy first asserts that under the terms of Articles IV and XX of the Wage Agreements, it has no monetary obligation to the Funds based on worked lunch hours. Beth Energy argues essentially that while an employee may forego his contractually scheduled lunch period, this does not mean that he does not eat lunch; in the interest of production efficiency, the miner simply eats lunch at a time later than he otherwise would have. The total amount of time worked is the same. Beth Energy compensates the miner at a premium rate, not because he works longer, but because his delaying lunch increases the efficiency of the mining operation.
Beth Energy claims that when the contract terms are evaluated, in light of actual worked lunch hour practice, it is clear that no additional contribution is required. Beth Energy focuses upon Article IV(b) of the wage agreement which defines the “basic” work day as eight hours portal-to-portal. Uninterrupted staggered thirty minute lunch periods are included in this eight hour period. Beth Energy then argues that Article XX establishes that the hours actually worked (the portal-to-portal hours) —and only those hours — trigger the contribution obligation. Thus, a miner who delays his regularly scheduled lunch hour and, in reality, does no additional work, is entitled only to contribution for the eight hours of portal-to-portal time; no contribution is required because no additional hours are worked. Beth Energy buttresses this position by relying on the testimony of collective bargaining negotiators to the effect that contributions to the Funds were intended to be based only on actual “clock time”; contributions were not intended to be based on premium pay where that premium pay was not the result of an increase in the number of hours worked.
This argument does not persuade us any more than it did the district court. During these proceedings to the point of our decision in Consolidation Coal, Beth Energy consistently defined the “worked lunch hour” as “the practice of an employee foregoing his or her uninterrupted lunch period in exchange for premium pay.” See, e.g., App. 113a, 173a, 262-263a, 341a, 422a, 502a, 543a and 605a. It was only after our decision in Consolidation Coal that Beth Energy explained that this term really means “delayed lunch hour.” This redefinition renders the phrase “worked lunch hour” meaningless.
We believe that neither Beth Energy’s practice of awarding premium pay for the worked lunch hour nor its accounting for these lunch hours under “Hours Four” squares with this redefinition. In our view, the fact that Beth Energy provides premium pay for “worked lunch hours” suggests that the miner, in foregoing his contractually scheduled lunch hour, is conferring something of special value upon Beth Energy or is giving up something of value to which he is contractually entitled. In working through the scheduled lunch break, it seems clear that the employee does something which the Wage Agreements do not require him to do and is, therefore, entitled to additional compensation. It is also clear that the Wage Agreements contemplate that there will be times when contributions are due on hours for which the miner is paid at a premium.
Article XX(d)(l)(vii) of the Wage Agreement provides that:
[h]ours actually worked for which a premium pay of any type is provided shall be treated for purposes of Employer contributions to the Trust as though worked on a straight-time basis.
App. at 77a. The miner does actually work through his contractual lunch period and is provided with premium pay. The plain language of the Agreement establishes that contributions are due on a straight-time basis.
In concluding that Beth Energy is obligated to the Funds for worked lunch hours, we have also found it significant that, in accounting for worked lunch hours in the category “Hours 4,” Beth Energy reported these hours as overtime hours for purposes of awarding pension credit. Employee pay stubs also reflect credit for overtime. App. at 392a. This accounting for the hours in question implies recognition on the part of Beth Energy that extra work is being performed. If, as Beth Energy claims, the worked lunch hour issue involves nothing beyond juggling of lunch periods, we find it difficult to understand why Beth Energy would provide premium pay and report worked lunches as overtime for pension credit purposes. In sum, we find nothing in Beth Energy’s actual worked lunch hour practice which would support our deviating from the construction given the identical provisions of the Wage Agreements in Consolidation Coal.
We find no merit to Beth Energy’s contention that this case is distinguishable from Consolidation Coal in that the record here, unlike the record in Consolidation Coal, contains persuasive evidence relating to the collective bargaining history of the Wage Agreements. We think that the district court was correct in finding “no material difference between the evidence of bargaining history before the Court of Appeals in Consolidation Coal and the evidence of bargaining history before this court.” Connors v. Beth Energy Mines, Inc., No. 87-1392, 1989 WL 21328 (E.D.Pa., March 13, 1989) at 6.
Finally, we reject Beth Energy’s argument that evidence relating to industry practice with respect to worked lunch hours was improperly considered by the district court. In an affidavit made by Judy L. Lance, the Fund’s Audit Manager, Lance stated that her audit review of the top 40 contributors to the Funds revealed only three instances in which the auditors identified underpayment of contributions to the Funds because of improper reporting of worked lunch hours.
Beth Energy contends that the Trustees gave up the right to rely on this affidavit and any other evidence of industry practice when they refused to answer Beth Energy’s Interrogatory 16. The Trustees declined to answer this interrogatory, which sought identification of employers determined by audit to have credited lunch hours improperly, on the ground that “a response would serve no purpose.” Based upon this refusal, Beth Energy contends that “through that sworn discovery statement, the Funds ... effectively stated that industry practice is irrelevant to this case.”
We do not believe that the Trustees’ refusal to answer the interrogatory posed mandated the district court to refuse consideration of evidence relevant to industry practice. Given the Trustees’ rather vague response to the interrogatory, Beth Energy certainly could have sought clarification of the Trustees’ intent to rely on industry practice, moved to compel discovery, or countered the material set forth in the affidavits.
In sum, we find nothing in the record before us which would remove this case from the holding in Consolidation Coal and will, therefore, affirm the district court’s determination that Beth Energy is required, under the terms of the Wage Agreements, to make Fund contributions based upon worked lunch hours.
III.
Having concluded that Beth Energy is liable to the Funds for worked lunch hour contributions, we must next determine the extent of that liability. Relying on the applicable three year statute of limitations, the district court granted Beth Energy’s motion for partial summary judgment and limited the Funds’ recovery to those contributions which were due from March 11, 1984 forward. The Funds argue that the district court erred in failing to apply the doctrine of equitable tolling to stay the running of the statute. Our review is plenary. In re Japanese Electronic Products Antitrust Litigation, 723 F.2d 319 (3d Cir.1983).
Under Pennsylvania law governing the doctrine of equitable tolling, it is clear that “the courts have not required fraud in the strictest sense, encompassing an intent to deceive, but rather have defined fraud in the broadest sense to include an unintentional deception.” Nesbit v. Erie Coach Co., 416 Pa. 89, 96, 204 A.2d 473, 476 (1964). Even under this broad interpretation of fraud, however, it is clear that, in order for the doctrine of equitable tolling to apply, the defendants’ actions must have amounted “to an affirmative inducement to plaintiff to delay bringing the action.” Ciccarelli v. Carey Canadian Mines, Ltd., 757 F.2d 548, 556 (3d Cir.1985). The intent of the defendant in making this affirmative inducement is irrelevant; “it is the effect upon the plaintiff, not the intention of the defendant, that is pertinent.” Swietlowich v. County of Bucks, 610 F.2d 1157, 1162 (3d Cir.1979).
The burden of proving fraud or concealment, whether intentional or not, rests upon the party making the claim. The evidence presented must be clear, precise and convincing. “[M]ere mistake, misunderstanding, or lack of knowledge is not sufficient to toll the statute of limitations.” Molineaux v. Reed, 516 Pa. 398, 403, 532 A.2d 792, 794 (1987).
Our review of the record reveals no “clear, precise and convincing evidence” to establish that Beth Energy acted intentionally to mislead the Trustees in revising its method of accounting for worked lunch hours. The inquiry thus becomes whether Beth Energy has engaged in unintentional deception. The Funds argue that Beth Energy’s change in the reporting of worked lunch hours without notification to the Funds constituted an affirmative act which had the effect of deceiving the Funds so that suit was delayed. The Trustees argue that “through no fault of their own, the Trustees were unaware of Beth Energy’s practice of misreporting worked lunch hours and, thus, were unaware of their claim for delinquent contributions.” The claim was not discovered until 1985 when the Funds conducted an audit of Beth Elk-horn records.
In our view, the record does not support the Trustees’ construction of the facts. We recognize that there is serious disagreement over whether the Funds were notified or became aware of the change in accounting for worked lunch hours at some time prior to the 1985 audit. The precise details of this disagreement are not relevant to this discussion, however, because we find that, even on the basis of what is undisputed, the Funds are not entitled to invoke the doctrine of equitable tolling.
The parties agree that at all times relevant to this action, Beth Energy supplied the Funds with bi-weekly magnetic tape reports which contained detailed information on Beth ■ Energy’s accounting for worked lunch hours. In these reports, hours were divided by type, individual employee, and location. It is undisputed that these tapes reflected the change in accounting for worked lunch hours as soon as the change was made. The Trustees admit that the tapes’ “breakdown of hours type included Beth Energy’s reporting of worked lunch hours as union committee time” but argue that “consistent smaller misrepresentations are much more difficult to detect than a one-time large anomaly in reporting.” We believe that while this may be so, these tapes were sufficient to put the Trustees on notice of claims based upon the misreporting of worked lunch hours.
As the Trustees have noted, even under accrual of actions and equitable tolling rules, the limitations period begins to run at the point where the plaintiff knew or should have known of the cause of action. See, e.g., Keystone Insurance Co. v. Houghton, 863 F.2d 1125, 1129 (3d Cir.1988) (accrual), and Vernau v. Vic’s Market, Inc., 896 F.2d 43 (3d Cir.1990) (Pennsylvania tolling principles). In light of the bi-weekly reports reflecting the change in accounting for worked lunch hours, we find that the Trustees should have become aware, in the exercise of reasonable dil-igenee, of claims arising from accounting for worked lunch hours, prior to the 1985 audit. We will, therefore, affirm the district court’s conclusion that those claims based on misreporting of worked lunch hours prior to March 11, 1984, are time-barred.
IV.
The final issue which we are called upon to address involves the district court’s award of and Beth Energy’s challenge to interest and liquidated damages incurred during periods of court-imposed delay. Beth Energy argues that in enacting ERISA, Congress did not contemplate that damage and interest assessments would continue during the period of delay which resulted from the district court’s suspending these proceedings pending our decision in Consolidation Coal. Beth Energy also argues that interest and damages should not have been assessed during a period of extension of time for discovery requested by the Trustees which amounted to 103 days for which interest and damages were calculated at $34,533.44. We are asked to rule that the district court’s assessment of this amount was error and that no interest or liquidated damages are due for the court-imposed periods of delay. Here, too, our review is plenary. Universal Minerals, Inc. v. C.A. Hughes & Co., 669 F.2d 98, 101-02 (3d Cir.1981).
In order to resolve this question, we look to 29 U.S.C. § 1132(g)(2) which provides that, under ERISA, interest on unpaid contributions and liquidated damages will be awarded to a retirement plan in any successful action based upon delinquent contributions. We have held that the statutory language is clear; the award of damages and interest is mandatory. United Retail and Wholesale Employees Pension Fund v. Yahn and McDonnell, Inc., 787 F.2d 128, 134-35 (3d Cir.1986).
Beth Energy is unable to provide us with any authority in support of its proposition that the damage and interest award becomes discretionary during periods of delay not attributable to the defendant. Because we find no reason to believe that we are not bound by the mandatory language of the statute, we will affirm the district court’s award of interest and liquidated damages.
V.
Having found no error in the district court’s application of our holding in Consolidation Coal to the facts of this case, in its determination that claims prior to March 11, 1984 are time-barred, or in its calculation of interest and damages, we will affirm the judgment of the district court.
. These four funds were established in order to provide pension, health, and other welfare benefits to certain miners and their dependents. The levels of benefits to be paid and relevant eligibility requirements are negotiated by the parties to the Wage Agreements. Benefits are paid from contributions made by signatory employers in accordance with formulae set forth in the Wage Agreements.
. The Trustees also sought contributions for so-called “grievance-hours.” The grievance hour claims are not at issue here.
. The Beth Energy hours accounting system was derived from an instruction booklet prepared by the Funds in conjunction with the parties to the Wage Agreements. The booklet identified four basic categories into which employee hours might fall. “Hours 1" was defined to “[include] all hours worked, or fractions thereof, by all employees. Hours 1 must include all shift time paid for (portal to portal, lunch time, etc.) as such time is specified in the Agreements.” Contributions to the Fund were required for each hour listed in this category. “Hours 2” represented “all time for which employees are paid by the employer but during which no classified work is performed.” This category was to include time spent for vacation, holidays, jury duty, bereavement, etc. “Hours 3" represented sickness and accident hours not paid for by the employer, and “Hours 4" was to include contractual union committee work hours. No Fund contributions were required for Hours 2, 3, or 4. Employees did, however, receive vesting credit and benefit accrual for Hours 3 and 4.
.The record reflects a vigorous factual dispute over when the Funds became aware of the change in accounting procedure. Beth Energy contends that the Trustees were notified of the change late in 1983 or 1984. Our analysis does not require that we determine which view of the facts is correct.
. The underlying purposes of federal labor policy are best served where the collective bargaining agreement is interpreted and enforced uniformly. See Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 211, 105 S.Ct. 1904, 1911, 85 L.Ed.2d 206 (1985).
. The district court noted that it had before it the affidavit of Roger Haynes, a participant in the collective bargaining process underlying the Wage Agreements. The Haynes testimony relative to bargaining history was also available to us in Consolidation Coal.
. In reaching this conclusion, we have not overlooked Internal Operating Procedure 9.1 which provides that no subsequent panel overrules a published opinion of a previous panel. Rather, we do not regard that procedure as controlling as our decision in Consolidation Coal was predicated on the undisputed facts in that record which were employed to interpret the contract. Beth Energy was not a party to that litigation. We regard Internal Operating Procedure 9.1 as applying to rules of law.
. The parties do not dispute that the three year statute of limitations set forth in Pennsylvania’s Wage Payment Collection Law, 43 Pa.Stat.Ann. § 260.9a(g) (Purdon Supp.1985) is controlling. This issue was resolved in Consolidation Coal, 866 F.2d at 604.
. We are aware that our affirmance on the equitable toiling issue rests on an analysis different from that employed by the district court. While we believe that the district court may have placed undue emphasis on the issue of intent to deceive, we are confident that the result reached was correct and that any error was harmless.
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.
HAYS, Circuit Judge:
The National Labor Relations Board filed this application for enforcement of its order directing respondent Local 810 to cease and desist from conducting a secondary boycott in violation of Section 8(b) (4) (i) and (ii) (B) of the National Labor Relations. Act, 29 U.S.C. § 158(b) (4) (i) and (ii) (B) (1970). The charging parties, Sid Harvey, Inc. and Sid Harvey Brooklyn Corp., intervened, urging that the application be granted. The Union cross-petitioned to set aside the Board’s order. We deny enforcement of the Board’s order and grant respondent’s cross-petition to set it aside.
I. The Facts
The Trial Examiner’s findings of fact were adopted by the Board and are supported by substantial evidence. These findings establish the following:
A. The Initial Dispute
An employee of Sid Harvey Supply, Inc. was discharged on February 20, 1970, and the Union went on strike after the company refused to reinstate him. The Union began picketing Supply that day, and on March 10 commenced picketing Sid Harvey, Inc. In May and June, members of the Union picketed and distributed handbills in front of stores operated by Sid Harvey Brooklyn Corp., Sid Harvey Nassau, Inc., and Sid Harvey Suffolk, Inc. The picket signs and leaflets, and the verbal exhortations of the pickets, requested the public not to buy Sid Harvey products. The pickets were successful in persuading some of the potential customers of one store operated by Nassau not to patronize that store, and also prevailed on carriers not to make deliveries to Inc. and Brooklyn. On June 11 the Union discontinued the picketing of Inc., Brooklyn, Nassau, and Suffolk after the United States District Court for the Eastern District of New York temporarily enjoined the Union from picketing the four corporations in violation of § 8(b) (4) (i) and (ii) (B).
B. Relationships Among the Sid Harvey Companies
1. Structure and Operations
Supply, the company which the Union struck, and the four companies the Union picketed before the issuance of the temporary injunction, are a part of a complex of interrelated corporations operating on a nationwide basis. The Sid Harvey corporations are engaged in the reconditioning, distribution, and sale of air conditioning and heating equipment to trade users. While the Sid Harvey corporations are not totally interdependent, they constitute what is essentially a vertically integrated operation, or to use the popular term for their relationship to each other, they are engaged in a straight-line operation.
The keystone of the Sid Harvey organization is Inc., located in Valley Stream, Long Island. Inc., and Sid Harvey Midwest, Inc., located in Illinois, are engaged in the business of rebuilding and reconditioning air conditioning and heating equipment and parts for such equipment. Inc. obtains the used equipment that it rebuilds from the sales companies within the Sid Harvey group.
The equipment rebuilt by Inc. is warehoused and then distributed by Supply to the various Sid Harvey sales companies. Supply does not distribute only Inc. goods, but all of Inc.’s goods are distributed by Supply. Supply distributes only to sales companies within the Sid Harvey group.
Although the record is not entirely clear, it appears that there are approximately 20 sales companies in the Sid Harvey group, many of which, like Nassau, Brooklyn, and Suffolk, have corporate names containing the words “Sid Harvey.” These sales companies receive from Inc. via Supply all the rebuilt equipment they sell. The greater part of the new equipment sold by the sales companies is obtained indirectly from the manufacturers through Supply, with the remaining portion obtained directly from manufacturers. Thus, of Nassau’s sales, 40% represents sales of Inc.’s rebuilt equipment, and 60% is of new equipment; 60% of the new equipment sold is obtained through Supply. The corresponding figures for Brooklyn are 20%, 80%, and 85-90%, and for Suffolk are 33%, 67%, and 70%.
2. Control
Stephen Harvey owns 100% of the voting stock of Inc., and is chairman of the board of directors, president, and treasurer. Supply is owned by fourteen Sid Harvey sales companies located in the Northeast. Stephen Harvey has voting control of nine of these sales companies, including Brooklyn and Nassau. Collectively those nine own 73% of the stock of Supply. Stephen Harvey is chairman of the board and an officer of each of these sales companies, and is chairman of the board and treasurer of Supply. Although Stephen Harvey has a commanding position in the interlocking corporate structure of the Sid Harvey group, the Trial Examiner found that he “has no actual day-to-day duties in any of these corporations except Inc.”
3. Corporate Policy and Functional Relationships
Much of the hearing and a large part of the opinion of the Trial Examiner were devoted to an examination of policies, practices, and working conditions within the various Sid Harvey corporations. In view of the basic questions raised by a suit of this nature, a good deal of what the Trial Examiner concerned himself with was of marginal relevance and dubious materiality.
The Trial Examiner found that some of Inc.’s marketing activities are conducted in the building where Supply has its offices, although the areas in which the two corporations are located “are separated by partitions and lockable doors (which are open during working hours), and the employees of each company have separate entrances and separate restrooms.” The two pay rent directly to the landlord, a partnership in which Stephen Harvey “has an interest,” as he does in all the partnerships from which companies in the Sid Harvey group rent land and facilities. The two corporations located in the one building utilize a common switchboard, and Inc. pays Supply a service fee for “some minor services” such as janitorial work. All the companies in the Sid Harvey group have the same hospital, medical, group life, and automobile liability policies. Occasionally an employee of one of the companies will take a job with another Sid Harvey company. One accounting firm served all the Sid Harvey corporations and it “prepared an office manual of standard operating procedures.” However the companies were not required to use the manual.
The Trial Examiner compared the working conditions at Supply and Inc. and found:
“Although [the Union] showed a number of working conditions in common among the employees of Inc. and Supply, [including “the same system of rating jobs, the same work hours and two 10-minute rest periods, the same number of holidays, Christmas bonuses based upon length of service, the same profit-sharing program”] there were also many working conditions that were different between the two groups .... The two groups had different rules for qualification of overtime, different sick pay and disability benefits, and other benefits. Supply has no pension plan; Inc. does. Inc. has a cash attendance award. Supply does not. Inc. has a savings plan for employees; Supply does not. There are differences in the rules on ‘tardiness,’ smoking, making telephone calls, working on Election Day, to mention a few.”
More important for the question presented by this case, the Trial Examiner and the Board found that once a year “the presidents and some other top executives” of the Sid Harvey group of companies meet to discuss problems common to the companies. The Board found that at the May, 1970 meeting the strike at Supply was discussed, but “there was no proof that overall policies resulted from these meetings, particularly no overall labor policy or personnel policy.”
In addition the Board found that Stephen Harvey had personally fired two presidents of two Sid Harvey companies, and that he actively oversaw and controlled the financial aspects of the Sid Harvey companies. Inc. publishes a monthly news letter, “Renews,” which the Trial Examiner termed a “house organ.” This house organ contains news about people in the various Sid Harvey companies as well as corporate news. Its content reveals that the personnel of the companies considered themselves to be engaged in interlocking business activities in an interrelated corporate structure.
II. The Decision of the Board
The Board, adopting the Trial Examiner’s decision, stated that the question of whether the Union had violated § 8(b) (4) (i) and (ii) (B) by picketing Brooklyn, Suffolk, Nassau, and Inc. turned on whether the related companies were so closely allied as not to be “other employer [s]” within the meaning of that section. The Board said:
“On the ‘ally’ issue the precise question is whether the corporations were under the actual control of Stephen Harvey, as distinguished from his potential control.”
The Board found
“[u]pon all. the above facts and considerations and the entire record in the case considered as a whole . . . that despite the cooperation and mutual assistance among the various corporations directly involved herein, there is not that appreciable degree of integration of management and day-to-day operations between Supply, the primary employer, and the others, as to make them allies and deprive Inc., Brooklyn, Nassau, and Suffolk of the protection of Section 8(b) (4) of the Act.” (Emphasis added.)
In so holding, the Board relied heavily on the conclusion, that, despite Stephen Harvey’s dominant position in the corporate structures of Inc., Supply, and the various Sid Harvey sales companies, he did not actually control the daily operations of all these companies. In addition, in considering the differences in the working conditions and benefits of Supply, Inc., and the sales companies, the Board assumed that if the management and operations of the Sid Harvey group were integrated on a day to day basis, all working conditions and benefits — such as smoking rules and disability benefits — would be the same, regardless of the function or size of the individual company.
III. Section 8(b) (4) and the Neutral Secondary Employer
The question presented for decision by the Board was whether the four secondary employers picketed by the Union were in fact the same employer within the meaning of § 8(b) (4) (i) and (ii) (B), which provides:
“(b) It shall be an unfair labor practice for a labor organization or its agents—
******
(4) (i) to engage in, or to induce or encourage any individual employed by any person engaged in commerce or in any industry affecting commerce to engage in, a strike or a refusal in the course of his employment to use, manufacture, process, transport, or otherwise handle or work on any goods, articles, materials, or commodities or to perform any services; or (ii) to threaten, coerce, or restrain any person engaged in commerce or in an industry affecting commerce, where in either case an object thereof is—
(B) forcing or requiring any person to cease using, selling, handling, transporting, or otherwise dealing in the products of any other producer, processor, or manufacturer, or to cease doing business with any other person, or forcing or requiring any other employer to recognize or bargain with a labor organization as the representative of his employees . Provided, That nothing contained in this clause (B) shall be construed to make unlawful, where not otherwise unlawful, any primary strike or primary picketing . . . . ”
The question presented in this case is whether the Board applied the correct legal test and whether it could properly conclude, on the basis of the evidence in the record that the four employers picketed by the Union were “other employer [s]” within the meaning of the Act.
Section 8(b) (4), as amended, was enacted to prevent the widening of a labor dispute to entangle employers who had no concern with the original dispute. To this end Congress prohibited unions from engaging in secondary boycotts, that is “pressure tactically directed toward a neutral employer in a labor dispute not his own.” National Woodwork Mfrs. Ass’n v. N. L. R. B., 386 U.S. 612, 623, 87 S.Ct. 1250, 1257, 18 L.Ed.2d 357 (1967) (footnote omitted). The broad policy objective of this section is “the protection of neutrals against secondary pressure . . . .” Id. at 627, 87 S.Ct. at 1259 (emphasis added) “Congressional concern over the involvement of third parties in labor disputes not their own prompted § 8(b) (4) (B). This concern was focused on the ‘secondary boycott,’ which was conceived of as pressure brought to bear, not ‘upon the employer who alone is a party [to a dispute], but upon some third party who has no concern in it’ ” (footnotes omitted). N. L. R. B. v. Local 825, Int’l Union of Operating Engineers, 400 U.S. 297, 302-303, 91 S.Ct. 402, 406, 27 L.Ed.2d 398 (1971). The basic question in this case is whether in fact Inc., Nassau, Brooklyn, and Suffolk were neutral third parties in the dispute between respondent Union and Supply. N. L. R. B. v. Local 810, Steel Fabricators, 299 F.2d 636, 637 (2d Cir. 1962); N. L. R. B. v. Milk Drivers Local 584, 341 F.2d 29, 32-33 (2d Cir.), cert. denied, 382 U.S. 816, 86 S.Ct. 39, 15 L.Ed.2d 64 (1965).
In determining whether an employer is in fact a neutral in a labor dispute, the courts have considered such factors as the extent to which a corporation is de facto under the control of another corporation, the extent of common ownership of the two employers, the integration of the business operations of the employers, and the dependence of one employer on the other employer for a substantial portion of its business. See, e. g., Carpet Layers Local 419 v. N. L. R. B., 429 F.2d 747, 752 (D.C. Cir. 1970); N. L. R. B. v. General Teamsters Local 126, 435 F.2d 288, 291 (7th Cir. 1970); Truck Drivers Local 728 v. Empire State Express, Inc., 293 F.2d 414, 423 (5th Cir.), cert. denied, 368 U.S. 931, 82 S.Ct. 365, 7 L.Ed.2d 194 (1961); N. L. R. B. v. Somerset Classics, Inc., 193 F.2d 613, 615 (2d Cir.), cert. denied, 344 U.S. 816, 73 S.Ct. 10, 97 L.Ed. 635 (1952).
As the court said in Vulcan Materials Co. v. United Steelworkers of America, 430 F.2d 446, 451, 453 (5th Cir. 1970), cert. denied, 401 U.S. 963, 91 S.Ct. 974, 28 L.Ed.2d 247 (1971):
“In the final analysis, however, the question of neutrality cannot be answered by the application of a set of verbal formulae. Rather, the issue can be resolved only by considering on a case-by-case basis the factual relationship which the secondary employer bears to the primary employer up against the intent of the Congress as expressed in the Act to protect employers who are ‘wholly unconcerned’ and not involved in the labor dispute between the primary employer and the union.
* * * * * *
In determining whether the relationship of a secondary employer and a primary employer is such as to destroy neutrality, the court must look to the essence of the relationship, and not to its incidental trappings.”
See also Local 24, Int’l Bhd. of Teamsters v. N. L. R. B., 266 F.2d 675, 680 (D.C. Cir. 1959). The Supreme Court has cautioned against the mechanical application of tests which obscures the “central theme” — neutrality—of this section. Nat’l Woodwork Mfrs. Ass’n v. N. L. R. B., supra, at 625, 87 S.Ct. 1250. See also Local 761, Intern Union of Electrical, etc., Workers. v. N. L. R. B., 366 U.S. 667, 677, 81 S.Ct. 1285, 6 L.Ed.2d 592 (1961). Cf. N. L. R. B. v. Denver Building & Construction Trades Council, 341 U.S. 675, 71 S.Ct. 943, 95 L.Ed. 1284 (1951).
Neutrality, for purposes of the Act, is not a technical concept. To determine whether an employer is neutral involves a common sense evaluation of the relationship between the two employers who are being picketed. In mechanically applying a “day-to-day” test in this case, the Board engaged in a technical exercise in the intricacies of corporate structure rather than a realistic, common sense evaluation of neutrality.
The Sid Harvey organization is essentially an integrated complex which manufactures, distributes, and sells a limited number of products. Ownership and control of the five corporations is centralized or overlapping. The daily contact among the corporations is extensive, and the operation and success of each is interrelated with and heavily dependent upon the other members of the group performing their assigned tasks. Only in the most strained and technical sense could the picketed employers be characterized as neutral.
The petition for enforcement is denied, and the cross petition for an order vacating the order of the Board 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.
BONSAL, District Judge:
The American Medical Association (“AMA”), the Connecticut State Medical Society (“CSMS”), and the New Haven County Medical Association, Inc. (“NHCMA”) petition for review of a Cease and Desist Order issued by the Federal Trade Commission (“FTC”) against AMA on October 12, 1979 (FTC Dkt. No. 9064). The Order requires AMA to cease and desist from promulgating, implementing, and enforcing restraints on advertising, solicitation, and contract practices by physicians and on the contractual arrangements between physicians and non-physicians. The FTC found that ethical standards issued by AMA were in violation of Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45(a)(1). The FTC cross-petitions for enforcement of its Order.
THE FACTS
AMA is an Illinois not-for-profit corporation first incorporated in 1897. Its membership is comprised of physicians, osteopaths and medical students, but most of its members are practicing physicians. As of December 31, 1974, 52.6% of the licensed physicians in the United States were members of AMA. AMA’s legislative body is its House of Delegates. Enactments of the House of Delegates become the official policy of AMA. In 1957 the House of Delegates approved the “Principles of Medical Ethics” consisting of a preamble and ten paragraphs. Interpretation of the “Principles of Medical Ethics” is made by AMA’s Judicial Council, a committee of the House of Delegates, and the decisions of the Judicial Council are set forth in the AMA publication, Opinions and Reports. The Judicial Council also is responsible for reviewing adjudications of state societies.
CSMS is the state medical society in Connecticut. A number of state medical societies originally formed AMA and membership in a state medical society is a condition to membership in AMA. 82% of Connecticut physicians are members of CSMS.
NHCMA is a local medical association. 71% of New Haven physicians are members of NHCMA. A New Haven physician must be a member of NHCMA in order to become a member of CSMS.
On December 19, 1975, the FTC filed a complaint against AMA, CSMS, and NHCMA charging them with restricting the ability of their members to advertise for and solicit patients and with interfering with the ability of their members to engage in contractual relationships with non-physicians. CSMS and NHCMA were included in the complaint on the ground that the state societies and local associations follow the lead of AMA and because the FTC believed that there was a conspiracy between AMA and the state societies and local associations to restrict competition among physicians through ethical limitations on advertising, solicitation and contractual relationships. Such restriction, in the view of the FTC, violated Section 5 of the Federal Trade Commission Act.
The FTC held hearings between September 7,1977 and May 5, 1978. On November 13, 1978, the administrative law judge, Ernest G. Barnes, issued his Initial Decision finding that the ethical practices complained of violated Section 5 of the Federal Trade Commission Act. On appeal of the administrative law judge’s decision to the FTC, the Commission affirmed and issued its Opinion and Final Order on October 12, 1979 (FTC Dkt. No. 9064) (“FTC Opinion”). The Final Order requires AMA to cease and desist from promulgating, implementing and enforcing restraints on advertising, solicitation and contract practices by physicians and on the contractual arrangements between physicians and non-physicians. Exception is made with respect to “false or deceptive” practices, and the Order provides that nothing contained therein prohibits AMA from
“formulating, adopting, disseminating to its constituent and component medical organizations and to its members, and enforcing reasonable ethical guidelines governing the conduct of its members with respect to representations, including unsubstantiated representations, that would be false or deceptive within the meaning of Section 5 of the Federal Trade Commission Act, or with respect to uninvited, in-person solicitation of actual or potential patients, who, because of their particular circumstances, are vulnerable to undue influence.”
The Order also requires AMA to disassociate itself from any state or local society that violates the terms of the Order.
PRELIMINARY ISSUES
Two preliminary issues have been raised by the petitioners: (1) that the FTC lacks jurisdiction over the petitioners, and (2) that Chairman Michael Pertschuk should have been disqualified because he had demonstrated through his public statements that he had prejudged key issues in the proceeding.
Jurisdiction over Petitioners
Petitioners contend that as nonprofit corporations, they are not subject to the jurisdiction of the FTC as set forth in Section 4 of the Federal Trade Commission Act, 15 U.S.C. § 44, which defines “corporation” to include any entity “organized to carry on business for its own profit or that of its members.” The record satisfies us that the petitioners serve both the business and non-business interests of their member physicians. As long ago as 1902, AMA amended its Articles of Incorporation to provide that one of its objectives was to “safeguard the material interests of the medical profession.” The administrative law judge found that AMA actively lobbies for legislation that it believes may be for the profit of its members. He also found that AMA, in a variety of ways, including advice on insurance plans, renders business advice to its members.
The business aspects of the activities of the petitioners fall within the scope of the Federal Trade Commission Act even if they are considered secondary to the charitable and social aspects of their work. See Goldfarb v. Virginia State Bar, 421 U.S. 773, 788, 95 S.Ct. 2004, 2013-14, 44 L.Ed.2d 572 (1975); FTC v. National Commission on Egg Nutrition, 517 F.2d 485, 488 (7th Cir. 1975), cert. denied, 426 U.S. 919, 96 S.Ct. 2623, 49 L.Ed.2d 372 (1976).
Petitioners’ reliance upon Community Blood Bank of Kansas City Area, Inc. v. FTC, 405 F.2d 1011 (8th Cir. 1969), is misplaced. That case involved a blood bank run as a charitable organization. However, the court recognized that “Congress did not intend to provide a blanket exclusion of all non-profit corporations .... ” Id. at 1017.
The FTC fully considered the facts bearing on whether the petitioners’ activities included their business aspects. See FTC v. Ernstthal, 607 F.2d 488, 490 (D.C.Cir.1979). In addition, the Cease and Desist Order involves only advertising, solicitation and contractual relationships. We therefore conclude that the evidence in the record sustains the jurisdiction of the FTC. Disqualification of Chairman Pertschuk
During the FTC proceeding, the petitioners moved to disqualify Chairman Pertschuk on the ground that he had prejudged the merits of this proceeding before it came before the Commission. In support of this contention, petitioners cite a speech made by Chairman Pertschuk before the American Enterprise Institute’s Occupational Li-censure Conference on February 22, 1979 concerning the misuse of licensing procedures to restrain competition. However, no mention of this case was made, nor was there any reference to physicians as a group.
Chairman Pertschuk prepared a statement for presentation to the Subcommittee on Health and Scientific Research, of the United States Senate, on October 10, 1977, which was never presented because of the cancellation of the hearings. This statement discussed the medical profession in the context of a multitude of issues in the field of health care. The lone reference to this proceeding was that a complaint had been filed challenging portions of the Code of Ethics of AMA that “may” unduly restrain dissemination of information about physicians’ services. He stated that “[sjince these matters are currently in litigation, I hope you will understand why it would not be appropriate for me to comment further about them.”
Petitioners also refer to a speech made by Chairman Pertschuk before the Consumer Assembly on January 19, 1978 with respect to food and health care costs. He mentioned the trial of this case as one of the many activities being undertaken by the FTC in the medical care field.
We do not find that Chairman Pertschuk’s statements on these occasions, considered in their entirety, Kennecott Copper Corp. v. FTC, 467 F.2d 67, 80 (10th Cir. 1972), cert. denied, 416 U.S. 909, 94 S.Ct. 1617, 40 L.Ed.2d 114 (1974), approach the appearance of impropriety, the test applied in Cinderella Career and Finishing Schools, Inc. v. FTC, 425 F.2d 583, 590-91 (D.C.Cir. 1970). Nor do we find that Chairman Pertschuk prejudged the facts and the law in this case before hearing it. Gilligan, Will & Co. v. SEC, 267 F.2d 461, 468 (2d Cir.), cert. denied, 361 U.S. 896, 80 S.Ct. 200, 4 L.Ed.2d 152 (1959). At most, the public statements brought to our attention by the petitioners indicate that the chairman was informing the Congress and the public as to FTC’s activities and policies in general, FTC v. Cement Institute, 333 U.S. 683, 700-01, 68 S.Ct. 793, 803, 92 L.Ed. 1010 (1948), including those in the medical field. We do not find these statements to be grounds for disqualification.
LIABILITY
At the time the FTC filed its complaint in this action on December 19, 1975, AMA’s authoritative interpretation of the ethical restraints that are the subject of this action were contained in the 1971 edition of Opinions and Reports. Both the administrative law judge and the Commission detailed numerous examples of applications of the ethical restraints evidencing an anticompetitive purpose and effect. These included restrictions upon the dissemination of price information, bans upon advertisement of individual physicians’ services and alternative forms of medical care, and restraints upon particular forms of advertising. The Commission concluded that this evidence “is susceptible to no interpretation other than that ethical principles of the medical profession have prevented doctors and medical organizations from disseminating information on the prices and services they offer, severely inhibiting competition among health care providers.” FTC Opinion, at 29. The Commission further found that AMA’s contract practice restrictions had the purpose and effect of restraining competition by group health plans, hospitals, and similar organizations, and restricted physicians from developing business structures of their own choice. Id. at 41-43. Based upon our own review of the record, we conclude that these findings are supported by substantial evidence. See 15 U.S.C. § 45(c).
Petitioners contend that the ethical guidelines are merely to assist the state societies and the local associations; in other words, that they are advisory only. They point out that no formal action has been taken by AMA in these matters since 1955 in the appeal of Ben E. Landess where Dr. Landess was charged with “the indirect solicitation and procurement of patients by advertising.” Dr. Landess was the Medical Director of the Jamaica Medical Group, which had a contract with the Health Insurance Plan of Greater New York, Inc. (“H.I. P.”), which offers a form of prepaid medical coverage in the State of New York. H.I.P. advertises directly to the public. The Judicial Council of AMA adopted the report of the Queens County Medical Society that no action be taken against Dr. Landess. The Judicial Council went on to say that since the quality of its advertising is not in issue and “since Dr. Landess had nothing to do with the preparation or distribution of the advertising, it is our opinion contrary to that of the state and county medical societies that the conduct of Dr. Landess does not violate the ethic relating to solicitation and advertising.” Joint App. at 425.
In any event, the issue here is not whether AMA has specific power or authority over the state societies and local associations or, if it has, whether it exercises it. The issue is whether these groups have acted in concert to effectuate restraints on advertising and solicitation in violation of the Federal Trade Commission Act. It is this concerted activity for a common purpose that constitutes the violation. FTC v. Cement Institute, 333 U.S. at 709, 68 S.Ct. at 807. See National Society of Professional Engineers v. United States, 435 U.S. 679, 692-96, 98 S.Ct. 1355, 1365-68, 55 L.Ed.2d 637 (1978).
The record satisfies us that AMA intended and expected that the state and local medical groups would enforce the limitations on advertising and solicitation and, indeed, advised them as to how to do it. In other words, AMA limitations “provided the impetus” for the actions taken, and individual physicians “could be expected to comply in order to assure that they did not discredit themselves by departing from professional norms, and perhaps betraying their professional oaths.” Goldfarb v. Virginia State Bar, 421 U.S. at 791 n.21, 95 S.Ct. at 2015.
REMEDY
The Final Order of the Commission consists of six Parts, the first two being the Cease and Desist Orders, and the third and fourth being the notice and disaffiliation provisions. The Final Order is directed only to AMA, and not to CSMS or NHCMA.
Part I of the Order directs AMA to cease and desist from (A) restricting the advertising of services, facilities, or prices by physicians or organizations with which physicians are affiliated; (B) restricting the operation of any organization that offers physicians’ services to the public, by means of representations concerning the ethical propriety of medical service arrangements that limit the patients’ choice of a physician; and (C) inducing any physician or nongovernmental medical organization to take any of the prohibited restrictive actions. Part I expressly excludes from its prohibitions the dissemination by AMA of reasonable ethical guidelines concerning false and deceptive advertising and solicitation.
Part II of the Order directs AMA to cease and desist from (A) restricting or interfering with the consideration offered or provided physicians in return for the sale or distribution of their professional services; (B) restricting any organization that offers physicians’ services by means of representations concerning the ethical propriety of medical service arrangements that limit the patients’ choice of a physician; (C) restricting participation by non-physicians in the ownership or management of such organizations; and (D) inducing physicians or any organization from taking any of the actions prohibited by Part II.
Part III of the Order requires AMA in any proceeding involving violations of its ethical standards to provide (A) reasonable notice, (B) a hearing, and (C) written findings and conclusions.
Part IV of the Order requires AMA to (A) give written notice of the Order to its members and affiliate societies; (B) provide all new members and affiliate societies with a copy of the Order for a period of ten years; (C) remove from all of its publications and policy statements any provisions inconsistent with the Order; (D) require that all affiliate organizations, as a condition of affiliation, agree to adhere to the Order; and (E) disaffiliate for one year any constituent organization that engages in any act or practice prohibited by the Order. Post-Complaint Activities of AMA
Petitioners contend that the revisions of the ethical standards contained in the 1977 Opinions and Reports obviate any need to enter the Order herein. However, this does not constitute grounds for denying enforcement of an FTC order, see, e. g., Fedders Corp. v. FTC, 529 F.2d 1398, 1403 (2d Cir.), cert. denied, 429 U.S. 818, 97 S.Ct. 63, 50 L.Ed.2d 79 (1976), especially since the publication of the revisions occurred “only after the filing of the FTC complaint.” Great Atlantic & Pacific Tea Co. v. FTC, 557 F.2d 971, 988 (2d Cir. 1977) (emphasis in the original), rev’d on other grounds, 440 U.S. 69, 99 S.Ct. 925, 59 L.Ed.2d 153 (1979). In any event, the Commission can properly find, as it did here, that the revisions were insufficient.
Additionally, it is not clear that the 1977 revisions rescinded prior ethical standards. AMA has never announced to its members or affiliate societies that the 1971 ethical standards are no longer in effect. Moreover, nothing in the 1977 version of the Opinions and Reports indicates that it was intended to disavow prior standards. Rather, it refers with approval to the “long standing policy of the Judicial Council on advertising and solicitation by physicians.”. By referring to the established policies, AMA indicated that its positions may not have changed and that the restraints, “if abandoned at all, may be resumed.” FTC Opinion, at 57. See SCM Corp. v. FTC, 565 F.2d 807, 813 (2d Cir. 1977). Finally, it is well established law that it is within the discretion of the FTC to determine whether an order is “necessary to cope with the unfair practices found.” FTC v. Colgate-Palmolive Co., 380 U.S. 374, 392, 85 S.Ct. 1035, 1046, 13 L.Ed.2d 904 (1965). We have determined that the FTC considered the changes and rationally assessed their significance in concluding that a cease and desist order was warranted. See SCM Corp. v. FTC, 565 F.2d at 812. See also FTC v. National Lead Co., 352 U.S. 419, 429, 77 5. Ct. 502, 509, 1 L.Ed.2d 438 (1957).
On July 22, 1980, AMA’s House of Delegates adopted a new version of the Principles of Medical Ethics. The most notable change is the removal of the ban on “solicitation” previously found in Section 5 of the Principles. The 1980 Principles instead require a physician to deal “honestly,” to expose doctors “deficient in character or competence,” and “to respect the rights ... of other health professionals.”
The elimination of the ban on solicitation which appeared in the 1957 version of the Principles reflects a significant and commendable effort to comply with the terms of the FTC order here under review. AMA does not, however, concede any legal obligation to make such changes, since it still denies any involvement in the unlawful restraints found by the FTC.
The language of the 1980 Principles is general and imprecise in nature. Moreover, the various written interpretations of the 1957 Principles previously promulgated by AMA remain in effect. In the absence of any interpretation of the 1980 Principles in AMA’s Opinions and Reports, we cannot find that the FTC’s claims are moot.
First Amendment
Petitioners contend that Part II of the Cease and Desist Order constitutes a prior restraint upon speech and impermissibly interferes with the right to freedom of association under the First Amendment. We disagree. The FTC determined that various restrictions which AMA imposed upon contract practices of physicians violated the FTC Act. These included ethical restraints upon so-called “closed panel” arrangements, upon the consideration paid physicians by health care organizations, and upon physicians’ arrangements with non-physicians. By its terms, the Order applies solely to “ethical” restraints, and thus does not affect any speech or other First Amendment rights except insofar as it applies to statements officially condemning contract practices. “Just as an injunction against price fixing abridges the freedom of businessmen to talk to one another about prices, so too the injunction in this case must restrict [AMA’s] range of expression on the ethics of [contract practices of physicians].” National Society of Professional Engineers v. United States, 435 U.S. 679, 697, 98 S.Ct. 1355, 1367, 55 L.Ed.2d 637 (1978). Cf. California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 513, 92 S.Ct. 609, 613, 30 L.Ed.2d 642 (1972) (right to freedom of association does not include the right to violate the law).
Overbreadth and Vagueness
Petitioners assert that the proviso at the end of Part I, which permits AMA to adopt “reasonable ethical guidelines governing the conduct of its members with respect to representations, including unsubstantiated representations, that would be false or deceptive within the meaning of Section 5 of the Federal Trade Commission Act,” is overbroad and vague. The proviso was inserted in the Final Order at the request of AMA because of the Commission’s “conviction that the AMA has a valuable and unique role to play with respect to deceptive advertising and oppressive forms of solicitation by physicians.” FTC Opinion, at 58. AMA asks that it be granted more leeway in determining what kinds of claims are deceptive and misleading without the chilling effect that the threat of fines and penalties could have on its regulation of false and deceptive advertising. The Commission recognizes the “ ‘special role’ of organized medicine ... [that] necessarily confers on AMA a measure of discretion to develop ‘principles of conduct.’ ” FTC Brief at 109, quoting Bates v. State Bar of Arizona, 433 U.S. 350, 384, 97 S.Ct. 2691, 2709, 53 L.Ed.2d 810 (1977). In view of the foregoing, we will amend the proviso by inserting the words “respondent reasonably believes” so that the concluding paragraph of Part I will read as follows:
“Nothing contained in this Part shall prohibit respondent from formulating, adopting, disseminating to its constituent and component medical organizations and to its members, and enforcing reasonable ethical guidelines governing the conduct of its members with respect to representations, including unsubstantiated representations, that respondent reasonably believes would be false or deceptive within the meaning of Section 5 of the Federal Trade Commission Act, or with respect to uninvited, in-person solicitation of actual or potential patients, who, because of their particular circumstances, are vul(modifinerable to undue influence.” cation emphasized)
Additionally, petitioners contend that Part II-A of the Order requires AMA to cease and desist from “advising on the ethical propriety of, or interfering with the consideration offered or provided to any physician in return for the sale, purchase or distribution of his or her professional services.” AMA points out that this provision is so broad as to impinge upon valid activity such as professional peer review of the fee practices of physicians. In apparent recognition of this and mindful of Judge Wisdom’s caveat that an FTC order “should not be drawn so broadly that it will cover legitimate practices,” Cotherman v. FTC, 417 F.2d 587, 596 (5th Cir. 1969), the Commission requests us to modify clause II-A of the Order to add the words “in any contract with any entity that offers physicians’ services to the public” following the word “physician.” This modification clarifies the meaning of the Order, especially in light of the administrative record herein. See, e. g., Trans World Accounts, Inc. v. FTC, 594 F.2d 212, 215 n.2 (9th Cir. 1979); National Commission on Egg Nutrition v. FTC, 570 F.2d 157 at 163 (7th Cir). However, in view of AMA’s contention in its reply brief that the Order is still overbroad, we will further modify the Order by adding the words “except for professional peer review of fee practices of physicians.” Thus, the clause, as modified, will read:
“Restricting, regulating, impeding, advising on the ethical propriety of, or interfering with the consideration offered or provided to any physician in any contract with any entity that offers physicians’ services to the public, in return for the sale, purchase, or distribution of his or her professional services, except for professional peer review of fee practices of physicians . ... ” (modifications emphasized)
The Disaffiliation Provision
Part IV of the Order requires AMA to disaffiliate for one year any state or local medical society that engages in acts or practices that would violate the Order if engaged in by AMA, and requires as a condition to affiliation that the state and local societies agree to adhere to the provision of the Order. Petitioners contend that this violates due process. However, this provision finds support in National Society of Professional Engineers v. United States, 435 U.S. at 697, 98 S.Ct. at 1367. The Order does not violate AMA’s right to due process since it bears a reasonable relationship to the unlawful practices found to exist. See, e. g., Jacob Siegel Co. v. FTC, 327 U.S. 608, 613, 66 S.Ct. 758, 760, 90 L.Ed. 888 (1946). See also United States v. International Boxing Club of New York, Inc., 171 F.Supp. 841, 842 (S.D.N.Y.1957), aff’d 358 U.S. 242, 245, 79 S.Ct. 245, 247, 3 L.Ed.2d 270 (1959). The Commission “must be allowed effectively to close all roads to the prohibited goal, so that its orders may not be bypassed with impunity,” FTC v. Ruberoid Co., 343 U.S. 470, 473, 72 S.Ct. 800, 803, 96 L.Ed. 1081 (1952), by the state and local medical societies.
The Final Order of the FTC is MODIFIED as indicated herein. As so modified, the Order is ENFORCED.
. PRINCIPLES OF MEDICAL ETHICS
PREAMBLE
These principles are intended to aid physicians individually and collectively in maintaining a high level of ethical conduct. They are not laws but standards by which a physician may determine the propriety of his conduct in his relationship with patients, with colleagues, with members of allied professions, and with the public.
SECTION 1
The principle objective of the medical profession is to render service to humanity with full respect for the dignity of man. Physicians should merit the confidence of patients entrusted to their care, rendering to each a full measure of service and devotion.
SECTION 2
Physicians should strive continually to improve medical knowledge and skill, and should make available to their patients and colleagues the benefits of their professional attainments.
SECTION 3
A physician should practice a method of healing founded on a scientific basis; and he should not voluntarily associate professionally with anyone who violates this principle.
SECTION 4
The medical profession should safeguard the public and itself against physicians deficient in moral character or professional competence. Physicians should observe all laws, uphold the dignity and honor of the profession and accept its self-imposed disciplines. They should expose, without hesitation, illegal or unethical conduct of fellow members of the profession.
SECTION 5
A physician may choose whom he will serve. In an emergency, however, he should render service to the best of his ability. Having undertaken the care of a patient, he may not neglect him; and unless he has been discharged he may discontinue his services only after giving adequate notice. He should not solicit patients.
SECTION 6
A physician should not dispose of his services under terms or conditions which tend to interfere with or impair the free and complete exercise of his medical judgment and skill or tend to cause a deterioration of the quality of medical care.
SECTION 7
In the practice of medicine a physician should limit the source of his professional income to medical services actually rendered by him, or under his supervision, to his patients. His fee should be commensurate with the services rendered and the patient’s ability to pay. He should neither pay nor receive a commission for referral of patients. Drugs, remedies or appliances may be dispensed or supplied by the physician provided it is in the best interests of the patient.
SECTION 8
A physician should seek consultation upon request; in doubtful or difficult cases; or whenever it appears that the quality of medical service may be enhanced thereby.
SECTION 9
A physician may not reveal the confidences entrusted to him in the course of medical attendance, or the deficiencies he may observe in the character of patients, unless he is required to do so by law or unless it becomes necessary in order to protect the welfare of the individual or of the community.
SECTION 10
The honored ideals of the medical profession imply that the responsibilities of the physician extend not only to the individual, but also to society where these responsibilities deserve his interest and participation in activities which have the purpose of improving both the health and the well-being of the individual and the community.
. The Order herein does not require, at least directly, that CSMS or NHCMA petitioners cease and desist from doing anything. However, both petitioners contend that they are proper parties to this proceeding since they were named as respondents in the agency action below, adverse findings were made against them by the FTC, and they are affected by the Final Order. The FTC does not oppose their participation in this proceeding, and suggests that they may be treated as intervenors. At the same time, CSMS and NHCMA do not appear to be seeking relief independent from that sought by AMA. In view of these factors, we assume without deciding that CSMS and NHCMA are proper parties to this petition for review.
. There appears to be no dispute that the practices complained of affect interstate commerce.
. Neither Cinderella nor Texaco, Inc. v. FTC, 336 F.2d 754, 760 (D.C.Cir.1964), are of assistanee to petitioners, since in both of those cases a commissioner made statements as to specific facts yet to be resolved in the respective proceedings. Indeed, the Texaco court specifically noted that since it could “not expect a Trade Commissioner to be neutral on anti-monopoly policies,” such an adjudicator could be permitted to hear a case, even “after he had expressed an opinion as to whether certain types of conduct were prohibited by law.” 336 F.2d at 760. As we have noted in a somewhat different context, “it is not improper for members of regulatory commissions to form views about law and policy on the basis of their prior adjudications of similar issues which may influence them in deciding later cases.” Rombough v. FAA, 594 F.2d 893, 900 (2d Cir. 1979).
. Sixteen months after the complaint was filed, AMA revised its Opinions and Reports. Petitioners contend that any violations that may have existed earlier were corrected by the 1977 version. We do not believe the FTC was required to amend its complaint at that point. However, AMA’s post-complaint revision properly may be considered on the issue of the remedy provided in the Final Order. See United States v. Parke, Davis & Co., 362 U.S. 29, 47, 80 S.Ct. 503, 513, 4 L.Ed.2d 505 (1960); United States v. Oregon Medical Society, 343 U.S. 326, 332, 72 S.Ct. 690, 695, 96 L.Ed. 978 (1952).
. For example, the ban on “solicitation” in the “Principles of Medical Ethics” was left unchanged, and the definition of that term incorporates many of the catchwords of earlier restraints. One instance of this is the retained condemnation of “self-laudatory” advertisements, even if fully accurate. In addition, the list of “accepted local media” fails to include newspapers, radio, or television. Publication of fees is mentioned only in connection with “reputable directories.”
. The record is mixed with regard to the impression of the average physician regarding the effect of the 1977 edition of Opinions and Reports on earlier versions. One witness testified that it was well accepted in the medical community that publication of a new edition rescinds previous editions. Other evidence, however, indicated that pre-1977 standards are still viewed as binding by physicians.
. In view of our finding of other substantial evidence to support the remedial order, we need not address the question whether the administrative law judge properly rendered an adverse finding against AMA for failure to comply with a subpoena duces tecum.
. AMA in its reply brief urges comparison with the FTC’s actions regarding veterinary organizations, in which the agency withdrew proposed rules concerning veterinary advertising as a result of voluntary reforms on the part of those organizations. Federal Trade Commission, News Summary (April 11, 1980). However, we feel that this example cogently illustrates the limits of our review in cases of this nature: It is up to the FTC to take recognition of genuine, voluntary reform by withdrawing formal proceedings when within its discretion it sees fit to do so.
. The relevant provisions of the Order require AMA to cease and desist from:
A. Restricting, regulating, impeding, advising on the ethical propriety of, or interfering with the consideration offered or provided to any physician in return for the sale, purchase or distribution of his or her professional services;
B. Restricting, interfering with, or impeding the growth, development or operations of any entity that offers physicians’ services to the public, by means of any statement or other representation concerning the ethical propriety of medical service arrangements that limit the patient’s choice of a physician;
C. Restricting, interfering with, or impeding the growth, development or operations of any entity that offers physicians’ services to the public, by means of any statement or other representation concerning the ethical propriety of participation by non-physicians in the ownership or management of said organization; and
D. Inducing, urging, encouraging, or assisting any physician, or any medical association, group of physicians, hospital, insurance carrier or any other non-governmental organization to take any of the actions prohibited by this Part.
. In addition, we refer petitioners to the opinion of the FTC herein, in which they are provided certain guidelines, to wit, where ads merely state the price of routine and standardized services, there is little need for further ethical restrictions to prevent deception; where restrictions are justified, they should be reasonably related to goal of preventing deception; and across-the-board bans to broad categories of representations, or general restrictions applicable to any representation made through a specific medium, are highly suspect. FTC Opinion, at 59.
. AMA cannot claim, as it attempts to do, that the disaffiliation provisions of the Order contravene Fed.R.Civ.P. 65(d), since that rule is inapplicable to agency orders. Moreover, there are no specific contempt proceedings that AMA’s constituent societies need be protected from since they are not bound by any FTC order. See Vuitton et Fils S.A. v. Carousel Handbags, 592 F.2d 126 (2d Cir. 1979).
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.
MATHES, District Judge:
Leonard and Amy Van Domelen appeal from a judgment of the District Court entered upon a jury verdict finding them liable upon their joint written guaranty in favor of appellee.
The guaranty in question, dated January 7, 1964, was executed in Oregon in favor of the appellee, Westinghouse Electric Corporation, and by its terms guarantees payment of the account of Sharon Manufacturing Company with Westinghouse. Federal jurisdiction is grounded upon diversity of citizenship, so the substantive law of Oregon governs. [Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).]
Appellants’ first contention is that this guaranty failed to satisfy the expression-of-consideration requirement of the Oregon Statute of Frauds, which provides in part that:
“In the following cases the agreement is void unless it, or some note or memorandum thereof, expressing the consideration, is in writing * * *
(2) An agreement to answer for the debt, default or miscarriage of another.” [Ore.Rev.Stat. § 41.580.]
Although the challenged instrument recites that it was executed “In consideration of your [Westinghouse] extending credit to Sharon Furniture Manufacturing Co., Inc. * * * and for value received”, appellants argue that this is an insufficient expression of the consideration for the guaranty here, since the consideration claimed by Westinghouse to have been given was not extension of credit, but a forbearance of suit against Sharon.
It is to be noted however, that the provisions of the guaranty conclude with the following recital: “Witness our hands and seals the day and year above written.” The abbreviation “L.S.” appears in print following each of the Van Domelen signatures, and signifies presence of a seal in accordance with § 42.-120 of the Oregon Revised Statutes, which was in effect at all times relevant here.
In Johnston v. Wadsworth, 24 Or. 494, 34 P. 13 (1883), the Oregon Supreme Court considered the requirement of “expressing the consideration”, as found in Oregon’s Statute of Frauds [Or.Rev. Stat. § 41.580], and observed that “the agreement being under seal, the seal is itself sufficient to satisfy the statute.” [24 Or. at 502, 34 P. at 15; cf. Title & Trust Co. v. Nelson, 157 Or. 585, 71 P.2d 1081, 114 A.L.R. 1196 (1937).]
Although, as appellants point out, § 41.350(3) of the Oregon Revised Statutes declares that a recital of consideration is excluded from the conclusive presumption of “[t]he truth of the facts recited * * * in a written instrument”, this provision is relevant to a determination of whether or not there was in fact a failure of the expressed consideration, and not to a determination of whether or not the Oregon Statute of Frauds has been satisfied.
The requirements of Oregon's Statute of Frauds being met by execution of the guaranty under seal, parol evidence was properly admitted to explain that the ambiguous phrase “extending credit * * * and for value received”, as employed in the guaranty, referred to forbearance of suit on the part of appellee. [See Or.Rev.Stat. §§ 41.740, 42.-220.]
Appellants next urge that there was insufficient evidence to support the jury’s determination that Westinghouse agreed to forbear suit against Sharon, but so to hold would require us to declare that the jury could not reasonably have believed the testimony of appellee’s credit manager. We are unable to say that the jury’s finding from the evidence in the case was outside the bounds of reasonableness. [See Commissioner of Internal Revenue v. Duberstein, 363 U.S. 278, 80 S.Ct. 1190, 4 L.Ed.2d 1218 (I960).]
Finally, appellants contend that in all events there was no credible evidence to warrant a jury finding that Westinghouse relied upon the guaranty in forbearing to sue Sharon; and in this connection they also assert that the trial court erroneously limited appellants’ cross-examination of appellee’s principal witness on this issue.
The trial judge instructed the jury that, in order to find in favor of appellee, they must find not only that Westinghouse promised Sharon to forbear suit in return for appellant’s guaranty, but also that Westinghouse relied at least in part upon appellants’ guaranty in actually forbearing suit against Sharon for the agreed period of time. Inasmuch as we find no authority suggesting that the courts of Oregon would follow a different rule from that adhered to in other jurisdictions, we hold that the jury’s verdict in favor of appellee would have been fully supported either by a finding of a promise to forbear, or by a finding of actual forbearance in reliance upon the guaranty. [See Restatement of Contracts § 75 (1932); 1 Corbin on Contracts § 139 (1963); Annot., 78 A. L.R.2d 1414.]
And since there was ample evidence to support the finding of a promise to forbear on the part of Westinghouse, and it is undisputed that Westinghouse actually did forbear during the agreed-upon period of time, the trial court’s error, if any, in limiting appellants’ cross-examination and in tendering the issue of reliance upon the guaranty to the jury, was harmless. [See Fed.R. Civ.P. 61.]
The verdict in favor of appellee on the January 7, 1964 guaranty being sufficient to sustain the judgment appealed from, we need not reach the questions raised as to the correctness of the trial court’s rulings involving an earlier guaranty executed in 1963 by appellant Leonard Van Domelen alone in favor of appellee.
The judgment appealed from is affirmed.
Judge Mathes prepared and signed this opinion, hut died before it could be filed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
AUGUSTUS N. HAND, Circuit Judge.
This is an appeal from an order denying the petition of A. J. Schanfarber, Abram M. Frumberg, Edgar J. Schoen, and Samuel Zirn for an allowance for legal services rendered in connection with an action brought by them in the Supreme Court of New York on behalf of one Levy, holder of $5,000 of debentures of Paramount Publix Corporation against that company, Film Production Corporation, its wholly owned subsidiary, certain bank creditors of Paramount, and others. The suit was on behalf of Levy and all other debenture holders similarly situated and is said to have resulted in the relinquishment by the bank creditors of Paramount of a large amount of securities as a result of which they became general instead of secured creditors. The allowance asked was $75,000.
The Levy suit was brought prior to the date of the equity receivership of Paramount, its adjudication in bankruptcy, and the institution of the present proceeding for a reorganization under section 77B of the Bankruptcy Act (11. U.S.C.A. § 207). It sought to set aside an alleged preferential agreement between Paramount and its bank creditors made at a time when it was said to have- been insolvent, and on February 3, 1933, the appellants, or some of them, obtained from the state court an injunction restraining the defendants pendente lite from disposing of the pledged assets stated to have amounted to -some $10,000,000. The alleged fraudulent transfer was to the subsidiary Film Production Corporation. Paramount transferred certain films and rentals thereof to that subsidiary, and it in turn gave its notes therefor to Paramount, who turned them over to the banks. The various defendants had the suit of Levy dismissed by the state court on the ground that he was not a judgment creditor and because the trustee under the trust indenture for the bondholders was alone vested with the right to attack the transfer on their behalf.
The petitioners base their claim to an allowance upon the sole ground that their injunction, though improvidently issued, was a step in preventing the dissipation of the transferred assets until the trustees for Paramount settled a suit which they later brought to set aside the transfer to Film Production Corporation. They clearly have established no right to an allowance. Their suit failed and the injunction was improvident. Not only had the court, as was finally decided, no right to entertain it, but it was needless because it was not shown that the banks were not fully responsible for any claim the debenture holders might have against them. Moreover, they had no lien on the property transferred and could only reach it by reducing their notes to judgment and issuing an execution. Consequently they never were in the position of transferees or preferred creditors. In our opinion the Levy suit was based on no tenable theory and the application for an allowance was properly denied.
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.
PER CURIAM.
Appellant, Mary Jean Gardner, personal representative of the estate of her late husband, Gregory Gardner, appeals from a judgment of the United States District Court for the Southern District of Indiana, Evansville Division (Brooks, J.), after a jury trial in favor of appellee, the Southern Railway Company.
Appellant raises two issues on appeal: (1) whether the district court erred by excluding appellant’s evidence of a prior collision through which appellant sought to charge the Railway with notice of a dangerous condition at a railway intersection and (2) whether the district court erred in allowing appellee to amend its answer shortly before trial, denying that the deceased stopped his truck prior to crossing the railroad tracks. On cross-appeal, the Railway claims that the district court’s denial of its Motion for Bill of Costs was an abuse of discretion. We affirm as to the issues raised by the appellant and reverse and remand for further proceedings as to the issue raised by the Railway.
This action arises out of a fatal collision involving the deceased, Gregory Gardner, which occurred at a railway crossing at approximately 9:45 A.M. on February 24, 1978 in Pike County, Indiana while deceased was driving an empty coal-hauling truck north in Pike County Road 100 West. While crossing the railroad’s tracks at the junction of County Road 100 West, he was struck and killed by a westbound Southern Railway Company train, consisting of three engines, one car and a caboose.
In her complaint, filed February 4, 1980, appellant claimed that at the time of the accident, the Railway was negligent in failing to maintain its crossing so as to provide decedent with an unobstructed view of the Railway’s tracks as required by Indiana Code 8-6-7.6-1. The testimony of the officer in charge of investigating the accident, ex-State Trooper Davis, established that at the time of the collision deceased did not have the sight distance required by the Indiana Code because of trees, brush and undergrowth which obstructed his view.
Sometime following the February 24, 1978 collision, through discovery proceedings, appellant discovered that on November 30, 1976, another fatal collision involving the Railway’s train and a truck had occurred at the same crossing. An examination of photographs taken at the time of that collision revealed that the physical conditions at the time were essentially the same as those on February 24, 1978. The Indiana State Police Accident Report made of that prior accident disclosed that the accident occurred under substantially the same circumstances as the collision involving the deceased. However, on April 18, 1981, the Railway filed a Motion in Limine requesting the court to exclude all evidence of the prior collision. On April 15, 1981, appellant filed its Memorandum in Opposition to this Motion maintaining that by reason of the prior accident, the Railway was charged with notice of the extra-hazardous conditions at the crossing fifteen months before the collision involving the deceased. At its final pre-trial conference on June 12, 1981, the Court granted the Railway’s Motion in Limine.
At trial, appellant offered to prove notice to the Railway of a dangerous and hazardous condition by other means such as photographs of the crossing taken on the day of the prior accident and the testimony of the two Indiana State Police Officers who investigated the prior accident. The photographs and the testimony of both officers with respect to their investigation of the collision were excluded. The Court did, however, permit one officer to testify (without being identified as a police officer) to the fact that he had been at the crossing prior to the subject collision and to relate what he had observed.
We refer now to the second issue raised by appellant. In its original answer, filed March 6, 1980, the Railway admitted that the deceased stopped his vehicle at the fatal intersection. Additionally, on April 15, 1980, the Railway filed a Request for Admissions in which it asked appellant to admit that the deceased had stopped his vehicle at the critical intersection. Nevertheless, on May 15, 1981, the final day of discovery, the Railway moved the court for leave to amend its answer to raise as a factual question the issue of whether or not the deceased had stopped his truck prior to attempting to cross the railroad tracks.
There was other evidence concerning the stop at the railroad crossing on the day of the collision. The Railway’s employee, Gordon Byrd, obtained a tape-recorded statement from a witness, Randal Lewis, who was driving a vehicle a short distance behind the deceased at the time of the accident. At that time, Lewis said that he saw no taillights go on in the rear of the deceased’s truck. This statement was used by the Railway to impeach Lewis at trial. The tape recording had never been turned over to apj)ellant during discovery although it was submitted to the jury with appellant’s consent.
Our final consideration is the Railway’s cross-appeal. A Bill of Costs was filed by the Railway on July 9, 1981, wherein it requested that certain expenses amounting to Two Thousand Nine Hundred Fifty-one Dollars and Sixty-five Cents ($2,951.65) incurred by the Railway in connection with the trial be taxed to the appellant. Appellant filed her Objection to the demand for Taxation of Costs and Memorandum in Support of her Objections thereto, on July 15, 1981. The Railway’s Reply to Plaintiff’s Objection to Taxation of Costs was filed on July 24, 1981. No other pleadings were filed on this issue and no hearing was held. On August 3, 1981, the district court issued an order denying the Railway’s motion for Bill of Costs. But the order contained no finding that the Railway had been guilty of any misconduct or that appellant was indigent. Accordingly, the Railway cross-appealed the denial of its Bill of Costs pursuant to 28 U.S.C. § 1291.
PRIOR ACCIDENT
We agree with appellant’s interpretation of the law applicable to prior accident evidence in railroad collision cases. A railroad can be found negligent not only in the manner in which it operates its trains, but also because it failed to take adequate precautions at a grade crossing which it knew or should have known to be extra-hazardous. Stevens v. Norfolk & W. Ry. Co., 171 Ind.App. 334, 357 N.E.2d 1, 4 (1977); see also Menke v. Southern Railway Company, 603 F.2d 1281 (7th CirM979). Evidence of prior accidents which occurred at that crossing under similar conditions may be admitted to show that the railroad had prior knowledge that a dangerous and hazardous condition existed. New York Central Railroad Co. v. Sarich, 133 Ind.App. 516, 180 N.E.2d 388, 398 (Ind.App.Ct.1965); 5A Personal Injury § 1.05[l][j], pp. 124-27. Moreover, as the Third Circuit and other circuits suggest, it is appropriate to relax the requirement of similar conditions when the offer of proof is to show notice of the dangerous character of the crossing rather than defendant’s negligence. Evans v. Pennsylvania Railroad Co., 255 F.2d 205, 210 (3rd Cir. 1958); McCormick, Evidence (Horn Book Series), p. 352; compare McCormick v. Great Western Power Co., 214 Cal. 658, 8 P.2d 145, 81 ALR 678 (1932); City of Taylorville v. Stafford, 196 Ill. 288, 63 N.E. 624 (1902).
The controlling principle in cases of this type, however, appears in Rule 403 of the Federal Rules of Evidence, reading:
Although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.
Unless we find, therefore, that the district court abused its discretion in excluding the evidence, we must affirm. United States v. Catalano, 491 F.2d 268, 274 (2nd Cir.), cert. denied, 419 U.S. 825, 95 S.Ct. 42, 42 L.Ed.2d 48 (1974); Shepard v. General Motors Corp., 423 F.2d 406, 408 (1st Cir. 1970).
Judge Brooks undoubtedly considered many factors including photographs in rendering his decision. First, conditions and surrounding circumstances at the crossing at the time of the prior accident on November 30, 1976, were different, at least in some respects, from those which existed on February 24, 1978. Second, because no action was ever brought nor any claim filed on behalf of the previous decedent, it is not known whether conditions at the crossing or decedent’s own negligence were responsible for the 1976 accident. That no action was ever brought may suggest the latter. Third, notwithstanding the ambiguity surrounding the prior accident, the jury might infer from evidence of the prior accident alone that ultra-hazardous conditions existed at the site and were the cause of the later accident without those issues ever having been proved. In any case, the district court permitted appellant to present testimony that the conditions which existed at the crossing at the time of the February 24, 1978 collision had been evident some time l>efore. Thus the dangerous conditions were presented in a non-prejudicial manner. These facts could certainly lead a reasonable person to conclude that the danger of prejudice and delay from admitting such evidence would substantially outweigh its probative value. Under these circumstances, we find no abuse of discretion in excluding this evidence.
THE AMENDED ANSWER
Appellant asserts that the district court erred in allowing the Railway to amend its answer shortly before trial to the prejudice of the appellant and despite undue delay, bad faith and dilatory motive on the part of the Railway. Rule 15(a) of the Federal Rules of Civil Procedure provides that a party may amend his or her pleading ’ more than twenty days after it is served “only by leave of court or by written consent of the adverse party: and leave shall be freely given when justice so requires.”
In Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962), the leading case upon this question, the Supreme Court stated:
If the underlying facts or circumstances relied upon by the plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claims on the merits. In the absence of any apparent or declared reason — such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of amendment, futility of amendment, etc. —the leave sought should, as the rules require, be “freely granted.”
Of course, the Court added, “the grant or denial of an opportunity to amend is within the discretion of the District Court . . . . ” Id.
The Railway pleaded contributory negligence in its original answer and so alerted appellant to the possibility that an argument would be made as to the non-stop. The Railway filed its motion for leave to amend its answer only once it became apparent both that eyewitness Lewis intended to change the story he had originally told the Railway and that appellant had no unimpeachable testimony of deceased’s stopping. Appellant filed her own series of motions at the eleventh hour. In any event, appellant was left with at least twenty-six days following- the Railway’s motion in which to respond, which would seem to have been more than sufficient since appellant knew of all the possible eyewitnesses. Under these circumstances, the district court’s decision seems perfectly reasonable.
Apjiellant also asserts that appellee should have been bound by its admission regarding the deceased’s stopping contained in its own Request for Admissions. Rule 36(b) of the Federal Rules of Civil Procedure indeed provides that “[a]ny matter admitted under this rule is conclusively established unless the court on motion permits withdrawal or amendment of the admission.” The rule continues:
Subject to the provisions of Rule 16 governing amendments of a pre-trial order, the court may permit withdrawal or amendment when the presentation of the merits of the action will be subserved thereby and any party who obtained the admission fails to satisfy the court that withdrawal or amendment will prejudice him in maintaining his action or defense on the merits.
Although the Railway never sought to amend this particular admission, it did seek and obtain leave to amend its answer following the last pre-trial conferences denying that a stop was made by the deceased. The purpose of Rule 36 is to permit the person obtaining the admission to rely thereon in preparation for trial. Compare Moosman v. Blitz, 358 F.2d 686 (2d Cir. 1966). There is no way in which appellant in this case could have relied on such admission to her prejudice in view of the amendment to the Railway’s answer as permitted by the court. Under the circumstances of this case, permission to amend the answer was tantamount to permission to withdraw the admission.
THE CROSS-APPEAL
On cross-appeal, the Railway asserts that the district court’s denial of its Bill of Costs, without finding either that appellee was guilty of some misconduct or that appellant was indigent, was an abuse of discretion. Rule 54(d) of the Federal Rules of Civil Procedure creates a presumption that the prevailing party is entitled to costs. Lichter Foundation, Inc. v. Welch, 269 F.2d 142, 146 (6th Cir. 1959); 10 C. A. Wright and A. R. Miller, Federal Practice and Procedure, Civil, § 2668 at 142 (1973). To overcome that presumption the losing party must show something more than mere good faith on its part. Popeil Brothers, Inc. v. Schick Electric, Inc., 516 F.2d 772, 776 (7th Cir. 1975). We have no evidence of such a showing here. Moreover, the district court failed to explain why it denied appellee’s Bill of Costs.
When a trial court refuses to award costs to the prevailing party, it should state its reasons for such disallowance. Unless an appellate court knows why a trial court refused to award costs to the prevailing party, it has no real basis upon which to judge whether the trial court acted within the proper confines of its discretion. Walters v. Roadway Exp., Inc., 557 F.2d 521 (5th Cir. 1977).
Serna v. Manzano, 616 F.2d 1165, 1168 (10th Cir. 1980).
Judgment affirmed except as to costs and remanded for a redetermination of costs and findings in case of disallowance.
. In a number of jurisdictions, before evidence of prior accidents is admissible to show notice, it must be shown that a specific physical or structural condition of the crossing was a proximate or contributing cause of the present collision. 5A Personal Injury § 1.05[l][j], pp. 126-27; see Jewell v. Pennsylvania R.R., 55 Del. 6, 183 A.2d 193 (1962); So. Pac. R.R. v. Watkins, 83 Nev. 471, 435 P.2d 498 (1967); So. Pac. R. R. v. Harris, 80 Nev. 426, 395 P.2d 767 (1964).
. In Young v. Illinois Central Gulf R. R. Co., 618 F.2d 332 (5th Cir. 1980), there are so many other rulings constituting abuses of discretion that the case can hardly support the proposition that the simple failure to admit prior accident testimony was itself an abuse.
. Appellant’s Specifications of Negligence and witness lists were filed seven days prior to the original trial date of March 23, 1981 instead of January 15, 1981, as was requested by the court, forcing appellee to seek a continuance. Appellant’s Motion for Leave to Add Additional Witnesses and Exhibits, the first clear indication that appellant intended to offer prior collision evidence, was filed ten days before the rescheduled trial date of April 13, 1981. On May 15, 1981, the last day of discovery before the yet rescheduled trial date of June 15, 1981, appellant added an additional Specification of Negligence. Finally, during trial appellant again moved to amend her allegations to conform to her evidence.
. Rule 54(d) of the Federal Rules of Civil Procedure reads:
Except when express provision therefor is made either in a statute of the United States or in these rules, costs shall be allowed as of course to the prevailing party unless the court otherwise directs . .. (emphasis added).
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
SLOVITER, Circuit Judge.
Emanuel Liebman and the law firm of Liebman & Flaster appeal from a district court order 569 F.Supp. 761 (D.N.J.1983) directing them to comply with an Internal Revenue Service summons. The appellants claim that enforcement of the summons, which seeks the names of all clients who paid fees over a three-year period in connection with the acquisition of certain tax shelters, would violate the attorney-client privilege. We agree, and we will reverse.
I.
Facts and Procedural History
The appellants, who specialize in tax law, investigate and evaluate real estate partnerships for clients who want to invest for tax purposes. At least for the period at issue here, the firm charged fees only to those clients who invested. Liebman & Flaster concedes that each of these clients was advised that the fee was deductible as a legal expense. Brief for Appellants at 7. The IRS contends, however, that the fees are not legal fees but brokerage charges, and are therefore not deductible. When the IRS discovered that some investors had deducted fees paid to Liebman & Flaster, the agency sought to ascertain the names of others who might have done the same by various cross-matching methods. This information is not readily available to the IRS from the returns of the other investors because taxpayers who deduct legal fees are not required to identify the recipients. Frustrated in its effort to find the other taxpayers, the IRS sought a John Doe summons to compel the law firm to identify clients who had paid fees in connection with real estate partnerships.
The IRS petitioned the district court under Section 7609(f) of the Internal Revenue Code, which permits service of a John Doe summons upon a showing that it relates to an “ascertainable group or class of persons” when there is “a reasonable basis for believing” that these persons have failed to comply with a tax code provision and the information sought is “not readily available from other sources.” The summons requested “books, records, papers, billing ledgers and any other data which contains, reflects, or evidences the names, addresses and/or social security numbers of clients who paid fees in connection with the acquisition of real estate partnership interests in 1978, 1979 and/or 1980.” App. at 12a.
Liebman and his firm objected that enforcement of the summons would violate the attorney-client privilege. The district court rejected the claim and granted the enforcement order, although it permitted the attorneys to produce a list of names rather than their records. See App. at 147a.
This appeal was taken from the district court’s order.
II.
Discussion
The sole issue before us is whether the attorney-client privilege protects the identities of the Liebman & Flaster clients sought by the IRS. The question is governed by federal common law, see Fed.R. Evid. 501, which of course includes the attorney-client privilege. While the applicability of the privilege must turn on the facts of each case, determining the scope of protection in each case is a question of law. See Upjohn Co. v. United States, 449 U.S. 383, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981).
It is well established that “absent unusual circumstances the identity of the client does not come within the attorney-client privilege.” Gannet v. First National State Bank of New Jersey, 546 F.2d 1072, 1073 n. 4 (3d Cir.1976), cert. denied, 431 U.S. 954, 97 S.Ct. 2674, 53 L.Ed.2d 270 (1977). See 2 Weinstein’s Evidence U 503(a)(4)[02], at 503-32 & n. 2 (1982). The courts have found such “unusual circumstances” where so much of the actual attorney-client communication has already been disclosed that identifying the client amounts to full disclosure of the communication. NLRB v. Harvey, 349 F.2d 900, 905 (4th Cir.1965). See also In re Grand, Jury Proceedings — Gordon, Witness, 722 F.2d 303, 307 (6th Cir.1983); Grand Jury Empanelled February 14, 1978 (Markowitz), 603 F.2d 469, 473-74 (3d Cir.1979); United States v. Pape, 144 F.2d 778, 783 (2d Cir.), cert. denied, 323 U.S. 752, 65 S.Ct. 86, 89 L.Ed. 602 (1944).
In Markowitz, we approvingly referred to cases affirming that the attorney-client privilege applies to the identity of a client in such a situation. We stated.
In Colton v. United States, 306 F.2d 633 (2d Cir.1962), cert. denied, 371 U.S. 951, 83 S.Ct. 505, 9 L.Ed.2d 499 (1963) the court found the privilege warranted where “the substance of a disclosure has already been revealed but not its source.” Id. at 637. Similarly, in United States v. Pape, 144 F.2d 778 (2d Cir.), cert. denied, 323 U.S. 752, 65 S.Ct. 86, 89 L.Ed. 602 (1944) the court observed that there may be “situations in which so much has already appeared of the actual communications between an attorney and a client, that the disclosure of the client will result in a breach of the privilege.” Id. at 783.
Markowitz, 603 F.2d at 473. We held that the privilege was inapplicable in Markowitz because there were no confidences to which Markowitz’ client would be linked were its identity known. Id.
In this case, appellants argue persuasively that protected confidences would be revealed by disclosing the clients’ identities. If the summons merely requested the names of clients who paid fees, the information would not be protected by the attorney-client privilege. However, the summons is more specific. The affidavit of the IRS agent supporting the request for the summons not only identifies the subject matter of the attorney-client communication, but also describes its substance. That is, the affidavit does more than identify the communications as relating to the deductibility of legal fees paid to Liebman & Flaster in connection with the acquisition of a real estate partnership interest, App. at 116a-121a. It goes on to reveal the content of the communication, namely that “taxpayers ... were advised by Liebman & Flaster that the fee was deductible - for income tax purposes.” App. at 117a. Thus, this case falls within the situation where “so much of the actual communication had already been established, that to disclose the client’s name would disclose the essence of a confidential communication____” See United States v. Jeffers, 532 F.2d 1101, 1115 (7th Cir.1976) (and cases cited therein).
The fact that the district court’s enforcement order limited appellants’ obligations to producing a list of names rather than their records does not alter the scope of the information sought, since the IRS has averred, and Liebman & Flaster have acknowledged, that the clients who paid fees for such advice were told they were deductible. Because the IRS request was limited to the group of persons who paid for specific investment advice, the IRS would automatically identify those who were told they could make the questionable deductions.
The IRS argues, and the district court agreed, that the identity of the client would fall within the attorney-client privilege only when disclosure of a client’s identity would implicate the client in the matter for which he or she sought advice. App. at 145a-146a. Since the court assumed that the IRS is not investigating the taxpayers for illegalities arising from their participation in the real estate partnership but rather for the legality of the deduction of the attorney’s fees and that, according to the district court, was not the matter as to which the taxpayers initially consulted Liebman & Flaster, the court found the attorney-client privilege inapplicable.
This construction of the privilege is unduly narrow. As we stressed in Markowitz, “it is the previously revealed confidence, not the fact of potential criminal prosecution, which accounts for the privilege.” Markowitz, 603 F.2d at 473 n. 4 (emphasis added). Other courts have agreed that application of the privilege to a client’s identity is not limited to discussions of criminal activity or torts. See In re Grand Jury (Osterhoudt), 722 F.2d 591, 593 (9th Cir.1983); In re Grand Jury Investigation No. 83-2-35, 723 F.2d 447, 453 (6th Cir.1983); NLRB v. Harvey, 349 F.2d 900, 907 (4th Cir.1965). To limit the protection of a client’s identity as the IRS urges would vitiate the privilege. It does not advance resolution of the issue to argue, as does the IRS, that the attorney-client privilege “is an obstacle to the search for the truth.” Brief for the Appellee at 8. The salutary purpose of the privilege has recently been noted in Upjohn v. United States, 449 U.S. at 389, 101 S.Ct. at 682, where the Court stated,
Its purpose is to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice.
All legal communications entered into with the expectation of privacy are privileged -whatever the initial purpose of the consultation.
Nor do we see any basis for holding that the communication itself is not within the scope of the privilege. At issue is not the mere disclosure of the act of retaining a lawyer, a fact not normally privileged, but the disclosure of a substantial confidential communication. See Osterhoudt, 722 F.2d at 594; Colton v. United States, 306 F.2d 633, 637 (2d Cir.1962), cert. denied, 371 U.S. 951, 83 S.Ct. 505, 9 L.Ed.2d 499 (1963). Since the deductibility of a fee is a legal matter, it is a confidence ordinarily protected by attorney-client privilege. We concludé that it is so protected here.
If appellants were required to identify their clients as requested, that identity, when combined with the substance of the communication as to deductibility that is already known, would provide all there is to know about a confidential communication between the taxpayer-client and the attorney. Disclosure of the identity of the client would breach the attorney-client privilege to which that communication is entitled. For this reason the district court’s order enforcing the summons will be reversed.
. Appeal No. 83-5766 is from the district court's oral order denying a timely motion for reconsideration. Appeal No. 83-5842 is from the district court’s subsequent written order denying the same motion. We consider the appeals as consolidated.
. The Fifth Circuit, in In re Grand Jury Proceedings (Pavlick), 680 F.2d 1026, 1027 (5th Cir.1982) (in banc), stated that the privilege would apply when the client’s identity furnishes the "last link” in a chain of incriminating evidence that would result in the client’s indictment. This appears to go further in sustaining the privilege than we were willing to accept in Markowitz. We do not rely on this "last link” in this case because here we find that there was a protected communication, and hence our decision is entirely consistent with Markowitz.
. A legal communication is protected even if the consultation included advice that would be unprotected if rendered by a nonlawyer. See NLRB v. Harvey, 349 F.2d at 905 n. 3. Therefore, even if the IRS is correct in contending that counseling about the purchase of partnership interests was a broker's rather than an attorney's function, this fact would have no bearing on the communication at issue here.
. The IRS contends that the taxpayers waived their attorney-client privilege because they deducted the fees. Since the mere deduction of the fee did not disclose the substance of the communication, it could not constitute a waiver of the privileged substance of the advice received. See Colton v. United States, 306 F.2d at 639 (worksheets privileged to the extent they contain communications not disclosed on the tax return); United States v. Jeremiah, 76-1 U.S. T.C. (CCH) H 9441 (D.Ore.1975) (lawyer’s tax advice comes within attorney-client privilege even though taxpayer presumably acted on the advice in filing return). Moreover, it is by no means clear that all the clients whose identities would be revealed did take the deduction; those who did not can hardly be said to have "waived" the attorney-client privilege even under the government’s theory, and we cannot find waiver on a speculative basis.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
OPINION OF THE COURT
PER CURIAM:
Relator Patrick J. Gomes was convicted of manslaughter in the Essex County (New Jersey) Court, and was sentenced to imprisonment in the New Jersey State Prison for seven to nine years. His conviction was affirmed by the Appellate Division of the Superior Court of New Jersey, and the New Jersey Supreme Court denied certification. State v. Gomes, 57 N.J. 434, 273 A.2d 61 (1971). Thereupon relator filed the present petition for a writ of habeas corpus. Since the issues raised in the present petition have already been presented to the state courts, state remedies have been exhausted, as required by 28 U.S.C. § 2254. Roberts v. LaVallee, 389 U.S. 40, 88 S.Ct. 194, 19 L.Ed.2d 41 (1967); cf. Picard v. Connor, 404 U.S. 270, 92 S.Ct. 509, 30 L.Ed.2d 438 (1971).
Relator contends that his identification at a preindictment “lineup” in the absence of counsel denied him his right to counsel under the Sixth Amendment, and that evidence of the identification should therefore have been excluded from his trial. He contends in addition that his in-court identification should have been excluded because it was tainted by the prior identification, which took place under circumstances that were unnecessarily suggestive.
The facts are these: On the night of January 21, 1968, relator and two companions were patrons of the Six Corners Tavern in Newark. While they were in the tavern, someone threw some beer which splashed several other patrons of the tavern, among them Victor Jeffries. Jeffries approached relator and the two companions and during the resulting altercation somebody slugged Jeffries. Sometime thereafter Jeffries died.
The bartender was making a sandwich in the kitchen during the scuffle, but returned from the kitchen as relator and the two companions left the tavern. He wrote down the license number of their car, and gave the number to the police. A call was sent out over police radio, and the three men were arrested in their car five blocks from the tavern, traveling faster than the posted speed limit.
The police returned to the tavern with the three arrested men, who were handcuffed, about half an hour after the slugging. About six patrons of the tavern were present, including Allen Rome. The six were asked, “Are these the ones?” Everyone responded in the affirmative. Then, in response to a police question, Rome picked out relator as the one who had done the actual slugging.
In his testimony at a hearing out of the presence of the jury, the witness Rome recounted the events at the tavern, including the identification of relator there, and identified relator in court as the one who slugged the decedent. Further questioning revealed that Rome had seen relator for a considerable time in the tavern prior to the slugging; that he had seen the motion of the fatal punch although he had not seen the punch land because a pole was in the way; that after the slugging he saw that the man who had thrown the punch was relator; and that after the punch the relator yelled “knockout” and left the tavern. The trial judge held that the identification in the tavern would be admissible at trial, along with the in-court identification.
Since this appeal has been pending, the Supreme Court has decided Kirby v. Illinois, 406 U.S. 682, 92 S.Ct. 1877, 32 L.Ed.2d 411 (1972). That case held that the Sixth Amendment right to counsel at lineups, recognized in United States v. Wade, 388 U.S. 218, 87 S.Ct. 1926, 18 L.Ed.2d 1149 (1967), does not extend to those lineups that take place prior to commencement of “adversary judicial criminal proceedings.” 406 U.S. at 682, 92 S.Ct. 1877. Because Kirby has thus limited Wade, and because in the present case formal proceedings against relator had not begun at the time of the out-of-court identification, relator had no right to counsel at the identification. Therefore we have no reason to decide whether the identification was a proper on-the-scene identification within the scope of United States v. Gaines, 450 F.2d 186, 196-198 (3d Cir. 1971).
Even though relator had no right to counsel at his on-the-scene identification, that identification nevertheless should have been excluded from his trial if it was carried on in a manner that was “unnecessarily suggestive and conducive to irreparable mistaken identification.” Kirby v. Illinois, supra, 405 U.S. at 691, 92 S.Ct. at 1883, citing Stovall v. Denno, 388 U.S. 293, 87 S.Ct. 1967, 18 L.Ed.2d 1199 (1967), and Foster v. California, 394 U.S. 440, 89 S.Ct. 1127, 22 L.Ed.2d 402 (1969). We have examined the record with care and we are convinced that the identification of relator in the tavern was not unnecessarily suggestive or conducive to misidentification. Thus admission of the identification at relator’s trial was not improper. See Stovall v. Denno, supra; United States v. Gaines, supra.
Relator’s final argument is that his identification by the witness Rome in court was improper since it was “tainted” by the identification in the tavern and by Rome’s exposure to relator’s photograph prior to the trial. Because we hold that the identification in the tavern was not improper, we need not consider whether the in-court identification was “tainted” by that identification. Rome’s testimony at the pretrial hearing established, however, that his in-court identification was not based on the lineup or upon the photograph, but was based upon his observations of relator prior to and during the time that the slugging took place. There was no “taint.”
The District Court’s order dismissing the petition will be affirmed.
. The witness Rome had also identified the relator from photographs, but the trial judge excluded evidence of the photographic identification. He found, however, that Rome’s in-court identification was not “tainted” by the photographic identification, but instead rested upon an independent basis.
. Although only four justices joined in the opinion of Justice Stewart, who announced the result, the opinion of Justice Powell, who concurred in the result, indicates his agreement with this reading of Kirby.
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.
HAYS, Circuit Judge:
Petitioner asks us to review and set aside an order of the National Labor Relations Board based upon a finding that petitioner violated Section 8(a) (1) and 8(a) (5) of the National Labor Relations Act, 29 U.S.C. § 158(a) (1) and (a) (5). The Board seeks enforcement. We deny the petition and enforce the order.
The Board held that petitioner violated Section 8(a) (1) of the Act by threatening employees, by granting benefits to discourage joining the union, by coercive interrogation and by encouraging employees not to cooperate with the Board in the investigation of unfair labor practices. The Board held that petitioner violated Section 8(a) (5) and (1) by refusing to recognize and bargain with the union.
The union involved is the United Electrical, Radio and Machine Workers of America (UE) Local 218. The plant of the employer at which the unfair labor practices occurred is located in Springfield, Vermont.
In May 1962 the union undertook a campaign to organize petitioner’s employees. By August 14 the union had authorization cards from 198 of petitioner’s 337 bargaining unit employees. On that date the union notified the employer by letter that it represented a majority of the employees and asked for a bargaining meeting. The petitioner replied to the union’s letter declining to meet with the union and stating the company’s “very definite policy” of refusing recognition in the absence of Board certification. The employer then began a campaign of vigorous opposition to the union, carried on largely by letters and notices to the employees. In the meantime the union had filed a representation petition with the Board.
Interrogation
A number of employees were questioned by supervisory officials as to their attitude toward the union. The Board could properly find that this interrogation was coercive since it took place in an atmosphere of active opposition to the union, Bourne v. NLRB, 332 F.2d 47, 48 (2d Cir. 1964), without explanation to the employees of the purpose of the questioning and under circumstances indicating that it had no legitimate purpose, Edward Fields, Inc. v. NLRB, 325 F.2d 754, 758-759 (2d Cir. 1963) and was unaccompanied by any assurance against reprisals, see NLRB v. Lorben Corporation, 345 F.2d 346, 348 (2d Cir. 1965). Numerous instances of questioning involved particularly threatening connotations because employees were interrogated in connection with interviews concerning eligibility for merit increases.
Threats
There was substantial evidence to support the Board’s finding that the employer threatened employees with reprisals. Questioning of employees as to union activity in connection with discussion of merit increases, referred to above under “Interrogation” could well have been considered by the employees to carry with it the implication that those who favored the union would not receive an increase. One of the supervisors, when he learned that an employee was a member of the union organizing committee asked him, “Do you like your job?” On another occasion a supervisor told an employee that if the union won he could not be transferred from one job to another when work was slack but would be sent home.
Benefits
During the period prior to the representation election the employer announced an increase in pension benefits. The announcement was coupled in an advertisement published in the local newspaper and in a notice sent to employees with material urging employees to vote against the union. The Board could properly hold that this promise of benefit was a violation of Section 8(a) (1). NLRB v. Exchange Parts Co., 375 U.S. 405, 409, 84 S.Ct. 457, 11 L.Ed.2d 435 (1964); NLRB v. D’Armigene, Inc., 353 F.2d 406, 408 (2d Cir. 1965).
Dissuading employees from cooperation with the Board
We are agreed that the Board could properly find that the employer violated the Act by posting a notice to employees stating that they were under no obligation to assist the Board in connection with its investigation of unfair labor practice charges, and that they did not “have to talk with these people.” This notice accompanied by the employer’s assurance that it would resist the Board’s efforts “with every force available to free men,” constituted an unjustified obstruction of the Board’s processes. See Henry I. Siegel Co. v. NLRB, 328 F.2d 25, 27 (2d Cir. 1964).
A majority of the court believes that the Board’s finding of violation in the employer’s reinterviewing the employees who testified at the Labor Board hearing between their direct and cross-examination was unjustified. This determination requires no modification of the Board’s order.
Refusal to Bargain
The Board’s finding that on August 14, 1962 when the union wrote to the employer to request bargaining, the union had a majority of the employees is supported by substantial evidence in the record. See NLRB v. Gotham Shoe Mfg. Co., 359 F.2d 684 (2d Cir. 1966).
The authorization cards signed by the employees were free from ambiguity. The evidence credited by the Board, and therefore accepted by us, see NLRB v. Warrensburg Board & Paper Corporation, 340 F.2d 920, 922 (2d Cir. 1965), established that the union’s organizers made no misrepresentations to the employees as to the purpose of the cards and the effect of their signatures. Indeed the record shows that a representative of the union correctly explained to the employees at the first organizational meeting the methods by which recognition could be attained and at no time were the employees told that the sole purpose of signing the cards was to secure an election. See NLRB v. Gotham Shoe Mfg. Co., supra; NLRB v. S. E. Nichols Company, 380 F.2d 438, 444-445 (2d Cir. 1967).
There is also adequate support for the Board’s conclusion that the employer did not have a good faith doubt of the union’s majority status. Not only did the employer not suggest a card check but it rejected the possibility that such a verification would be acceptable by announcing its “very definite policy” of refusing any evidence of representational rights other than a Board certification.
The history of violations of Section 8(a) (1) is sufficient to establish that the employer deliberately destroyed the union’s majority and the Board’s order to bargain is an appropriate method of correcting this default. Franks Bros. Co. v. NLRB, 321 U.S. 702, 64 S.Ct. 817, 88 L.Ed. 1020 (1944); NLRB v. International Union, Progressive Mine Workers, 375 U.S. 396, 84 S.Ct. 453, 11 L.Ed.2d 412 (1964) (reversing per curiam 319 F.2d 428 (7th Cir. 1963) which directed an election because such a long period of time had passed since the union had attained its majority status).
The General Counsel’s Delay in Issuing the Complaint
The General Counsel delayed issuing the complaint for about 15 months while awaiting a Board decision clarifying the rule as to sustaining Section 8 (a) (5) charges where the union has participated in an election and lost. Mere delay in the issuance of the complaint is insufficient ground for the denial of relief.
“The company urges that, because of the lapse of time between the occurrence of the unfair labor practices and the Board’s final decision and order, and because the union was repudiated by the employees subsequently to the events recounted in this opinion, enforcement should be either denied altogether or conditioned on the holding of a new election to determine whether the union is still the employees’ choice as a bargaining representative. The argument has no merit. Franks Bros. Co. v. National Labor Relations Board, 321 U.S. 702 [64 S.Ct. 817, 88 L.Ed. 1020]; National Labor Relations Board v. P. Lorillard Co., 314 U.S. 512 [62 S.Ct. 397, 86 L.Ed. 380]; National Labor Relations Board v. Mexia Textile Mills, Ina, 339 U.S. 563, 568 [70 S.Ct. 826, 829, 833, 94 L.Ed. 1067]. Inordinate delay in any case is regrettable, but Congress has introduced no time limitation into the Act except that in § 10(b).” NLRB v. Katz, 369 U.S. 736, 748 n. 16, 82 S.Ct. 1107, 1114, 8 L.Ed.2d 230(1962).
We have examined the other points made by the petitioner and find them to be without merit.
Petition denied. Order enforced.
. (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;
(5) to refuse to bargain collectively with the representatives of his employees, subject to the provisions of section 159(a) of this title.
. I hereby request and accept membership in the above named union, and authorize it to represent me, and in my behalf to negotiate and conclude all agreements as to hours of labor, wages, and all other conditions of employment.
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.
CHAPMAN, Circuit Judge:
Appellant North Carolina Farm Bureau Mutual Insurance Company ceased paying certain benefits to appellees, former members of its sales force, when they violated a condition of payment. Appellees filed this action, alleging that the condition was unenforceable under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 etseq. (1982 & Supp. II 1984) (ERISA). The central issue is whether the court erred in ruling that the former agents had been employees of Farm Bureau for purposes of ERISA and that the benefits provisions of their contracts established employee pension benefit plans. Finding no pension plan within the meaning of ERISA, we reverse.
I
Farm Bureau markets its insurance through a sales force of agents and agency managers who solicit applications for insurance. Farm Bureau has treated the members of its sales force as independent contractors. They are paid through commissions, which are reported to the IRS on Form 1099, not Form W-2. Farm Bureau withholds neither FICA nor FUTA from the commissions. Farm Bureau has a funded pension plan that complies with ERISA for its full-time employees, but the members of the sales force do not participate in that plan.
The contracts provide for termination at the end of the year that the agent or agency manager reaches age 65 or by either party upon ten days notice, without cause. The agent’s contract contains the following provisions:
RETIREMENT, DEATH AND DISABILITY BENEFITS
14. Upon termination of this contract, Company shall pay to agent ... an amount equal to the agent’s renewal commission for the last 12 months prior to termination of this contract. The following provisions shall apply to this payment:
(A)Payment shall be made unless contract is terminated for reasons of fraud or criminal act.
(B) Agent shall have been agent for Company for at least five consecutive years prior to termination of contract.
(C) Amount payable shall be paid in 60 equal monthly payments beginning 60 days after termination of contract.
(D) Agent shall not be licensed to sell any kind of insurance in North Carolina during the payment period.
(G) Company shall deduct above payment from the commission payable to the incoming agent in equal monthly amounts for 60 consecutive months beginning the first full month after the Agent takes over the territory.
The agency manager’s contract contains similar provisions. Farm Bureau has no fund or trust for the payment of these benefits
Plaintiffs are former agents or agency managers for Farm Bureau who, during the payment period, became licensed to sell insurance with other companies in North Carolina and solicited sales in competition with Farm Bureau. When Farm Bureau discontinued payment of their benefits, they instituted this action in the U.S. District Court for the Eastern District of North Carolina. Plaintiffs alleged that they had been employees of Farm Bureau covered by ERISA and that the benefits provision of their contracts established a pension plan under ERISA. They alleged that the condition under which Farm Bureau ceased making payments violates ERISA’s vesting provisions, 29 U.S.C. § 1053 (1982 & Supp. II 1984), and thus is invalid and unenforceable. They sought to recover sums past due and sought a declaratory judgment that the remaining amounts would become due in the future.
On the parties’ motions for summary judgment, the court granted partial summary judgment for plaintiffs, ruling that the agents and agency managers had been employees of Farm Bureau covered by ERISA and that the termination benefits were pension plans under ERISA. The court found that the benefits were vested under the contract and that the clause requiring that the plaintiffs not be licensed to sell insurance during the payment period was invalid and unenforceable because of ERISA’s nonforfeitability requirements.
On Farm Bureau’s motion to alter or amend the judgment, the court ruled that the five-year vesting period in the contract exceeded the requirements of § 1053(a)(2)(A), that an employee with at least ten years of service has a nonforfeitable right to his entire accrued benefit derived from employer contributions. The court ruled that although the benefits were vested after five years, they were forfeita-ble under the condition until the agent had ten years of service; therefore, those plaintiffs with less than ten years of service were barred from recovery. 643 F.Supp. 633. Following trial on the issue of whether plaintiffs were covered by the highly-compensated employee exception to ERISA’s vesting requirements, § 1051(2), the court entered an order incorporating its prior rulings and holding that plaintiffs were not covered by the exception. Farm Bureau appeals, and plaintiffs cross-appeal.
II
The parties have raised numerous issues, but we need address only one. Farm Bureau argues that even if plaintiffs were its employees under ERISA, the court erred in determining that the contractual provisions establishing the termination benefits constituted a pension plan within the meaning of ERISA. Given the specific facts here, we agree.
The nonforfeitability requirements of ERISA, set forth in § 1053(a), apply to pension plans, which are defined as follows:
Except as provided in subparagraph (B) [regarding the Secretary’s power to create certain exempt categories], the terms “employee pension benefit plan” and “pension plan” mean any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that by its express terms or as a result of surrounding circumstances such plan, fund, or program—
(i) provides retirement income to employees, or
(ii) results in a deferral of income by employees for periods extending to the termination of covered employment or beyond,
regardless of the method of calculating the contributions made to the plan, the method of calculating the benefits under the plan or the method of distributing benefits from the plan.
29 U.S.C. § 1002(2)(A) (1982). The provisions do not establish any deferral of the agent’s and agency manager’s income. Thus, the question is whether they provide retirement income.
In two opinion letters prepared by the Office of Pension & Welfare Benefit Programs, the Department of Labor has indicated that employment contracts that include provisions for post-retirement income are not themselves “plans” within the meaning of ERISA. The first letter dealt with a situation in which an employee entered into an agreement with his employer under which he would be paid a pension benefit upon his reaching age 65; however, he was terminated from his employment before any of his benefit was vested. The opinion letter states that the agreement “is an employment contract and is not an ‘employee pension benefit plan’ as that term is defined in the Act.... [T]he agreement is not subject to the requirements of ... ERISA.” U.S. Department of Labor Opinion Letter 76-79 (May 25, 1976). The second letter dealt with an agreement between a corporation and an employee/50-percent shareholder to provide him additional retirement compensation for past services in return for certain consideration. The opinion letter states: “Under the circumstances, the agreement is an individual contract with Mr. (x) to render specific personal services and does not constitute an employee pension benefit plan within the contemplation of section 3(2) of ... ERISA.” U.S. Department of Labor Opinion Letter 76-110 (Sept. 28, 1976).
It was primarily on this basis that the court held in Jervis v. Elerding, 504 F.Supp. 606 (C.D.Cal.1980), that “a contract between an employer and individual employee providing for post-retirement or post-termination in-ldnd compensation is not a ‘plan, fund, or program’ within the definitional framework of ERISA.” Id. at 608. That case involved an agreement between an apartment complex owner and his manager. The parties agreed that following the termination of the manager’s employment, the manager would receive an apartment and utility services at no cost to her for the same number of months each year as the number of years that the manager had worked for the owner. This apartment was to be provided regardless of the reason for termination, whether by retirement or mutual cancellation or even breach by either party. When the manager left her position and the owner refused to provide the apartment, the manager brought an action under ERISA. The court dismissed the ERISA claim finding that the parties simply entered into an employment contract and did not create an employee pension benefit plan.
We find a similar situation in this case. The entire thrust of the agent’s and agency manager’s agreements involved here was to establish the parameters of the relationship between Farm Bureau and the agent or agency manager. The agreement appointed him to his position, stated his rights and duties, established the rate of his compensation, and discussed the term of the relationship. The post-termination benefits are calculated on the basis of the agent’s commissions for the prior year and, in that respect, are like a final commission, paid over an extended term.
Further, the nature of the payments is not indicative of a pension or retirement plan. The provisions in question are entitled “Retirement, Death and Disability Benefits.” Of course, the nature of the benefits cannot be determined from the title alone. The terms make it clear that the benefits were not limited to termination for death, disability, or retirement. The agent could terminate his contract at any age, and the payments were to be made regardless of the reason for termination except when the agent was terminated for reasons of fraud or criminal act. The amount of the payment is tied to only one factor, the amount of business in the last year prior to termination. Finally, the payments are recouped from the individual’s successor. In sum, the benefits are in the nature of a buy-out in which the departing agent receives payments based on what he leaves behind in the way of business for his successor. If the departing agent goes into competition with his successor, he is destroying the resource that would be used to pay him.
Under these specific circumstances, we find that the agreements were simply employment or agency contracts, that the terms in question simply established a final form of compensation for the business created by the agent, and that these payments do not constitute retirement income. Therefore, we find that these benefits are not pension plans and do not come within the scope of ERISA. Accordingly, the judgment of the district court must be
REVERSED.
. Thus, we need not determine whether the district court erred in ruling, on a motion for summary judgment, that plaintiffs were employees of Farm Bureau.
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
VAN DUSEN, Circuit Judge.
Netherlands Mead N. V. (Mead), the defendant, and Walter, the plaintiff, appeal and cross-appeal the January 7, 1974, judgment of the district court.
This suit resulted from the disintegration of Walter’s association with Mead. Prior to that association, Walter and his wife, operating through Walter Quick Freeze Corporation (WQF), were in the retail food business in the Virgin Islands. In 1959, in connection with this business, Walter negotiated the purchase of a cargo ship, the Santo Antonio. Rather than purchase the ship through WQF, however, Walter entered into a complicated arrangement with Mead, a corporation owned and controlled in 1959 by Walter’s friend, Reynolds. This arrangement involved four parts. Mead purchased the Santo Antonio. On January 1, 1960, WQF and Mead signed a 10-year agreement which made WQF the preferred customer of Mead’s “Shipping Division,” i. e., the Santo Antonio, which guaranteed Mead specified minimum gross revenues and which granted to Mead 50% of WQF’s net profits. At the same time, Mead and Walter signed a 10-year employment agreement which made Walter a “Managing Director” of Mead’s Shipping Division. And Walter purchased eight profit-sharing debentures from Mead, each having a face value of $1,000. Each debenture entitled Walter to 4.4% of the annual net profits of the Shipping Division.
This litigation concerns the employment contract and debentures. Some of the terms of these agreements must be set forth for an understanding of the issues. Clauses 2 and 7 of the employment agreement provided:
“(2) During the term of this Agreement, Walter shall devote such time and energy to the furtherance of the business of the Employer as its Managing Director of the Shipping Division as may be required and, except in connection with his employment with Walter Quick Freeze Corporation, Walter shall not act in any advisory or other capacity for any individual, firm, association or corporation other than for the first party in any matter or matters without the prior written consent of the employer.
“(7) Walter shall not during the term of this Agreement and for a period of two (2) years following the expiration of the term provided for engage directly or indirectly or own an interest in any business which shall be in competition with the shipping business conducted by the Employer or by any subsidiary of the Employer or by any other business in which the Employer may have a controlling or substantial interest.”
In clause 3, the agreement gave Walter “sole responsibility for the management of the Shipping Division,” but directed Walter to “report, as required, to a committee appointed by the Board of Directors of the Employer for its Shipping Division.” Clause 6 provided that Walter could be removed only for cause.
The debentures provided, in pertinent part:
“This Debenture is registered and is nontransferable without the prior written consent of the Managing Director of the Company. In the event the registered holder hereof ceases, for any reason, to be associated with the Shipping Division of the Company either as officer, director or employee or if the registered holder of this Debenture takes any action to sell, assign, convey, transfer or pledge his interest in this Debenture without the prior written consent of the Managing Director of the Company, the Company may, at its option, redeem this Debenture at its face amount plus any interest the holder would be entitled to receive had this Debenture matured at that time.
“Upon sending notice of redemption to the registered holder of this Debenture at his registered address together with payment of such face amount and interest, such holder shall cease to have any rights hereunder.”
The district court observed that the “foundation stone of these intricate arrangements was the underlying personal relationship between Reynolds and Walter, between whom there was highest confidence and respect, and who counted on the venture to succeed primarily because of this mutual esteem.” 9 V.I. at 447. In 1961 Walter lost control of WQF and was dismissed as its manager in January 1962. By January of 1963, one O’Neil had acquired full ownership of Mead; by May of that year O’Neil controlled WQF as well.
As the ownership of the two companies changed, potential sources of disagreement between Walter and Mead became increasingly active. In November of 1962, and repeatedly thereafter, the directors of Mead requested Walter to transfer to Mead’s account in Miami, Florida, all funds in excess of $15,000. which Walter maintained in St. Thomas for the account of the Santo Antonio. Walter initially responded that $15,000. was too little for the operation of the ship, adding that he lacked confidence in the directors of Mead, but finally made a substantial transfer in July of 1963. During the same period, Walter surreptitiously began the construction of a new supermarket. This project was not revealed to O’Neil until August 12, 1963, when Walter attempted to use his interest in the new market to advantage in negotiating his future relations with O’Neil..
Despite Walter’s plans for the new market, the negotiations led only to his being discharged as manager of the Shipping Division on or about September 10, 1963. On October 4, 1963, Walter sold the partially completed supermarket to a competitor of WQF, Pueblo Supermarkets. On October 19, 1963, Mead’s Managing Director wrote Walter a letter which attempted, pursuant to the above-mentioned clauses of the debenture, a redemption of the six debentures still owned by Walter. The letter recited that Mead was exercising its right to redemption. It stated that $13,412.11 m interest had accrued on the debentures through December 31, 1962, but informed Walter that interest for 1963 could not be computed until Walter relinquished the necessary records. Thus, the total amount which Mead could compute to be due Walter was $19,412.11, representing $6,000. principal plus interest through 1962. However, rather than tendering this full amount, Mead proposed to pay Walter $10,000. upon receipt of the debentures. This latter amount represented the full amount computed, less an amount for which Mead claimed Walter had not properly accounted, conveniently estimated to be $9,412.11. Walter did not surrender the debentures and the $10,000. was never paid.
In December 1963, the new Pueblo market opened across the street from one of the WQF markets. WQF, which had a profit before taxes of $38,371.47 in 1963, lost $296,139.81 in 1964. Mead’s 50% interest in WQF’s profits suffered accordingly.
Walter filed this suit (see note 2 above) September 20, 1963, claiming both damages due to wrongful discharge and amounts due on the debentures. Mead counterclaimed for damages resulting from Walter’s alleged breaches of clauses 2 and 7 of his employment contract. The case came to trial on January 10, 1970, in the District Court of the Virgin Islands. The district court’s judgment was entered on January 7, 1974; it was supported by a memorandum dated March 27, 1973. The court found that Walter’s discharge had been proper, but awarded Walter principal and interest on the debentures through their expressed maturity date because it found Mead’s attempted redemption of the debentures to have been ineffectual. The court also found that Walter did not breach clauses 2 and 7 of his employment contract when he began construction of the new supermarket. Other parts of the district court’s judgment were not challenged on appeal.
I. The Employment Contract
Both parties object to the district court’s interpretation of the employment contract between Walter and Mead.
Walter contends that the district court erred in holding that his refusal to transfer to Mead the amounts in excess of $15,000. was a sufficient reason for his discharge. He maintains that the law of agency should control his contract with Mead, and advances three arguments for reversal under the agency rubric: first, that the directives to transfer funds were not issued by Walter’s “principal”; second, that the directives were unreasonable within the meaning of Restatement (Second) of Agency § 385 (1957); third, that Mead breached the employment contract in making the demand so that any subsequent breach by Walter was excused.
Although we find the district court’s opinion on the question of Walter’s discharge to be satisfactory, we will briefly respond to each of the above contentions. With respect to Walter’s first argument, the instructions to Walter were issued by Messrs. Lidstone, O’Neil, and Smeets. The district court, with its more thorough knowledge of the complex understandings between the various participants, never doubted that these men had authority to issue the instructions; instead, the court occupied its opinion with the question whether the instructions were merely suggestions. See 9 V.I. at 451-57. But Walter contends that Lidstone, O’Neil and Smeets were at best his equals in Mead, not his superiors. Walter relies, for example, on the fact that both Lidstone and he were called “Managing Directors of the Shipping Division.” It is true that the corporate titles for these men do not give a clue as to their comparative responsibilities. But Mead has directed our attention to minutes of a December 30, 1959, meeting of the shareholders of Mead which clarify their relative responsibilities:
“7. Proposal to approve the 'nomination by the Management of Mr. Ahto Walter, Mr. Ian Major, Mr. Richard J. Reynolds and Herrick K. Lid-stone as Special Attorneys of the company in charge of the Shipping Division of the company referred to above, Mr. Walter, Mr. Reynolds and Mr. Lid-stone each with the title of ‘Managing Director of the Shipping Division of the Company’ and Mr. Major with the title of ‘Director of the Shipping Division of the Company’, with the capacity in either Mr. Walter or Mr. Major to represent the Company jointly, judicially and extra judicially, in all matters concerning said Shipping Division, but only with the approval of either Mr. Reynolds or Mr. Lidstone, and with the capacity in Mr. Walter to represent the Company singly, judicially and extra judicially, in all matters concerning the routine, day-to-day affairs of the Shipping Division, such as from the day of this meeting.
“These proposals put to the vote, are unanimously adopted by the meeting.”
It was at this meeting that Mead’s shareholders ratified the contracts between WQF, Walter, and Mead. These minutes are, therefore, important evidence on the parties’ intent in making Walter a “Managing Director” of the Shipping Division, and in giving him “sole responsibility” for its operation. A fair reading of the minutes suggests that decisions regarding the overall management of the Shipping Division were made subject to Mr. Lidstone’s approval, but the implementation of such decisions was left to Walter’s sole discretion. The total amount of cash available for immediate withdrawal by Walter would seem to fall into the former category; by contrast, decisions regarding the proper disbursement of the cash for the efficient operation of the ship would be left entirely to Walter. We conclude, therefore, that at least Lidstone was empowered to direct Walter to transfer funds in excess of $15,000.
Walter’s second and third arguments have also failed to persuade us. Restatement (Second) of Agency § 385 (1957) provides:
“(1) Unless otherwise agreed, an agent is subject to a duty to obey all reasonable directions in regard to the manner of performing a service that he has contracted to perform.
“(2) Unless he is privileged to protect his own or another’s interests, an agent is subject to a duty not to act in matters entrusted to him on account of the principal contrary to the directions of the principal, even though the terms of the employment prescribe that such directions shall not be given.”
Comment “a” to subsection (1) explains in part:
“The agent cannot properly refuse to obey on the ground that the obedience will be injurious to the principal’s affairs, unless the agent’s compensation is dependent upon the execution of the undertaking or unless it has been agreed that the agent’s discretion shall control.”
In Walter’s mind, he refused to obey the instructions to transfer funds in order to protect the interests of the Shipping Division, which was entrusted to him, and on the success of which his participating interest in the debentures depended. For these reasons, he believes that the above sentence in comment “a” speaks directly to his situation. We cannot agree. Since we have found that the amount of cash at Walter’s disposal was, by agreement, left to the approval of Lidstone, we hold that the parties had “otherwise agreed” for purposes of § 385, so that their contract, and not comment “a,” controls. For the same reason, Mead did not breach its employment agreement with Walter when it demanded the transfer of funds. Having found that Mead’s requests for the funds were authorized and reasonable, we must conclude that the district court correctly held that Mead was privileged to discharge Walter upon his refusal to transfer the funds. See Restatement (Second) of Agency § 409(1) (1957).
We turn now to Mead’s claim that the district court should have found that Walter violated clauses 2 and 7 of his agreement with Mead when he began constructing the new supermarket. Mead argues, in effect, that these clauses were intended to embody Walter’s duty of loyalty to Mead. Applying standard principles concerning the duty of loyalty, Mead contends that Walter should be required to account for the profits Mead lost as a result of the opening of the Pueblo supermarket.
The problem with Mead’s analysis is that Walter’s actions slip between clauses 2 and 7. Clause 2 does not prevent Walter from acting in his own interest, but only from working for others. Clause 7 by its syntax prohibits competition only with the shipping business of Mead. Although the WQF — Mead contract linked the fortunes of the two companies, Mead also did shipping for other customers. It is, therefore, not appropriate to equate competition with WQF with competition with Mead’s Shipping Division for purposes of clause 7. We find that Walter’s conduct did not violate the express employment contract.
Even if we assume, without deciding, that Walter’s conduct would violate a duty of loyalty Walter owed to the corporation as its officer on common law principles, there remains the question whether the duty of loyalty was not subject to contractual modification in this very close corporation. We find that it was. At the time the employment contract was made, Mead was owned by Walter’s friend, Reynolds. O’Neil, who had stepped into Reynolds’ shoes by 1963, was surely apprised of the terms of Walter’s contract. Whereas strong principles of loyalty embody society’s ordinary expectations for the conduct of fiduciaries, such principles should not prevent the shareholders of this close corporation, Reynolds and later O’Neil, from entering into an agreement which, by clauses 2 and 7, restricted Walter’s duty of loyalty. We therefore affirm the district court’s holding that Walter did not breach these clauses when he began construction of the new supermarket.
The product of the district court’s resolution of these issues is that neither party will recover a large expectation interest under the employment contract. This aptly reflects the impasse which relations between Walter and Mead reached during 1962 and 1963. The mutual trust necessary for their continuing contractual cooperation had vanished; in retrospect, we can see that the complete failure of their arrangement was inevitable. Were we to place the blame caused by that failure on one of the parties by granting the other’s expectation interest, we would distort their agreement and the mutual failure of their trust.
II. The Debentures
The district court found that Mead’s deduction of $9,412.11 from the amount it had computed to be due Walter through 1962 was not authorized under the terms of the debentures set forth above. It held that the attempted redemption of the debentures was, therefore, ineffectual, so that Walter’s rights continued through January 1, 1970, the express maturity date of the debentures. Had the redemption been effectual, Walter would have recovered something over $20,000.; instead, he recovered $137,-514.71 in interest on the debentures, $6,000. principal, and $56,808.89 accrued interest from the dates on which the annual interest payments were due through March 27, 1973, the date of the district court’s memorandum.
Mead objects to this result on several grounds. It first argues that its deduction of the $9,412.11 was within the terms of the debentures, and therefore did not defeat its attempted redemption. We agree with the district court that the deduction was improper. However, Mead also contends that any defect which the court finds in the manner of its attempted redemption should not result in liability for interest through the express maturity of the debentures. We have concluded that such contention must be granted and the district court judgment must be reversed on this issue. On this record, Walter is estopped from raising any objection to the attempted redemption other than the one which he raised in his original complaint and which he maintained consistently thereafter, namely that his discharge had been improper so that Mead had no option to redeem the debentures under the redemption clause set forth above. By including this redemption issue in the complaint, Walter was the first party to raise it.
Mead contends, and Walter does not deny, that Walter’s initial written statement of position concerning the attempted redemption was his complaint in the district court. Walter’s original complaint stated a cause of action for improper discharge and predicated his right to participating interest through the debentures’ maturity date on the ground that his employment had been wrongfully terminated. The complaint proceeds as if Mead had already attempted to redeem the debentures, even though the complaint was filed nearly a month before Mead sent its October 19, 1963, letter attempting redemption. One must infer that, on the basis of their strained relationships, Walter anticipated that Mead would exercise its option to redeem the debentures upon Walter’s discharge, and that Walter was eager to record his claim on the debentures as part and parcel of his claim for improper discharge. Coming as it did before Mead’s letter, the complaint nowhere objected to the technical defects in the October 19, 1963, letter which Walter now asserts as having made that letter ineffectual to redeem the debentures.
On receipt of the October 19, 1963, letter, Walter did not amend his complaint to include his technical objections to the attempted redemption, nor did he take any other action calculated to apprise Mead of these objections. Indeed, the record indicates that Walter never thought of such objections until their possibility was raised by the trial judge near the end of the trial, as noted below. The pre-trial materials, which, of course, extend over a six-year period during which interest on the debentures was constantly accruing, were entirely silent on the subject until plaintiff’s October 1969 Statement (see below) was filed. It is clear, therefore, that Walter’s objection to the attempted redemption had not changed during this period from that of his original complaint. His “Statement of Factual and Legal Questions Involved,” filed October 20, 1969, restated exactly the same position, that he was entitled to recover on the debentures because his discharge had been improper, as follows:
“PLAINTIFF’S STATEMENT OF FACTUAL AND LEGAL QUESTIONS INVOLVED
“We herewith consolidate for the Court all of the factual evidence and outline the state of the case and the legal issues involved..
“II. THE ISSUES
“1. With respect to the non-competition provisions of the Employment Contract of January 1, 1960, are the provisions unfair, unreasonable, and unenforceable? Are they greater than required for the protection of the employer defendant; do they impose undue hardship upon the plaintiff employee; are they therefore illegal and unenforceable?
“2. Was Plaintiff improperly discharged from his position as Manager of the Shipping Division of Netherlands Mead?
“3. If he was improperly discharged, what is he entitled to under the terms of the debentures and the terms of the Employment Contract?
“4. If he was properly discharged, is Netherlands Mead entitled to relief under any of its counterclaims?” (Emphasis supplied.)
Document 66 at 1, 6-7. The theory on which Walter now relies, that the October 19, 1963, letter failed to comply with the method of redemption provided in the debentures, was first suggested by the trial judge, su a sponte, on January 21, 1970, after the debentures had matured (on January 1, 1970) and after plaintiff had rested his case (N.T. 671):
“THE COURT: The next question: are you suggesting on this motion that the Court dismiss Mr. Walter’s complaint in its entirety or partially?
“MR. ROSENBERG: Partially. Do you want me to elucidate on that?
“THE COURT: Well, the part that you don’t want — that you are not suggesting a dismissal on, I think, occurs to me, that’s why.
“MR. ROSENBERG: Well, he is entitled, as we suggest in our pleadings, I believe, to the earnings of the debentures prior to his discharge.
“THE COURT: Now, let’s get to that. If we agree that there were grounds for his discharge, it is clear that the debentures say that when he ceases to be an employee his right to hold them ceases also; isn’t that correct?
“MR. ROSENBERG: That’s right.
“THE COURT: Now, the debentures, however, provided how they should be redeemed. If they properly discharged him, did that relieve them of the obligation to redeem the debentures in the manner stated on the face of them?”
N.T. 710 — 11. The novelty of this theory was evident when, shortly after the above exchange, the district court had to correct Walter’s attorney, Mr. Ireland, who still believed that Walter’s claim on the debentures depended on proving that he had been improperly discharged:
“THE COURT: Please. And may I ask Mr. Ireland a question? I meant to ask it and forgot. Do you agree with Mr. Rosenberg that if there was in fact good cause to discharge Mr. Walter the whole case falls?
“MR. IRELAND: The whole case falls.
“THE COURT: Other than as to the debentures, if there is a finding that he was properly discharged, do you agree that that ends the plaintiff’s case, except in this area we are discussing now?”
N.T. 713.
Mead contends that, in reliance on the theory first seen in Walter’s complaint and maintained by Walter for six years until it was finally supplanted at trial at the district court’s suggestion, it did not correct the alleged deficiencies in its tender by depositing into court the amount Walter claimed Mead owed him. Instead, Mead assumed that its obligations to Walter on the debentures would stand or fall depending on whether the court found that its discharge of Walter had been justified. A venerable case in this Circuit is directly on point:
“Accordingly, when a party, with full knowledge of the facts... has selected and given one of several available reasons for his refusal to perform his contract or discharge his duty and after suit changes his position and seeks to rely upon the others, federal courts in this circuit, looking to the reason of the rule and keeping in mind the distinction between waiver and es-toppel,... examine the record to find whether it appears that the party has misled his adversary or induced him to alter his position to his prejudice or has himself reaped an advantage by failing seasonably to assert the defense subsequently made — in other words, whether the facts raise an estoppel...
Second National Bank of Allegheny v. Lash Corp., 299 F. 371, 372 (3d Cir. 1924) (citations omitted). See also Ohio & Mississippi Ry. v. McCarthy, 96 U.S. 258, 268, 24 L.Ed. 693 (1878).
Mead’s argument is believable. The October 19, 1963, letter was not so grossly defective that Mead’s reliance on it can be considered unreasonable, particularly in light of the assumption both parties shared until more than half way through the trial that Mead would be liable on the debentures through their express maturity date only if the court found that Walter had been improperly discharged. And it is difficult to believe that a profitable corporation, had it been apprised that Walter objected to the manner of redemption, would not have eliminated the risk of a ten-fold increase in its liability by making a corrected tender into court. Walter’s only counter to this argument is that paragraph 15 of Mead’s Answer filed on May 7, 1965, shows that Mead was on notice of Walter’s objections to the manner of redemption. But paragraph 15, copied in the margin, does not argue that the attempted redemption was in formal compliance with the terms of the debentures, as it would have if Mead thought Walter’s objection went to the manner of redemption. Although it is not explicit, paragraph 15 appears to reflect Mead’s continuing belief that its obligations on the debentures had ceased as of December 31, 1962. This belief is re-fleeted in Mead’s recitations that it had elected to redeem the debentures after Walter had been properly discharged, and that Walter had failed to supply information necessary to compute interest due between December 31, 1962, and the date of redemption.
For these reasons, we have concluded that the record supports Mead’s assertion of an estoppel. The estoppel arose as the result of Walter’s position, first stated in his September 20, 1963, complaint and maintained consistently thereafter, until the suggestion of the district court itself on January 21, 1970, that Walter’s objection to the attempted redemption was that he had been improperly discharged. Since we have held that Mead’s attempted redemption of the debentures on October 19, 1963, was ineffectual, we hold that Walter is entitled to interest on the debentures through September 20, 1963, together with interest accrued through the date of judgment. So much of the district court’s judgment as is inconsistent with this holding will be reversed.
III. Attorney Fees
The district court granted Walter, as the prevailing party, $30,000. in attorney fees. It relied on 5 V.I.C. ch. 45 (1967), which at § 541 provides:
Ҥ 541. Costs defined
(a) Costs which may be allowed in a civil action include:
(6) Attorney’s fees as provided in subsection (b) of this section.
(b) The measure and mode of compensation of attorneys shall be left to the agreement, expressed or implied, of the parties; but there shall be allowed to the prevailing party in the judgment such sums as the court in its discretion may fix by way of indemnity for his attorneys fees in maintaining the action or defenses thereto.”
Since our holding on the debenture issue substantially diminishes Walter’s recovery, we must vacate the district court’s grant of attorney fees and remand so that the district court can decide, in its discretion under § 541(b), whether Walter should still recover attorney fees.
Even if we had affirmed on the debentures, we would feel constrained to vacate the district court’s grant of attorney fees, since the court appears not to have complied with the standards for taxing attorney fees which have been set forth in recent opinions of this Circuit. The applicable principles were recently collected and analyzed by this court in Lindy Bros. Bldrs., Inc. of Phila. v. American R. & S. San. Corp., 487 F.2d 161 (3d Cir. 1973), and Estien v. Christian, 507 F.2d 61 (3d Cir. 1975). If on remand the district court decides that Walter is still the prevailing party for purposes of 5 V.I.C. § 541(b), it should compute the attorney fees due Walter on the basis of the criteria stated in Lindy and reaffirmed in Estien.
IV. Conclusion
The district court’s judgment will be reversed with respect to Walter’s recovery on the debentures, with instructions to enter judgment for Walter in the debentures’ principal amount ($6000.00), plus participating interest accrued through September 20, 1963, plus interest on such participating interest amounts accrued from the dates the annual payments were due through the date of entry of the new district court judgment on the debentures. The district court’s judgment with respect to attorney fees will be vacated and remanded for further proceedings consistent with the criteria set forth under heading III above. In all other respects, the judgment of the district court will be affirmed.
. Mead is a Netherlands Antilles corporation. The complaint was dismissed as to O’Neil.
. Our statement of the facts closely tracks the district court’s, but we have omitted material not relevant to these appeals. See Walter v. Netherlands Mead, N.V., 9 V.I. 438 (D.V.I. Civil No. 284-1963, 1973).
. Another clause of the debentures concerned the time at which interest payments fell due:
“Payment of such participating interest for the portion of the fiscal year of the Company during which this Debenture matures shall be made within 90 days of such maturity.”
Redemption, it appears, requires two steps. First, Mead is required to send notice with payment of the principal and interest accrued through the fiscal year preceding the year during which redemption occurs. Ninety days later Mead is required to tender interest for the fiscal year of redemption.
. Walter had sold his other two debentures to O’Neil.
. The pleadings contained additional claims which are not subjects of these appeals.
. The district court thoughtfully accounted for the litigation’s longevity. 9 V.I. at 444 n.l.
. Actually, Walter claims that they were both “special deputy managing directors.” Appel-lee’s Brief at 23. This designation was taken from Mr. Lidstone’s testimony regarding a meeting of Mead’s shareholders, the minutes of which appear to be Defendant’s Exhibit B. Those minutes reveal the actual titles to have been as stated in the text.
. These minutes were entered in the record as Defendant’s Exhibit B.
. Since we hold that Lidstone was empowered to direct the transfer of funds, we need not decide whether O’Neil and Smeets were also so empowered.
. The minutes indicate that Reynolds shared Lidstone’s power, but there is no indication that Reynolds objected to Lidstone’s demand. It will be recalled that Reynolds was losing control of Mead during the time the directions to Walter were made; it is possible, therefore, that he was no longer in a position to object.
. Where available, the Restatements have been adopted as the law of the Virgin Islands. See 1 V.I.C. § 4 (1967). On the conflict of laws issue, see note 14 infra.
. The district court specifically found that Walter was not acting for Pueblo in constructing the new supermarket. 9 V.I. at 470. Although Mead is able to point to a damaging statement made by Walter during his testimony, Reply Brief at 6, which Walter has disputed but failed to correct under F.R.App.P. 10(e), we are not able to say that the court’s finding was clearly erroneous, in light of the entire record.
. In general, an officer who competes with his own company will be liable in damages. Abbott Redmont Thinlite Corp. v. Redmont, 475 F.2d 85, 88-89 (2d Cir. 1973). See Lincoln Stores v. Grant, 309 Mass. 417, 34 N.E.2d 704 (1941).
Walter’s conduct may fall outside the rule, however. The new supermarket was not a potential competitor of Walter’s employer, Mead, but only of Mead’s trading partner, WQF. And Walter was not hired as an officer of Mead, nor was he one of Mead’s directors; rather, he was hired as a “Managing Director” of Mead’s “Shipping Division.” Had the corporation wished unequivocally to saddle Walter with the duty of loyalty, they could have made him an officer, but they chose not to do so.
. Presumably, the law of the Netherlands Antilles should govern the duties owed Mead by its officers and directors. However, Mead has made no effort to prove Netherlands Antilles law. F.R.Civ.P. 44.1. We shall therefore assume that the law of the Netherlands Antilles is consistent with the law of the forum. Leary v. Gledhill, 8 N.J. 260, 267, 84 A.2d 725, 728 (1951); B. Currie, Selected Essays on the Conflict of Laws 46-49 (1963). Since we have not found in the Virgin Islands Code any statutory regulation of the duty of loyalty of corporate officers and directors, and since there is no Restatement on the subject, common law principles control. 1 V.I.C. § 4 (1967).
. Mead cites several cases concerning the duty owed by an employee or agent to his employer or principal. For the reasons given above at note 14, the law of the Virgin Islands controls this issue; 1 V.I.C. § 4 directs us in this instance to Restatement (Second) of Agency (1957). Relevant portions of that Restatement provide:
“§ 389. Acting as Adverse Party without Principal’s Consent
Unless otherwise agreed, an agent is subject to a duty not to deal with his principal as an adverse party in a transaction connected with his agency without the principal’s knowledge.”
Ҥ 393. Competition as to Subject Matter of Agency
Unless otherwise agreed, an agent is subject to a duty not to compete with the principal concerning the subject matter of his agency.”
The Restatement thus subjects an agent’s duty of loyalty to contractual modification. This is consistent with the cases cited by Mead, which did not contain a contractual provision modifying the employee’s or agent’s duty of loyalty. See Community Counselling Service, Inc. v. Reilly, 317 F.2d 239 (4th Cir. 1963) (implied duty of loyalty); NLRB v. Montgomery Ward Co., 157 F.2d 486 (8th Cir. 1946) (implied duty of faithfulness); Commonwealth Finance Corp. v. McHarg, 282 F. 560 (2d Cir. 1922) (implied duty of loyalty).
. The record evidence indicates that all shares of Mead were owned by Reynolds or O’Neil from 1959 through 1963. And it is undisputed that in 1959, when the employment contract with Walter was made, Reynolds was the sole shareholder and in 1963, when suit was filed, O’Neil was the sole shareholder, so that neither of them can complain of terms in the contract with Walter.
. “If all the stockholders of a corporation consent, and it is not detrimental to creditors, officers may appropriate corporate assets. It follows that if there are no stockholders except the directors and officers, the latter may, of course, by unanimous consent, give away corporate property, where the rights of creditors are not impaired.”
3 W. Fletcher, Cyclopedia of the Law of Private Corporations § 1104 (Rev. ed. 1965). This principle was adopted in Stony Brook Lumber Co. v. Blackman, 286 Pa. 305, 309, 133 A. 556, 557 (1926), which was recently recognized in Brown v. Presbyterian Ministers Fund, 484 F.2d 998, 1005 (3d Cir. 1973) (rights of creditors were impaired). See also Moran v. Edson, 493 F.2d 400, 405 (3d Cir. 1974) (“[Ijn the case of a closely held corporation. where the directors are also the officers and stockholders, self-dealing on salary questions may be inevitable as a practical matter.”); Clark v. Dodge, 269 N;Y. 410, 199 N.E. 641 (1936) (enforcement of agreement among sole shareholders-directors to vote for certain people as officers, which did not affect the public, was permissible despite statutory policy to the contrary).
. In part, the district court denied Mead relief because it found that clause 2 was an unfair restraint of trade. 9 V.I. at 469. Because we do not believe that Walter’s conduct was covered by clause 2, we need not consider the restraint of trade holding.
. Relevant portions of Walter’s September 20, 1963, complaint read as follows:
“COMES NOW the plaintiff Ahto Walter, by and through his attorneys, Maas & Ireland, Esqs., and complaining of the defendant does allege and state as follows:
“12)... The purported removal of the plaintiff from office as Managing Director, and from ‘all association or connection with Netherlands Mead N.V.’ appears to be directly calculated and intended to improperly and fraudulently deprive plaintiff of debenture income to which he is entitled under the terms of the said debentures.
“14) Further, the defendant is entitled to the protection of this Court in connection with the income due to be paid to him on the debentures he holds in the Shipping Division of the defendant. By the action of defendant the plaintiff is now unable to obtain correct information and figures of the income developing in the future from the Shipping Division of the defendant. The wrongful and fraudulent actions of the defendant have been directed toward the removal of the plaintiff from the employment for which he is eminently qualified and for which he is entitled to
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PREGERSON, Circuit Judge:
Petitioner Benitez-Mendez seeks review of a decision of an immigration judge, affirmed by the Board of Immigration Appeals, finding petitioner deportable under 8 U.S.C. § 1251(a)(2) for entry without inspection. This court has jurisdiction under 8 U.S.C. § 1105a(a).
Petitioner was arrested by Border Patrol officers on April 13, 1981, while he was standing in a hop field near Granger, Washington. He had been working the field with a group of workers who fled when three marked Border Patrol vehicles approached the field. Petitioner did not run but remained standing in the field. A Border Patrol officer approached and questioned petitioner, who told the officer that he had papers in his car which showed his legal alien status. Petitioner was then detained in a Border Patrol vehicle while the officers examined his papers.
After the officers determined that the papers did not establish that petitioner was legally in the country, petitioner was arrested and taken to the Border Patrol office. At the office, he told the arresting officer that he was born in Mexico and that he had entered the United States near San Ysidro without an immigration inspection. The arresting officer wrote this information on a Form 1-213 (Record of Deportable Alien). At his deportation hearing on May 21, 1981, petitioner denied the allegations in the Order to Show Cause, denied deport-ability, and unsuccessfully moved to suppress the information contained on the Form 1-213.
Petitioner contends that he was unlawfully seized within the meaning of the Fourth Amendment, and that, therefore, the information obtained by the Border Patrol and used at the deportation hearing should have been excluded as the “fruit of an unlawful seizure.”
This court’s test to determine whether the factual circumstances of law enforcement activity rise to the level of a seizure under the Fourth Amendment is found in United States v. Anderson, 663 F.2d 934 (9th Cir.1981):
“[A] person has been ‘seized’ within the meaning of the Fourth Amendment only if, in view of all of the circumstances surrounding the incident, a reasonable person would have believed that he was not free to leave. Examples of circumstances that might indicate a seizure, even where the person did not attempt to leave, would be the threatening presence of several officers, the display of a weapon by an officer, some physical touching of the person of the citizen, or the use of language or tone of voice indicating that compliance with the officer’s request might be compelled.”
Id. at 939 (quoting United States v. Mendenhall, 446 U.S. 544, 554, 100 S.Ct. 1870, 1877, 64 L.Ed.2d 497 (1980) (opinion of Stewart, J.). When the stop in question rises to the level of a “seizure” under the Fourth Amendment, we have formulated a constitutional standard applicable to detentive questioning of suspected illegal alien workers. ILGWU v. Sureck, 681 F.2d 624, 638 (9th Cir.1982), rev’d on other grounds sub nom. INS v. Delgado, — U.S. —, 104 S.Ct. 1758, 80 L.Ed.2d 247 (1984). In ILGWU v. Sureck, we held that
INS investigators may not seize or detain workers for citizenship status questioning unless the investigators are able to articulate objective facts providing investigators with a reasonable suspicion that each questioned person, so detained, is an alien illegally in this country.
681 F.2d at 638. These two standards are applicable to the seizure of petitioner Benitez-Mendez.
From the record, it does not appear that the Border Patrol officer’s initial encounter with petitioner amounted to a seizure under the Anderson test. The officer approached petitioner in an open field and asked him several questions to which he responded voluntarily. There is no evidence of the use of physical force, a display of a weapon, or the threatening presence of several officers.
However, following the initial questioning during which petitioner stated that he had immigration documents in his car, the Border Patrol officer took petitioner to the Border Patrol vehicle and put him inside to wait until other officers could check his papers. We find that the placing of petitioner in the Border Patrol vehicle was a seizure under the Anderson test. Border Patrol Agent Minyard testified that he directed a second Border Patrol officer, Agent Stinsley, to keep petitioner in the Border Patrol vehicle until his papers could be examined. Once petitioner was placed inside the vehicle and told to wait, it is clear that he reasonably “would have believed that he was not free to leave.” Anderson, 663 F.2d at 939.
Having determined that the detention of petitioner in the vehicle was a seizure, we find that the Border Patrol officer was not able to articulate objective facts providing a reasonable suspicion that Benitez-Mendez was an alien illegally in this country. ILGWU v. Sureck, 681 F.2d at 638. The objective facts known to the officers at the time of petitioner’s detention were that petitioner was a field worker whose co-workers had fled upon sight of a marked Border Patrol detail, that he was an alien, and that he claimed to possess documents showing his legal status. Agent Minyard, who ordered petitioner detained in the vehicle, did so over the radio solely upon the information conveyed by Agent Stinsley that “he had a person there who claimed to be legal status; however, his papers was (sic) in his vehicle.”
In sum, the Fourth Amendment standard articulated in ILGWU v. Sureck has not been met in this case. At the time that Agent Minyard ordered Agent Stinsley to seize and detain petitioner, neither officer had sufficient grounds to suspect that petitioner was an alien illegally in this country.
We granted rehearing in light of the Supreme Court’s decision in INS v. Lopez-Mendoza, — U.S. —, 104 S.Ct. 3479, 82 L.Ed.2d 778 (1984), that the exclusionary rule does not apply in civil deportation proceedings. Accordingly, even though we have found that petitioner’s arrest violated the Fourth Amendment, the information obtained as the result of the arrest (petitioner’s statements on Form 1-213) was admissible at his deportation hearing.
On the basis of this evidence, we affirm the immigration judge’s order of deportation. To enable petitioner to seek any available alternative forms of relief and to move for a stay of deportation, our mandate shall issue forty-five days from the date of entry of this judgment. We also reinstate the immigration judge’s grant of 30 days voluntary departure time, to commence on the effective date of any order of deportation issued against petitioner.
. Because the Supreme Court held that no seizure had occurred in Delgado (Sureck below), it did not review our formulation of the constitutional standard applicable when a seizure has in fact occurred. See 104 S.Ct. at 1764.
The facts of the instant case, distinguishable from those in Delgado, establish the INS agents’ conduct did constitute a seizure. In Delgado, "the INS agents’ conduct ... consisted simply of questioning employees and arresting those they had probable cause to believe were unlawfully present in the factory.” Id. Here, in addition to questioning Benitez-Mendez about his immigration status, the Border Patrol officer placed him in a Border Patrol vehicle before the officer had reasonable suspicion, let alone probable cause, to believe that Benitez-Mendez was illegally in the country. Such conduct amounts to a seizure under Anderson and warrants application of the Sureck "articulable facts/reasonable suspicion” test.
. Petitioner had not yet violated 8 U.S.C. § 1304(e), requiring an alien to "at all times carry with him and have in his personal possession any certificate of alien registration or alien registration receipt card issued to him____" Since petitioner stated that his papers were in his car, parked adjacent to the field, the officers should have afforded him the opportunity to produce the papers. Under the circumstances the papers were constructively in petitioner’s personal possession. It was reasonable for petitioner to leave the papers in his car while he engaged in heavy agricultural labor. Only if the petitioner refused to produce the papers, or was unable to produce the valid papers, would he have committed a ’ misdemeanor under § 1304(e), giving the INS officers probable cause to arrest him.
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:
Before us are two in forma pauperis appeals from summary judgments entered in the district court dismissing with prejudice two amended complaints of plaintiff alleging patent infringement by each of two defendants of plaintiff’s U. S. Patent No. 3,088,447, entitled “Control for _ Automotive Exhaust Air Pollution”.
While there is much in the briefs about infringement and patentability, there are but two issues before us: (1) Was Claim 6 of the Henderson Patent No. 3,088,447 anticipated by prior art, i. e., the Hanks Patent No. 2,354,-373 ? (2) Was there public use and sale more than one year prior to December 5, 1961? We affirm on a positive answer to each question.
I
The trial court made specific findings on- the issue: “Positive crankcase ventilation systems” for internal combustion engines for automobiles have “long been known” in the trade. (C.T. p. 14, Finding III.) The “usual” components were found to be: “a hose or a pipe, a flow control valve, appropriate connectors and an adapter plate for insertion between the carburetor and the intake manifold of the engine.” (C.T. p. 14, Finding IV.) The patent in suit adds: (a) an adjustable needle valve at the intake manifold, and (b) heating means in the adapter to heat the fed back crankcase vapors. It was this last addition which Claim 6 of the patent purports to cover. (C.T. p. 14, Finding IV.)
Application for the Henderson Patent No. 3,088,447 was filed December 5,1961. It was a continuation-in-part of U. S. Application Serial No. 86,565 filed by Henderson January 25, 1961. The invention asserted in Claim 6 is not described in the earlier application (C.T. p. 15, Finding VI).
The alleged anticipating patent— Hanks Patent No. 2,354,373 was issued July 25, 1944. Each of the elements of Claim 6 (described in detail in Findings VIII and IX; C.T. pp. 16-17) were found to exist in the Hanks patent (C.T. p. 17, Finding X), which was not cited as a reference during prosecution of the Henderson patent (C.T. p. 17, Finding XI). The trial court further found General Motors had commenced the manufacture and sale of the alleged infringing device in September 1960, and continuously manufactured and sold them since that date. (C.T. p. 17, Finding XII.)
In its Conclusions of Law the trial court found both anticipation by the Hanks earlier patent (C.T. p. 18, Concl. Ill), and the required prior use and sale (C.T. p. 18, Concl. IV).
Because of the foregoing findings, the trial court held that the pleadings and testimony did not raise any genuine issue on any material issue of fact. This is the sole error claimed on appeal. (Appellant’s Brief, p. 6.)
Appellant asserts the question presented is whether “the expediency of a dismissal summarily given outweigh the patent purpose on an important invention where the parties do not agree on facts pertinent to the alleged anticipation.” (Brief, p. 6.)
Primarily, appellant attacks the testimony of the expert appointed by the trial judge to assist him in determining the issues. He asserts that “the expert’s testimony is pregnant with admissions that issues of fact exist,” yet there is but one reference in appellant’s brief to this alleged plethora of issues of fact.
At page 13 of his brief, appellant states:
“[T] here’s admittedly an issue of fact as to whether or not the earliest filing date Henderson can claim is December 5, 1961. Mr. Kotts, the Court appointed expert, stated that if there was adequate disclosure in Henderson’s first application he can take the benefit of this filing date. See page 11, beginning line 4 of Reporter’s Transcript. He says in other words, there is a genuine issue of fact.” (Emphasis added).
The italicized statement is neither logical nor complete, though accurate as far as it goes. Immediately following the reference to “adequate disclosure,” the court’s expert stated:
“If he cannot take the benefit of this earlier application, then if everything stated in the affidavit [would be] correct, that would be a statutory bar since there would have been a sale more than a year prior to his effective filing date, the filing date of the second application which issued into the patent.” (R.T. p. 11.)
The expert then stated:
“It is my opinion that his disclosure in his first application was insufficient due to the [patent] office action issued by the Examiner which stated that he could not understand the invention and advised filing a new specification.” (R.T. p. 12,1. 18-21.)
There is no dispute (a) regarding the fact of the patent examiner’s action, specifying the lack in detail (shown in the file history (R.T. pp. 16-17)); (b) the fact there was a lack of any response thereto by Henderson; except (c) the fact of the filing of new papers by Knox and Knox; (d) the fact that the new papers contained a more detailed description of the alleged claim of invention.
There also is no dispute that Mr. Henderson testified he and Mr. Trimble (who filed the first application) “were aware that the patent was not put together so that the Commissioner would understand it.” (R.T. pp. 19, 20.)
There seems no question but that the only date upon which appellant can rely is the filing date of his application, namely December 5th, 1961. Under 35 U.S.C. § 102(b) the critical date is one year prior to said application — i. e., December 5, 1960.
It is uncontradicted that General Motors introduced its crankcase ventilation system in September 1960, and has manufactured and sold the same continuously since then. (See Majewski Affidavit (C.T. pp. 20-28) and Exhibits attached.)
Appellant urges that the epigrammatic expression: “That which infringes, if later, would anticipate, if earlier” is too broad a statement of law. If by this appellant takes the position that General Motors’ earlier sales do not invalidate Claim 6 because the devices General Motors sells do not embody the invention claimed by Claim 6, then appellant’s claim must ultimately fail for lack of infringement. Anderson v. Miller, 129 U.S. 70, 9 S.Ct. 224, 32 L.Ed. 635 (1889).
It is not difficult for a layman to distinguish between the appellant’s earlier application, and Claim 6 of his patent. There is no flow control valve in the former, as there is in the latter, and in the Hanks patent.
Thus both because of the admitted inadequacy of the original disclosure, and the obvious material difference between the original and Claim 6 specifications, appellant is bound by the December 5th, 1961 date (35 U.S.C. § 102(b)).
As to the existence of any material issue of fact, we are faced with the problem that appellant was content to have the matter submitted to the court with little cross-examination of the court’s expert witness plus the testimony of appellant’s own expert (R.T. p. 25 et seq.), an expert but “slightly familiar” with the Hanks patent (R.T. p. 34). Appellant filed no counteraffidavits or memoranda. He failed to argue below that he was entitled to the filing date of his abandoned application (with the inherent problem of how much it disclosed) ; nor did he ask his expert (Neill) about it. In the appellant’s brief on appeal no attempt is made to point out that the abandoned application contains a description of the elements required by Claim 6 of the patent in suit.
We are required to affirm as to General Motors on the issue of prior use and sale.
II
On the issue of anticipation by the Hanks patent, raised by both defendants, we refer to Exhibits NN attached to the Majewski affidavit. The court’s expert, Mr. Kotts, testified all elements of Henderson’s Claim 6 are present in the Hanks patent. It was his expert opinion that no expert testimony was required to prove the Henderson Claim 6 invalid as anticipated; that a layman’s comparison of the documents established this beyond doubt.
Appellant makes several general statements to the contrary, with but one specific reference (as is required by the rules of this court). At page 3, appellant states that at page 46, lines 11 and 12 of the Reporter’s Transcript, one feature of the Henderson device was described as exactly opposite that of the Hanks device,
We agree with the appellee’s (General Motors’) argument on this point.
The mere statement that “an issue exists” does not prevent the granting of a summary judgment below. To abide by such a rule would emasculate the statute permitting such judgments.
Nor is it sufficient to rely on the “strong presumption” that a patent in suit is valid (particularly when such presumption has repeatedly been held “largely dissipated” by the failure to find in the file wrapper a reference to earlier pertinent art, as here exists). The presumption then is that the prior art was not considered by the patent office. Nor can appellant rely on the statement that his patent is “important.” All patents are important, and there is no such thing as a “little” patent, if it be valid; any more than there can in law be a “small” injustice.
Summary judgments are not prohibited in patent suits. This is true even if there are counter-affidavits.
In Cee-Bee Chemical Co. v. Delco Chemical Co., 263 F.2d 150 (9th Cir. 1959), relied upon strongly by appellant, the issue was whether a “soapy” spray and a “water-rinsable, solvent-miscible” spray are one and the same. We held that the “sameness” having been denied in counter-affidavits filed by defendant, plaintiff was not entitled to rely on its assertion that the two sprays were the same, and that a genuine issue of material fact existed.
We find no such genuine issue of material fact here exists, and Cee-Bee Chemical, supra, is therefore not controlling.
It is the duty of the trial court to dismiss a patent suit when the necessary showing is made on a motion for a summary judgment.
Affirmed.
. Claim 6 of Patent No. 3,088,447 was the only portion of said patent finally before the court as to General Motors. The other 5 claims had been disposed of by a Partial Summary Judgment (entered July 14,1965) from which no appeal was taken.
. Similar, though not precisely the same, findings were made in favor of Ford Motor Co. in the companion case. (C.T. pp. 81-85.) Conclusions — -(a) there was no infringement of Claims 1 through 5; (b) the Hanks patent anticipated the Henderson Claim 6 by more than a year, and hence Claim 6 was invalid under 35 U.S.C. § 102(b); (c) there was no genuine issue of fact.
The two cases were filed consecutively, and tried together, and we will consider them together, despite some difference in issues.
. Appellant’s brief makes no attempt to comply with our Rule 18.
. Reporter’s Transcript, pp. 34-37, 44.
. “The matter involved is in no way material. Neill testified that the Hanks flow-control valve operated in the opposite manner to that of Henderson (Nov. 8 Tr. 46). While Neill was incorrect in his statement, the matter is of no moment. Claim 6 simply calls for a flow-control valve operable by engine induced vacuum. It does not require that the valve operate in any particular direction or manner. Thus, the ‘issue’ suggested by plaintiff is not a material one. Similarly, but in more general terms, plaintiff argues that there are differences between the device described in the patent in suit and that of the Hanks patent. Any such differences are, of course, immaterial as to the validity of claim 6 unless these differences are set forth in the claim. See Winslow Engineering Company v. Smith, (C.A.9, 1955) 223 F.2d 438 (adhered to on rehearing, 228 F.2d 332).
“Next, plaintiff states (Appellant’s Tr. 3) that Mr. Henderson gave direct testimony on the factual differences between his device and the earlier Hanks device and refers to page 22, lines 15 through 25 of the November 8 transcript. Plaintiff’s characterization of his portion of the Record as ‘direct testimony’ is very misleading. Mr. Henderson had not been sworn as a witness nor was he on the stand. To the contrary, the court had simply asked Mr. Henderson if he had any questions to put to Mr. Notts the court’s expert who was then on the stand (Nov. 8 Tr. 19). Rather than questioning Notts, Mr. Henderson proceeded simply to argue his cause. This fact was noted by the court (Nov. 8 Tr. 24).
“The full statement referred to, commencing on page 21 and continuing through page 24 of the transcript, shows that what Mr. Henderson was really arguing was that his device differed from Hanks in that he utilized a catalyst and screens and that these elements were not shown by Hanks. Both the court and Notts pointed out to him that clairri 6 contains no reference to either screens or a catalyst and therefore his argument had no relevancy on the question of anticipation.” (Brief of Appellee General Motors, pp. 19-20.)
. Monroe Auto Equip. Co. v. Superior Industries, Inc., 332 F.2d 473 (9th Cir. 1964), cert. den. 379 U.S. 901, 85 S.Ct. 190, 13 L.Ed.2d 175 (1964); Pressteel Co. v. Halo Lighting Prods., Inc., 314 F.2d 695 (9th Cir. 1963); Jacuzzi Bros., Inc. v. Berkeley Pump Co., 191 F.2d 632 (9th Cir. 1951).
. Milcor Steel Co. v. George A. Fuller Co., 316 U.S. 143, 62 S.Ct. 969, 86 L.Ed. 1332 (1942); Englehard Industries, Inc. v. Research Instrumental Corp., 324 F.2d 347 (9th Cir. 1963).
. Rankin v. King, 272 F.2d 254 (9th Cir. 1959).
. Barkeij v. Lockheed Aircraft Corp., 210 F.2d 1 (9th Cir. 1954).
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.
STEPHENSON, Circuit Judge.
Plaintiff-appellant Michael C. Narez appeals from the trial court’s grant of summary judgment to the defendant-appellees, United States Marine Corps. Inasmuch as the record reveals yet to be resolved issues of material fact, we reverse and remand to the trial court for proceedings not inconsistent with this opinion.
In stating the facts relevant to the appeal, we will adhere to the standards established for summary judgment:
Where several possible inferences can be drawn from the facts contained in the affidavits, attached exhibits, pleadings, depositions, answers to interrogatories, and admissions on file, “[o]n summary judgment the inferences to be drawn from the underlying facts contained in such materials must be viewed in the light most favorable to the party opposing the motion.”
City Nat’l Bank v. Vanderboom, 422 F.2d 221, 223 (8th Cir.) cert. denied, 399 U.S. 905, 90 S.Ct. 2196, 26 L.Ed.2d 560 (1970), quoting from United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962).
Narez enlisted in the Reserve Marine Corps on April 18, 1971, for a period of six years. When he enlisted, he signed an enlistment contract by which he acknowledged his obligation to attend weekend drills and an annual active duty summer camp. As a part of this agreement, Narez also assumed the responsibility of informing the military of his current address.
From the time of his enlistment until March 1975, Narez presumably satisfactorily fulfilled his military obligations. In the weekend drill of March 1975, however, the commanding officer of Narez’ Company, Captain Dudash, designated Narez as an “unsatisfactory” participant in each drill. The apparent reason for the unsatisfactory designation was that Narez’ wig, although allegedly in compliance with Corps standards, did not conform to Dudash’s grooming standards. The unsatisfactory rating continued even after Narez had twice cut the wig (between the Saturday morning and Saturday afternoon drills and prior to the Sunday morning drill) in an attempt to conform to Dudash’s expectations.
Relevant to this appeal is the fact that in November 1973 Narez was a plaintiff in a suit brought to challenge the then-existing policy of the Marine Corps which did not allow reservists to wear short hair wigs to cover their own longer hair. On December 19, 1973, this court affirmed a district court order enjoining the implementation of the no-wig policy insofar as it applied to weekend reservists. Miller v. Ackerman, 488 F.2d 920 (8th Cir. 1973). In particular we said:
[W]e find no rational basis for the proscription of short-hair wigs and [affirm the district court’s order, Klinkhammer v. Richardson, 359 F.Supp. 67 (D.Minn.1973)] enjoining any proscription of the use of short-hair wigs in the reservists’ weekend training program.
Miller v. Ackerman, supra, 488 F.2d at 922.
The Marine Corps consequently changed its policy to conform to the district court’s order and allowed, subject to regulations, the wearing of wigs by reservists on drill weekends.
Narez appeared at the next regularly scheduled drill in April 1975; at that time Dudash allegedly told Narez that unless he got rid of his wig and cut his natural hair, Dudash would “activate” him to involuntary active duty.
Narez also contends that at both the March and April 1975 drills, he requested of Dudash to be allowed to appear for MAST, but was never permitted such. MAST is an internal informal Corps procedure by which an enlisted Marine reservist who wishes to lodge a complaint against a superior officer or non-commissioned officer may request the right to appear before that officer’s or non-commissioned officer’s commanding officer to discuss the complaint.
Narez’ record shows that Narez did not appear for the next seven months of drills, nor did he appear for his required two weeks of active duty in July. In December 1975, Narez finally reappeared at drill and was given credit for the drills on December 5, 6 and 7; the record shows that he was counseled on December 5 concerning mandatory participation and makeup drills. Narez’ makeup drills were scheduled for December 11, 12, 15, 16, 17, 29 and 30. He did not report on the 11th; he reported on the 12th, at which time his performance was rated “unsatisfactory” as he was not in uniform and his hair did not adequately conform to the requirements. Narez was told he could not do his makeup drills unless his appearance was satisfactory; he was also warned that if the makeup drills were not performed, he would be recommended for involuntary active duty.
Narez appeared for the January 1976 drills, wearing a new wig which he contends conformed with Marine Corps standards. Dudash again marked Narez as an “unsatisfactory” participant on the basis that — according to Narez — the wig did not meet “Dudash’s standards.” At that time, Narez decided not to attend any future drills, and he was not present for the February, March and April 1976 drills.
During the next few months, several letters were written by Marine officials and sent to Narez explaining what action the Corps was going to take against him. All but one of these letters failed to reach Narez, however, and the Corps maintains Narez was the cause of this failure inasmuch as he had not kept the Marines advised of his most current address.
The letter that Narez received was sent March 9, 1976, received March 11,1976, and advised Narez of the Marines’ intent to recommend his discharge on the basis of “an established pattern of shirking.” On March 15, pursuant to the choices outlined in the Marines’ letter, Narez wrote back, stating that he did not wish to accept the discharge and requesting to have his case be considered by an administrative discharge board. The Marines never replied to Narez’ March 15 letter and did not pursue the plans to discharge him. Instead, on April 28, 1976, the Corps sent to Narez a notice of its intent to recommend that Narez be ordered to involuntary active duty (for which there is no provision for review by an administrative board); on June 4, 1976, sent to Narez a notice of intent to recommend that he be administratively reduced to the rank of private; and on September 8, 1976, sent to Narez a second letter of intent to recommend that he be recommended for involuntary active duty. None of these letters ever reached Narez, and they were returned, marked “Unclaimed” or “Moved.”
On November 1, 1976, Narez’ order of assignment to involuntary active duty, effective November 30, was issued, and the Corps began a series of efforts to locate Narez by telephone. On November 12, 1976, the Corps located Narez at his place of employment and informed him of the order. Narez said that he wished to contest the order and stated that he would appear for that purpose on November 20, 1976. Narez authorized an attorney to review Narez’ records on November 19, 1976, but Narez did not appear on November 20. On November 29, Narez’ orders to report were personally delivered to him at his place of work, and on November 30, Narez failed to report as ordered.
Narez raises three primary issues on appeal. The only one necessary for us to discuss here is his contention that the pleadings, affidavits and depositions of the parties raise a genuine issue of material fact as to whether Narez was ordered to involuntary active duty, directly or indirectly, as a result of his wearing a regulation wig to weekend drills.
In a summary judgment situation, the court may consider admissions and facts conclusively established but all reasonable doubts touching the existence of a genuine issue as to material fact must be resolved against the movant.
“A summary judgment upon motion therefor by a defendant in an action should never be entered except where the defendant is entitled to its allowance beyond all doubt. To warrant its entry the facts conceded by the plaintiff, or demonstrated beyond reasonable question to exist, should show the right of the defendant to a judgment with such clarity as to leave no room for controversy, and they should show affirmatively that the plaintiff would not be entitled to recover under any discernible circumstances. * * * A summary judgment is an extreme remedy, and, under the rule, should be awarded only when the truth is quite clear. * * * And all reasonable doubts touching the existence of a genuine issue as to a material fact must be resolved against the party moving for summary judgment.”
United States v. Farmers Mut. Ins., 288 F.2d 560, 562 (8th Cir. 1961), quoting from Traylor v. Black, Sivalls & Bryson, Inc., 189 F.2d 213, 216 (8th Cir. 1951). See Goodman v. Parwatikar, 570 F.2d 801, 803 (8th Cir. 1978); City Nat’l Bank v. Vanderboom, supra, 422 F.2d at 223.
If, by reasonable inference from the facts, it could be concluded that by action of the Corps Narez was denied his constitutionally protected right to govern his personal appearance, directly or indirectly in violation of our decision in Miller v. Ackerman, supra, then the Corps, as the moving party, has failed to sustain its burden, and the order of summary judgment must be reversed.
The issue is a material one in that it goes to the heart of Narez’ pleading; and a review of the record also discloses that there are sufficient facts that give rise to the inference that Narez suggests: (1) Narez’ claim that he was marked unsatisfactory because of his wig, when Narez contends his wig conformed to Corps requirements; (2) the allegations that Dudash told Narez to get rid of his wig or Narez would be activated; (3) the Corps’ change of recommendation from discharge (of which there is a review by an administrative board) to involuntary active duty (for which a review by an administrative board does not exist); (4) the fact that Narez claims he at least twice requested MAST, but did not receive it; and (5) the delay in the orders to activate Narez (Narez was absent from drills in May, June, July, August, September, October and November, 1975, and yet the Corps’ notification to Narez of discharge or involuntary active duty did not come about until after the further dispute Narez had with Dudash over Narez’wig in January 1976). We do not list these factors as a comment upon the strength or weakness of Narez’ case; we only point to these facts to illustrate that a reasonable inference can be drawn from these facts favorably for Narez.
Thus, for the reason that a genuine issue as to a material fact exists in this case, we hold that this case is not an appropriate one for summary judgment. The purpose of summary judgment “is not to cut litigants off from their right of trial * * * if they really have evidence which they will offer on a trial[;] it is to carefully test this out, in advance of trial by inquiring and determining whether such evidence exists.” Whitaker v. Coleman, 115 F.2d 305, 307 (5th Cir. 1940).
We reverse and remand for proceedings not inconsistent with this opinion.
. The Honorable John K. Regan, Senior United States District Judge for the Eastern District of Missouri.
. General L. Wilson and Captain J. J. Dudash are the named defendants in this case. Narez v. Wilson, 449 F.Supp. 141 (E.D.Mo.1977).
. An unsatisfactory rating is essentially equivalent to an absence from the drill.
. Narez states in his affidavit:
During the morning formation at the drill weekend on March 22, 1975, Captain Dudash, the inspecting officer, told me that my wig was not cut satisfactorily, and he gave me an unsatisfactory performance. Although the wig was cut satisfactorily, I had it cut using a ruler to conform to his demands, but at 1:00 that afternoon, I was inspected again, and told that my wig was still unsatisfactory. When I told him that it met Marine Corps standards, he said, “I don’t care what you did to it, it still doesn’t meet my standards.” He gave me another unsatisfactory drill. That gave me two unsatisfactories for the weekend. I took the wig home on Saturday night and cut it again. On Sunday, March 23, 1975, I went back to the next day’s drill. Captain Dudash again told me that my wig cut was unsatisfactory, and he gave me an unsatisfactory rating for the drill. I told him, “I cut the wig as much as I possibly can, the band is almost visible,” and Captain Du-dash then replied, “Yes, I can see that you did, but now it is too messy, even though it is short enough.” When I asked him what I could do to meet his standards, he said, “I’m not telling you anything, it was your problem when you started wearing the wig.”
. Narez missed the Saturday drill because of car trouble; Dudash excused that absence.
. Narez states in his affidavit:
Captain Dudash said, “Narez, you know I was given a choice of either straightening out this company or stepping down. You know I believe in the Reserve program, so instead of stepping down, I’m going to stay. I have been told either to get rid of those people who wear wigs by activating them or by having them take off their wigs and getting their hair cut.” I said, “Sir, I have never heard of an individual being activated for not having a haircut,” and Captain Dudash replied, “I know that it’s never been done, and I don’t know if it can be done, but I will try, which brings me to you. I am going to use you as an example, either get rid of your wig and get a haircut, or I will find some way of activating you.” I said, “Sir, it sounds to me like you are making a scapegoat out of me,” and Captain Dudash replied, “You can call it what you want, but I want you to go out and tell the other troops what I said.” I did as he told me * * *.
. Narez states in his affidavit:
During the January, 1976 drill, I was inspected by Captain Dudash. I was wearing a new wig which I had cut to Marine Corps standards. Captain Dudash gave me three unsatisfactory drills for that weekend, because, according to him, the wig didn’t meet “his standards.” * * * [Ajfter I had received my third unsatisfactory, I went to talk to Captain Dudash. I said, “Captain, I have tried to conform to your grooming standards, but I don’t know what more to do.” Captain Dudash replied, “Narez, I don’t see any way or anything you can do that you can measure up to my standards. Every time you come out here, you’ll be given an unsatisfactory drill.” I said, “Captain, I work at Monsanto, and they do not pay us for weekend drills. I’m losing two days’ pay every weekend from work, and you do not pay me out here because you give me an unsatisfactory performance.” (Reservists are not paid when they are given unsatisfactories for the drills, even though they may spend the full time at the drill). Captain Dudash replied, “That is your tough luck.” At that point, I decided to stop going to drills, because I was afraid that the Marines would write to Monsanto and tell them that I was a troublemaker at the drills, and I would be fired.
. Narez moved approximately four times during his career with the Reserve.
. Narez’ letter states:
I do not wave any rites. I have not ever had the oppertunity to present my case before you. I do not except a undesirable discharge. I desire the rite to discuss my case with the proper officials in this mater. I feel it only nessecary to tell you that I have been a victim of circumstance which was bestowed upon me by Captain J. Dudash Co. of Company I in a drill in April of 1975. Upon when I was verbally harassed. I am sure I can come up with a proper case or witnesses if necesary. I have been a particapant with Co. I for 4‘/2 years of continues service without any blemishes on my record at all. So in last stating I do here by ask you to grant me at least a meeting with the right officialls. In accordance with my case or I will have to write my Congressman.
. The reservist may respond with a statement, however.
. We note that there appear to be other “facts” perhaps not fully aired, i. e., whether the Corps followed its own regulations in its transactions with Narez, and the impact of those possible failures on the immediate situation.
. We specifically refrain from commenting upon the extent of military discretion or the scope of review of military actions by the court. We duly note:
(a) Notwithstanding any other provision of law, the President may order to active duty any member of the Ready Reserve of an armed force who—
(1) is not assigned to, or participating satisfactorily in, a unit of the Ready Reserve;
(2) has not fulfilled his statutory reserve obligation; and
(3) has not served on active duty for a total of 24 months.
(b) A member who is ordered to active duty under this section may be required to serve on active duty until his total service on active duty equals 24 months. If his enlistment or other period of military service would expire before he has served the required period under this section, it may be extended until he has served the required period.
(c) To achieve fair treatment among members of the Ready Reserve who are being considered for active duty under this section, appropriate consideration shall be given to—
(1) family responsibilities; and
(2) employment necessary to maintain the national health, safety, or interest.
10 U.S.C. § 673a.
A case factually similar to the instant case is Baugh v. Bennett, 329 F.Supp. 20 (D.Idaho 1971), and Baugh v. Bennett, 350 F.Supp. 1248 (D.Idaho 1972), affirmed mem., 547 F.2d 1174 (9th Cir. 1976).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM:
The background to this prosecution for racketeering, extortion, and obstruction of justice is set forth in United States v. Carlock, 806 F.2d 535 (5th Cir. Dec. 9, 1986). We add only those facts necessary to this appeal.
Michael Greer, a member of Local 406 of the International Union of Operating Engineers, was often appointed by Willard S. Carlock, Sr., the business agent of the Lake Charles district office of Local 406, to be an assistant master, and at times master, mechanic on job sites. As an assistant master mechanic, Greer served as an assistant foreman and wielded power over the workers.
Greer was named in the Carlock indictment but his case was severed when his counsel became ill during trial in Monroe, Louisiana. Greer was later tried before a jury under a superseding indictment in Lake Charles.
The superseding indictment charged in Count 1 that Greer conspired with Willard S. Carlock, Sr., and others to conduct and participate, directly and indirectly, in the affairs of Local 406 through a pattern of racketeering activity. According to this count, Greer used his positions of authority to extort, or attempt to extort, kickbacks from operating engineers and sexual favors from female operating engineers on behalf of Carlock, Sr., and to attempt to obstruct and impede justice by counseling witnesses to lie to a federal grand jury. Count 2 charged Greer with a substantive racketeering violation based upon the acts alleged in Count 1.
Count 3 charged Greer with conspiring with Carlock, Sr., Columbus J. Laird, and others to obstruct justice in violation of 18 U.S.C. § 1503. This count alleged that the confederates counseled grand jury witnesses to lie to the grand jury about their kickback scheme. Specifically, Greer was charged with having counseled Houston Byrd, Jr., Nathan Courville, and Jerry Wade French to falsely deny the kickbacks. Counts 4-6 charged Greer with specific acts of obstruction of justice.
At trial, Greer was convicted of racketeering conspiracy in violation of 18 U.S.C. § 1962(d); of participating in the conduct of an enterprise’s affairs through racketeering, in violation of 18 U.S.C. § 1962(c); of conspiracy to influence, obstruct, and impede justice; and three counts of influencing, obstructing, and impeding justice. He appeals and we affirm his conviction on all counts.
I
Greer argues that the cumulative effect of trial court errors denied him a fair and impartial trial. He contends that the trial court abused its discretion in refusing to sequester the jury despite the possibility that the jury was contaminated by jurors’ spouses and friends present in the courtroom during the trial. He also argues that the trial court erred in excluding a prior recorded statement of a government witness pursuant to the attorney-client privilege and Federal Rules of Criminal Procedure Rule 16(d)(2), and that the trial court improperly interfered with Greer’s ability to examine a defense witness by excluding and striking testimony and by instructing the witness as to his obligations under the oath. Finally, Greer adopts by reference arguments made on behalf of Willard Car-lock, Sr., in United States v. Carlock, specifically adopting those regarding prejudicial pre-trial delay and alleged improprieties of the Senate Subcommittee which urged the Government to seek indictments. We address each contention in turn.
A
Sequestration is “an extreme measure, ‘one of the most burdensome tools of the many available to assure a fair trial.’ ” United States v. De Peri, 778 F.2d 963, 973 (3d Cir.1985) (quoting United States v. Porcaro, 648 F.2d 753, 755 (1st Cir.1981)), cert. denied — U.S. -, 106 S.Ct. 1518, 89 L.Ed.2d 916 (1986). The decision to sequester a jury is entrusted to the sound discretion of the trial judge. United States v. Phillips, 664 F.2d 971, 997 (5th Cir.1981). A defendant, complaining of a refusal to sequester, must demonstrate a substantial likelihood of prejudice flowing from the refusal to sequester to warrant a new trial. Id.
Greer argues that the court erred when it refused to sequester the jury after learning that a juror’s husband had been expressing his views on the trial to other trial spectators. After one and one-half days of testimony, government counsel informed the court that this man had been expressing to others his view that “from what I have seen, the Government doesn’t have anything on Mr. Greer.” Both sides moved to sequester the jury, although the defense objected to the government’s alternative request that the juror be removed.
After separate interviews of the juror and her husband, the court was convinced that the two had not discussed the case and would not do so. The court did not tell the juror what her husband had said. It told her that her husband had been discussing his views of the case, that the two were not to discuss the case, and that the court was concerned that the defendant’s rights be protected. The court then denied both motions before it.
Greer suggests that the court should have addressed the jurors as a group, avoiding identification of the wife. He contends that the wife would naturally assume that her husband thought the defendant was guilty, since the court told her that it was concerned about the protection of the defendant’s rights. This reading of the cold record is not implausible and has given us pause, but we are finally persuaded that there was no reversible error. We are aided in our effort to gauge the impact of the court’s handling of the situation by the fact that Greer objected to the juror’s removal. That is, Greer’s counsel, a witness to the whole episode, did not think that the juror was tainted. Nor can Greer now suggest error because the court refused to remove the juror. Cf. United States v. Kelly, 722 F.2d 873, 881 (1st Cir.1983) (failure to ask for juror’s dismissal constitutes waiver of objection to his continuing), cert. denied, 465 U.S. 1070, 104 S.Ct. 1425, 79 L.Ed.2d 749 (1984). In any event, sequestration, the remedy sought below by Greer, would not have solved the suggested problem, as the juror would have remained free to “speculate” about her husband’s views.
We are satisfied that the court’s interviews and repeated admonitions protected the interests of the defendant. The trial judge must be given considerable latitude to respond to the infinite troubles of trial. With this due deference in mind, we conclude that there was no error.
Greer also asks us to assume that the jurors spoke to their friends and relatives about the case despite the court’s repeated instructions not to do so. Greer admits, however, that he can only speculate as to what might have been said, if anything, and “cannot show actual prejudice as a result of the sequestration refusal.” Such speculation takes us nowhere and certainly not to a reversal. See United States v. Diggs, 649 F.2d 731, 737-38 (9th Cir.), cert. denied, 454 U.S. 970, 102 S.Ct. 516, 70 L.Ed.2d 387 (1981).
Finally, Greer alleges that sequestration was necessary to safeguard the jury from comments made by witnesses or other spectators. However, Greer does not allege that such statements continued after the incident or that any jurors were exposed to any statements.
B
Greer also contends that the trial court erred when it excluded a tape recording offered by Greer to impeach government witness C.J. Laird, on the grounds that Greer failed to comply with Federal Rules of Criminal Procedure Rule 16 and that the tape enjoyed an attorney-client privilege. We are persuaded, however, that no reversible error occurred.
Laird and his attorney taped this statement in preparation for plea bargaining. In the statement, Laird denied meeting with Greer, Byrd, and Courville in Basile to prepare Byrd and Courville to lie before the Lafayette grand jury, stating that to the extent Byrd said otherwise, Byrd was lying. The taped statement was in direct conflict with his trial testimony that the four men met in Basile to rehearse false testimony to be given before that grand jury. Laird, however, later admitted on cross-examination that he made the previous inconsistent statement. Because the tape was properly excludable for this reason, we do not then reach the questions of whether the tape was in fact excludable because it was privileged or because Greer’s counsel failed to comply with Rule 16. Fed.R.Evid. Rule 613(b); see also United States v. Roger, 465 F.2d 996, 997-98 (5th Cir.) (when prior inconsistent statement has been admitted, extrinsic proof of the statement is excludable), cert. denied, 409 U.S. 1047, 93 S.Ct. 517, 34 L.Ed.2d 498 (1972).
Finally, Greer argues that he was told by the court that he could question Laird about the taped statements, but his attempts to do so were thwarted by sustained objections, denying effective cross-examination. The argument is so bereft of merit that we will not detail the exchanges. The objections were properly sustained.
C
Greer next argues that the court undermined the credibility of defense witness Bill Smith by reminding Smith of his oath and by repeatedly sustaining objections on his direct examination. These arguments are without merit.
First, Greer contends that the trial court committed reversible error when it admonished Smith about his oath. Because counsel for Greer failed to object to the court's admonition at trial, we review under the plain error doctrine. United States v. Carpenter, 776 F.2d 1291, 1295 (5th Cir.1985). After Smith testified as to Greer’s reputation for truthfulness, the prosecution asked Smith how many people he had talked to about that subject. Smith testified that he did not know how many. When the prosecution persisted with this line of questioning, Smith asked if the prosecution wanted the truth. The court then reminded Smith that his oath required the truth, and instructed Smith to testify accordingly.
Contrary to Greer’s contention, the trial court’s response was limited and appropriate. While reminding the witness about his duty under the oath, the court stated, “I know you didn’t mean it.” The district judge, as overseer of the trial, has the duty to ensure that all witnesses understand the importance of their appearance and adhere to the oath of truthfulness. We find no error.
Second, Greer claims that the court undermined the credibility of Smith’s testimony by sustaining a number of objections by the prosecution. We reject this argument because the court properly sustained the objections. Greer called Smith not only as a character witness, but also to testify about a meeting at which Houston Byrd, Jr., Greer and Smith discussed Byrd’s upcoming appearance before the federal grand jury in Lafayette. Greer wanted Smith to testify to what Greer and Byrd said at this meeting, and to testify that Byrd stated that Greer had previously instructed him to tell the truth before the grand jury. When requested by the trial court to state the purpose of the proffered testimony, Greer’s counsel responded that the testimony was to be used to impeach Byrd. But Byrd was never confronted with his prior inconsistent statements, and thus extrinsic evidence of the statements could not be used to impeach him. Fed.R. Evid. Rule 613(b). Moreover, the trial court properly rejected Greer’s contention that Smith’s testimony regarding Byrd’s and Greer’s conversation was not hearsay because it recounted the statements of co-conspirators. See Fed.R.Evid. 801(d)(2)(E). The statements were not made in furtherance of the conspiracy.
Greer also attempted to elicit testimony from Smith that Laird told Smith that he had never been to Basile to meet Byrd, Greer, and Courville. Laird testified at trial that the four men discussed the false testimony to be given by Byrd and Cour-ville before the grand jury at this meeting. On cross-examination, Laird admitted that he previously maintained that this meeting never occurred. Hence, there was no error in rejecting extrinsic evidence of his prior inconsistent statement.
Finally, the trial court properly struck non-responsive testimony by Smith during direct examination. While testifying about Laird’s and Byrd’s reputations for truthfulness, Smith interjected editorial and inappropriate comments.
D
Greer has adopted the arguments made on behalf of Carlock, Sr., in Carlock, 806 F.2d 535, expressly those regarding pre-trial delay and alleged Senate improprieties. See United States v. Ballard, 779 F.2d 287 (5th Cir.), cert. denied — U.S.-, 106 S.Ct. 1518, 89 L.Ed.2d 916 (1986). In Carlock, we found the claims he adopts to be without merit.
II
The conviction of Michael Greer is AFFIRMED.
. The joint trial originally began in Lake Charles, but mistrial was declared when the court failed to obtain an impartial jury. The trial was then transferred to Monroe, where the jury was sequestered during trial.
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.
HAYNSWORTH, Circuit Judge.
These are cross appeals from an order •of the District Court approving Hopewell’s geographic plan for the assignment of pupils to its schools and refusing to require the retransfer of certain Negro pupils attending schools outside of their geographic zones under a previous order of the Court. Finding no error on •either appeal, we affirm.
Hopewell, Virginia, is an industrial ■city located at the confluence of the James and Appomattox Rivers. It is roughly bisected by the Norfolk and Western Railroad, which runs from Hopewell’s southwestern border roughly northeasterly to the James River, while the Seaboard Airline Railroad divides the city in an approximately east-west direction. Except in the southwestern portion of the city, the Norfolk and Western Railroad is bounded on its southeastern side by many factories, and there are long reaches of that railroad which are uncrossed by streets. These railroads, and the industrial sections which bound them, constitute obvious and natural geographic boundaries between residential areas, some of which are made remote from each other by the intervening industrial, nonresidential sections which abut the railroads.
The School Board adopted a geographic zoning plan. The zone boundaries were drawn along natural geographic boundaries, particularly the railroads. The schools are centrally located in each zone, except for two zones in areas annexed to the City of Hopewell after those two schools had been constructed.
Some Negroes live on the northwestern side of the Norfolk and Western railroad. They are in an elementary school zone in which the majority of the residents are white. Pupils from the elementary school in that zone are fed automatically to a high school in which the majority of the pupils are white.
The great majority of the Negro residents of Hopewell live on the southeastern side of the Norfolk and Western Railroad. With an exception to be mentioned presently, the residential areas in which they live are separated from residential areas inhabited principally by white people by the railroad and by industrialized, nonresidential sections. One elementary school is located centrally in the area it serves, as is another combined elementary and high school attended entirely by Negroes. A third elementary school attended solely by Negroes is located at the extended city limits, this being one of the schools which came into the Hopewell City School System by annexation after it had been constructed.
When this action was first commenced and before the court approved Hopewell’s geographic zoning plan, it ordered the admission of the then infant plaintiffs into the schools of their choice. They were admitted, after which the School Board took an appeal to this Court. We held that the question was moot, since the order required their admission only for the current year and the School Board had fully complied with the order.
Thereafter, after some modification of the plan, principally the addition of a provision giving any child who lived nearer to a school outside of the zone in which its residence was located a right to attend that school, the District Court approved the plan. It refused, however, to require, or permit, the involuntary retransfer of the original plaintiffs transferred pursuant to the earlier order of the Court.
The plaintiffs concede, in general, that the elementary school zone boundaries were drawn along natural geographic boundaries and barriers. They contend as unreasonable only the boundary between Arlington and Woodlawn School zones. That boundary, however, runs along a main arterial highway, and the plaintiffs can suggest no other boundary between those zones of geographic significance. Use of that boundary incorporates in the Woodlawn zone certain areas which are closer to Arlington School. However, any transfer to Arlington of any readily divisible portion of that part of the Woodlawn School zone lying closer to Arlington School would result in a transfer to Arlington School of far more pupils than it could receive, leaving Woodlawn School greatly under-populated.
These are the two schools which Hopewell acquired by annexation of adjacent territory. Neither is centrally located in the zone it serves, but the main highway along which the School Board has drawn the boundary which separates those two zones is patently the most logical and reasonable. Such an artery is a natural boundary to choose in the absence of any other significant geographic feature. The fact that a portion of Woodlawn zone lies closer to Arlington School than Woodlawn School is not a valid objection to the plan when incorporating a portion of that area into the Arlington School zone would leave Arlington overwhelmed with pupils, for which it could not care, and Woodlawn greatly underpopulated. Arlington zone’s other boundaries are the limits of the City, the Seaboard Airline Railroad and industrial areas, so that there are no feasible compensating adjustments by which portions of the Arlington zone might be shifted to permit it to include a portion of Woodlawn zone.
Under these circumstances, the District Court was abundantly justified in concluding that the zone boundaries were reasonably drawn in accordance with natural geographic features and not on racial lines.
Assignments to the high schools are made in accordance with a feeder system. We find nothing objectionable in this when the primary school zoning is on a nonracial basis, for the result is, in effect to create reasonable zones for the high schools. The zones of those primary schools which feed each high school are collectively the zone for the high school. So viewed, the high school zones are as compact and reasonable as the primary school zones which we have considered.
The plaintiffs suggested below that the high school zones might have been drawn differently, but their suggestion was impractical because it would have overly crowded one school while under-populating another. The School Board’s lines achieved an even distribution of pupils, and there was an evidentiary basis supporting the District Court’s approval of them.
Under the plan, the School Board reserved the right to consider transfer applications to a school other than the one serving the zone in which the pupil resides if founded upon some specific reason, but the plan provides that the race of the applicant will not be a factor to be considered in granting or denying such a transfer application. The School Board in this Court insists that the reservation is intended to take care of extraordinary cases such as that of a crippled child whose mother is a teacher in a school other than one in the zone in which they reside. It is not to be used, the Board says, for the purpose of avoiding or increasing the extent of the mixing of the races in the schools which results from the geographic zoning plan. That is the clear purpose and effect of the plan’s limitation upon the reservation. The restriction saves the reservation which would otherwise be suspect, for permissive transfers of minorities granted because of their race are unlawful.
The plaintiffs object that the result of the geographic zoning is a large measure of de facto segregation. It is true that it is, but this is because of the residential segregation that exists. The Harry E. James School zone, for instance, bounded in part by Hopewell’s city limits, is otherwise largely surrounded by railroad classification yards and industrial tracks, with adjacent industrialized areas, which isolate the residential portions of that zone from all other residential areas. De facto segregation could be avoided for those pupils only by transporting them to distant schools.
While the Carter Woodson and the Arlington school zones are not so isolated as the Harry E. James school zone, substantially the same thing may be said of them. They are not gerrymandered zones designed to impose a segregated school population, but de facto segregation results from the fact that the surrounding residential areas are inhabited entirely by Negroes.
The Constitution does not require the abandonment of neighborhood schools and the transportation of pupils from one area to another solely for the purpose of mixing the races in the schools.
The plaintiffs also complain that the District Court did not order a general reassignment of teachers and administrative personnel on a nonracial basis. There has been no inquiry into that matter in the District Court, and the failure of the District Court here to enter an order in accordance with this request of the plaintiffs is affirmed for the reasons stated in Bradley v. School Board of City of Richmond, Virginia, 4 Cir., 345 F.2d 310 (decided today).
The School Board’s appeal from the Court’s refusal to require or permit the involuntary reassignment of the fifteen pupils we also find to be without merit.
It is true that in our earlier opinion we held that the original order of the District Court required the admission of these fifteen pupils to the schools of their choice for the then current school year only. That was the school year of 1963-4. Under the geographic zoning plan, which the Court has now approved, those fifteen pupils would be assigned to other schools than those they now attend.
A reassignment of those fifteen pupils to the schools they attended prior to 1963-4 may have a substantially adverse effect upon them. The District Court was entitled to give consideration to that fact, though their continued attendance at the schools where they were assigned for 1963-4 is inconsistent with the otherwise uniformity of the geographic attendance plan.
In approving a geographic zoning plan, indeed, any other plan for the assignment of pupils, a District Court has a large measure of discretion in imposing such conditions or exceptions as fairness and justice seem to it to require. The question, therefore, is not answered by a finding that the assignment of these pupils is a departure from the geographic zoning plan which we now approve. It is an exception to it, but the exception imposed by the District Court in the interest of fairness to these fifteen individuals was not beyond the range of discretion vested in it.
We find no reversible error in the Order of the District Court.
Affirmed.
. Gilliam v. School Board of City of Hopewell, Virginia, 4 Cir., 332 F.2d 460.
. Goss v. Board of Education of City of Knoxville, Tennessee, 373 U.S. 683, 83 S.Ct. 1405, 10 L.Ed.2d 632; Dillard v. School Board of City of Charlottesville, 4 Cir., 308 F.2d 920.
. Bell v. School City of Gary, Indiana, 7 Cir., 324 F.2d 209; see also Bradley v. School Board of City of Richmond, Virginia, 4 Cir., 345 F.2d 310 (decided this day).
. Gilliam v. School Board of City of Hopewell, Virginia, 332 F.2d 460.
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.
SCHNACKENBERG, Circuit Judge.
From a summary judgment for the defendants, plaintiff appeals. 127 F. Supp. 722.
Plaintiff, as a citizen of the state of Illinois, filed a complaint in the district court against the defendants, citizens of Wisconsin. In substance the complaint charges that the defendants, Mueller, Goecks and Grover, were, at the times mentioned in the complaint, members of the town board of Milwaukee, Wisconsin, and that defendant Pfeifer was then building inspector, defendant Borman was health officer, defendant Dineen was attorney, and defendant Tel-lier was plumbing inspector, for said town of Milwaukee. It further alleges that plaintiff owned a certain two-family residence and the lot upon which it was built, all located in Milwaukee, and that on September 30, 1950, plaintiff received by registered mail a notice that the town of Milwaukee and the building inspector thereof did determine, pursuant to Section 66.05 of the Wisconsin statutes, that said building was:
“so old, dilapidated, out of repair, unsafe, unsanitary and otherwise unfit for human occupation or use that it is unreasonable to repair the same and further notifying the plaintiff that due to these conditions, the plaintiff, Joseph M. Baker, is required and hereby ordered to raise” (sic) “and remove such building within 20 days from the date of the service of such notice upon him for the reason that in the judgment of the Town Board and the Building Inspector, said building cannot be made safe by repair and it is not suitable to be made usable for living purposes because proper sanitary facilities cannot be installed therein; * * *”
The notice further informed plaintiff that, in the event of his failure or refusal to comply with the order, the building inspector would proceed to cause the building to be razed or removed. The complaint further alleges that a copy of said notice was attached to the front of said house “in full view of the public and of passers-by.”
The complaint charges upon information and belief that the issuing of the order by the members of the town board and the building inspector was malicious, wanton, unreasonable and wrong, and that their judgment was faulty; that they were totally and utterly wrong in declaring said building unfit for human occupancy and ordering it to be razed, demolished and removed; that the nailing of the order upon the house caused it to become “a badge of inferiority”, the value of the building was “smeared” and all prospective buyers were warned to beware, the value of the house was depreciated, plaintiff suffered pecuniary loss and his private rights were jeopardized. It is charged that he was deprived of his property rights under the 14th amendment to the Constitution of the United States, and the conduct of the defendants constituted malfeasance.
The complaint further alleges that plaintiff secured an injunction or restraining order restraining the members of the town board and the building inspector or others designated by the town board, from demolishing, razing or removing said building.
The complaint alleges that the building was not unsafe or old and dilapidated and out of repair, or unfit for human occupancy, that prospective buyers refused to purchase said premises and real estate men refused to list it. It further alleges that, due to the posting of said notice, plaintiff was forced to sell at a lower price than he could have otherwise obtained. It charges that Borman’s neglect to use his authority as health officer to control the actions of plaintiff’s tenants constituted nonfeasance. It charges that, by virtue of the foregoing, plaintiff suffered damages in the amount of $5,-500, for which he prayed judgment.
Before us plaintiff also contends that § 66.05 is void because it violates the Wisconsin Declaration of Rights in depriving plaintiff of the right of trial by jury.
Defendants contend that they are immune from liability in the instant case because they acted in their official governmental capacity when they caused the demolition notice involved to be posted, and that the pleadings upon their face show that the action is barred by the express provisions of § 66.05, Wisconsin Statutes. They likewise contend that said § 66.05 is a clear exercise of the police power of the state government and it is not therefore repugnant to the 14th amendment to the Constitution of the United States or the Declaration of Rights of the State of Wisconsin.
1. In Wisconsin it is the law that the inhabitants of a municipal corporation hold their property subject to a reasonable exercise of police power, and that property may be destroyed to protect the public welfare when such property becomes a nuisance or dangerous to public safety. Miller v. Foster, 244 Wis. 99, at page 103, 11 N.W.2d 674, at page 676, 153 A.L.R. 845, announces this rule. The court there said:
“In Mugler v. [State of] Kansas, 123 U.S. 623 [669], 8 S.Ct. 273, 301, 31 L.Ed. 205, the court said: * The exercise of the police power by the destruction of property which is itself a public nuisance, or the prohibition of its use in a particular way, whereby its value becomes depreciated, is very different from taking property for public use, or from depriving a person of his property without due process of law. * *’ And in State v. Laabs * * * (171 Wis. 557 [559], 177 N.W. [916] 917), this court said: * * The state may, in its power of police regulation, adopt such measures as are reasonable for the protection of the people’s health, and remove the causes that menace it’ ”.
In Miller v. Foster, supra, it appeared that the plaintiff owned a two-family dwelling and, without previously obtaining a building permit, altered it to a five-family dwelling. The construction of the building was below the minimum requirements of the ordinance controlling construction of dwellings in the particular fire zone in which the building was located. The defendant, building inspector of West Allis, gave notice to the tenants of the violation and directed them to cease occupancy. The plaintiff sued the building inspector to recover damages for what was alleged to be wilful, malicious conduct. The Supreme Court, in examining the lower court’s judgment dismissing the plaintiff's complaint stated:
“It is undisputed that the defendant was the building inspector of the city of West Allis and that his acts were within the scope of his official authority and in the line of his official duty, which relieves him from personal liability.”
It is significant that in that case plaintiff alleged that notices delivered by the defendant to plaintiff’s tenants were so given “willfully, maliciously, without lawful authority and with intent to wrongfully injure the plaintiff”. Similar charges are made in the complaint in the case at bar.
To the same effect is Wasserman v. City of Kenosha, 217 Wis. 223, 258 N.W. 857.
In the case at bar, the defendants acted pursuant to the provisions of § 66.05, Wisconsin Statutes and, since they acted within the scope of their official duty, they are relieved from any personal liability to the plaintiff. This would be true even if the defendants had erroneously determined the plaintiff’s house to be a nuisance and had erroneously caused the condemnation notice to be posted.
2. Section 66.05 of the Wisconsin Statutes, under which the defendants proceeded, provides in part as follows:
“Anyone affected by any such order shall within 30 days after service of such order apply to the circuit court for an order restraining the inspector of buildings or other designated officer from razing and removing such building or part thereof or forever be barred. * * The court shall determine whether the order of the inspector of buildings is reasonable, and if found reasonable the court shall dissolve the restraining order, and if found not reasonable the court shall continue the restraining order or modify it as the circumstances require. * * The remedies herein provided shall be exclusive remedies and anyone affected by such an order of the inspector shall not be entitled to recover any damages for the razing and removal of any such building.”
Plaintiff pursued his remedy under that act. He procured a temporary injunction, which has had the effect of temporarily preventing the razing or removal of his building. Until the court in that proceeding determines whether the order of the inspector of buildings is reasonable as it pertains to plaintiff’s property, it is not judicially known whether the posting of the notice thereon was justified. On oral argument before this court, plaintiff admitted that that case has never been disposed of. It does appear from the complaint that he has sold the property to others since the notice was posted. The court issuing the temporary injunction still has jurisdiction to determine the reasonableness of the action of the defendants in posting the notice, and that proceeding, being a prior action pending, takes precedence over the instant case. It is a bar to this proceeding.
3. The statute above quoted is a clear exercise of the police power of the state. Moreover, it provides for a judicial review of the acts of the public officials involved. It does not violate the 14th amendment to the Constitution of the United States.
4. Also contending that § 66.05 is invalid, plaintiff charges that it deprives him of a right to trial by jury on the cause of action set forth in his complaint, in violation of section 5 of article I of the Wisconsin Declaration of Rights, which reads as follows:
“The right of trial by jury shall remain inviolate, and shall extend to all cases at law without regard to the amount in controversy”.
Having held that defendants, as public officials, are immune from suit based upon acts performed in their governmental capacities, it is apparent that plaintiff was not deprived of a jury trial in the case at bar because the case is not maintainable in any event. Actually § 66.05 grants a remedy in the present situation where none otherwise would have existed. The remedy granted is one equitable in its nature. In equity there is no right to trial by jury. Plaintiff’s right to a jury trial, as required by the Wisconsin Declaration of Rights, was not, therefore, infringed.
5. In his brief in this court plaintiff contends that the district judge should have disqualified himself to sit in this case. This point was not raised before the district court and comes too late in this court.
For the reasons herein set forth, 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.
COLEMAN, Chief Judge:
This is a government appeal, 18 U.S.C., § 3731, from the suppression of (1) tangible evidence found in the Miller automobile and (2) Miller’s confessions after he had been arrested and arraigned for having a false driver’s license and an expired automobile inspection sticker. The District Court first suppressed a pistol, rifle, and a portfolio found in the Miller automobile. Later, it suppressed all use of Miller’s correct identity and three confessions which, while voluntary, were thought to be “fruits of the poisonous tree”.
I
The Indictments
On January 9, 1978, Clifford Miller, a previously convicted felon, was indicted in the Pecos Division of the Western District of Texas for possession of a firearm in violation of 18 U.S.C., § 1202(a) Appendix. On January 19, 1978, Clifford Miller and Kathelyn Miller were jointly indicted in the El Paso Division of the Western District for conspiracy to defraud the United States by filing a false social security claim in violation of 18 U.S.C., § 286. Count two of the same indictment charged Kathelyn Miller with the completed substantive offense, in violation of 18 U.S.C., § 287, and Clifford Miller with aiding and abetting that offense. A third indictment was filed in the El Paso Division on March 2,1978, charging Clifford Miller and Kathelyn Miller with mail fraud, in violation of 18 U.S.C., § 1341.
II
The Astonishing Facts
On November 18, 1977, officers of the Texas Department of Public Safety (DPS) set up a routine license and vehicle registration checkpoint adjacent to a Border Patrol checkpoint, a lighted area, on Highway 67, about five miles south of Marfa, Texas. All cars traveling in either direction were stopped for the purpose of checking driver-licenses and motor vehicle registration, a procedure apparently approved in Delaware v. Prouse, 440 U.S. 648, 99 S.Ct. 1391, 59 L.Ed.2d 660 (197,9).
Officers at the checkpoint were DPS Officers (Agents) Greer, Kilpatrick, and Maxwell, along with a state highway patrolman, the county sheriff, and several other officers. The checkpoint was set up at noon and operated for twenty-four hours.
Around 8 o’clock p. m., after dark, a 1969 Chrysler, with other cars behind it in the same traffic lane, was stopped in regular traffic. It was driven by an individual who ultimately turned out to be Clifford Jerome Miller. His wife, Mrs. Kathelyn Miller, was also riding on the front seat. The automobile carried Texas license plates and displayed an expired safety inspection sticker.
Miller showed Agent Maxwell a New Mexico temporary driver’s permit, made out to Joseph Rosenfeld, specifying a date of birth and social security number. The document was only a carbon copy of the original and it carried no picture. When Agent Maxwell asked Miller to state his name, birthday, and social security number, Miller said his name was “Rosenfeld” and gave the date of birth listed on the permit. However, he recited a completely different social security number to that appearing on the permit.
Maxwell requested that Miller step to the rear of the vehicle, where he was asked to repeat the information recorded on the temporary license, whereupon he gave the same response. This, of course, alerted the officers to the likelihood that there was something rotten in Denmark.
When asked about the ownership of the Chrysler, Miller stated that he had just purchased it in south Texas from Alfred Phipps. Suspiciously enough, he could provide no bill of sale or other document evidencing that transaction. Whereupon, Maxwell called Officer Greer, who was then checking the first car behind Miller’s, to run a National Crime Information Center (NCIC) check on the permit and the automobile. While Miller was with Greer, and while the dispatcher was being contacted by radio for the desired reports, Maxwell drove the Miller Chrysler off the pavement, out of the highway traffic lane. He parked it at the end of the Border Patrol van, on the shoulder of the road, so that it would not obstruct moving traffic and halt the ongoing checks of other vehicles. Mrs. Miller remained in the car, sitting where she had been, on the passenger side of the front seat. Upon getting into the car for the purpose of moving it off the road, Maxwell saw a Colt’s pistol and holster between the bucket seats, only partially covered with a pillow. He unloaded the pistol and took it to Officer Greer in order that an NCIC check might also be run on it.
When the. NCIC reports came in, Greer told Maxwell that the vehicle was reported as registered to Alfred Phipps, of Alice, Texas, and that there was nothing in the computer on the temporary driver’s license. While all this was going on Miller volunteered that he had “purchased the pistol somewhere up North, and that there was a 30.06 riñe in the back seat that he [Maxwell] could check, also ”.
When Maxwell went back to the car to pick up the rifle he saw a plastic identification holder over the sun visor which, upon examination, contained credit cards issued to an oil company. Without stopping to pick up the rifle, Maxwell took these cards to Greer and then returned for the rifle. When he got back with the rifle he found out that “Rosenfeld” was now claiming to be Phipps. However, “Rosenfeld” gave different “middle names” for Phipps. He said that he had been arrested for DWI in Wyoming, that his driver’s license had been taken away from him, that he knew he couldn’t get a driver’s license using his real name, so he used the name Joseph Rosen-feld to get the New Mexico license. Greer testified that there was a credit card slip with the cards, signed that day with a “Phipps” signature. This signed credit slip was what caused “Rosenfeld” to start claiming that he, in fact, was Phipps. However, the credit card incident is of no materiality to this appeal as Miller has not been indicted on that subject.
In the face of the credit card development, Maxwell went back to the car, where the lady passenger insisted that the driver’s name was Rosenfeld, which Maxwell, of course, knew to be untrue.
The NCIC reported that the rifle had been stolen in El Paso and that the credit cards were also stolen. Upon receipt of that information, Greer arrested “Rosen-feld-Phipps” and gave him his Miranda warnings.
When Maxwell asked the lady passenger for the second time about the identity of the driver of the car and she insisted that he was Rosenfeld, Maxwell looked in the back seat and saw a plastic portfolio behind the driver’s seat which, it turned out, contained several sets of identification and a blue diary. He next searched the trunk of the vehicle, the back seat, and two footlockers on top of the car. Nothing found in the trunk or in the footlockers seems to have been of any evidentiary importance. The diary, when read by Maxwell later that night, opened a trail which caused the discovery of Miller’s true identity. It also led to his identification as the perpetrator of a bizarre insurance fraud.
Although the passenger was not arrested, she went to the jail, but was then taken to the bus station so that she could return home. Meanwhile, Agents Maxwell and Greer examined the blue diary. They then requested that a deputy go to the bus station and get the passenger and return her to the jail where she and the prisoner were questioned about entries in the diary and the driver’s identification. Apparently, they learned nothing from her. She was then permitted to return to the bus station.
The next day after his arrest, the driver was duly arraigned, was again warned of his rights, and bond was set.
On the evening of the arrest and the next morning, Maxwell read through the blue diary and other documents taken from the portfolio. He then called the Mutual of New York Insurance Company (MONY) to try to obtain identifying information. By that call he learned that the automobile driver’s true identity was Clifford Jerome Miller. Maxwell also found out that Mrs. Miller had unsuccessfully sued MONY for $50,000 for life insurance allegedly due for the asserted death of her husband, who at one time had been a MONY employee. He was told that there had been a similar claim against Standard Insurance Company of Oregon. Maxwell confronted “Rosenfeld-Phipps” with this information, meeting first with a denial and then with an admission that the prisoner, in fact, was Clifford J. Miller.
After these conversations, Officer Maxwell called the FBI to advise of the potential mail fraud and social security violations by Miller, and he called an Alcohol, Tobacco, and Firearms (ATF) Agent to report a possible firearm violation. Meanwhile MONY apparently contacted the Standard Insurance Company and notified them that Miller was not dead, but very much alive. Standard Insurance then contacted the Postal Inspector to request a mail fraud investigation in the case.
On November 22, 1977, Miller was arraigned before a Presidio County Justice of the Peace as a “fugitive from El Dorado County, California, Governor’s warrant # 14530”. In his right name Miller signed the arraignment form which fully advised him of his right to counsel, that counsel would be appointed for him if he was too poor to afford a lawyer, that he had a right to remain silent, that he was not required to make a statement, and any statement he did make could be used against him in court, that he had a right to stop interviews or questioning at any time and that he had a right to an examining trial.
On November 29, eleven days after his arrest, still in jail because he could not furnish bail, Miller consented to interviews with agents representing three federal agencies. In each and every instance, Miller was warned of his Miranda rights and signed the waiver form.
Postal Inspector Harmond Clemmons conducted the first interview at 9:00 a. m. Clemmons, stationed in Texas, had been asked by a postal inspector in Oregon to interview Miller. Clemmons had not heard of the diary and knew nothing of its contents. He had only been given an outline of the insurance transactions and been told that Miller was still alive.
Miller told Clemmons that he had purchased the Standard Insurance policy while living in California, prior to moving to El Paso in 1974, where he worked as an agent for MONY. He stated that he started putting his “death plan” together in October of 1975 while in Mexico. On December 2nd or 3rd of that year, he and his wife returned to Mexico, and with the help of a doctor, a judge, and another man, Miller faked a heart attack in a field and was pronounced dead. He stated that his wife did not know about his plan. His “funeral” was the next day.
Miller said he returned to the United States via Laredo, Texas, on December 7, 1975, three or four days after the faked death and funeral, using false identification under the assumed name of Alfred Phipps. Before going to Mexico he had arranged for these false identification papers. He said that two or three months later he contacted his wife to tell her that he was alive and that she should go ahead with the insurance claims on his death. He asked her to send him $2,000 of the insurance money she had already received.
About a week prior to November 29, ATF Agent Jimmy Searles had been briefed by Maxwell, but he was mainly concerned with Miller’s prior conviction and a description of the guns which were in his possession at the time of his arrest. At 10:30 a. m., November 29, Searles interviewed Miller. For the fourth time, Miller was advised of his rights, which he again waived in writing. The statement obtained by Searles dealt only with the firearms and contained no reference to the insurance matter.
Wayne Taylor of the FBI was the third federal officer to interview Miller on November 29. Although Agent Taylor had in his possession all the documents seized in the search, he was not completely familiar with their contents, but the major part of the information he got from Miller was clearly connected with and based on the contents of the diary.
III
The Suppression Rulings
Two suppression hearings were held on the three indictments which had been consolidated for hearing purposes. At the first suppression hearing the District Court made oral findings and rulings. He refused to suppress the statements which Kathelyn Miller made during non-custodial interrogation. He granted the motion to suppress the revolver and rifle and all other tangible evidence recovered from the Miller’s vehicle. A written order was entered on March 10, 1978, but the number on the order was only that of the firearms case (the Pecos Division case).
A second suppression hearing was held on April 28, 1978, partially for the purpose of clarifying the first suppression order and to hear further testimony on the issue of the admissibility of Clifford Miller’s three confessions. The memorandum opinion and order following this hearing were entered on May 30, 1978.
As to Clifford Miller, the Court then suppressed all items seized from the car and all fruits thereof, including the statements elicited from him by agents subsequent to the search (with the exception of two pages of the FBI report) and all evidence of his actual identity. As to Kathelyn Miller, the Court suppressed all items seized during the search of the appellees’ vehicle and all fruits of that search except for her husband’s confession.
The government filed notices of appeal from each of the orders. The cases have been consolidated for consideration here.
IV
The Findings in the District Court The First Hearing
We consider it advisable to copy in toto the oral findings of the District Court after the first (Pecos) suppression hearing:
THE COURT: The factual situation concerning what lead up to the ultimate arrest of Mr. Miller is, I think, probably a perfect example of good police work that is handled carefully, conscientiously but improperly. There’s no question in my mind,... that in fact the moving of that automobile led to a chain of events and started a chain of events which sequentially, one to another, left it fairly clear to me that the search was not a proper search.
I don’t have any question at all about the propriety to stop, and I don’t believe the defendant, Mr. Miller, does. I don’t have any question in my mind about the propriety of the asking for the driver’s license, nor the suspicion that the officer had when Mr. Miller gave him, on two different occasions, a Social Security number which was not the one listed on the temporary license. If he had said he couldn’t remember his Social Security number, I think that would have been understandable. But to have obviously known his Social Security number committed to memory and be able to give it to the officers twice, I think, would make any officer suspicious that something was not quite right. I think the officers quite correctly ran the check of the vehicle, on the registration itself, but it came back negative. I think they quite properly tried to run down his driver’s license and any information they could about that. And again, there was nothing that led them any further there.
Then Mr. Maxwell got back in the car, and he got back in without the consent, obviously, of Mr. Miller, and he says that he did. It may have been a ministerial act, and it may have been the most logical and appropriate thing to do, but it seems to the Court that at that point had he not gotten back in the car, he never would have seen the pistol. (Emphasis added by the copier).
Now, if they had had some fear about that car or about — about the people in the' car being a danger to them, I am relatively certain that they would not have left his companion in the car, and they didn’t know who she was at 'the time, didn’t know whether she was his wife, girl friend, or what she was. They left her in the car, and it wasn’t until fifteen or twenty minutes later they took her out, and for her comfort, allowed her to go to the van.
So they saw the pistol. They brought the pistol back and ran the check on it, and it came back negative. And then Mr. Miller volunteered that, “If you’re concerned about that, there’s a thirty ought six in the back of the car”. And Mr. Maxwell testified that he could reach back in the back and obviously saw it and had no difficulty getting it. But he got back in the car then and started going through other things, namely the thing— the visor, the credit cards and at some point — and it’s not clear when — into the portfolio on the back seat that was lying apparently in plain view on the back seat, which, of course, was a rich harvest of things.
I just can’t believe that there was at that time any probable cause for that search. Obviously, they were correct. Obviously, they had hold of a man who is involved in questionable activities, but they didn’t know that at the time. All they suspicioned was they might have a stolen car, and they found they didn’t. They didn’t know what it was, but they knew what it wasn’t.
The oral findings were delivered on March 6, 1978. On March 10, the Court entered a written order suppressing the.38 caliber revolver, the 30.06 caliber rifle, and all other tangible evidence recovered from defendant’s vehicle, “because the Court is of the opinion that the search of defendant’s vehicle was conducted without probable cause to believe that an offense had been committed”.
Nothing was said as to Miller’s volunteering the presence of the rifle or his suggestion that the officers could check it if they wished to do so.
The Second Hearing
A second suppression hearing took place in El Paso on April 28, 1978. This hearing was directed to the various statements given by Miller to various officers who had interviewed him in the jail at Marfa.
The Court then entered another order in which it was held that “[Ajfter the NCIC reports on the vehicle, the defendant’s driver’s permit and the pistol came back as negative, the officers’ search became little more than a fishing expedition”.
The Court further held that:
“[T]he initial intrusion must be justified before the validity of subsequent police conduct of a warrantless search of an automobile can be considered [citing Coolidge v. New Hampshire, 403 U.S. 443 [91 S.Ct. 2022, 29 L.Ed.2d 564] (1971)] but here, although the initial stop was justified, the agents went beyond the permissible scope of intrusion.”
The Court then ordered that:
“All fruits of the search of the defendant’s vehicle, including all items seized therein, are SUPPRESSED” [as to all three indictments against Miller]. The same order was entered as to Miller’s wife on the two indictments in which she was charged.
It was further held that:
“[N]one of the government agents who elicited statements from defendant Clifford Jerome Miller could have done so but for Agent Maxwell’s seizure of the defendant’s diary and his subsequent perusal thereof.... The government has shown no attenuation sufficient to destroy the taint which arises out of the illegal search of the defendant’s vehicle and continued through each of the interviews with defendant Clifford Jerome Miller except as to the interview with the FBI Agent Taylor. Agent Taylor’s testimony clearly reflected that, although he had access to the information contained in the diary prior to interviewing the defendant on November 29, 1977, he did not refer to the diary until after the defendant had narrated the events of his past to him.”
It was ordered that the government:
“Shall not attempt to introduce any evidence as to his identity against [Miller] in prosecuting him.”
This ruling was based on the finding that Miller did not voluntarily reveal his identity (emphasis added) and that but for the illegally seized diary and identification cards, Agent Maxwell could not have found whom to contact in order to discover Miller’s actual identity.
It was further held, however, that Kathe-lyn Miller did not have standing to challenge her husband’s statements made while he was in custody, or his identification.
V
The Applicable Law
Since the District Court was of the view that Maxwell’s removal of the Miller car to the shoulder of the road was an act which “poisoned” everything that occurred thereafter, the first inquiry is whether entering the Miller car to get it out of the line of traffic “was unreasonable under the circumstances”, United States v. Chadwick, 433 U.S. 1, 97 S.Ct. 2476, 53 L.Ed.2d 538 (1977).
We believe that this question should be answered in the negative — moving the car was not unreasonable.
We start from the undisputed premise that the officers were performing a lawful state function, on a public highway, in a lawful manner, State of Delaware v. Prouse, supra.
Neither Miller nor his wife testified in support of the motion to suppress. There was no proof in support of a notion that the officer drove the Miller automobile out of the line of traffic backed up behind it as a pretext for getting an otherwise prohibited look at things inside the vehicle, see United States v. Ceccolini, 435 U.S. 268, 98 S.Ct. 1054, 1062, 55 L.Ed.2d 268 (1978). The absence of such proof is hardly surprising since in the lighted area at the Border Patrol checkpoint it is likely that Maxwell could have seen the pistol by merely looking through the window from the outside. See United States v. Kaiser, 5 Cir., 1977, 545 F.2d 467, 476.
Moreover, it is reasonable that the officers may take any action reasonably necessary and relevant to the operation when it is not a pretext for circumventing constitutional rights. The rationale for getting this car off the highway is no different to allowing an inventory of the contents of an automobile lawfully impounded as the result of an arrest. Moreover, it would have been unreasonable, and likely a public safety hazard, to delay all the vehicles behind the Miller car while his status was being resolved.
Finally, the Millers were exercising no expectations of privacy in the pistol. They did not conceal it when they encountered the roadblock and Mrs. Miller took no steps to conceal it while Miller was being questioned about his driver’s permit and lack of a vehicle title.
Pennsylvania v. Mimms, 434 U.S. 106, 98 S.Ct. 330, 54 L.Ed.2d 331 (1977), was a case in which two police officers on routine patrol saw the defendant driving an automobile with an expired license plate. The officers stopped the vehicle for the purpose of issuing a traffic summons. The defendant was asked to step out of the car and produce his owner’s card and operator’s license. When the defendant stepped out, a large bulge was seen under his sports jacket, which led to the detection of a.38 caliber revolver loaded with five rounds of ammunition. A motion to suppress the revolver was denied and the Supreme Court affirmed. The Court held that the intrusion caused by asking the defendant to step out of the car could “only be described as de minimis that it hardly rose to the level of a petty indignity. Moreover, the Court held that the mere inconvenience of getting out could not prevail when balanced against legitimate concern for the officers’ safety.
While no question of officer safety entered the instant case, the efficient operation of a roadblock for lawful purposes, along with a reasonable regard for the travel rights and personal safety of other travelers, was involved. It was perfectly natural for the officer to wish to get the car out of the way. Simply moving a lawfully halted vehicle at a checkpoint to the side of the road, when no search is intended or undertaken, is not an infringement of Fourth Amendment rights.
The pistol was in plain view. Following an unbroken line of authority, we have repeatedly held that where the initial intrusion is not unreasonable, the warrantless seizure of inadvertently-discovered evidence in plain view does not offend the Constitution if it is immediately apparent to the police officer that he has evidence before him. See, e. g., United States v. Duckett, 5 Cir., 1978, 583 F.2d 1309.
Duckett was a case in which an automobile had been stopped because the motor vehicle did not have a visible license plate light. The motorist was unable to produce an operator’s license, a vehicle registration form, or any other means of identification. He was arrested. While looking for the vehicle identification number (VIN) on the vehicle, the officer saw two envelopes addressed to someone other than Duckett. Inside an already opened envelope were two United States Treasury checks made payable to someone other than Duckett. We affirmed a denial of suppression of the government checks.
While it was not unlawful for the Millers, as travelers, to have a pistol in their automobile, there was nothing unreasonable about running the NCIC check on it once it had been discovered in plain view. NCIC information on the pistol might well have led to the correct identification of the driver who for two reasons had put his identity in doubt (1) by offering the officers a carbon copy of a temporary driver’s permit with no picture on it (a temporary New Mexico permit for the driver of a car carrying a Texas license plate) and (2) by being unable to furnish any documentary evidence that he, in fact, had title to the automobile.
Neither the removal of the automobile nor the seizure of the pistol for the purpose of having it checked against National records maintained for that very purpose was a violation of constitutional rights. It necessarily follows that when Miller, contemporaneously with the receipt of the report on the pistol, volunteered the information that the rifle was in the car and suggested that the officers could have it checked if they so desired, accepting that suggestion was neither unreasonable nor arbitrary. Even if it had taken a search to locate the rifle on the backseat, which the officers without contradiction denied, Miller had suggested the search.
The officers had not asked Miller if there were other firearms in the automobile. He simply volunteered it. This involved no infringement of Miranda rights.
Volunteered statements of any kind are not barred by the Fifth Amendment and their admissibility is not affected by our holding today.
Miranda v. Arizona, 384 U.S. 436, 478, 86 S.Ct. 1602, 1630, 16 L.Ed.2d 694 (1966).
The fact that NCIC had reported the car as registered to one Phipps did not prove that Phipps had sold or loaned it to “Rosen-feld”. Neither did it prove that the man who got out of the car was Phipps. The NCIC report on the temporary driver’s permit offered no information whatever.
In any event, as we appraise the facts, neither the pistol nor the rifle was obtained by what might be considered to be a conventional search. The pistol was in plain view. Miller told the officer where to go get the rifle, negating any necessity for uncovering it by searching for it.
We are compelled to the view that by originally entertaining the idea that moving the car onto the shoulder of the road was itself unlawful and thus unconstitutionally tainted everything which occurred thereafter, the Court fell into the error of suppressing the pistol and the rifle.
We reverse the suppression of the pistol and the rifle and remand the case for trial as to the unlawful possession of these weapons by one previously convicted of a felony.
The Suppression of any Evidence as to Miller’s Identity
We have held that the seizure of the pistol and the rifle did not offend the Fourth Amendment. Accordingly, those weapons were admissible in evidence. However, competent proof of Miller’s actual identity is a necessary predicate to establishing that he is the same person who previously had been convicted of a felony, an essential ingredient of this federal firearms violation. Did the trial court err when it suppressed ail use of Miller’s actual identity?
We shall hold, post, that the seizure of the diary contravened the Fourth Amendment. The diary put the officers on the trail which resulted in the discovery that “Rosenfeld-Phipps” was, in fact, Miller. The District Court was of the opinion that “but for” the use of the tainted diary Miller’s true identity would never have been learned, therefore, it directed that the government “shall not attempt to introduce any evidence as to his identity against [Miller] in prosecuting him”. It suppressed “all use of Miller’s correct identity”. This, of course, stopped the prosecution dead in its tracks.
It must be recognized that from the very outset Miller’s true identity was in question. He had volunteered the presence of the rifle. The NCIC check was run on it prior to, and independently of, the search of the portfolio. The information from the portfolio was not the exclusive source available to the police. Miller had been arrested. His fingerprints were available. The stolen gun could be traced. An elementary investigation would have settled the existence or non-existence of an Alfred H. Phipps in Alice, Texas. It would have been surprising indeed if a reasonably intelligent investigator could not have found someone who knew Miller on sight. Miller’s actual identity might be proved from evidentiary sources having absolutely no connection with the portfolio.
The question then becomes: Where, by unconstitutionally obtained documents, the government learns the identity of a person travelling on the public highway, with a false driver’s permit and attempting to evade identification, is the prosecution thereby foreclosed from producing identity from independent, untainted sources?
Miller’s identity was not dependent on a search and seizure in the usual Fourth Amendment sense. His person was in plain view in a pubic place, voluntarily exposed to the sight of all who wished to see. For the observation of his generally identifying characteristics no search was necessary. What a person knowingly exposes to the public, even in his own home or office, to say nothing of the public highway, is not the subject of Fourth Amendment protection, Katz v. United States, 389 U.S. 347, 351, 88 S.Ct. 507, 511, 19 L.Ed.2d 576, 582 (1967).
Miller’s identity was an immutable fact, the same before and after the public encounter. Nothing discovered there or afterwards could alter it. The officers could not seize it like seizing a physical object.
Miller was lawfully in custody and it only remained for the officers to learn his identity by constitutionally admissible means. See United States v. Houltin, 5 Cir., 1978, 566 F.2d 1027.
This situation is governed by what Mr. Justice Holmes wrote in Silverthorne Lumber Company v. United States, 251 U.S. 385, 392, 40 S.Ct. 182, 183, 64 L.Ed. 319 (1920):
Of course this does not mean that the facts thus [unconstitutionally] obtained became sacred and inaccessible. If knowledge of them is gained from an independent source they may be proved like any others..
This holding was quoted in Nardone v. United States, in Wong Sun v. United States, and again in United States v. Cec-colini.
We hold that Miller’s actual identity may be proved by evidence, if there be any, from sources unconnected with the search of the portfolio and the examination of its contents. To the extent that the order suppressed “any” and “all” evidence of identity, as hereinabove set forth, it will be reversed and the case remanded to the District Court.
We agree, of course, that under the “fruit of the poisonous tree” doctrine none of those involved in the seizure and utilization of the diary itself may be allowed to testify as to Miller’s true identity, although they are certainly free to testify as to the details of the arrest and to identify him in court as the person arrested.
The Firearms Confessions
Miller was lawfully arrested for the possession of the stolen rifle. The statements made to Searles and Greer with reference to the firearms came after Miller had been thoroughly informed of his rights to silence and counsel. Indeed, he specifically declined to give Searles any more information “without my attorney being present”. These statements were obviously voluntary in every respect. The statement to Searles recites Miller’s record of convictions, where and how he obtained the weapons, and how he come to have them with him when stopped near Marfa. Not a word is said of the insurance matters uncovered by the use of the diaries. The statement to Greer confirmed only the story given to Searles as to where he, Miller, had obtained the rifle.
The statements to Searles and Greer should not have been suppressed in their entirety. Only those parts of the confessions in which Miller correctly identified himself as “Clifford Jerome Miller” should be excised. Therefore, except for the identification of Miller, the suppression of the statements given Officers Searles and Greer in connection with the firearms is reversed.
The Search of the Portfolio and the Subsequent Confessions with Reference to the Insurance Frauds
Assuming that the portfolio was Miller’s personal luggage, an assumption which appears to be supported by the evidence, we agree with the defendants that the search of that portfolio did not comply with Fourth Amendment requirements, Arkansas v. Sanders,-U.S.-, 99 S.Ct. 2586, 61 L.Ed.2d 235 (1979); United States v. Johnson, 5 Cir., 1979, 588 F.2d 147, 151. The government’s argument that the admissibility of the portfolio contents may be rescued as an “inventory search” simply is not supported by the record. The diary may not be introduced in evidence against Miller.
Miller contends that his subsequent confessions with reference to the insurance frauds were “fruits of the poisonous tree” and that they were correctly suppressed. Here, following a wealth of precedent, we must, at least in part, agree with Miller. Prior to the search of the portfolio none of the officers so much as suspected Miller of the insurance fraud. They were not looking for insurance fraud. The seizure of the diary did not comply with Fourth Amendment requirements. Its contents set in motion the desire of the subsequently investigating officers to obtain statements from him. Postal Inspector Clemmons did not see the diary and did not know of its existence; he, however, had been informed of facts which had been gathered from the diary. It necessarily follows that his use of that information was to exploit it. We cannot say that his lack of knowledge as to the existence of the diary and his failure to have seen it supplied an attenuation sufficient to purge the primary taint. To hold otherwise would open a potentially large loophole for the use of illegally obtained evidence; in other words, “turn the information over to a fellow officer without informing him where it came from”. Obviously, this approach could not pass constitutional muster.
This leaves one final question — was the Clemmons confession “an intervening act of free will that purges the evidence of the taint of the unlawful invasion”?
The Clemmons confession will be annexed to this opinion as an Appendix.
Its opening paragraph states that
Prior to being interviewed, Mr. Miller was advised that I wanted to talk with him about his faked death, the fake death certificate, and the claims filed against his insurance. He was advised of his rights, and he said he had no objections to talking, but he would possibly not answer some questions.
Miller signed the waiver form which will also be appended to this opinion.
At the close of the Clemmons statement, it is recited that “Miller refused to furnish handwriting exemplars”.
Before Miller signed the Clemmons waiver, he had been informed of his right to remain silent and his right to counsel when he had been arraigned on a fugitive warrant from California, on November 22. Twice that same day, November 29, Miller had been informed of his rights and had signed waivers before being interviewed by other officers. There can be no doubt that the statement to Inspector Clemmons was voluntarily given, with full knowledge of and waiver of constitutional rights.
In order for the causal chain between the illegal acquisition of the Miller diary and his subsequent statements to be broken, the statements must have been voluntary and “sufficiently an act of the free will to purge the primary taint”, Brown v. Illinois, 422 U.S. 590, 95 S.Ct. 2254, 2261, 45 L.Ed.2d 416 (1975).
Brown further teaches that the burden of admissibility rests with the prosecution, that Miranda warnings are an important factor but standing alone they cannot always make the act sufficiently a product of the free will to break, for Fourth Amendment purposes, the causal connection between the illegality and the confession. Alternatively, per se or “but for” rules are rejected.
The issue must be answered on the facts of each case. However, the record may be of amply sufficient detail and depth to allow an answer at the appellate level. Factors to be considered, in addition to warnings, are the temporal proximity of the illegality and the confession, the presence of intervening circumstances, and, particularly, the purpose and flagrancy of the official misconduct.
The District Court held that none of the government agents who elicited statements from Miller could have done so but for (emphasis added) Agent Maxwell’s seizure of the defendant’s diary and his subsequent perusal thereof, that the government had shown no attenuation sufficient to destroy the taint which arose from the illegal search of the defendant’s vehicle and continued through each of the interviews with Miller, except for part of the interview had with FBI Agent Taylor.
As Brown teaches, however, cases of this type are not to be decided on a per se “but for” rationale. See, also, Parker v. Estelle, 5 Cir., 1974, 498 F.2d 625, 629. Other factors are to be considered.
We consider the following factors:
1. Miller had been lawfully, not unlawfully, arrested.
2. His right to counsel and right to remain silent had been explained to him when he was arrested on November 18. This was done again before the Magistrate on November 22. This was repeated by Postal Inspector Clemmons and by two other officers on November 29.
3. At least eight days had elapsed between the discovery of the diary and Clem-mons’ visit.
4. Miller told Clemmons that he was willing to talk on some subjects but might not be willing to talk about others, indicating that
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM:
The question presented by this appeal is whether under South Carolina law an absolute privilege protects defamatory statements uttered in the course of private arbitration proceedings. The District Court held that such statements were absolutely privileged and granted defendants’ motion for summary judgment. We affirm on the basis of the District Court’s opinion, 278 F.Supp. 393 (D.S.C.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:
|
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
PER CURIAM:
The Board’s Decision and Order is reported at 201 N.L.R.B. No. 135.
Our review of the record convinces us that the reasoning of the Board’s Decision was correct. Accordingly, and upon the basis of the Board’s reasoning, the Petition to Review is denied, the respondent Board’s Cross-Application is granted, and the Board’s Order will be
Enfoi’ced.
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.
GIBSON, Circuit Judge.
Petition for Review and Cross-Application for Enforcement of an Order of the National Labor Relations Board. The Board’s Decision and Order are reported at 199 NLRB No. 107.
The S.W. Noggle Company was found by the NLRB to have committed an unfair labor practice in violation of §§ 8(a) . (1) and (3) of the National Labor Relations Act, 29 U.S.C. §§ 158(a)(1) and (3), by threatening to discipline and later by the discharge of Mike Masonbrink. It is the contention of the General Counsel that the employer discharged Mason-brink because he advocated that the employees go out on strike for a new contract.
The Department Store, Package, Grocery, Paper House, Liquor and Meat Drivers, Helpers and Warehousemen, Local No. 955, an affiliate of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (the Union), had represented a unit consisting of the employer’s ware-housemen and drivers for 30 years. On September 30, 1971, the three-year contract between the employer and the Union expired. Negotiations were in progress at the time of the events with which this action is concerned.
Masonbrink was a part-time employee of the Noggle Company from October 1969 to May 1970 when he enlisted in the Coast Guard. He returned from this military service in June 1971. At the end of June, through the efforts of his sister, Vickie Harrison, an order clerk for Noggle, he was rehired on a full time basis. He worked as a truck driver until mid-October when he requested and received a transfer to the warehouse. He worked in the warehouse about six weeks, until his discharge on December 1, 1971.
During the period when he was employed in the warehouse the Trial Examiner found that Masonbrink “was far from being a model employee.” On several occasions he refused to perform his duties as he was instructed to do although he stated that he later would go ahead and do them. He was reported by Bramer, the leadman, to Thomas Turner, the general manager for Noggle, who in turn complained of his conduct to the Union.
Several witnesses testified that they had heard Mansonbrink state that he would like to draw “rocking chair money” which was explained as meaning state unemployment compensation. Ma-sonbrink did not deny this but only stated that he could not remember saying it.
On November 15, at a meeting between the unit employees and several union representatives Masonbrink strongly advocated that the Union strike the company because of its failure to negotiate a new collective bargaining agreement. Leadman Bramer reported Masonbrink’s position to General Manager Turner. Turner spoke to Vickie Harrison on about November 29, and told her, “Vickie, we’re going to have to do something about Mike. He has the men upset about going out on strike.” When she replied that it was because the company had not negotiated a new contract yet he responded, “I can’t help that. He still has to get his orders out.” The Trial Examiner found that this was a threat to discipline Masonbrink.
Two days later, after Vickie had spoken to her brother concerning this conversation, Masonbrink called to Turner while he was in the warehouse, and told him that if he had anything to say to him he should do so directly and not to tell his sister. Turner made no response to this. At this point the stories of the parties diverge. Masonbrink states that they then began to discuss the performance of his work. Turner stated that he asked Masonbrink to fill a rush order and that Masonbrink refused because he was already working on another order. One of the other warehousemen heard this conversation and his version, while not identical to that of Turner’s tends to support Turner’s version. Both Mason-brink and Turner testified that Mason-brink said that if Turner thought he could do a better job he could do it himself, and that Turner stated to Mason-brink that if he did not like working there he could quit. Masonbrink admits that he told Turner that if he did not like the way he was doing his job Turner could fire him. This challenge was repeated several times and finally Turner did fire Masonbrink.
The sole issue on this appeal is a factual one, whether the finding of the Trial Examiner and the Board that Mason-brink was discharged for his advocacy of a strike was supported by substantial evidence in the whole record. 29 U.S.C. § 160(e). ■ The Supreme Court has defined “substantial evidence” as:
“ ‘. . . such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.’ Consolidated Edison Co. v. Labor Board, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126 '[I]t must be enough to justify, if the trial were to a jury, a refusal to direct a verdict when the conclusion sought to be drawn from it is one of fact for the jury.’ Labor Board v. Columbian Enameling & Stamping Co., 306 U.S. 292, 300, 59 S.Ct. 501, 505, 83 L.Ed. 660. This is something less than the weight of the evidence, and the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency’s finding from being supported by substantial evidence Labor Board v. Nevada Consolidated Copper Corp., 316 U.S. 105, 106, 62 S.Ct. 960, 961, 86 L.Ed. 1305; Keele Hair & Scalp Specialists, Inc. v. FTC, 275 F.2d 18, 21.” Consolo v. Federal Maritime Comm’n, 383 U.S. 607, 619-621, 86 S.Ct. 1018, 1026, 16 L.Ed.2d 131 (1966) (footnotes omitted).
Considering first the finding by the Board that Turner had not requested Masonbrink to fill a rush order and been refused, we hold that this finding is not supported by substantial evidence on the whole record. The issue was decided by the Trial Examiner as a matter of credibility, balancing the testimony of Turner that he had told Masonbrink to fill the order and been refused against Masonbrink’s denial of the incident and testimony that the conversation concerned only his work performance generally. The Trial Examiner appeared to ignore the testimony of Ralph Roberts, one of the other warehousemen, to the effect that he had heard the conversation between Turner and Masonbrink, and that he had heard Turner tell Masonbrink to fill an order. Although Roberts did not testify that Masonbrink had openly refused to comply with the instruction, Robert’s version of the confrontation is more consistent with Turner’s version than was Masonbrink’s in that Mason-brink denied that he was even told to fill an order.
Turning next to the statement made by Turner to Vickie Harrison with regard to Masonbrink’s advocacy of striking, the Examiner failed to fully examine this incident. Beyond reciting the facts of the statement and the bare finding that “I also find that Turner’s statement to Vickie constituted a violation of Section 8(a)(1) of the Act” there was no analysis of the statement. Turner denied that it was a threat to discharge Masonbrink. He stated that he wanted Vickie to see if she could get Mike to settle down. In view of the fact that Vickie Harrison had been instrumental in getting Masonbrink the job, and the cordial relationship which obviously existed between the small group of employees and the management, this is not an unlikely explanation for the conversation. From the record of this conversation it would be erroneous to draw the conclusion that Turner was threatening to fire Masonbrink for advocating a strike.
In view of the fact that Masonbrink had been employed in the warehouse only a short time, and that after the one occasion when a complaint had been made of Masonbrink’s sub-par performance Turner had promptly notified the Union, this record cannot support the finding by the Examiner that Turner had “put up with quite a bit” or condoned the prior misconduct of Masonbrink. This finding appears incredible. By employing such reverse logic, the mere condoning of inferior work, would give the employee a shield against dismissal for cause.
Even without the refusal by Masonbrink to fill the order on the day of his discharge, the record does not support the finding that he was not discharged for cause but for his union activities. It is clear that he initiated the confrontation with Turner. It is further undisputed that he several times challenged Turner to discharge him if Turner did not like the way he did his work, indicating that he would not even attempt to meet the standards which his employer would expect. This sort of defiant attitude by employees is not protected by either a Union shield or the National Labor Relations Act.
Considering the record as a whole, it is clear that the finding of a discriminatory discharge of this hostile and contentious employee is not supported by substantial evidence. Accordingly, the Board’s Order which required his reinstatement with back pay will not be enforced.
Enforcement denied.
. Of course, an employee, absent a protective agreement, may be discharged with or without cause so long as it is not for a reason prohibited by the National Labor Relations Act.
“It must be remembered that it is not the purpose of the Act to give the Board any control whatsoever over an employer’s policies, including his policies concerning tenure of employment, and that an employer may hire and fire at will for any reason whatever, or for no reason, so long as the motivation is not violative of the Act.” NLRB v. Ace Comb Co., 342 F.2d 841, 847 (8th Cir. 1965).
See also NLRB v. Red Top, Inc., 455 F.2d 721, 726 (8th Cir. 1972) (cases cited at n. 4).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
WIDENER, Circuit Judge:
This is an appeal of an order entered by the district court dismissing a complaint filed by the taxpayers seeking to enjoin the government from collecting assessed income tax deficiencies. The taxpayers’ complaint also sought a release of a federal tax lien which the Internal Revenue Service (IRS) had filed against the taxpayers’ property after deficiency assessments had been made. The government moved to dismiss the taxpayers’ complaint for failure to state a claim upon which relief could be granted, and the district court dismissed the case on that ground pursuant to FRCP 12(b)(6). It is from this dismissal order that the taxpayers took their appeal. We agree that the complaint should be dismissed, but on a different ground.
Douglas B. Roger and Palma Roger (taxpayers) were residents of Cocoa Beach, Florida in 1978 and 1979, and, for the years at issue here, the taxpayers’ income tax returns indicated a Cocoa Beach address. In 1981, the taxpayers became residents of Blowing Rock, North Carolina and indicated this new address on their 1981 income tax return. Despite their change in address, when the IRS, Florida District, determined that deficiencies existed for the Rogers’ tax years of 1978 and 1979, a statutory notice of deficiency was sent by certified mail to the Rogers in 1982 at their Cocoa Beach, Florida address. Although this notice was returned undeliverable, the IRS assessed deficiencies against the taxpayers for tax years 1978 and 1979. The taxpayers claim that they first received notice of the tax deficiencies in April 1983, after the IRS had already made the deficiency assessments. They also assert that they never received actual notice of the proposed deficiency. While the Rogers maintain that they have not received the statutory notice of deficiency, see IRC § 6212, upon receiving notice of the assessments, taxpayers through their accountant informed the IRS that no notice of the proposed deficiency had been received prior to the deficiency assessments. Additionally, the Rogers allege that, after the IRS notified them of the 1978 and 1979 assessments, they requested the IRS to send actual notice of deficiency, but that the IRS failed to do so prior to its filing of a federal tax lien against the taxpayers in October 1983.
A few weeks after the IRS filed its tax lien, the taxpayers brought suit in the district court seeking to enjoin the IRS from collecting the assessments for 1978 and 1979 and to require release of the federal tax lien. Essentially, the Rogers’ complaint alleged that any assessment or collection effort by the IRS in respect of tax deficiencies for 1978 and 1979 would be improper because the IRS failed to provide an adequate notice of the proposed deficiency, prior to assessment, as required by IRC §§ 6212, 6213. As a result of this failure to comply with IRC provisions, the taxpayers alleged that they would suffer irreparable injury if the court failed to issue the injunction because further illegal collection activity by the IRS would continue to impair their business reputation and ability to transact business. The complaint further alleged that since payment of the illegally assessed taxes would damage the taxpayers’ business interests irreparably, no adequate remedy at law existed to preclude the issuance of an injunction.
As stated, the government filed a motion to dismiss the Rogers’ complaint under FRCP 12(b)(6), which the district court granted, and taxpayers appealed. While this appeal was pending, however, the taxpayers fully paid the assessed income tax deficiencies, as well as the penalties and interest thereon, and thereby effected a release of the federal tax lien.
Because the taxpayers have paid fully the assessed deficiencies as well as the penalties and interest thereon, we must consider whether such payment, during the pendency of this appeal, has rendered the case moot. Article III of the Constitution limits our power to hear only those cases involving an actual case or controversy. Furthermore, actual controversy must exist at all stages of review rather than only at the time of the filing of the complaint. Steffel v. Thompson, 415 U.S. 452, 459 n. 10, 94 S.Ct. 1209,1215 n. 10, 39 L.Ed.2d 505 (1974). Therefore, even if a controversy existed at the time the Rogers filed their complaint, we are without jurisdiction to hear their appeal if payment of the deficiencies has rendered the case moot during the appeal. State of California v. San Pablo & Tulare Railroad, 149 U.S. 308, 13 S.Ct. 876, 37 L.Ed. 747 (1893). Accordingly, only upon a finding that the case is not moot may we reach the merits of the case.
Generally, subject only to quite limited exceptions, when a court denies a taxpayer’s request for an injunction to prohibit his government from collecting taxes, an appeal of this denial presents a moot question over which an appellate court has no jurisdiction, if the taxpayer has paid the taxes during the pendency of the appeal. Singer Manufacturing Co. v. Wright, 141 U.S. 696, 12 S.Ct. 103, 35 L.Ed. 906 (1891); Little v. Bowers, 134 U.S. 547,10 S.Ct. 620, 33 L.Ed. 1016 (1890); R.J. Reynolds Tobacco Co. v. Robertson, 80 F.2d 966 (4th Cir.), cert. denied, 297 U.S. 719, 56 S.Ct. 596, 80 L.Ed. 1004 (1936); see also Harvey v. Early, 160 F.2d 836, 837 (4th Cir.1947).
Notwithstanding the fact that payment of the taxes and release of the tax lien have been accomplished during the pendency of this appeal, the taxpayers argue that the appeal of the dismissal order nevertheless is not moot. While we in no way condone the fact that the taxpayers have been denied a prepayment forum in the Tax Court because they did not receive the statutory notice of deficiency, this denial of a prepayment forum does not obviate the fact that the deficiencies have been fully paid, and whatever our concerns with the government’s method, we nonetheless lack jurisdiction to hear the case unless an actual controversy exists.
Turning to their contentions, we first consider two interrelated arguments which, essentially, ask us to find this case not moot for policy reasons. More specifically, the taxpayers claim that since Congress drafted an explicit exception to the Anti-Injunction Act to enable taxpayers to contest alleged deficiencies, prior to payment, by filing a petition in the Tax Court within 90 days of receiving notice of a proposed deficiency, the procedure employed here by the IRS in failing to give effective notice within this 90-day period defeats Congressional intent to provide a prepayment forum. Thus, taxpayers claim that this procedure, maintained as proper by the IRS, presents an important public issue inasmuch as the IRS has frustrated Congressional intent and has undermined the jurisdiction of the Tax Court. Because, the argument goes, this is a significant public issue with a likelihood of repetition, public interests would be undermined if the appeal were held moot. We do not think this is a permissible consideration, Little, supra, 134 U.S. at 558, 10 S.Ct. at 623, but even if it is we do not accept the argument for two reasons. First, the capable-of-repetition doctrine which permits a federal court to hear a claim which is capable of repetition, yet evades review, is inapposite to the facts of this case. “[T]he capable-of-repetition doctrine applies only in exceptional situations, and generally only where the named plaintiff can make a reasonable showing that he will again be subjected to the alleged illegality.” City of Los Ange-les v. Lyons, 461 U.S. 95, 109, 103 S.Ct. 1660, 1669, 75 L.Ed.2d 675 (1983), citing DeFunis v. Odegaard, 416 U.S. 312, 319, 94 S.Ct. 1704, 1707, 40 L.Ed.2d 164 (1974). We do not think that the taxpayers have made a showing that they again will be subjected to the same procedure of alleged illegal assessments following improper notice. Also, the claim of illegal assessment will not evade review to the extent that the taxpayers may be able to vitiate the effect of any illegal assessment in a claim and suit for refund.
As a second policy argument, the taxpayers claim that we should hear the case on the merits because dismissal of the case as moot would sanction a procedure by which the government could force an appeal to become moot. In particular, the taxpayers argue that following dismissal of their complaint in the district court, the Collection Division of the IRS proceeded to levy on the taxpayers’ home and property, thereby forcing them to pay the alleged deficiencies to avoid forced foreclosure prior to the resolution of the dismissal issue on appeal. The Rogers claim that our dismissal of the appeal would reward the IRS for its own misdeeds and would offend the appellate process since the post-dismissal collection activity forced the taxpayers to pay the alleged illegal assessments to avoid forced liquidation during the pendency of this appeal. Accordingly, taxpayers assert forced payment of the assessments should not render the appeal moot.
We, however, cannot find on this ground that the appeal is not moot. While the taxpayers perceive that unilateral action by the IRS has forced them to pay the assessments and thereby prejudice their appeal, the taxpayers in actuality were not without power to seek a stay or injunction of the district court dismissal order during the pendency of the appeal. See FRCP 62; FRAP 8(a). The same point was made in Little v. Bowers, supra, 134 U.S. at 553, 10 S.Ct. at 621, and decided against the taxpayer. Since the Rogers chose, during the pendency of the appeal, to pay the assessments, without seeking a stay or injunction pending appeal, we cannot say that the IRS unilaterally forced the appeal to become moot. Thus, while we express no opinion whether unilateral action on the part of the IRS in forcing payment of assessed deficiencies necessarily preserves on appeal any controversy existing at the time the injunction suit was filed, see Little v. Bowers, at 553-558, 10 S.Ct. at 621-623, cf. Singer, supra, 141 U.S. at 700, 12 S.Ct. at 104, we decline to find this case not moot on this ground.
We have considered the other assignments of error and are of opinion they are without merit.
In accordance with United States v. Munsingwear, 340 U.S. 36, 71 S.Ct. 104, 95 L.Ed. 36 (1950), we vacate the judgment of the district court and remand to that court to dismiss the taxpayers’ complaint as moot for lack of jurisdiction “which will clear the path for future relitigation of the issues between the parties.” 340 U.S. at 40, 71 S.Ct. at 107.
The judgment of the district court is
VACATED AND REMANDED WITH INSTRUCTIONS.
. Taxpayers argue that the notice they received in April 1983 indicating that taxes had been assessed for 1978 and 1979 did not amount to a "notice of deficiency” authorized by IRC § 6212(a). A § 6212 notice of deficiency must be sent to a taxpayer’s last known address before the IRS may make an administrative assessment of the tax deficiencies. IRC §§ 6212(b)(1), 6213(a). Since the Rogers received notice of the deficiencies after the IRS had made the assessments, the argument goes, the post-assessment notice did not constitute a notice of deficiency within the meaning of IRC § 6212(a).
. IRC section numbers are the same as 26 U.S.C. Thus, IRC § 6212 is 26 U.S.C. § 6212.
. Section 6212 requires the IRS to send a notice of deficiency (90-day letter) to a taxpayer’s “last known address” so that the taxpayer may file a petition in the Tax Court to seek redetermination of the deficiencies. IRC § 6213(a). In contrast to a refund suit which must be brought in either the District Court or Court of Claims following payment of tax deficiencies, a suit in the Tax Court provides a taxpayer with a prepayment forum.
. IRC § 7421(a) generally prohibits any suit seeking to enjoin the collection or assessment of any federal tax. Section 7421(a), however, contains explicit exceptions to the general prohibition against injunction actions. Of relevance here, § 7421(a) specifically excepts any action provided for in § 6212(a) and § 6213(a). Section 6212 authorizes issuance of deficiency notice and § 6213(a) contains authorization for injunction actions by providing that if collection or assessment action is begun either before 90 days have elapsed after the mailing of the notice of deficiency or after a taxpayer has filed a petition in the Tax Court, then the taxpayer may bring suit to enjoin such proceeding.
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.
PIEALY, Circuit Judge.
On January 27, 1947, A. Moody & Co., Inc., petitioned for an arrangement under § 322 of the Bankruptcy Act, 11 U.S.C.A. § 722, and an order was made continuing the debtor in possession with permission to operate its business. On March 14, 1947, appellant Goggin was appointed receiver with like powers. Seven days later there was an adjudication of bankruptcy and Goggin became trustee with authority to operate the business.
The bankrupt was a manufacturer of mattresses. A part of its factory premises was under lease to a field warehouse company, and a substantial portion of its stock, namely mattresses and material for the manufacture thereof, had been placed in the possession of the field warehouseman. Warehouse receipts against this property had been issued prior to the initiation of the proceeding, and the receipts had been pledged by the bankrupt to secure an indebtedness owing by it. The balance of the bankrupt’s goods, of like character with those in the field warehouse, was unpledged, and the free merchandise was sold by the trustee on April 12, 1947 for about $27,000. On April 4, 1947 the trustee filed a verified statement with the assessor of Los Angeles County showing the property owned, possessed or controlled by the bankrupt as of the first Monday in March, 1947. In this statement the entire quantity of merchandise owned by the bankrupt, both pledged and unpledged, was listed as one item valued at $126,950. The county assessor made a single assessment of the property at the value placed on it by the trustee.
On May 31, 1947, appellee (the county tax collector) filed his claim for $9,979.86, as the amount of the tax upon the property, and petitioned for an order directing its payment. The referee, on the trustee’s objection, ordered the claim reduced by the amount of $5,389.90 on the theory, apparently, that the first proviso of § 64, sub. a (4) of the Act, presently to be examined, requires that course. The balance of the tax was allowed as an expense of administration. On June 20, 1947, the trustee petitioned for leave to abandon the pledged property as an asset of the estate, and authority to do so was granted two months later. It may be taken as established that at no time did the bankrupt estate have any equity of value in the pledged goods; also that on or after the inception of the proceeding neither the debtor, the receiver, nor the trustee had actual possession thereof except as to a part, of the assessed value of about $1,000, which was released to the trustee upon his paying its reasonable value. The court on review held the collector entitled to payment of his claim in full as an expense of administration, and the trustee appeals.
So far as appears, the tax claimed by the collector was in all respects unexceptionable, that is to say the amount claimed constituted “taxes legally due and owing by the bankrupt.” It is not contended that the valuation placed on the property was excessive, or that the tax was wrongly computed, or that in arriving at the valuation for tax purposes the amount of the encumbrance on the pledged portion of the property was, under state law, required or permitted to be deducted. Admittedly, also, the tax was unsecured, was due and payable on the first Monday in March,* and liability for its payment then attached as a personal obligation.
We turn now to § 64, sub. a of the Bankruptcy Act. This, so far as pertinent, provides: “(a) The debts to have priority, in advance of the payment of dividends to creditors, and to be paid in full out of bankrupt estates, and the -order of payment, shall be (1) * * *; the costs and expenses of administration * * *; (4) taxes legally due and owing by the -bankrupt to the United States-or any State or any subdivision thereof: Provided, That no order shall be made for the payment of -a tax assessed against any property of the bankrupt in excess of the value of the interest of the bankrupt estate therein as determined by the court: And provided further, That, in case any question arises as to the amount or legality of any taxes, such question -shall be heard and determined by the court; * *
The trustee's -argument, as we understand it, is that the first proviso of this statute prohibits the payment of a tax to the extent that it is based on an assessment in excess of the value of the interest of the bankrupt estate in the property. We disagree. The proviso confers no authority on the court to reduce a tax claim unless the tax exceeds the value of the -bankrupt’s interest in the property. Glass v. Phillips, 5 Cir., 139 F.2d 1016; In re Ingersoll Co., 10 Cir., 148 F.2d 282. Such was not the case here. The property assessed was one lot of goods, part of which had come into the possession of the estate and wa-s sold for more than the amount of the total tax. We agree with the trial court that the subsequent abandonment of the pledged property did not operate to avoid the personal liability for taxes accrued while the debtor and the trustee were conducting the business pursuant to court order. We find nothing in the Act which relieves the trustee or debtor in possession from the payment of current taxes as they accrue. Cf. Boteler v. Ingels, 308 U.S. 57, 521, 60 S.Ct. 29, 84 L.Ed. 78, 442; Swarts v. Hammer, 194 U.S. 441, 24 S.Ct. 695, 48 L.Ed. 1060; United States v. Killoren, 8 Cir., 119 F.2d 364.
The Bankruptcy Court is given no authority to redetermine an assessment, or to divide it arbitrarily, after it has been quasi-judicially determined pursuant to state law. Arkansas Corporation Commission v. Thompson, 313 U.S. 132, 61 S.Ct. 888, 85 L.Ed. 1244. Assuming the doubtful proposition that the trustee was entitled to any relief, his remedy wa-s by application to the county board of equalization. Quinn v. Aero Services, Inc., 9 Cir., 172 F.2d 157.
Affirmed.
11 U.S.C.A. § 104, siibTa(4b
§ 2901, Revenue & Taxation Code of California,
§§ 3C03, 3004, Revenue & Taxation Code of California.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
ALVIN B. RUBIN, Circuit Judge:
In this capital case, a Texas inmate appeals from the district court’s order denying his petition for habeas corpus relief under 28 U.S.C. § 2254. Because the petitioner’s eighth and fourteenth amendment right to exercise voir dire challenges knowingly was infringed when the state trial court refused to allow him to ask questions directed towards determining whether veniremembers harbored misconceptions about Texas parole law that might bias them in favor of capital punishment, he has a right to be resentenced.
I.
On October 16, 1978, Leon Rutherford King was convicted of the capital murder of Michael Clayton Underwood and sentenced to be executed. The facts of the crime are recounted by the Texas Court of Criminal Appeals in King v. State, 631 S.W.2d 486 (Tex.Crim.App.1982) (en banc). King’s original conviction was overturned by the Texas Court of Criminal Appeals on February 6, 1980, and a retrial was ordered. In May 1980, King was convicted and sentenced to death a second time. That conviction was affirmed by the Texas Court of Criminal Appeals, and King’s subsequent petition for a writ of certiorari was denied by the Supreme Court. King then sought collateral review of his conviction in the state courts, with no success. His ensuing federal habeas corpus petition was denied by federal district court in 1986, but King was granted a certificate of probable cause to appeal and now does so.
King raises three issues concerning the constitutionality of his second trial. He contends: (1) the trial court violated his sixth and fourteenth amendment rights by failing to permit him to conduct voir dire directed toward discovering whether veniremembers harbored serious misconceptions about Texas parole law that might have biased them in favor of capital punishment; (2) his trial was rendered unfair and his entitlement to a presumption of innocence defeated when two jurors saw him bound in handcuffs on the second day of his trial during an emergency evacuation of the courthouse due to a fire; and (3) he was denied his rights under the eighth and fourteenth amendments by the trial court’s refusal to allow him to conduct his own defense during the penalty phase of his trial.
II.
King contends that the voir dire he requested was necessary to dispel the common misconception that a life sentence might result in incarceration for only nine to ten years and to permit him to use peremptory challenges against prospective jurors whose erroneous assumptions about parole law might have biased them in favor of imposing the death penalty.
The state contends that King’s claims are premised on the erroneous assumption that a jury instruction on parole issues is constitutionally mandated in capital cases. Under Texas law in effect at the time of King’s trial courts were precluded in all cases from giving jurors instructions on the Texas parole eligibility law. The com stitutionality of this rule, Texas argues, has been confirmed in O’Bryan v. Estelle. In O’Bryan, a panel of this court held that the due process clause does not give capital defendants the right to an instruction about the possibility of parole for a person sentenced to life imprisonment. King’s characterization of his claim as a challenge to an impermissible restriction on voir dire, the state continues, merely restates the issue in different terms because King can claim no right to accomplish through voir dire what he may not accomplish with a jury instruction.
Even if the state is correct in asserting that O’Bryan forecloses King’s claim that he is constitutionally entitled to a jury instruction on parole law upon request, however, it does not follow that King is not entitled to inquire about preconceptions of parole law harbored by veniremembers so that he can, at least, exercise his peremptory challenges knowingly.
The right to an impartial jury is basic to our system of justice. This right carries with it the concomitant right to take reasonable steps designed to ensure that a jury is impartial. Perhaps the most important device to serve this end is the jury challenge, a device based on voir dire examination. Although the proper scope of voir dire is generally left to the sound discretion of the trial court, that discretion is not unfettered. Limits on voir dire that create an unreasonable risk of bias or prejudice infecting the trial process violate due process.
The Supreme Court has recognized “that the qualitative difference of death from all other punishments requires a correspondingly greater degree of scrutiny of the capital sentencing determination.” The severity of the punishment is, however, not the only factor dictating that voir dire in capital cases be closely scrutinized. In such cases an accused’s right to an impartial jury also must be more carefully safeguarded because capital juries are called upon to make a “highly subjective, ‘unique, individualized judgment regarding the punishment that a particular person deserves.’ ” Because of the range of discretion entrusted to juries in capital cases, a unique opportunity exists for bias to operate undetected. The Court, therefore, has struck down capital sentences whenever it has found that the circumstances under which they were imposed created an unacceptable risk that the death penalty may have been imposed “arbitrarily or capriciously” or through “whim ... or mistake.”
The significance of the information King sought to discover is clear. A juror might decline to impose the death penalty if the alternative were confinement of the criminal for life without possibility of parole because the general public would be adequately protected by such a life sentence. Similarly, a juror might decline to impose the death penalty on a particular defendant if he believed that the individual to be sentenced would no longer represent a menace if he were confined for at least twenty years without parole for the crime he committed. If, on the other hand, a juror believed it were likely — or even possible — that a convicted person would be released in a few years and the juror believed that the criminal would then still constitute a hazard to the public, that juror might conclude that only the death penalty would adequately ensure public safety.
Because widely held misconceptions about the actual effect of imposing a life sentence raise an unacceptable risk that the death penalty may be imposed on some defendants largely on the basis of mistaken notions of parole law, defendants in capital cases are at least entitled to determine whether such misconceptions are held by veniremembers and to exercise peremptory challenges to protect themselves against the effects of error. The state contends that, by instructing the jury that parole “is no concern of yours” and is not to be considered, the court benefitted King by essentially telling the jury that “life means life.” If a misconception exists, no instruction that merely directs jurors to disregard issues of parole in making their sentencing determination can erase that fallacy from their minds. That voir dire could easily minimize the risk to the accused created by this misconception strengthens King’s claim to constitutional protection from the potential ramifications of failing to strike a juror who harbors a mistaken belief.
As the dissent points out, the scope of voir dire has been consistently and correctly held to be within the discretion of the trial court. The Supreme Court cases evaluating the voir dire of veniremembers exposed to adverse pretrial publicity, however, support our view that the ambit of this discretion does not extend to prohibiting a defendant whose life is at stake from inquiring about misconceptions or preconceptions that might bias the jury so as to exercise intelligently his peremptory challenges. In Patton v. Yount, the most recent of the pretrial-publicity cases, the Court stressed that trial judges, who observe and participate in voir dire, are best placed to assess a veniremember’s impartiality and that a factual finding of impartiality should, therefore, be presumed correct. Nonetheless, the court reaffirmed that, had “the jurors at Yount’s trial had such fixed opinions that they could not judge impartially the guilt of the defendant,” Yount would have been deprived of a fair trial and stripped of his right to due process. Following the logic of Supreme Court precedent, this court has held that when the record reveals a significant possibility that pretrial publicity prejudiced the venire the district court is obligated to conduct individual voir dire to assure impartiality. If preconceptions based on unreliable pretrial publicity might so bias a jury as to taint the trial, then misconceptions about the possibility of early parole might so bias a jury as to undermine due process in a capital sentencing proceeding, making adequate voir dire necessary to afford the defendant “reasonable assurance that prejudice would [have been] discovered if present.”
In addition to assessing the adequacy of voir dire in highly publicized cases, this circuit has before addressed questions about the accused’s right to inquire about veniremembers’ understanding of the law. In Moreno v. Estelle, Moreno sought habeas corpus relief from his conviction for aggravated assault and from his life sentence under the enhancement provisions of the Texas habitual offender statute. He contended that he had been denied a fair trial by an impartial jury because the trial court had refused to allow him to question prospective jurors about their willingness to impose an enhanced sentence should this be required. He argued that Texas law clearly established his right to conduct such voir dire. This court deferred to the Texas Court of Criminal Appeals’ holding that the trial court’s error of state law in restricting voir dire had been rendered harmless by its later jury charge. The opinion went on to say that Moreno’s challenge to the restriction of voir dire presented no federal constitutional question but was purely a matter of state criminal procedure. That Moreno had no federal right to question veniremembers about their view of enhanced punishment does not mean that King had no right to conduct voir dire on parole law. Moreno involved the jurors’ willingness to follow the requirements of the Texas habitual offender statute, but a trial judge’s admonition to jurors to follow the law as stated obviates the need for specific inquiry into their views on every law relevant to trial or sentencing. In this case, however, both the voir dire and the trial judge’s instructions were inadequate to dispel biasing misconceptions about parole law, in part because Texas law prohibits jury instructions on parole. This prohibition makes adequate voir dire all the more important.
A more recent case, Milton v. Procunier, is distinguishable on similar grounds. Milton challenged the voir dire leading to his capital conviction, arguing that the trial judge had improperly excluded questions about veniremembers’ understanding of the terms “deliberately,” “probability,” and “criminal acts of violence.” This court found no abuse of discretion because the voir dire taken as a whole was “painstaking” and because in the context of the voir dire and the jury instructions, the allegedly ambiguous terms took on sufficiently precise meanings to afford the jury the guidance required in capital cases. King did not have the benefit of such clarification. If jurors began with an unfounded fear that a life sentence might result in early parole, they ended with that fear. Thus, while the requested voir dire may have been superfluous in Moreno and Milton, it was essential here.
Our determination that King was improperly denied an opportunity to conduct voir dire on issues that might influence the sentencing phase of his trial raises a second important issue: whether, under federal law, this infringement on the voirdire process requires reversal of King’s conviction or merely resentencing. In Turner v. Murray, a capital defendant charged with an interracial killing challenged the refusal of the state trial court to conduct voir dire regarding prospective jurors’ racial biases. A plurality of the Supreme Court, joined by Chief Justice Burger concurring in the result, held that the decision of the trial court created an unacceptable risk that racial prejudice would infect the sentencing proceeding but that the imperatives requiring intervention in the sentencing phase of the trial were not sufficiently involved in the guilt phase to require retrial of that issue. Because the risk that the trial court’s refusal to permit King to conduct voir dire regarding jurors’ preconceptions about Texas parole law does not, under the circumstances of this case, create substantial risk that the guilt phase of his trial was tainted by juror bias, resentencing is a sufficient remedy under federal law.
III.
King also asserts that he was entitled to a jury instruction concerning the minimum duration of a life sentence in Texas. Although he did not request such a charge, he excuses his failure to do so by arguing that such a request would have been futile after the trial court had denied him even the opportunity to conduct voir dire on the parole issue. His failure to make the request may foreclose his right now to raise the issue, but the controversy is not moot. Because recent changes made by the Texas legislature that now require parole instructions for certain felonies explicitly exclude capital offenses, the issue will arise again at resentencing.
A.
The decision in O’Bryan v. Estelle that due process does not entitle a defendant to an instruction on parole in capital cases represents a substantial leap from the principles enunciated by the Supreme Court in California v. Ramos. In Ramos, the Supreme Court determined that a court might instruct a jury without violating a defendant’s constitutional rights that a sentence of life without possibility of parole was commutable by the governor. The Court noted, however, that its determination that a state may inform jurors of the governor’s power to commute sentences was “not intended to override the contrary judgment of [other] state legislatures____ It is elementary that States are free to provide greater protections in their criminal justice system than the Federal Constitution requires____We hold only that the Eighth and Fourteenth Amendments do not prohibit such instruction.” Although the Court rejected Ramos’s contention that the state must also inform the jury that the governor may commute death sentences if it permits instructions on commutation of life sentences without parole, it did so because such information would not mitigate the likelihood that death would be the sentence chosen. This cannot be said about the instruction King seeks. When sentencing jurors may harbor the type of misconceptions about parole law King describes, the instruction he requests, unlike the instruction demanded in Ramos, would certainly mitigate against imposition of the death penalty.
In deciding Ramos, the Supreme Court confronted a different issue: whether a capital defendant is constitutionally entitled to have accurate, potentially aggravating information relevant to sentencing determinations excluded from jury consideration. O’Bryan's and King’s challenges were directed toward state policy precluding them from introducing equally accurate information that they believe mitigates against the death penalty under the circumstances of their cases. As the Supreme Court held in Hicks v. Oklahoma, a defendant’s interest in the exercise of the jury’s discretion in imposing punishment is a liberty interest protected by due process. A state’s decision to impinge on jury discretion in a capital case by precluding the defendant from informing jurors of the practical meaning of their sentencing options violates that interest.
B.
O’Bryan is distinguishable from this case in considering only whether a requested parole instruction is required by due process whereas King has challenged the Texas rule on both due process and eighth amendment grounds. Although eighth amendment jurisprudence contradicts the rationale of O’Bryan, the O’Bryan reasoning is derived directly from Ramos, in which the requirements of the eighth amendment and the due process clause were collapsed into a common analysis. Eighth amendment jurisprudence, however, provides a critical insight into the substance of the fundamental interest at stake.
As the Supreme Court recently reaffirmed in McCleskey v. Kemp the eighth amendment forbids “states [to] limit the sentencer’s consideration of any relevant circumstance that could cause it to decline to impose the [death] penalty. In this respect, the state cannot channel the sentencer’s discretion, but must allow it consider any relevant information offered by the defendant.” Alternative sentences and what, in reality, they mean constitute just such relevant information and circumstances. Although such information does not relate directly to a defendant’s character or record, it is an integral part of the calculus sentencers use to determine whether a life sentence will suffice to ensure that a particular defendant, convicted of a particular crime, will pose a continued threat to society.
In most jurisdictions, courts sentence noncapital defendants. In such circumstances the trial judge properly instructs the jury to determine guilt or innocence without considering the sentence that might be imposed, for sentencing is the duty of the court. In capital cases, however, sentencing becomes the duty of the jury alone, either by voting directly on the penalty or, as in Texas, by determining the existence of factors that require its imposition. Thus, in Texas, the capital sentence cannot be imposed unless the state proves three issues beyond reasonable doubt and the jury answers, “Yes,” to each of these questions:
(1) whether the conduct of the defendant that caused the death of the deceased was committed deliberately and with the reasonable expectation that the death of the deceased or another would result;
(2) whether there is a probability that the defendant would commit criminal acts of violence that would constitute a continuing threat to society; and
(3) if raised by the evidence, whether the conduct of the defendant in killing the deceased was unreasonable in response to the provocation, if any, by the deceased.
A juror’s answer to the second question would certainly be influenced by his impression of when the defendant will again become a member of society. Those who decide the answer to such a question should know not only the meaning of the inquiry but all facts the defendant reasonably believes relevant to the answer.
C.
This court has recently held that the failure of counsel for a defendant to advise a sentencing court of sentencing alternatives constitutes ineffectiveness of counsel and, hence, a denial of due process. We have also held that a defendant who raises a genuine issue as to the sentencing judge’s knowledge and understanding of the range of sentencing discretion is entitled to a hearing before a new judge in order to determine whether the sentencing judge failed to exercise informed discretion. If due process ensures that a judge must fully understand his sentencing options, the necessity of providing such information to a jury exists a fortiori. For Texas to deny a defendant the opportunity to present information about parole eligibility is, therefore, to limit his decision to bring to the sentencer’s consideration relevant information and circumstances that might cause the jury to decline capital punishment. The practice is unconstitutional both because it denies him due process and because it subjects him to what amounts to arbitrary infliction of the death penalty.
Nonetheless, “in the absence of intervening and overriding Supreme Court decisions,” one panel of this court is not free to overrule another. Although McCleskey sets forth principles of eighth amendment jurisprudence that we believe are fundamentally inconsistent with O’Bryan, those principles predate our decision in that case. Therefore we believe that, until O’Bryan is overruled en banc, its holding and rationale remain the law in this circuit.
IY.
On the second day of King’s trial, a fire broke out in the courthouse and all present were required to evacuate. The bailiff handcuffed King and other defendants together in a chain and evacuated them from the building. Although he took precautionary measures to prevent the jurors from seeing King, two of the jurors saw King in handcuffs outside the courthouse. After the jury had returned its verdicts of guilt and punishment, King’s counsel learned of this incident and filed a motion for a new trial, contending that the incident deprived King of an impartial jury and undermined his right to a presumption of innocence. At the hearing, the two jurors who had seen King in handcuffs, Mary Ann Kirtley and Thomas Thompson, both testified unequivocally that their brief and unplanned exposure to King while he was in handcuffs did not in any way influence or affect their deliberations. Moreover, both jurors testified that there had been no discussion in the jury room about their seeing King outside the courthouse in handcuffs. The state court implicitly concluded that King suffered no prejudice from this incident.
We find no reason to disagree with the state court’s conclusion. “[T]he Constitution ‘does not require a new trial every time a juror has been placed in a potentially compromising situation ... [because] it is virtually impossible to shield jurors from every contact or influence that might theoretically affect their vote.’ ” This circuit has determined “that brief and inadvertent exposure to jurors of defendants in handcuffs is not so inherently prejudicial as to require a mistrial, and defendants bear the burden of affirmatively demonstrating prejudice.” Because King has failed to show any prejudice resulting from his brief exposure in handcuffs before these two jurors, he has not established that the incident deprived him of his constitutional right to a fair trial.
V.
Because we have held that King is entitled to be resentenced due to the trial court’s improper infringement on voir dire, we do not reach his contention that he was unconstitutionally denied the right to represent himself during the penalty phase of his trial.
For the reasons stated above the order of the district court is affirmed in part and reversed in part and a writ of habeas corpus granted. The State shall be given the option either of retrying or resentencing the. petitioner within 120 days, as may be appropriate under Texas law.
. King v. State, 594 S.W.2d 425 (Tex.Crim.App.1980) (en banc).
. King v. State, 631 S.W.2d 486 (Tex.Crim.App.1982) (en banc).
. King v. Texas, 459 U.S. 928, 103 S.Ct. 238, 74 L.Ed.2d 188 (1982).
. King v. McCotter, 795 F.2d 517 (5th Cir.1986).
. See, e.g., Munroe v. State, 637 S.W.2d 475, 476-77 (Tex.Crim.App.1982) (en banc).
. 714 F.2d 365, 388-89 (5th Cir.1983), cert. denied, 465 U.S. 1013, 104 S.Ct. 1015, 79 L.Ed.2d 245 (1984). See also Andrade v. McCotter, 805 F.2d 1190 (5th Cir.1986); Turner v. Bass, 753 F.2d 342 (4th Cir.1985), rev'd on other grounds, 476 U.S. 1, 106 S.Ct. 1683, 90 L.Ed.2d 27 (1986).
. See, e.g., Lockhart v. McCree, 476 U.S. 162, 106 S.Ct. 1758, 1767, 90 L.Ed.2d 137 (1986).
. Pointer v. United States, 151 U.S. 396, 408, 14 S.Ct. 410, 414, 38 L.Ed. 208 (1894).
. Batson v. Kentucky, 476 U.S. 79, 106 S.Ct. 1712, 1719 n. 12, 90 L.Ed.2d 69 (1986).
. See Ristaino v. Ross, 424 U.S. 589, 595, 96 S.Ct. 1017, 1020, 47 L.Ed.2d 258 (1976).
. See Turner v. Murray, 476 U.S. 1, 106 S.Ct. 1683, 1687, 90 L.Ed.2d 27 (1986); Ham v. South Carolina, 409 U.S. 524, 93 S.Ct. 848, 35 L.Ed.2d 46 (1973).
. California v. Ramos, 463 U.S. 992, 998-99, 103 S.Ct. 3446, 3452, 77 L.Ed.2d 1171 (1983).
. Caldwell v. Mississippi, 472 U.S. 320, 340-41 .n. 7, 105 S.Ct. 2633, 2645-46 n. 7, 86 L.Ed.2d 231 (1985) (quoting Zant v. Stephens, 462 U.S. 862, 900, 103 S.Ct. 2733, 2755, 77 L.Ed.2d 253 (1983) (Rehnquist, J., concurring)).
. Turner, 476 U.S. at-, 106 S.Ct. at 1687.
. Id. at-, 106 S.Ct. at 1688 (citing Caldwell, 472 U.S. 320, 105 S.Ct. at 2647, 86 L.Ed.2d 231 (1985) (O’Connor, J., concurring in part and concurring in judgment)).
. See Id. at-, 106 S.Ct. at 1688.
. Irvin v. Dowd, 366 U.S. 717, 81 S.Ct. 1639, 6 L.Ed.2d 751 (1961); Murphy v. Florida, 421 U.S. 794, 95 S.Ct. 2031, 44 L.Ed.2d 589 (1975); Patton v. Yount, 467 U.S. 1025, 104 S.Ct. 2885, 81 L.Ed.2d 847 (1984).
. 467 U.S. at 1036-38, 104 S.Ct. at 2891-92.
. Id. at 1035, 104 S.Ct. at 2891.
. See also Irvin, 366 U.S. at 722, 81 S.Ct. at 1642.
. United States v. Hawkins, 658 F.2d 279, 282-85 (5th Cir.1981).
. Id. at 285 (quoting United States v. Nell, 526 F.2d 1223, 1229 (5th Cir.1976)).
. 717 F.2d 171 (5th Cir.1983), cert. denied, 466 U.S. 975, 104 S.Ct. 2353, 80 L.Ed.2d 826 (1984).
. Id. at 172-73.
. Id. at 178-79.
. Id. at 179.
. See United States v. Williams, 573 F.2d 284, 287-88 (5th Cir.1978); United States v. Ledee, 549 F.2d 990, 991-92 (5th Cir.1977), cert. denied, 434 U.S. 902, 98 S.Ct. 297, 54 L.Ed.2d 188 (1977).
. 744 F.2d 1091 (5th Cir.1984), cert. denied, 471 U.S. 1030, 105 S.Ct. 2050, 85 L.Ed.2d 323 (1985).
. Id. at 1095.
. Id. at 1096. Accord Esquivel v. McCotter, 777 F.2d 956, 957 (5th Cir.1985), cert. denied, — U.S. -, 106 S.Ct. 1662, 90 L.Ed.2d 204 (1986).
. 476 U.S. 1, 106 S.Ct. 1683, 90 L.Ed.2d 27 (1986) .
. Id. at-, 106 S.Ct. at 1688-89.
. See Riles v. McCotter, 799 F.2d 947, 952 (5th Cir.1986); O’Bryan v. Estelle, 714 F.2d at 385. See also Wainwright v. Sykes, 433 U.S. 72, 97 S.Ct. 2497, 53 L.Ed.2d 594 (1977); Tex.Code Crim.Proc.Ann. arts. 36.14, 36.15 (Vernon Supp.1987).
. See Tex.Code Crim.Proc.Ann. art. 37.07 § 4 (Vernon Supp.1987).
. 714 F.2d at 388-89.
. 463 U.S. 992, 103 S.Ct. 3446, 77 L.Ed.2d 1171 (1983).
. Id. at 1013-14, 103 S.Ct. at 3459-60.
. Id. at 1010-12, 103 S.Ct. at 3458-59.
. 447 U.S. 343, 100 S.Ct. 2227, 65 L.Ed.2d 175 (1980).
. — U.S. -, 107 S.Ct. 1756, 95 L.Ed.2d 262 (1987). See also Hitchcock v. Dugger, — U.S. -, 107 S.Ct. 1821, 95 L.Ed.2d 347 (1987); Skipper v. South Carolina, 476 U.S. 1, 106 S.Ct. 1669, 1671, 90 L.Ed.2d 1 (1986); Eddings v. Oklahoma, 455 U.S. 104, 113, 102 S.Ct. 869, 875, 71 L.Ed.2d 1 (1982); Lockett v. Ohio, 438 U.S. 586. 602. 98 S.Ct. 2954. 2963. 57 L.Ed.2d 973 (1978) (plurality opinion); Woodson v. North Carolina, 428 U.S. 280, 305, 96 S.Ct. 2978, 2991, 49 L.Ed.2d 944 (1976) (plurality opinion).
. — U.S. at-, 107 S.Ct. at 1774 (emphasis added).
. Tex.Code Crim.Proc.Ann. art. 37.071 (Vernon Supp.1987).
. Burley v. Cabana, 818 F.2d 414 (5th Cir.1987).
. See Anderson v. Jones, 743 F.2d 306, 308 (5th Cir.1984); Williams v. Maggio, 730 F.2d 1048, 1049 (5th Cir.1984); Hickerson v. Maggio, 691 F.2d 792, 794-95 (5th Cir.1982).
. White v. Estelle, 720 F.2d 415, 417 (5th Cir.1983).
. Rushen v. Spain, 464 U.S. 114, 118, 104 S.Ct. 453, 455, 78 L.Ed.2d 267 (1983) (quoting Smith v. Phillips, 455 U.S. 209, 217, 102 S.Ct. 940, 946, 71 L.Ed.2d 78 (1982)).
. United States v. Diecidue, 603 F.2d 535, 549 (5th Cir.1979), cert. denied, 445 U.S. 946, 100 S.Ct. 1345, 63 L.Ed.2d 781 (1980) (citing Wright v. Texas, 533 F.2d 185, 187 (5th Cir.1976)). Accord United States v. Webster, 750 F.2d 307, 331 (5th Cir.1984), cert. denied, 471 U.S. 1106, 105 S.Ct. 2340, 85 L.Ed.2d 855 (1985); United States v. Escobar, 674 F.2d 469, 479 (5th Cir.1982); Grantling v. Balkcom, 632 F.2d 1261 (5th Cir.1980).
. See Brown v. Estelle, 591 F.2d 1207 (5th Cir. 1979).
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:
In this appeal we are called upon to decide whether the district court abused its discretion in dissolving a permanent injunction against a public housing agency. The United States District Court for the Southern District of Florida held that subsequent changes in federal law and the local agency’s regulations concerning grievance proceedings for tenants of public housing now adequately serve the purposes contemplated by the injunction and thus constitute a change in circumstances sufficient to justify its dissolution. For reasons stated below, we vacate the district court’s order and remand for further proceedings.
This class action began in June, 1968. The original plaintiffs, tenants of public housing projects operated by the housing division of the Dade County Department of Housing and Urban Development (the “County”), challenged, on procedural due process grounds, the constitutionality of the County’s method of collecting sums alleged to be owed by public housing tenants as a result of loss or destruction of the County’s property. In 1970 the parties entered into a consent order in the district court which required the County to adopt regulations, set forth in the order, detailing the procedures to be followed when assessing charges against tenants. The order, which expressly applied to all present and future public housing tenants, guaranteed that any attempt at imposition of liability for loss, damage or destruction of the County’s property would be accompanied by a comprehensive notice including the nature of the loss, the proposed remedial action and the cost of any needed repairs or replacement, as well as a statement advising the tenant of the availability of a hearing. The decree also directed the County to provide its tenants a fair hearing to resolve liability disputes raised by tenants.
In the mid-1970s, the United States Department of Housing and Urban Development (“HUD”) promulgated regulations which obligated public housing agencies (“PHAs”) such as the County to adopt a regulation affording each tenant an opportunity for a hearing on a grievance “in accordance with the requirements, standards, and criteria” published by HUD. 24 C.F.R. § 966.52 (1988). Pursuant to HUD’s guidelines, the rules adopted by the PHAs must be made part of all the tenants’ leases. Id. To initiate a grievance proceeding, the tenant must present his complaint either to the PHA or the project office and participate in an informal discussion of the dispute. Id. at § 966.54. If the tenant remains dissatisfied, he or she may then request a hearing. Id. The federal regulations further provide that “[schedules of special charges for services, repairs and utilities and rules and regulations which are required to be incorporated in the lease by reference shall be publicly posted in a conspicuous manner in the Project Office and shall be furnished to applicants and tenants on request.” Id. at § 966.5. However, HUD’s regulations do not require PHAs to inform tenants, contemporaneously with an assessment, of the availability of a hearing. In 1983. Congress enacted a statute directing HUD, by regulation, to require PHAs to establish administrative grievance procedures under which tenants shall be notified of the specific grounds of any proposed adverse PHA action and furnished an opportunity for a fair hearing to contest such action. 42 U.S.C. § 1437d(k) (Supp. IY 1987).
A motion for contempt filed by two tenants in 1981 alleged that the County was not complying with the consent decree. The parties settled that dispute by signing, in 1982, an amended consent order which mandated updated notice and hearing requirements, incorporating the County’s grievance procedure provisions previously adopted to comply with the federal regulations.
The latest chapter in this litigation began in 1987 with a contempt motion filed by Lorenza Chavez and Elizabeth Dewberry (the “Tenants”) charging the County with widespread noncompliance with the 1982 , amended consent order. The County responded by filing a motion to dismiss. At oral argument on the motions, the County argued that federal regulations and statutes adopted after 1968 require the County to accomplish the purposes contemplated by the permanent injunction. The district court agreed that the intervening changes in federal law constituted a sufficient change in circumstances to justify modification of the consent decree. Consequently, the district court denied the contempt motion and dismissed the proceedings, without prejudice to the Tenants, terminating the injunction. The Tenants appeal.
The Tenants attack the district court’s order on two grounds. First, they argue that the case was not in a proper procedural posture for dismissal because the County had not formally sought relief from the judgment , based on changed circumstances, and the district court failed to hold an evidentiary hearing to determine whether, in fact, conditions had changed sufficiently to warrant relief. Second, the Tenants contend that the district court overlooked the applicable substantive law, failing to apply the stringent standard urged by Tenants in evaluating the merits of the changed circumstances controversy.
We agree with the Tenants “that a district court must hold an evidentiary hearing before modifying a consent decree in such a manner as to remove requirements previously imposed.” Delaware Valley Citizens’ Council for Clean Air v. Commonwealth of Pennsylvania, 674 F.2d 976, 981 (3d Cir.), cert. denied, 459 U.S. 905, 103 S.Ct. 206, 74 L.Ed.2d 165 (1982). Therefore, the district court’s order must be vacated and the case remanded to determine whether changed conditions justify modification. The more difficult question concerns the appropriate substantive standard to be applied in making that determination.
The parties do not dispute the court’s authority to dissolve its decree. Inherent in the jurisdiction of a court of equity is the power “to modify an injunction in adaptation to changed conditions, though it was entered by consent.” United States v. Swift & Co., 286 U.S. 106, 114, 52 S.Ct. 460, 462, 76 L.Ed. 999, 1005 (1932). It matters not whether, as here, the court by the terms of its order reserves the power to revoke or modify it. Id. Thus, “[a] continuing decree of injunction directed to events to come is subject always to adaptation as events may shape the need.” Id. Congress has approved a codification of this judicial formulation in Rule 60(b)(5), F.R.Civ.P. See 11 Wright & Miller, Federal Practice and Procedure: Civil § 2961, at 599 (1973).
Before exercising its power to modify, a court must be convinced by the party seeking relief that existing conditions differ so substantially from those which precipitated the decree as to warrant judicial adjustment. The parties here sharply dispute the weight of the County’s burden in demonstrating a change in circumstances adequate to justify modification of the consent decree. The Tenants, relying on Swift, insist that the County’s responsibility is a heavy one. The rigorous Swift standard derives from Justice Cardozo’s statement that “a court does not abdicate its power to revoke or modify its mandate if satisfied that what it has been doing has been turned through changing circumstances into an instrument of wrong.” 286 U.S. at 114-15, 52 S.Ct. at 462, 76 L.Ed. at 1006. This standard requires an evaluation of both the continuing need for the injunction as well as the hardship, if any, suffered by the enjoined party:
The inquiry for us is whether the changes are so important that dangers, once substantial, have become attenuated to a shadow. No doubt the defendants will be better off if the injunction is relaxed, but they are not suffering hardship so extreme and unexpected as to justify us in saying that they are the victims of oppression. Nothing less than a clear showing of grievous wrong evoked by new and unforeseen conditions should lead us to change [the decree].
Id. at 119, 52 S.Ct. at 464, 76 L.Ed. at 1008. According to the Tenants, the County failed to pass the Swift “instrument of wrong” test.
Since Swift, however, the Court has placed less emphasis on the deleterious effects of a decree on the defendant and more on the continuing need for the injunction. See Wright & Miller, supra, at 602. As the Court pointed out in United States v. United Shoe Machinery Corp., 391 U.S. 244, 248, 88 S.Ct. 1496, 1499, 20 L.Ed.2d 562, 566 (1968), “Swift teaches that a decree ... may not be changed in the interests of the defendants if the purposes of the litigation as incorporated in the decree ... have not been fully achieved.” Disregarding the confusing double negative, this restatement of the holding in Swift declared that a defendant can successfully seek modification when an injunction’s purposes have been realized. After United Shoe, the defendant need not be a victim of oppression before a court can grant relief from its earlier judgment. As this court stated, “the job of a district court after Swift and United Shoe is to look at the particular facts and circumstances of the ease to determine whether the modification satisfies the underlying purpose of the decree.” Williams v. Butz, 843 F.2d 1335, 1338 (11th Cir.) reh. denied, 854 F.2d 1326 (1988).
In this circuit, Swift plays a distinguished but diminished role. We have limited the decision in a manner which lessens its influence considerably. In Newman v. Graddick, 740 F.2d 1513 (11th Cir.1984), this court construed a statement in Justice Cardozo’s opinion which drew a “distinction ... between restraints that give protection to rights fully accrued upon facts so nearly permanent as to be substantially impervious to change, and those that involve the supervision of changing conduct or conditions and are thus provisional and tentative.” Swift, 286 U.S. at 114, 52 S.Ct. at 462, 76 L.Ed. at 1005-06, cited by New man, 740 F.2d at 1520. The court concluded that the Supreme Court had characterized the injunction at issue in Swift as one of the former variety, requiring the stringent test. “Where, however, a consent decree involves the supervision of changing conduct or conditions and is therefore provisional, modification may be more freely granted.” Newman, 740 F.2d at 1520; accord, Nelson v. Collins, 659 F.2d 420, 423-24 (4th Cir.1981) (en banc). This reading of Swift requires elaboration, however. In the pertinent passage, Justice Cardozo failed to explain precisely the import of the distinction drawn. The resulting ambiguity raises the question whether the distinction to which Justice Cardozo referred is between two types of decrees which are subject to modification, or rather between those decrees which may be modified and those decrees which may not. Under the first interpretation, the one preferred by the courts in Nelson and Newman, the distinction is significant because it determines whether the stringent standard announced by the Court in Swift is to be applied, or whether an unspecified, less rigorous test is appropriate. Contrast that with the second interpretation, an alternative which permits only one test — the strict one. Under that reading, the distinction is not relevant to the selection of a test. Rather, it determines whether the court has power to modify a particular decree. All decrees susceptible to changing conditions are, under this construction, subject to the same tough test. The former Fifth Circuit Court of Appeals expressed this latter view in Cook v. Birmingham News, 618 F.2d 1149, 1152 (5th Cir.1980). See also, Twelve John Does v. District of Columbia, 841 F.2d 1133, 1139 (D.C.Cir.1988). Because the language under consideration appears in a paragraph concerned with the court’s power to modify (as opposed to the showing needed to justify the court’s exercise of that power, a subject dealt with in succeeding paragraphs), the first reading, while plausible, is less persuasive than the second.
The Fifth Circuit Court of Appeals avoided the largely academic discussion speculating as to what exactly Justice Cardozo meant and harmonized Newman — which considered court orders requiring the release of prisoners from overcrowded prison facilities — and Nelson as decisions consistent with several others announcing “a less demanding standard for modification of consent decrees ... within the institutional reform arena.” Ruiz v. Lynaugh, 811 F.2d 856, 861 (5th Cir.1987) (citing also New York State Association for Retarded Children, Inc. v. Carey, 706 F.2d 956, 970 (2d Cir.), cert. denied, 464 U.S. 915, 104 S.Ct. 277, 78 L.Ed.2d 257 (1983); United States v. City of Chicago, 663 F.2d 1354, 1359-60 (7th Cir.1981) (en banc); Philadelphia Welfare Rights Organization v. Shapp, 602 F.2d 1114, 1120-21 (3d Cir.1979), cert. denied, 444 U.S. 1026, 100 S.Ct. 689, 62 L.Ed.2d 660 (1980); and Benjamin v. Malcolm, 564 F.Supp. 668, 686 (S.D.N.Y.1983)). In Carey, the Second Circuit declared, “It is well recognized that in institutional reform litigation ... judicially-imposed remedies must be open to adaptation when unforeseen obstacles present themselves, to improvement when a better understanding of the problem emerges, and to accommodation of a wider constellation of interests than is represented in the adversarial setting of the courtroom.” Carey, 706 F.2d at 969. Thus, where a decree is the product of institutional reform an application for the modification of such decree “should ... be viewed with generosity,” id. at 971, and granted “with a rather free hand.” Id. at 970. The retreat from Swift in Nelson and Newman probably is better explained by the institutional reform rationale than by a critical analysis of Justice Cardozo’s prose. In any event, Newman remains the law of this circuit.
The County believes that the injunction here is of the provisional sort, and that, therefore, under Newman it did not need to make the showing required by Swift. We agree. The injunction here is a continuing decree intended to effect institutional reform. By its terms, the order requires ongoing court supervision, and therefore it is provisional. Thus, Newman, and not Swift, controls, and modification may be granted more freely.
This is not to say that relief is available at the County’s pleasure. Certainly the district court must exercise judicious discretion in deciding whether to modify its earlier decree. But although “there must be wide discretion in the District Court,” System Federation No. 91 v. Wright, 364 U.S. 642, 648, 81 S.Ct. 368, 371, 5 L.Ed.2d 349, 353 (1961), judicial discretion is bounded, and we believe our decision in Butz, supra, offers guidance in locating the limits of discretion appropriate in the instant case.
In Butz, the Farmers Home Administration (“FmHA”) appealed the district court’s denial of its motion to modify a consent decree which required the federal agency to use only judicial proceedings to foreclose mortgages on homes purchased under a federal loan program. Butz, 843 F.2d at 1336. The FmHA argued that new federal statutes and regulations had cured the due process default which had given rise to the consent decree, and it sought to alter the order to allow it to conduct foreclosure proceedings pursuant to the regulations. Unlike the consent decrees, the regulations permitted nonjudicial foreclosure proceedings. The district court refused to modify the injunction, holding that “the FmHA neither submitted evidence that the decree violated constitutional, statutory or deci-sional law, which would render it invalid, nor showed ‘the kind of extreme, unexpected oppression and hardship which would justify modification of the Court’s decree.’ ” Id. On appeal, this court, after reviewing Swift and United Shoe, vacated • and remanded, concluding that the district court had applied the wrong legal principles.
Rather than focusing on the hardship to the defendant, the court wrote in Butz, the district court must discern the underlying purpose of the decree and decide whether modification would be consistent with that purpose. Id. at 1338. The objective of the decree in Butz was to secure for borrowers under the federal program procedural due process in foreclosure proceedings. Therefore, if the decree were vacated, the new federal laws would have to guarantee that the FmHA comply with procedural due process, lest the decree’s goal be abandoned. The court did not question that a change in the law which obligated the enjoined party to act in a manner not contrary to the command of the court order constituted a proper basis for modification:
A change in relevant statutory law— such as in this case where Congress required that the FmHA ensure by regulation that due process rights are afforded to borrowers and regulations are promulgated in compliance with that mandate— is a fully adequate basis upon which modification to a consent decree may be based.
Id.
The court concluded by studying the new federal statute, which required the FmHA to promulgate regulations establishing an administrative appeals procedure designed to correct due process deficiencies. It found that the congressional enactment did “not conflict with the underlying purpose of the consent decree.” Id. at 1339. However, the court reasoned that the decree conflicted with the federal law “by depriving the FmHA of a choice that Congress intended it should be able to exercise.” Id. Thus, the court remanded to allow the district court to determine whether the FmHA had complied with the statute and promulgated regulations comporting with constitutional due process. If it answered the question in the affirmative, then the district court was instructed to vacate or modify the injunction so as to permit the FmHA to employ nonjudicial foreclosure proceedings.
This case is similar to Butz. Here we are faced with a continuing injunction much like the one in that case with respect to purpose. The underlying reason for the present decree is to force the County to afford public housing tenants procedural due process in the collection of maintenance charges. As in Butz, a subsequent congressional enactment presently requires the appropriate federal agency (HUD) to promulgate regulations directing local PHAs such as the County to adopt administrative grievance procedures including the basic elements of due process — notice and opportunity for a fair hearing. HUD has complied, promulgating regulations setting forth the requirements, standards and criteria with which public housing authorities must comply when fashioning their own regulations governing grievance procedures. The County in turn has obeyed the federal regulatory scheme, adopting the requisite rules. In addition, the County, pursuant to the consent decree, has adopted specific notice provisions, requirements not explicitly provided for in the regulations.
Applying Butz, we first note that the federal regulatory scheme is not contrary to the underlying purpose of the consent decree. Both are intended to ensure that procedural due process will not be ignored. However, the decree conflicts with the federal laws, because the consent order mandates special notice requirements not imposed by Congress or HUD. On remand, the district court should first determine whether compliance with the federal laws necessarily satisfies due process. If so, the court can dissolve the injunction, because in that event the decree merely compels an outcome consistent with the one demanded by the federal statute and regulations. That the County might alter its grievance procedure following dissolution of the injunction is not significant, as long as any regulations adopted by the County conform to the requirements of the federal laws and procedural due process. Congress and HUD have permitted PHAs some discretion in establishing such procedures, and the Tenants cannot insist on additional or unique protection of their rights absent constitutional fault. Id. at 1339. See System Federation No. 91, 364 U.S. at 648, 81 S.Ct. at 371-72, 5 L.Ed.2d at 354.
If the district court finds that compliance with the federal regulatory scheme would not satisfy due process, a second series of questions will arise, because the County’s existing regulations fulfill the demands of due process. Therefore, if the district court determines that the criteria and standards contained in the federal regulations do not meet the minimum requirements of due process, then it should consider whether the County, if relieved of the consent decree’s burden, would quickly repeal its current regulations and promulgate new, constitutionally deficient procedural rules. Were it persuaded that the County would not immediately discard its current rules, and in addition were it convinced that the County could reasonably be anticipated to abide by such rules, the district court might then find that the County no longer need be ordered to obey these regulations. See Tobin v. Alma Mills, 192 F.2d 133, 136 (4th Cir.1951), cert. denied, 343 U.S. 933, 72 S.Ct. 769, 96 L.Ed. 1342 (1952). On the other hand, if the federal regulatory regimen does not protect adequately the procedural due process rights of public housing tenants, then dissolution of the consent decree would be inappropriate provided the district court also were to find either that (1) the County would then implement constitutionally deficient procedures; or (2) the County would then repeatedly violate its existing regulations. Such conduct would result same deprivations which prompted the original suit, necessitating new actions to remedy individual constitutional violations.
VACATED AND REMANDED.
. A "grievance” is "any dispute which a tenant may have with respect to PHA action or failure to act in accordance with the individual tenant’s lease or PHA regulations which adversely affect the individual tenant’s rights, duties, welfare or status.” 24 C.F.R. § 966.53(a) (1988).
. The amended consent order instructs the County to include in the notice statement the following message: IF YOU THINK THAT THE DAMAGE OR LOSS DESCRIBED ABOVE IS NOT YOUR FAULT, OR NOT THE FAULT OF A MEMBER OF YOUR FAMILY OR A PERSON VISITING YOU OR YOUR FAMILY OR THAT YOU ARE BEING CHARGED TOO MUCH FOR IT, THEN:
1. GO TO THE MANAGER OF YOUR PROJECT AND TELL HIM YOUR COMPLAINT.
2. IF YOU ARE NOT SATISFIED WITH THE MANAGER’S RESPONSE, YOU SHOULD FILL IN THE WRITTEN GRIEVANCE FORM AVAILABLE IN THE MANAGER’S OFFICE. HUD WILL RESPOND IN WRITING TO YOU. IF YOU ARE NOT SATISFIED WITH HUD’S WRITTEN RESPONSE TO YOUR GRIEVANCE, YOU MAY ASK FOR A HEARING BY SENDING A WRITTEN REQUEST TO HUD WITHIN 10 DAYS OF RECEIVING HUD’S WRITTEN ANSWER TO YOUR GRIEVANCE.
YOU MAY HAVE AN ATTORNEY AND/OR FRIEND OR RELATIVE REPRESENT YOU AT THE HEARING.
This statement and a Spanish translation of it appear in both the County's "General Maintenance And Repair Order” and its "Emergency Maintenance And Repair Order.”
. In paragraph 4 of the amended consent order the district court "specifically retain[ed] jurisdiction of the cause to enter such further and additional relief as is just, equitable and necessary for the enforcement of the Order.”
. Rule 60(b) provides that “[o]n motion and upon such terms as are just, the court may relieve a party or a party’s legal representative from a final judgment, order, or proceeding for the following reasons: ... (5) ... it is no longer equitable that the judgment should have prospective application.”
. From the institutional reform cases the Fifth Circuit distilled the elements of a more flexible standard, which in Ruiz it did not have occasion to expressly adopt, applied by courts in such circumstances:
If the defendant (1) can establish some change in circumstances has occurred from the time the decree was negotiated and approved; (2) convince the court that it has attempted to comply with the decree in good faith; and (3) asks for a modification that does not frustrate the original and overall purpose(s) of the decree, then the court may grant modification.
Ruiz, 811 F.2d at 861 n. 8.
. The constitutionality of the County’s existing procedures is not an issue in this case. In the third paragraph of the amended consent order the district court held "that such procedures are in conformity with the requirements of procedural due process of law as required by the Fourteenth Amendment to the Constitution of the United States.” Neither party challenges this determination.
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.
CELEBREZZE, Circuit Judge.
This appeal involves a wrongful death action instituted in Kentucky state court and removed to federal court on the basis of diversity of citizenship. Plaintiff-appellant, Geraldine Garrison, is administratrix of the estate of her husband, Kenneth Garrison (decedent). The decedent was killed in a work-related accident while employed as an ironworker by the Austin Company (Austin), which was general contractor for the construction of a Clark Equipment Company (Clark) plant near Georgetown, Kentucky. Defendant-appellee, Jervis B. Webb Company (Webb), was a subcontractor. The district court directed a verdict for Webb at the close of all the evidence, reasoning that there had not been a sufficient showing of negligence on the part of Webb to send the case to the jury. We affirm.
Webb was a subcontractor responsible for the installation of a conveyor system in the Clark plant. The conveyor was to run, in part, over a large concrete pit in the floor of the plant. To support the conveyor at this point, Webb installed a long steel “header beam” between two large steel “truss beams” near the ceiling of the plant. The truss beams were parallel to one another and the header beam ran between them at a right angle and in the same horizontal plane as the truss beams. All these beams were roughly thirty feet above the bottom of the concrete pit, which was a few feet lower than the surrounding floor.
At the time of the accident, Webb had connected the header beam to the truss beams with steel clips. These clips consisted of steel plates above and below the header beam which plates were connected by several nuts and bolts. The tightening of the nuts and bolts served to clamp the header beam onto the truss beams. Webb had “tack welded” the bottom portion of these clips to the header beam in order to facilitate attachment of the header beam to the truss beams in their elevated position by obviating having to hold onto the tack welded portions. The responsibility for holding the header beam in place, however, rested wholly on the steel clips, as tightened by the nuts and bolts, and the tack welding was only meant to facilitate installation.
Austin officials decided that the header beam should be moved about one foot along the truss beams. The decedent and another Austin employee undertook this task by removing some of the steel clips on the header beam and loosening the bolts on the remaining clips just enough so that the header beam would slide along the truss beams when struck with a large hammer. When the decedent so struck the header beam at one end, the tack weld between the remaining steel clips and the header beam broke. This caused the clip to separate from the header beam and the header beam thereby fell apart from the truss beam. The decedent, apparently believing the steel clips were welded to the header beam solidly enough to withstand his hammering, fell to his death in the concrete pit some thirty feet below.
Appellant contends that the case should have gone to the jury on the issue of whether Webb was negligent in failing to solidly weld the clips to the header beam or alternatively whether, having tack welded the clips, Webb had the duty to warn foreseeable third parties, such as the decedent, of this fact. The district court, in directing a verdict for Webb, accepted Webb’s theory of the case that the steel clips were properly installed by Webb in accordance with the construction specifications and that Austin had full knowledge that the clips were only tack welded to the header beam. We agree with the district court that a directed verdict for Webb was appropriate.
As noted, appellant’s case had two theories for recovery. The first was that Webb negligently and improperly installed the header beam by only tack welding the steel clips to the header beam rather than solidly welding them. The only evidence supporting this contention relates to a note, akin to a footnote, on a blueprint which depicted, inter alia, the clamp connection between the header beam and truss beams in question. This note read: “All Connections To Be Welded Solid.” Aside from introducing the blueprint itself and having several witnesses merely read this note, the only testimony favorable to appellant’s case regarding this note came from one witness who testified that he would interpret the note to mean that Webb should have solidly welded the clips to the header beam. This witness, however, was not qualified as an expert in reading blueprints. He also admitted that if all the clips had been welded solidly the header beam would not have moved at all along the truss beams. This completely destroyed the credibility of his testimony that the welds should have been solid since appellant concedes that the header beam had to be movable along the truss beams. Moreover, this testimony was squarely contradicted by several qualified witnesses, including some called by appellant and including the project engineer employed by Austin, who testified that Webb installed the header beam precisely as specified in the blueprint. They said that the note “All Connections To Be Welded Solid” did not apply to the clips in question because the blueprint clearly showed the use of nuts and bolts to tighten the clips in place.
The district court was thus faced with the question of whether Webb could be held liable when it installed the header beam precisely as called for in the blueprint, in the absence of any showing of negligent design on its part. While we have found no Kentucky cases directly on point, we believe that the Supreme Court of Kentucky would not sanction recovery against Webb under these circumstances. See Ulrich v. Kasco Abrasives Co., 532 S.W.2d 197, 201 (Ky.1976); Hercules Powder Co. v. Hicks, 453 S.W.2d 583, 590 (Ky. 1970). See also Garrison v. Rohm and Haas Co., 492 F.2d 346, 350-51 (6th Cir. 1974).
Appellant’s second theory of recovery is that, having only tack welded the clips, Webb had the duty to warn foreseeable third parties of this fact. Appellant, however, made no showing of an inadequate warning. Webb, on the other hand, put forward uncontradicted testimony from the project engineer employed by Austin that he knew that the clips had only been tack welded to the header beam and that this was appropriate. Thus, even assuming a warning was called for, the knowledge of the project engineer employed by Austin, the decedent’s employer, was clearly sufficient warning under Kentucky law. Hercules Powder Co. v. Hicks, 453 S.W.2d 583, 590-91 (Ky.1970). See also Garrison v. Rohm and Haas Co., 492 F.2d 346, 352 (6th Cir. 1974).
Appellant’s reliance on Restatement of Torts § 388 is misplaced. There was no evidence “that the chattel [was] or [was] likely to be dangerous for the use for which it [was] supplied.” Restatement § 388(a). The header beam installation was not at all dangerous until altered by the decedent by removing several of the steel clips holding the header beam to the truss beams. Also, assuming it to be dangerous, Webb had “reason to believe that those for whose use the chattel [was] supplied [would] realize its dangerous condition,” Restatement § 388(b), since Austin’s project engineer was fully aware of the condition of the header beam and under Kentucky law that notice was sufficient. This knowledge by Austin’s project engineer that the clips were only tack welded also means that Webb could not have been held liable for “failfing] to exercise reasonable care to inform them of its dangerous condition or of the facts which make it likely to be dangerous.” Restatement § 388(c).
The judgment of the district court is affirmed.
. “Tack weld” is a term used to describe a small weld, perhaps no more than one-half inch in diameter, designed to temporarily attach one piece of steel to another. It is often done intermittently along a meeting of two pieces of steel and is a weak weld not intended to ultimately bear significant weight or stress. It is to be distinguished from a “solid weld” or “structural weld” meant to create a permanent attachment of two pieces of steel which is as strong as the surrounding steel. A solid or structural weld is generally much larger than a tack weld, often being solid along the entire intersecting seam.
. While the record is not entirely clear on the point, the decedent was apparently sitting on the header beam, which he was trying to move with his hammering, when that beam fell from the truss beam.
. Formal findings of fact and conclusions of law were not required in this cause since Federal Rule of Civil Procedure 52(a) states that such “are unnecessary on decisions of motions under Rules 12 or 56 or any other motion except as provided in Rule 41(b).” The grant of a motion for a directed verdict would come within the “any other motion” language since Rule 41(b) concerns only involuntary dismissals in cases tried to the court. See Note of Advisory Committee to 1963 Amendment of Rule 41(b); 5 J. Moore, Moore’s Federal Practice Tl 41.01[12] (2d ed. 1977) [hereinafter “Moore’s”]. While a directed verdict in a jury case pursuant to Rule 50(a) is very similar to an involuntary dismissal in a nonjury case pursuant to Rule 41(b), they are not identical. 5 Moore’s fl 41.13[3]-[4]. This justifies requiring findings of fact and conclusions of law in the latter case but not the former. See Note of Advisory Committee to 1946 Amendment to Rule 41(b); 5 Moore’s fl 41.01[5]-[7], See also 5A Moore’s fí 52.08.
While formal findings of fact and conclusions of law were not required herein, the district court nevertheless took the commendable step of rendering an opinion justifying its action. We believe this is the better practice since it facilitates appellate review and insures full consideration of the case by the district court. Cf. Robin Products Co. v. Tomreck, 465 F.2d 1193, 1196 (6th Cir. 1972). We thus encourage the district courts of this circuit to render opinions justifying their actions when granting motions for directed verdicts in jury cases under Rule 50(a). This would apply with equal force to granting motions for judgment n. o. v. under Rule 50(b), since they are legally equivalent to motions for directed verdicts. 5A Moore’s [150.07[2], This practice is also supported by the similarity of both motions to a motion for involuntary dismissal under Rule 41(b), the grant of which is required to be accompanied by findings of fact and conclusions of law.
We note that the opinion in this cause was rendered orally in chambers, and transcribed by the court reporter, and was essentially an informal colloquy between the district judge and counsel. We approve the practice of rendering transcribed oral opinions in appropriate cases. See Christensen, A Modest Proposal for Immeasurable Improvement, 64 A.B.A.J. 693 (May, 1978). It must be remembered, however, that while oral opinions can be potential timesavers, they require great care to insure that the district court fully sets forth its reasoning both as to legal standards employed and the underlying factual basis.
. While there is a split among the circuits on the issue, this circuit has long held that state law controls in a diversity case as to whether there was sufficient evidence presented to withstand a motion for a directed verdict or a motion for judgment n. o. v. See, most recently, O’Neill v. Kiledjian, 511 F.2d 511, 513 (6th Cir. 1975), Chumbler v. McClure, 505 F.2d 489, 491 (6th Cir. 1974), and Moskowitz v. Peariso, 458 F.2d 240, 244 (6th Cir. 1972). Other cases so holding, and contrary cases applying the federal standard, are collected in Annot., 10 A.L.R.Fed. 451. See generally 5A Moore’s 50.06 and C. Wright, Law of Federal Courts § 92, p. 404, (2d ed. 1970) [hereinafter “Wright”], both suggesting application of the federal rule is appropriate in diversity cases.
The law of Kentucky on the standard for granting a motion for a directed verdict has been variously stated. The general rule emerges, however, that a directed verdict should be granted when, drawing all inferences in favor of the nonmoving party, there is no substantial probative evidence which could support a verdict in the nonmoving party’s favor and reasonable men could only conclude that the moving party was entitled to a verdict. Spivey v. Sheeler, 514 S.W.2d 667, 673 (Ky. 1974); Perry v. Ernest R. Hamilton Associates, Inc., 485 S.W.2d 505, 508 (Ky.1972); Burnett v. Ahlers, 483 S.W.2d 153, 157 (Ky.1972); Harris v. Cozatt, Inc., 427 S.W.2d 574, 575 (Ky.1968); Current v. Columbia Gas of Kentucky, Inc., 383 S.W.2d 139, 142 (Ky.1964); Lee v. Tucker, 365 S.W.2d 849, 851 (Ky.1963); Wadkin’s Adm'x v. Chesapeake & Ohio Ry. Co., 298 S.W.2d 7, 9-10 (Ky.1956).
This standard, of course, is essentially the same as the federal standard, 5A Moore’s f[ 50.-02[1] and Wright § 94, pp. 415-16, so it is of little consequence whether we apply the state or federal standard in Kentucky diversity cases.
. He was qualified as an expert in inspecting welding.
. Restatement of Torts (Second) § 388:
One who supplies directly or through a third person a chattel for another to use is subject to liability to those whom the supplier should expect to use the chattel with the consent of the other or to be endangered by its probable use, for physical harm caused by the use of the chattel in the manner for which and by a person for whose use it is supplied, if the supplier
(a) knows or has reason to know that the chattel is or is likely to be dangerous for the use for which it is supplied, and
(b) has no reason to believe that those for whose use the chattel is supplied will realize its dangerous condition, and
(c) fails to exercise reasonable care to inform them of its dangerous condition or of the facts which make it likely to be dangerous.
While appellant’s brief cites the first Restatement, we prefer to quote the more recent Restatement (Second), which contains no pertinent changes.
It is appropriate for federal courts in diversity cases to look to the Restatements when there is no controlling state law on point when the state has indicated, as has Kentucky, that it considers the Restatements to be persuasive authority. See, e. g., Jones v. Hutchinson Mfg, Inc., 502 S.W.2d 66, 69 (Ky.1973); Hercules Powder Co. v. Hicks, 453 S.W.2d 583, 587-88 (Ky.1970) (citing, inter alia, Restatement of Torts (Second) § 388); Post v. American Cleaning Equipment Corp., 437 S.W.2d 516, 520 (Ky. 1968) (citing, inter alia, Restatement of Torts § 388); Dealer’s Transport Co. v. Battery Distributing Co., 402 S.W.2d 441, 446-47 (Ky. 1966); C. D. Herme, Inc. v. R. C. Tway Co., 294 S.W.2d 534, 537 (Ky.1956).
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 a suit to recover for a tax payment which the taxpayer says was not properly exacted from it. It has to do with the question whether a loss was to be treated as an ordinary loss or charged as a capital loss. The district court decided the case against the taxpayer and rendered a thoroughly considered opinion in so doing, D.C.E.D.Pa. 1953, 115 F.Supp. 594. We do not have anything to add to that opinion.
The judgment will be affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
Petitioner seeks review and the National Labor Relations Board seeks enforcement of an order holding that City Disposal Systems, Inc. (the Company) violated Section 8(a)(1) of the National Labor Relations Act by discharging its former employee, James Brown, in disregard of his Section 7 rights.
The Board’s order relied upon the Interboro doctrine, although it noted that this Circuit has rejected the doctrine. City Disposal Systems, Inc., 256 N.L.R.B. No. 73 (June 9, 1981). We grant the petition for review and deny enforcement.
City Disposal Systems hauls garbage for the City of Detroit from a drop-off point to a land fill some 37 miles away. The garbage is hauled by tractor-trailers. Normally a driver is assigned to a certain tractor-trailer; however, when this vehicle is in for repairs, the driver may be reassigned to another vehicle.
James Brown was a driver for the Company. He normally drove truck number 245. On May 12, 1979, Brown had a near accident with truck number 244 driven by Frank Hamilton when the brakes on 244 would not stop the truck at the land fill. Hamilton took 244 back to the drop-off point. With Brown present, mechanics told Hamilton that the truck would be fixed over the weekend or the first thing Monday morning. Brown’s truck, 245, also had a problem with its fifth wheel which was to be fixed by Sunday.
Brown returned to work at 4:00 a. m. Monday, May 14. He took his truck out to the land fill and found that the fifth wheel continued to cause problems. Brown returned to the drop-off point, talked to the mechanics, and learned that his truck could not be fixed that day. He then spoke to a supervisor, Jasmund, who told him to punch out and go. home after confirming that his truck would not be fixed. Brown punched out but remained in the driver’s room. Jasmund returned and requested Brown to drive number 244. Brown said he would not do so since 244 had a brake problem. Jasmund instructed Brown to go home and the two had words. Another supervisor, Bob Madary, came on the scene. When Brown repeated that 244 had problems, Madary pointed out that all the trucks had problems and if the Company dealt with them all it would be unable to move the garbage. Brown testified that he replied, “Bob, what you going to do, put the garbage ahead of the safety of the men?” Madary was unmoved. Brown left work. Later he was notified that the Company had listed his as a voluntary quit.
Subsequently Brown, a member of Local 247, International Brotherhood of Teamsters, Changers, Warehousemen and Helpers (the Union), filed a grievance seeking reinstatement and citing provisions in the collective bargaining agreement giving employees the right to refuse to operate unsafe equipment. The Union found no merit in his grievance and refused to process the grievance beyond the early stages of the contractual grievance procedure.
The Interboro doctrine, as we understand it, holds that an individual enforcing rights under the labor contract is engaged in concerted activity protected by Section 7 even though he is acting solely for his own purposes since the labor contract itself is the product of concerted activity and the action of the employee is an extension of that process. Aro, Inc. v. NLRB, 596 F.2d 713, 716 (6th Cir. 1979); See NLRB v. Selwyn Shoe Mfg. Corp., 428 F.2d 217, 221 (8th Cir. 1970); Interboro Contractors, Inc., 157 N.L. R.B. 1295 (1966), enf’d, 388 F.2d 495 (2d Cir. 1967).
Courts have recognized tension between the Interboro doctrine and the plain language of Section 7. See, e.g., Kohls v. NLRB, 629 F.2d 173, 177 (D.C.Cir.1980), cert. denied, 450 U.S. 931, 101 S.Ct. 1390, 67 L.Ed.2d 363 (1981); NLRB v. Northern Metals Co., 440 F.2d 881, 884 (3rd, Cir. 1971). Section 7 requires that the employee engage in “concerted activities.” An individual does not act in concert with himself. To test whether an action is concerted, we adhere to the criteria set forth by Judge Phillips in Aro, Inc.:
For an individual claim or complaint to amount to concerted action under the Act it must not have been made solely on behalf of an individual employee, but it must be made on behalf of other employees or at least be made with the object of inducing or preparing for group action and have some arguable basis in the collective bargaining agreement.
596 F.2d at 718; see NLRB v. Lloyd A. Fry Roofing Co., 651 F.2d 442, 445 (6th Cir. 1981).
There is no evidence in the record that Brown acted or asserted an interest on behalf of anyone other than himself. Brown did not attempt to warn other employees not to drive the truck he believed to be unsafe, even though the evidence established that there was a bulletin board on which employees informed their co-workers of problems with equipment. Likewise, Brown did not go to his union representative in an effort to avoid driving the truck he considered unsafe. While Brown’s isolated comment alluded to the safety of all the men, it was not relied on by the Board to evidence concerted action. In view of the vague and general nature of the comment, and the absence of evidence that Brown informed other drivers or his union that number 244 was unsafe, we do not accept the comment as substantial evidence of concertedness. Compare NLRB v. Lloyd A. Fry Roofing Co., supra, and NLRB v. Guernsey-Muskingum Electric Co-operative, Inc., 285 F.2d 8 (6th Cir. 1960) with Bay-Wood Industries, Inc. v. NLRB, 666 F.2d 1011 (6th Cir. 1981); United Parcel Services v. NLRB, 654 F.2d 12 (6th Cir. 1981) and Aro, Inc. v. NLRB, supra.
The Union made no effort to protest the use of the truck. Pursuit of Brown’s claim that he was discharged in violation of the labor agreement by the Union is to be distinguished from union activities with respect to the equipment Brown believed to be unsafe. The discharge claim asserts a different interest at a later time. It neither tends to prove nor disprove that when Brown complained he was seeking to represent the Union or other individual employees.
The District of Columbia Circuit relied upon similar facts to those present here in finding that an employee’s actions could not reasonably be perceived as concerted in Kohls v. NLRB, 629 F.2d at 177. We are in complete agreement with the analysis therein expressed by Judge Edwards as to this issue.
Having found no substantial evidence that the employee’s actions were concerted within the meaning of Section 7, we need not address the other arguments raised by the Company.
Accordingly, the Company’s petition for review is Granted and the Board’s cross-petition for enforcement is Denied.
. Section 8(a)(1) provides:
It shall be an unfair labor practice for an employer—
(1) to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section [7],
Section 7 provides in part:
Employees shall have the right ... to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.. ..
29 U.S.C. §§ 157 & 158 (1976).
. See Interboro Contractors, Inc., 157 NLRB 1295 (1966), enf’d, 388 F.2d 495 (2d Cir. 1967).
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:
The defendants, Arthur Murray, Inc., George Theiss, Nicholas Theiss, and Sam Costello, appeal from a default judgment. They contend that the district court abused its discretion by refusing to set aside the default. We agree and vacate the judgment.
In June 1979, the plaintiff, Shahram Lolatchy, filed this suit in federal district court. The substance of Lolatchy’s complaint is that the defendants breached an agreement to grant him an Arthur Murray Studio franchise.
The case was handled by three judges. The first died in April 1980. The case was then assigned to a second judge, and finally to the judge who entered the orders complained of. The case was set for trial twice. The first trial date was on February 9, 1981. The trial was not held on this date, and the record provides no explanation of its cancellation.
The next trial date was set for April 27, 1981 by letter from the court, with the pretrial order due March 23, 1981, and the pretrial conference to be held March 27, 1981. On March 23, 1981, the pretrial conference was rescheduled for April 1, 1981. On March 23 and March 24,1981, the plaintiff served on the defendants twelve discovery requests consisting of 46 pages, whereupon the defendants filed their motion for a protective order on the ground that a rule of court required discovery to be completed prior to the pretrial conference and that the late filing of the plaintiffs’ discoverv requests apparently had made compliance difficult or impossible before the date of the pretrial conference. The defendants, in the meantime, had proceeded with discovery.
Discovery had commenced in this case in late 1980. In March 1981, plaintiff served interrogatories, requests for production of documents, and requests for admission of facts (the requests for discovery above referred to) on each of the four defendants. In April, the district court granted the defendants an extension of time to respond to these discovery requests. Defendants agreed to file responses by May 15, 1981.
On May 14, 1981, defendants’ counsel was appointed to a state judgeship. Therefore, he turned his practice over to his brother, who entered an appearance in this case on June 20, 1981. Because of defendants’ change in counsel, discovery cutoff was left open. However, after plaintiff’s informal attempts to obtain discovery failed, the district court, by letter dated November 20, 1981, required response to the discovery requests within 15 days. When this order was not complied with, the' plaintiff moved for default judgment, as well as other sanctions.
In January 1982, the defendants’ counsel moved for and was granted an extension of time to respond to the plaintiff’s motion. This motion, which was filed late, was the first paper filed with the district court by the new attorney since entering the case seven months earlier. Thereafter, the attorney filed twelve untimely responses to Lolatchy’s discovery requests, the first of which was filed January 21, 1982 and the last February 27, 1982.
On March 3, 1982, the district court conducted a hearing on plaintiff’s motions and on April 14, 1982 entered the default as to liability against the defendants. Although the district court noted the severity of such a sanction, it stated that the defendants had shown a “continuous disregard of court rules and orders.” Defendants’ counsel, in a supplemental memorandum opposing plaintiff’s motion, had accepted complete blame for the delays in responding to discovery requests. In September 1982, he was replaced as attorney for the defendants by current counsel.
In February 1983, defendants moved, pursuant to Federal Rule of Civil Procedure 55(c), to set aside the default as to liability. The district court denied this motion and rejected the argument that the default judgment should not stand because the parties defendant themselves, as opposed to their past counsel, did not contribute to the delays.
In March 1983, the issue of damages was tried before the district court. Following this trial, the district court entered its money judgment, including costs, in favor of Lolatchy. The defendants appealed, taking issue with the lower court’s entry of default on liability, as well as its damage determination. Lolatchy then cross-appealed, also challenging the district court’s damage award.
There can be little doubt that the delay in this case was caused in significant part by defendants’ second attorney. The death of the first judge, however, and the cancellation of the two trial dates cannot be laid off to that attorney. Indeed, if fault must be laid off with respect to the second trial date, it must be to the plaintiff. There is nothing in the record to contradict the district court’s finding that the defendants’ themselves, as contrasted with their attorney, were blameless for the delay.
Other facts bear particular attention. There was no missing witness in the case whose testimony was made unavailable by the delay; there was similarly no dead witness; neither were there any records made unavailable by the delay, nor was there any evidence for the plaintiff which could have been presented earlier, the presentation of which was prevented by the delay. Prior to the time of the hearing on the motion for default in the district court on March 3, 1982, and of course the time a month later that the order was entered granting default as to liability on April 14, 1982, the defendants had responded to all discovery requests made by the plaintiff, and, as far as the record shows, the case was ready for trial. So the record shows without contradiction that the plaintiff suffered no prejudice on account of the delay. We grant that the plaintiff had been somewhat frustrated in his efforts to bring the ease to trial, but a part of that delay was of his own making. And, on the day the default judgment was entered as to liability, the only thing remaining to be done was to set a trial date. Instead of setting the case for trial, the court entered its default as to liability.
In this circuit’s most recent case on this question, we said that “justice demands that a blameless party not be disadvantaged by the errors or neglect of his attorney which cause a final, involuntary termination of proceedings.” United States v. Moradi, 673 F.2d 725, 728 (4th Cir.1982). In Moradi, a naturalized American citizen attempted to enter the United States with carpets obtained in his native country of Iran. The United States customs service denied duty-free entry and seized the rugs. Moradi retained counsel to negotiate with the United States. After negotiations proved unsuccessful, the United States filed suit in federal district court. After service of the complaint, Moradi’s attorney timely served an answer on the federal government’s counsel and the clerk of the court. However, citing non-compliance with local rules, the clerk of the court refused to accept the answer and returned the answer to the office of Moradi’s attorney.
When the answer was returned to Moradi’s attorney’s office, he was absent and the return of the answer by the clerk did not come to his attention. Thereafter, counsel for the United States, pursuant to instructions of the district court, notified Moradi's attorney’s office that a pre-trial conference had been scheduled for a certain date. Again, Moradi’s attorney apparently was not apprised of this message by his staff and consequently he failed to appear. The government then moved for and was granted a default judgment. Moradi appealed after his motion for Rules 55(c) and 60(b) relief was denied.
We reversed. We reasoned that “[tjraditionally, we have held that relief from a judgment of default should be granted where the defaulting party acts with reasonable diligence in seeking to set aside the default and tenders a meritorious defense.” Id. at 727. We based our reversal in Moradi largely on the lack of the party’s personal responsibility for the failures of his counsel to answer punctually or to appear at the pre-trial conference. Moradi, 673 F.2d at 728.
In Moradi, we also set out considerations to be taken into account in deciding whether or not to set aside judgment by default in such a case: the personal responsibility of the party, the prejudice to the party, whether there is a history of dilatory action, and the availability of sanctions less drastic. 673 F.2d at 728.
In the case at hand, the defendants are blameless. There has been no prejudice to the plaintiff. Any dilatory action was on the part of the attorney, not the defendants, it was not drawn out, and continued at the most for a time span of only a few months. No sanctions short of default were attempted by the district court. The only sanction it ever imposed was default as to liability.
In these circumstances, we are of opinion the district court abused its discretion. The attorney, for example, could have been charged with all costs and expenses attendant to the delay, including attorneys’ fees, or even held in contempt of court. There is nothing in the record to suggest that either of these actions would not have promptly cured his failure to respond. Indeed, the motion for judgment by default brought forth responses to plaintiff’s requests for interrogatories, and an examination of the papers in the record filed by the plaintiff with the district court following the defendants responses show that the plaintiff made little or no objection to the responses filed by the defendants or claim he was not ready for trial, only claiming that there had been a delay in his getting ready. Such frustration, we think, while it may be a sufficient reason for sanctions short of default judgment, should not suffice as a reason for depriving the defendants of their day in court.
In sum, “an extensive line of decisions” has held that Federal Rule of Civil Procedure 55(c) must be “liberally construed in order to provide relief from the onerous consequences of defaults and default judgments.” Tolson v. Hodge, 411 F.2d 123, 130 (4th Cir.1969). And, although the decision whether to set aside a default judgment is one committed to the sound discretion of the district court, see Fed.R.Civ.P. 55(c), Moradi, 673 F.2d at 727, “an abuse of discretion in refusing to set aside a default judgment ‘need not be glaring to justify reversal.’ ” Jackson v. Beech, 636 F.2d 831, 835 (D.C.Cir.1980) (quoting Keegel v. Key West & Caribbean Trading Co., 627 F.2d 372, 374 (D.C.Cir.1980)); accord Davis v. Musler, 713 F.2d 907, 913 (2d Cir.1983). We find an abuse of discretion here, and hold that there has indeed been “good cause shown” to set aside the entry of default. F.R.C.P. 55(c).
Accordingly, we vacate the judgment of the district court and remand for proceedings consistent with this opinion. That action makes it unnecessary to examine the other questions raised in the appeal and cross-appeal.
No. 83-1862 is VACATED AND REMANDED.
No. 83-1945 (the cross appeal) is DISMISSED WITHOUT PREJUDICE.
. There is no question in this case of the assertion of a meritorious defense or of due diligence in seeking to have the default set aside.
. The dissenting opinion depends principally on National Hockey League v. Metro Hockey Club, 427 U.S. 639, 96 S.Ct. 2778, 49 L.Ed.2d 747 (1976), and Rabb v. Amatex Corp., 769 F.2d 996 (4th Cir.1985). The applications of the principles advocated in the dissenting opinion may well have been justified in those cases. The dissenting opinion does not discuss, however, the addition in each of those cases of a salient fact not present here. That fact is that in National Hockey League, as well as in Rabb, the district court explicitly warned the defaulting party in advance of the consequence of default, which was dismissal. In re Professional Hockey Anti-Trust Litigation, 63 F.R.D. 641, 647 (E.D.Pa.1974); Rabb, 769 F.2d 996, 997. No such warning was given in this case; had there been, another case would be presented.
We note again other aspects of the majority opinion not taken account of in the dissent, each of which is of more than a little consequence. First, the case was handled by three district judges which was bound to have contributed to the delay; second, by the time the motion to dismiss was decided, the case was ready to be tried; and, third, the plaintiff was not entirely blameless and contributed to the delay.
Finally, the dissent apparently faults defendants’ present attorneys, and certainly defendants, for "wait[ing ...] another ten months” to file their motion under Rule 55(c), thus implying that nothing was done until February 24, 1983, when the motion at issue here was filed. With respect, we hardly think this presents an accurate picture of what happened. The defendants’ present attorneys entered their appearance September 8, 1982. Prior to that time, on September 3rd, they had had a meeting with the district judge about the case at which time the court had made it clear that it would entertain no further argument on the subject of default. Overlooked, however, in the dissent is the fact that the damages aspect of the case had not yet been tried. On October 21, 1982, the parties agreed upon, and the court entered a scheduling order setting the date for trial of damages for the week of March 7, 1983. The order provided for discovery deadlines, times for filing memoranda of authorities, motions, a status report, a pre-trial order, and pre-trial conference. Between September 8, 1982 and March 9, 1983, the day the damages trial commenced, the defendants’ attorneys participated in at least the following actions with respect to this case:
October 21st, scheduling order;
October 22nd, notice to take depositions;
November 1st, order extending dme to file response;
November 19th, filing damages memorandum;
November 24th, notice to take depositions;
December 27th, motion to compel discovery, with memorandum;
December 27th, motion to compel discovery, with memorandum;
December 27th, notice to take depositions;
December 29th, extension of discovery schedule;
January 4, 1983, notice to take depositions;
January 4, 1983, order to postpone depositions at plaintiffs’ request.
Additionally, the attorneys participated in depositions at least on November 5, 1982, December 6, 1982, December 21, 1982, and January 10, 1983. So, we suggest the attorneys were both diligent and busy and neither they nor the defendants should be faulted.
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 is an action brought under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e, et seq. The Equal Employment Opportunity Commission, EEOC, alleged that defendant F & D Distributing, Inc., discriminated against Ms. Rowena Gressel and other females because of their sex in refusing to consider them for employment as route drivers. Trial to the court resulted in a judgment favorable to the defendants, and the EEOC appeals. We affirm.
F & D Distributing is a corporation engaged in the sale and distribution of books and magazines in Durango, Colorado, and Farmington, New Mexico. The corporation, owned by Tom and Kathryn Fawcett, owns and operates the Village Book Shop in Farmington. In June, 1980, F & D published a newspaper advertisement seeking applicants for a route driver vacancy. The advertisement stated:
“WANTED — ROUTE Person for magazine & book distributing co.; Must be 21 yrs. old & have good driving record; Job requires skill in merchandising, for complete in store service to retail accounts in and around Farmington; Fantastic future opportunities & growth potential for an ambitious individual who is willing to work hard; Paid vacation, insurance benefits, & bonuses offered; Pick up applications at Village Book Shop, San Juan Plaza.”
On June 30, 1980, Rowena Gressel went to the Village Book Shop to apply for the job. The testimony is conflicting as to the conversation at the shop, but the court accepted the version of events as recited in plaintiffs charge of unlawful discrimination as filed with the New Mexico Human Rights Commission. The plaintiff spoke with an employee in the store, a sixty-year old woman, Mrs. Claborn, requesting an application for the route driver’s job. Mrs. Claborn replied: “Well dear, I really don’t think this is [a] woman’s job.” When the plaintiff asked why, Mrs. Claborn said: “Well, it’s a man’s job and requires some lifting.” Plaintiff responded: “Well, I guess I won’t waste my time.” She then left without asking Mrs. Claborn if she was the manager and without requesting an application form.
The defense testimony was that Mrs. Cla-born was not manager of the store, that she had no authority to hire or fire, and that her responsibility was only to take applications and to make such comments as she deemed appropriate.
The trial court found that because she had no authority to hire or fire and had not been clothed with apparent authority, Mrs. Claborn was not the agent of F & D. The EEOC argues that the court applied the wrong test for agency. It says that the cases have applied the theory of respondeat superior to hold the employer liable for acts of an employee taken within the scope of his employment.
Miller v. Bank of America, 9 Cir., 600 F.2d 211, 213, was a case where that court held that respondeat superior is the proper test “where the action complained of was that of a supervisor, authorized to hire, fire, discipline or promote, or at least to participate in or recommend such actions, even though what the supervisor is said to have done violates company policy.” In Gillin v. Federal Paper Board Company, Inc., 2 Cir., 479 F.2d 97, the employee plaintiff asked the supervisor about applying for a different job which was open, but did not apply because she was told that it was a man’s job. Although the vice president had the ultimate hiring responsibility, the supervisor made recommendations which determined who would be interviewed. On this basis the court held that the company could be held liable for discrimination. In Nanty v. Barrows Co., 9 Cir., 660 F.2d 1327, the court held that plaintiff had made out a prima facie case of discrimination. Plaintiff went to the company’s warehouse three times seeking a job as truck driver. Normally, an employee of Barrows would interview an applicant and if found qualified by the interviewer, he would be given an application. Plaintiff was told that the job had been filled even though Barrows, continued to accept applications thereafter.
EEOC argues that the courts have looked beyond the authority to hire and fire in determining agency and thus “employer” status under Title VII. This case, however, is fundamentally different from Miller, Gillin, or Nanty, in that there is no evidence that Mrs. Claborn had any authority in the hiring process. No evidence indicated that F & D engaged in a pattern of discrimination. The job advertisement was completely non-discriminatory. Although she was allowed to make comments, no evidence was adduced that these comments constituted a “prescreening” affecting the interviewing or hiring process. Mrs. Claborn had no authority to refuse, and never refused, to give Ms. Gressel an application. There is no evidence of a consistently enforced discrimination policy that would deter applicants from seeking the job. Cf. International Brotherhood of Teamsters v. United States, 431 U.S. 324, 365-366, 97 S.Ct. 1843, 1869-1870, 52 L.Ed.2d 396. The plaintiff did not prove her case.
The defendant’s cross-appeal attacks the trial court’s failure to award it attorneys’ fees as the prevailing party. See 42 U.S.C. § 2000e-5(k). In deciding whether fees should be awarded, the trial court must determine whether the action was frivolous, unreasonable, or groundless. See Christianburg Garment Co. v. EEOC, 434 U.S. 412, 422, 98 S.Ct. 694, 700, 54 L.Ed.2d 648. The trial court’s determination that the suit was not so unreasonable as to warrant the award of fees was not an abuse of discretion.
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.
HARLINGTON WOOD, Jr., Circuit Judge.
On June 30, 1981, a train owned by the Indiana Harbor Belt Railroad (“IHB”) toppled a scaffolding erected for the purpose of painting an advertisement on an IHB-owned bridge. A state court jury determined that the negligence of both IHB and Transportation Displays, Inc. (“TDI”), caused the accident, which injured one painter and killed another, and that the resulting damages were in excess of $2.4 million. That verdict was later affirmed on appeal. Carter v. Indiana Harbor Belt R.R., 190 Ill.App.3d 1052, 547 N.E.2d 488, 138 Ill.Dec. 321 (1st Dist.1989).
The state court plaintiffs have since received payment and the only remaining issue is a quarrel between IHB, TDI, and TDI’s insurer, Aetna Insurance Company (“Aetna”), regarding the ultimate liability for the underlying judgment. TDI’s parent corporation, Winston Network, Inc. (“Winston Network”), filed this diversity, declaratory-judgment action seeking to determine the rights and responsibilities of the various parties. IHB thereafter filed a counterclaim against Winston Network and a cross-claim against Aetna. As the caption attests, none of the parties was entirely happy with the disposition below and the resulting appeals, cross-appeals, and protective appeals have been consolidated for more efficient review.
I.
A. The Parties
Winston Network is engaged in the business of outdoor advertising and TDI, its wholly owned subsidiary, specializes in advertising on property owned by railroads. Under the standard scenario, TDI contracts for rights to place advertising on the railroad’s property and then seeks out advertisers. When it finds a willing advertiser, TDI sells that party an advertising license and shares the revenue with the railroad.
On November 15, 1980, Aetna issued a “Commercial Package Policy” that covered both Winston Network and TDI. This policy included general liability coverage for TDI’s own negligence. TDI had significantly more exposure, however, because each of its 300 railroad contracts included a promise to hold harmless.and indemnify the railroad for any negligence on the part of either TDI or the railroad. In order to cover this additional exposure, the policy included coverage for liability assumed under “any contract or agreement relating to the conduct of the named insured’s business.”
IHB, the final party to this action, is a switching railroad that operates approximately forty miles of track. The railroad has always been a subsidiary — presently of the Consolidated Rail System (“Conrail”), which in turn acquired the line from the Penn Central Railroad, which in turn inherited it from the New York Central Railroad. IHB has never functioned independently of its parent, which has, for example, always handled IHB’s real estate transactions.
B. The Business Relationship Between TDI and IHB
On July 17, 1951, the New York Central Railroad granted TDI an exclusive license to place advertising on New York Central’s property in return for, inter alia, TDI’s promise to hold harmless and indemnify New York Central. This base agreement was amended in 1961 to include “additional billboard rights on properties owned, leased, operated or controlled by [New York Central], specifically those of the IHB.” The agreement was further amended in 1971 to include advertising rights on overhead bridges.
TDI and IHB continued to do business under the 1951 agreement even after control of IHB passed by merger to the Penn Central Railroad. When Conrail assumed control of the ailing Penn Central, it, too, was initially satisfied with the 1951 agreement. In 1980, however, Conrail decided to consolidate the motley collection of contracts that it had inherited from bankrupt railroads like Penn Central. It requested bids on an advertising management con-traet that would cover the entire Conrail system. TDI won the bid and a new contract was executed on June 1, 1981.
The 1981 agreement purports to have been “made and entered into” by TDI and “CONSOLIDATED RAIL CORPORATION, a Pennsylvania corporation... (‘Conrail’).” The agreement thereafter acknowledged that TDI was the successful bidder for the right to advertise “throughout Conrail’s rail system.” It then granted TDI “the exclusive right... to use, as a license only, Conrail property for sign advertising purposes.”
The remainder of the integrated agreement, which purports to be governed by Pennsylvania law, spelled out the terms under which the advertising license was granted. There are provisions, for example, wherein TDI agreed to procure liability insurance listing Conrail as a named insured. TDI also promised to hold harmless and indemnify “Conrail, its officers, agents, and employees” from “any and all claims, suits, loss, costs, and liability, arising from, or in connection with... any personal injury, death, or property damage, whatsoever.” Other portions of the contract note that “Conrail” reserved absolute and unconditional discretion over all signs and that “Conrail” could terminate the agreement by giving notice. Finally, the agreement purports to abrogate all prior contracts “between TDI and the various predecessors of Conrail to the extent Conrail inured to the benefits and assumed the obligations of such contracts.”
The 1981 agreement did not separately identify any of the dozens of railroads that make up the Conrail rail system, nor did TDI or Conrail believe it necessary to list each one individually. Prior to June 1, 1981, TDI looked to the 1951 agreement to determine a particular term or condition of its relationship with IHB; after June 1, 1981, TDI looked to the 1981 agreement. There was no change in the course of conduct between TDI and IHB after June 1, 1981, and TDI continued to place advertising on IHB’s property and pay a share of the advertising revenue to IHB.
C. The Accident and the Carter Litigation
Sometime on or before May 15, 1980, a TDI employee prepared an application by Pal Construction Company for an advertising license for the north face of an IHB-owned bridge at 4901 South Western, Chicago, Illinois. A license was issued on May 26, 1981, and Pal Construction made arrangements for B & G Quality Signs to paint its advertisement. The B & G painters had attached their scaffolding to the viaduct and were in the process of painting the advertisement when a passing IHB train with a defective boxcar door snagged a hook on the scaffolding and caused it to collapse, killing one painter and wounding another.
Wrongful death and personal injury actions were thereafter commenced in state court, see Carter v. Indiana Harbor Belt Railroad Co., 190 Ill.App.3d 1052, 547 N.E.2d 488, 138 Ill.Dec. 321 (1989), and both TDI and IHB were named as defendants. TDI tendered its defense of the suit to Aetna, which, pursuant to TDI’s general liability coverage, assumed the defense and eventually paid TDI’s portion of the judgment. IHB tendered its defense of the suit to TDI, which in turn tendered the defense to Aetna under its contractual liability coverage. Aetna refused to defend IHB, arguing generally that there was no indemnity contract between TDI and IHB and arguing specifically that IHB was not expressly named in TDI’s policy and that the indemnity provision in the 1981 agreement did not cover IHB.
D. Proceedings Before the District Court
In 1988, after the jury in Carter returned a $2.4 million verdict against TDI and IHB, Winston Network filed a complaint for declaratory relief seeking an adjudication of the parties’ rights and responsibilities under the 1951 and 1981 agreements. It also sought an adjudication of Aetna's liability under the contractual liability coverage. IHB, which was named as a defendant alongside Aetna, filed a counterclaim against Winston Network for breach of the 1951 and/or 1981 agreement to defend and indemnify. IHB also filed a cross-claim against Aetna for breach of its duty to defend and indemnify under the contractual liability coverage.
Winston Network and IHB initially attempted to resolve the dispute by means of motions for summary judgment. These motions took the position that the indemnity provision of the 1981 agreement covered IHB but that, if it did not, then the indemnity provision of the 1951 agreement was still in force insofar as IHB was concerned. The district court rejected these motions after concluding that a question of fact existed as to which contract applied at the time of the underlying accident. The district court also determined that the term “Conrail” was ambiguous insofar as it was used in the 1981 agreement and therefore agreed that parol evidence was admissible to clarify the intent of those who entered into the agreement.
The case was tried before a jury which, after hearing three days of testimony, answered special interrogatories as follows:
1. The 1981 agreement between Winston Network and IHB’s parent corporation, Conrail, governed the business relationship between Winston Network and IHB at the time of the underlying occurrence;
2. Winston Network did not breach its agreement to defend and indemnify IHB; and
3. Aetna breached its duty to defend and indemnify IHB.
The jury also returned general verdicts in favor of both Winston Network and IHB against Aetna and in favor of Winston Network and against IHB on IHB’s counterclaim. On October 26, 1989, the district court directed entry of judgment on these verdicts and found that there was no just reason to delay enforcement or appeal. See Fed.R.Civ.P. 54(b). Eight days later, an Illinois appellate court affirmed the jury’s verdict in the state court litigation. See Carter, 190 Ill.App.3d 1052, 547 N.E.2d 488, 138 Ill.Dec. 321.
The parties in the federal suit filed timely post-trial motions, to which the district court responded by memorandum opinion dated January 5,1990. That opinion denied motions by Winston Network and IHB to recover their attorneys’ fees in the present litigation. It also denied Aetna’s motion for judgment notwithstanding the verdict or a new trial. The opinion granted IHB’s motion for judgment notwithstanding the verdict on its counterclaim against Winston Network.
Attached to the memorandum opinion was an order retroactively amending the October 26 judgment. That order entered judgment in favor of IHB and Winston Network on their claims against Aetna, entered judgment in favor of IHB on its claim against Winston Network, and declared that:
1. IHB was covered by the June 1, 1981, agreement in its dealings with Winston Network;
2. The 1981 agreement required Winston Network to indemnify IHB in the Carter litigation;
3. Aetna owed duties to both Winston Network and IHB to defend and indemnify IHB in the Carter litigation;
4. Aetna breached its duties to Winston Network and IHB when it refused to defend and indemnify the latter;
5. Winston Network owed a duty to IHB to defend and indemnify it in the Carter litigation; and
6. Winston Network breached its duty to defend and indemnify IHB.
The district court then ordered Aetna to pay IHB’s costs, attorneys’ fees, and share of the judgment in the Carter litigation, retaining jurisdiction for the sole purpose of calculating those amounts. The order failed to state the damages, if any, for which Winston Network was liable. And once again, the district court found that there was no just reason to delay enforcement or appeal. See Fed.R.Civ.P. 54(b). All three parties thereafter filed timely notices of appeal.
On January 31, 1990, IHB moved for entry of judgment on the reserved issue of damages. After further proceedings, the district court directed entry of a $1,681,-193.14 judgment in favor of IHB and against Aetna on June 7, 1990. Aetna filed a notice of appeal from this judgment on June 19, 1990, and thereafter learned that IHB had filed a post-judgment motion on June 18, 1990. That motion, which purported to be filed under rule 59(e) of the Federal Rules of Civil Procedure, asked the district court to amend the June 7 judgment so as to reflect that Winston Network was also liable. The district court concluded that IHB’s motion actually related to the January 5 judgment, not the June 7 judgment, and on August 6, 1990, denied it as untimely. IHB thereafter filed a notice of appeal from the June 7 judgment and the August 7 order. Aetna filed another notice of appeal to insure that its appeal from the June 7 judgment was preserved.
II.
A. Jurisdiction (Appeal Nos. 90-1237, 90-1325, and 90-1337)
After the filing of the initial round of appeals, this court requested briefing on the issue of whether the district court’s January 5 judgment was “final.” In particular, we were concerned about the district court’s decision to retain jurisdiction for the purpose of computing damages. As stated in Parks v. Pavkovic, 753 F.2d 1397, 1401 (7th Cir.1985), cert. denied sub nom. Belletire v. Parks, 473 U.S. 906, 105 S.Ct. 3529, 87 L.Ed.2d 653, and cert. denied sub nom. Parks v. Belletire, 474 U.S. 918, 106 S.Ct. 246, 88 L.Ed.2d 255 (1985):
A district court does not have carte blanche to certify an order for an immediate appeal under Rule 54(b). The order must finally dispose of a separate claim or a separate party. Normally an order that merely decides liability and leaves the determination of damages to future proceedings does not finally dispose of any claim; it is just a preliminary ruling on the plaintiffs damage claim.
Id. at 1401.
After briefing, however, we are satisfied that we have jurisdiction over the first round of appeals. Parks states the general rule but it also states an exception—an immediate appeal from a liability judgment will be allowed if the determination of damages can be characterized as “ministerial.” Id. The computation of damages in this case required nothing more than adding IHB’s predetermined portion of the state court judgment, with statutory interest, to IHB’s defense costs in the state court litigation. That determination is viewed as “mechanical,” see, e.g., McMunn v. Hertz Equip. Rental Corp., 791 F.2d 88, 90-91 (7th Cir.1986); see also Horn v. Transcon Lines, Inc., 898 F.2d 589 (7th Cir.1990), and, in any event, it has already been completed. See Lovellette v. Southern Ry., 898 F.2d 1286, 1289 (7th Cir.1990) (judgment that becomes final while appeal is pending satisfies finality requirement). We therefore proceed to the merits.
B. Aetna’s Appeals
Aetna admits that it is liable to IHB if there was a valid contract of indemnity between IHB and TDI on June 30, 1981. According to Aetna, however, there was no contract of indemnity. And even if there was a contract of indemnity, it was void as against public policy.
1. The Absence of a Contract of Indemnity
Aetna’s first attack on the disposition below is an argument that the district court should not have admitted parol evidence to define the term “Conrad” in the 1981 agreement. “Conrad” means “Consolidated Rail Corporation,” Aetna argues, and nothing more. It does not mean “Conrad, its subsidiaries, and its affiliates,” either as a matter of common sense or as a matter of law. The term is not ambiguous and parol evidence was therefore inadmissible to prove that “Conrad” included IHB.
Aetna, however, has substantially eroded its own argument. In a reply brief, Aetna argues that the 1951 agreement was terminated, insofar as IHB was concerned, by language in the 1981 agreement that abrogated all prior contracts “between TDI and the various predecessors of Conrad (to the extent Conrad inured to the benefits and assumed the obligations of such contracts).” Under the terms of this provision, however, TDI’s contracts with Conrad’s predecessors (i.e., New York Central and Penn Central) were abrogated only insofar as they applied to “Conrad.” Aetna’s reply brief thus abandons the claim that “Conrad” means “Consolidated Rail Corporation” and adopts the position that “Conrad” means “Conrad, its subsidiaries, and its affiliates”—the very argument for which its opening brief criticizes Winston Network and IHB.
Irony aside, Aetna’s argument acknowledges that the term “Conrad” is ambiguous. And under Pennsylvania law, which undisputedly governs the 1981 agreement, parol evidence is admissible to interpret ambiguous terms. Penn-DOT v. Mosites Constr. Co., 90 Pa.Commw. 33, 36-37, 494 A.2d 41, 43 (1985); see Metzger v. Clifford Realty Corp., 327 Pa.Super. 377, 386, 476 A.2d 1, 5 (1984).
The remainder of Aetna’s argument on this issue appears to attack the jury’s verdict. Nowhere, however, does Aetna explain the theory behind this attack (for example, that the district court should have granted a directed verdict or that the district court erred in denying post-trial motions for judgment notwithstanding the verdict and for a new trial). The attack is also puzzling, moreover, because it assumes that this court will engage in de novo review of a jury verdict. Nothing could be farther from the truth. This circuit accords “great deference” to a jury’s decision; “ ‘it is well-settled that a jury verdict will not be set aside if a reasonable basis exists in the record to support that verdict.’ ” A. Kush & Assocs., Ltd. v. American States Ins. Co., 927 F.2d 929, 934 (7th Cir.1991) (quoting Spesco, Inc. v. General Elec. Co., 719 F.2d 233, 237 (7th Cir.1983)). Here, the record indicates that the jury had ample support for concluding that IHB was included in the 1981 agreement.
2. The Invalidity of Any Contract of Indemnity
Aetna’s second attack on the judgment is that any contract of indemnity would be unenforceable under either the anti-indemnity provisions of the Illinois Construction Contract Indemnification for Negligence Act, Ill.Rev.Stat. ch. 29, paras. 61-63,, or the Illinois common law rule that agreements to indemnify a party for his or her own negligence must be clear and explicit. See Westinghouse Elec. Elevator Co. v. La Salle Monroe Bldg. Corp., 395 Ill. 429, 70 N.E.2d 604 (1946). Even assuming, however, that Illinois would apply its anti-indemnity laws to a contract that purports to be governed by Pennsylvania law, neither of these arguments is ultimately meritorious. The indemnity provision of the 1981 agreement does not fall victim to the Illinois anti-indemnity statute, and it is also sufficiently clear and explicit to satisfy Illinois common law.
“Stripped to its bare essentials, the Illinois [anti-indemnity] statute prevents indemnity against a party’s own negligence in. construction contracts.” Lovellette, 898 F.2d at 1290. A construction contract, in turn, is defined as a contract “for the construction, alteration, repair or maintenance” of a structure. Ill.Rev.Stat., ch. 29, para. 61.
Aetna’s briefs focus primarily on the accident and argue that the painting of an advertisement on a railroad bridge is arguably “maintenance” or at least “alteration.” The focus of the statute, however, is “contracts or agreements,” not accidents, and the 1981 agreement does not obligate anyone to engage in activity that is even remotely construction-related. The agreement does envision that TDI will issue a license to a third party and that this third party may decide to paint an advertisement on a bridge, but this connection to construction (if painting an advertisement is, in fact, construction) is simply too attenuated. The statute, after all, applies to contracts "for the construction, alteration, repair or maintenance” of a structure, not to contracts “having some connection with the construction, alteration, repair or maintenance” of a structure. The 1981 agreement is an agency contract in which TDI agreed to solicit third parties to advertise on IHB property; it did not involve construction and the Illinois statute is therefore inapplicable.
Aetna also argues that we should apply the Illinois statute even if no construction contract was involved. Yet Aetna offers no case law to justify this extension, and our review of Illinois law suggests that Aetna has it backwards. As we noted in Rutter v. Arlington Park Jockey Club, 510 F.2d 1065, 1069 (7th Cir.1975), Illinois courts will generally enforce contracts of indemnity against one’s own negligence. See also Davis v. Commonwealth Edison Co., 61 Ill.2d 494, 496, 336 N.E.2d 881, 883 (1975); Burlington N.R.R. v. Pawnee Motor Serv. Co., 171 Ill.App.3d 1043, 1045, 525 N.E.2d 910, 912, 121 Ill.Dec. 603, 605 (1st Dist.), appeal denied, 123 Ill.2d 556, 535 N.E.2d 399, 128 Ill.Dec. 888 (1988).
This brings us to Aetna’s contention that the indemnity clause is void because it fails to articulate in a clear and explicit manner that TDI must indemnify IHB for IHB’s own negligence. See Westinghouse, 395 Ill. 429, 70 N.E.2d 604. There is little mystery, however, in the terms of the relevant provision: the 1981 agreement provides for indemnification “without regard to the acts, omissions, or negligence of any party.” Aetna finds solace in the clause’s failure to specify that TDI will provide indemnification for the negligent operation of a boxcar, but Illinois law does not require an indemnity provision to specify the cause of the injury. It only requires the provision to specify the indemnitor’s duty to indemnify against the indemnitee’s own negligence. Burlington N.R.R., 171 Ill.App.3d at 1047-49, 525 N.E.2d at 913-14, 121 Ill.Dec. at 606-07 (soundly rejecting same argument advanced by Aetna). The indemnity provision in the 1981 agreement meets that requirement, and it is therefore enforceable. See, e.g., id. at 1043, 525 N.E.2d 910, 121 Ill.Dec. 603 (finding specific and enforceable a contract providing for indemnification regardless of whether injury was “contributed to by the sole or partial negligence” of indemnitee).
C. Winston Network’s Cross-Appeal
Winston Network appeals only from the district court’s denial of its request for attorneys’ fees under section 155 of the Illinois Insurance Code. Ill.Rev.Stat., ch. 73, para. 767 (allowing insured to recover attorneys’ fees from insurer under specified circumstances). As Winston Network is well aware, however, section 155 applies only when an insurance company’s delay in settling a claim is “vexatious and unreasonable,” id., and the district court found that Aetna’s conduct was neither. That finding “ ‘will not be disturbed unless an abuse of discretion is demonstrated on the record,’ ” and there is no indication on this record that such an abuse of discretion has occurred. We therefore affirm the district court’s refusal to award attorneys’ fees to Winston Network.
As an initial matter, we note that Winston Network itself has never taken a firm stance on which agreement — 1951 or 1981 — governed TDI’s relations with IHB. Yet that should not matter, under Winston Network’s argument, because at least one of the agreements must have applied and because both agreements contained indemnity provisions. The only way that both agreements would not apply is if “Conrail” meant “Consolidated Rail Corporation” in the indemnity clause of the 1981 agreement but “Conrail, its subsidiaries, and its affiliates” in the clause canceling all prior agreements. And there is no possibility, according to Winston Network, that the same word could have two different meanings in the same agreement.
As Aetna pointed out in its briefs and at oral argument, and as should be evident from our discussion so far, the 1981 agreement is not an example of good draftsmanship. One of the clauses, for example, permits “Conrail” to terminate the agreement by giving timely notice. Another clause reserves to “Conrail” an absolute and unconditional discretion over all signs. Under Winston Network’s approach (in which Conrail must mean “Conrail, its subsidiaries, and its affiliates”), it appears that any one subsidiary or affiliate, no matter how lowly, had the right to cancel the entire agreement simply by giving the requisite notice. It also appears that any subsidiary or affiliate had the right to exercise an absolute veto power over any advertisement, wherever located. Surely, Aetna claims, this cannot be the intent of the parties to the agreement.
All of this suggests that maybe Winston Network and IHB, too, were relying on a theory in which “Conrail” had different meanings depending on the clause in which it was found. This realization, in turn, suggests that Aetna’s position may not be so unreasonable after all. Aetna may not be correct — the jury, in fact, concluded that Aetna was incorrect — but an insurer need not be correct in order to avoid liability under section 155. The inquiry should determine whether the insurer had good faith, and there is evidence of good faith on this record.
Another theme of Winston Network’s argument is that the parties to the 1981 agreement knew what it meant, that those dealing with railroads would know what it meant and, therefore, that Aetna should have known what the agreement meant. Aetna was not a party to the agreement, however, and it is in the insurance business, not the railroad business. Aetna cannot be held, therefore, to have the knowledge that Winston Network would seek to impute to it.
Most important, Winston Network’s arguments appear too focused. A proper inquiry under section 155 must look at “the totality of the circumstances,” not just a select portion. Rosenburg, 883 F.2d at 1335. This particular conflict developed gradually and the parties' present arguments went through periods of significant development before they achieved their present complexity. The district court, which was able to observe the entire course of this litigation, concluded that Aetna had not been “unreasonable and vexatious” in delaying settlement, and Winston Network has offered no real basis for undermining that conclusion. Although Winston Network blames this litigation entirely on Aet-na, it would do well to remember that this suit might have been unnecessary had the parties to the 1981 agreement been more precise in their language.
D. IHB’s Cross-Appeals
1. Attorneys’ Pees (No. 90-1337)
IHB, too, has asked for its attorneys’ fees and costs in this litigation, although under different theories than the one advanced by Winston Network. Instead of the Illinois Insurance Code, IHB claims litigation expenses under both Pennsylvania common law and Pennsylvania contract law. IHB also claims that both Winston Network and Aetna are responsible for its expenses.
The easiest place to begin is the 1981 agreement, which in relevant part states:
9. TDI, as part of the consideration of the rights granted by this Agreement, and without regard to the acts, omissions, or negligence of any party, and while acting under color of this Agreement, hereby covenants and agrees to hold Conrail, its officers, agents and employees, harmless from, and to indemnify and defend Conrail, its officers, agents, and employees, against any and all claims, suits, loss, costs, and liability, arising from, or in connection with:
(b) any personal injury, death, or property damage whatsoever;
(e) the inclusion of Conrail in, or addition of Conrail to, any civil or criminal action [besides any such action arising from (a), (b), (c), or (d) of this section 9] arising from the contractual relationship with TDI under this Agreement.
IHB argues that the emphasized portions of this clause are sufficiently specific to allow the recovery of its attorneys’ fees and costs in this litigation. In support of that argument, it cites Fidelity-Philadelphia Trust Co. v. Philadelphia Transportation Co., 404 Pa. 541, 173 A.2d 109 (1961), in which the Pennsylvania Supreme Court held that a clause requiring the in-demnitor to "reimburse the Trustee for all its expenditures, and to indemnify and save the Trustee harmless against any liabilities which it may incur” was sufficiently specific to include attorneys’ fees. Id. at 548, 173 A.2d at 113-14.
It is unclear whether the district court addressed this argument, but it involves a question of law and is therefore fair game for an appellate court. And in light of the Pennsylvania Supreme Court’s conclusion in Fidelity-Philadelphia Trust Co., the language in the 1981 agreement certainly appears broad enough to include attorneys’ fees and costs (even though they are not expressly mentioned). If there were any doubts, however, the briefs before this court present no meaningful resistance to IHB’s argument. Winston Network, for example, does not even address this portion of IHB’s cross-appeal. Aetna has responded to IHB’s claim but maintains only that a party cannot by express contract agree to indemnify another for litigation expenses incurred in an action to obtain indemnification. But the case cited to support this proposition, Aetna Cas. & Surety Co. v. Nationwide Mut. Ins. Co., 471 F.Supp. 1059 (M.D.Pa.1979), aff'd, 620 F.2d 287 (3d Cir.1980), simply does not support Aetna’s argument. It does suggest that Pennsylvania common law might not support IHB’s request for attorneys’ fees and costs, id. at 1067, but it does not in any way prohibit IHB from expressly contracting for payments that the common law might not otherwise imply. Under these circumstances, it is appropriate that IHB receive from Winston Network and Aetna its attorneys’ fees and costs in this litigation.
2. Money Judgment Against Winston Network (No. 90-2796)
The second issue in IHB’s cross-appeal raises another jurisdictional question. Specifically, what was the effect of IHB’s June 18 motion? If IHB’s motion was a timely rule 59(e) motion to alter or amend the judgment, then Aetna’s first notice of appeal from the June 7 judgment (No. 90-2360) “is not worth the paper it is written on.” Fed.R.App.P. 4(a)(4); see Alerte v. McGinnis, 898 F.2d 69, 71 (7th Cir.1990). Aetna has wisely prepared for this possibility, however, by filing a protective notice of appeal after the district court denied IHB’s motion (No. 90-2766). If IHB’s motion was not a timely rule 59(e) motion, then Aetna’s first notice of appeal from the June 7 judgment is valid and the protective notice of appeal is mere surplusage.
With this background in mind, we turn to the motion itself, which asked the district court to add the following paragraph to its June 7 judgment:
It is further ordered that Plaintiff-Coun-terdefendant Winston Network, Inc., shall be liable to the Indiana Harbor Belt Railroad Company for payment of any amount of said judgment that Aetna fails or is unable to pay...,
As the district court pointed out, however, jurisdiction was retained only to determine the actual dollar amount due IHB, and IHB’s post-judgment motion did not raise any issues with respect to the amount of damages. Instead of relating to the question of how much was owed, IHB’s motion was addressed to the question of from whom such amounts were owed. The district court’s ruling on that issue had been set forth over six months earlier, in the January 5 judgment, and only Aetna was listed as owing damages.
We agree with the district court, therefore, that IHB’s June 18 filing was not a timely rule 59(e) motion. In order to be timely, a rule 59(e) motion must be filed “not later than 10 days after entry of the judgment” it seeks to alter or amend. Fed.R.Civ.P. 59(e). IHB’s motion was submitted well over six months after the judgment it sought to alter or amend. Appeal no. 90-2360 is therefore valid, and appeal no. 90-2766 is a safety precaution that turned out to be unnecessary.
We cannot stop here, however. IHB’s August 15 notice of appeal (No. 90-2796) was untimely insofar as the June 7 judgment was concerned; both the thirty-day period after entry of judgment and the fourteen-day period after filing of Aetna’s June 19 notice of appeal had long since passed. Fed.R.App.P. 4(a)(1), (3). It was not untimely, however, insofar as the district court’s August 3, 1990, ruling on the post-judgment motion was concerned. We therefore have jurisdiction over Aetna’s appeal from the denial of its post-judgment motion.
This concession does little for IHB. Rule 59(e) contains a specific time limit and the district court has no discretion whatsoever to extend that limit. Fed.R.Civ.P. 6(b); see also Vukadinovich v. McCarthy, 901 F.2d 1439, 1445 (7th Cir.1990), cert. denied, — U.S. -, 111 S.Ct. 761, 112 L.Ed.2d 780 (1991); Green v. Bishy, 869 F.2d 1070, 1072 (7th Cir.1989). Nor can Winston Network extend that time limit by its failure to defend the appealed ruling. As the Fifth Circuit stated in Flores v. Procunier, 745 F.2d 338, 339 (5th Cir.1984), cert. denied, 470 U.S. 1086, 105 S.Ct. 1851, 85 L.Ed.2d 148 (1985), “The time limit fixed by Rule 59(e) is jurisdictional: it may not be extended by waiver of the parties or rule of the district court.” The district court could not have granted the relief sought by IHB’s untimely motion. Its denial of the motion must therefore be affirmed.
III.
The district court’s denial of litigation expenses to IHB is Reversed and Remanded for an assessment of IHB’s costs and attorneys’ fees in this litigation. With that one exception, the remainder of the disposition below is Affirmed.
. Conrail owns only 51% of IHB; the Soo Line owns the remaining 49%.
. TDI failed to add IHB’s name to its insurance policy until after the accident occurred.
. Aetna responded that neither agreement applied and argued that TDI and IHB had been operating under an oral license. At the close of the trial, the district court found no evidence to support this theory and Aetna has not pursued it on appeal.
. Although the district court apparently was not aware of this fact on January 5, 1990, an Illinois appellate court had affirmed the judgment in Carter on November 3, 1989.
. Citing Walker v. Dominick’s Finer Foods, Inc., 92 Ill.App.3d 645, 415 N.E.2d 1213, 47 Ill.Dec. 900 (1st Dist.1980), Aetna argues that, as a matter of law, a subsidiary is separate from its parent corporation.
. Winston Network and IHB argue that Pennsylvania law applies because the parties to the 1981 agreement expressly chose Pennsylvania law to govern their contract. Aetna’s opening brief argues that Illinois law applies but its reply brief on this matter later concedes that Pennsylvania law applies.
.We would not reverse even if we accepted Aetna’s arguments about the 1981 agreement. Aetna’s opening brief specifically states that "TDI’s authority to license advertising on the [IHB-owned] bridge... arose from one of two agreements:” the 1951 agreement (as amended) or the 1981 agreement. And if Aetna is correct about the 1981 agreement, then only the 1951 agreement remains and by Aetna's own admission it must apply. That agreement specifically names IHB, and it, too, contains an indemnity provision.
Aetna’s only attempt to avoid the consequences of this admission comes in its argument that this court cannot affirm on the basis of the 1951 agreement
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:
Appellant was tried and convicted in Texas state court for assault with intent to murder. He seeks federal habeas corpus relief on the grounds he was tried in prison garb, rather than in civilian clothing, which we have granted on a number of occasions. Hernandez v. Beto, 5 Cir., 1971, 443 F.2d 634, Brooks v. State of Texas, 5 Cir., 1967, 381 F.2d 619, accord, Gaito v. Brierley, 3 Cir., 1973, 485 F.2d 86.
However, an examination of the evidentiary record in this case reflects beyond a reasonable doubt appellant’s guilt. We therefore hold the infraction to be harmless error. Thomas v. Beto, 5 Cir., 1973, 474 F.2d 981.
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.
ALSCHULER, Circuit Judge.
Defendants below appeal from decree finding valid claims 1, 2, 3, 4 and 5 of United States patent No. 971,838, October 4, 1910, to Fulton, and all but claim 1 infringed. The Fulton Company appeals from so much of same decree as finds claim 1 not Infringed, and defendants below not guilty of unfair competition.
Judge Luse, before whom the cause was heard in the District Court, rendered an opinion therein which appears in the margin. The facts are there sufficiently stated.
In the briefs and oral argument here for defendants below the defense of double patenting is mainly relied on to defeat the patent. The contention is that United States patent No. 947,229 to same inventor, ’ antedating by several months the patent in issue, is for the same invention. The patent in suit is for a process, and the earlier patent purports upon its face to be. for a.product. But it is contended that the, earlier patent is, in fact, for a process, and the same process as the other, and that the later patent is therefore void. The opinion of the District Court does not deal specifically with this contention, The product patent shows a structure which, while produced as there specified, and substantially as described in tbe process patent,-is distinctive in that it describes a product" having an increased toughness and resiliency at specified locations, needless here to be specifically considered, since that patent is not here in issue. It is narrowly limited, and presumably was not deemed to have been infringed, else it would also have been sued upon, as was the case in Fulton Co. v. Bishop & Babcock Co., 17 F.(2d) 999, where both of the patents were sued upon, and the District Court found the product patent not infringed, but all of the claims of the process patent valid and infringed — that decree being affirmed in the Sixth C. C. A. Fulton Co. v. Bishop &. Babcock Co., 17’- F.(2d) 1006 (March 7, 1927).
! One of the conditions upon which a patent monopoly is granted is that in the application there be'made such disclosure as will enable the public to practice and to have the beneficial use of the invention when the monopoly expires. The patent is therefore ¿one the less for a product from the fact alone that it discloses how to make it.
. ' The salutary rule against double patenting is directed against the evil of prolonging by subsequent patent the monopoly of an earlier grant. But where, as here, the later patent was separately applied for pursuant to an order for division made by the patent office upon an earlier application, which included both product and process,, the conclusion of double patenting will not so readily follow. Aurora Mantle & Lamp Co. v. Kaufman (C. C, A.) 243 F. 911.
.Although the earlier patent ifidicates how the product is produced, we are satisfied that thaUpatent does'suffieiently indicate the product,.as i¿ itself an invention, .as properly to stamp it the product patent it purports to be, and that the two grants are 'not, in this respect, for the,same invention, and we are well fissured that- the challenge of the patent’s validity on the ground of double patenting has not been sustained. :
The contention of defendants below that they did not follow the process of the claims found infringed, -and of the Fulton Company that defendants below did infringe claim 1, and were also guilty of unfair competition, were fully and properly treated in the District Court opinion, and need not here be further discussed, and we agree in its conclusion that these contentions are not sustainable.
We are impressed by what the Circuit Court of Appeals of the Second Circuit said in the last paragraph of its opinion in Fulton Co. v. Bishop & Babcock Co., supra, respecting the matter of reasonable royalty; and we suggest that the master investigate, and report, inter alia, what during the infringing period would have been a reasonable royalty.
The decree of the District Court is affirmed.
Luse, District Judge. Complainant’s bill filed September 10,1923, charges the individual defendant, Leach, acting as an individual and as an officer and in control of the defendant corporation, and the corporation, with using the process of making expansible and collapsible tubular metal walls embraced in Fulton patent No. 971,-838, assigned to plaintiff. The bill also charges the defendants with unfair competition, in that defendants have copied plaintiff’s process of manufacture and imitated the products of plaintiff’s manufacture, with the intent and purpose, successfully carried out, of deceiving the purchasing public in the purchase of defendant’s product in place of plaintiff’s product.
The claims of the patent in suit are five in number. The fourth claim is identical with the second, except that, immediately following the phrase “consisting in forming a thin walled metal tube,” the phrase “annealing said tube” is inserted. The fifth claim is identical with the third, except that the phrase “annealing said tube” is inserted immediately following the phrase “consisting in forming a thin walled metal tube.” The first three claims of the patent are as follows:
“1. The process of making flexible corrugated metal walls, consisting in forming a thin walled tube, forcing the metal- of the tube outward from the axis of the tube to form broad corrugations therein with narrow uncorrugated portions connecting the broad corrugations, then deepening and narrowing said corrugations while subjecting the metal at the bends to a metal rolling operation to toughen and temper the metal in said curved portions.
“2. The process of making flexible corrugated metals walls, consisting in forming a thin walled metal tube, forcing the metal of the wall outward to form broad corrugations, reducing the, radius of curvature of the- bends at said outwardly extending corrugations while transferring into the lateral portions, portions of said bends. , and subjecting said curved - portions to swaging pressure to toughen and temper, the metal in said curved portions. '
“3. The process of making flexible corrugated metal walls consisting in forming a thin walled metal tube, forcing the metal of the wall outward to form broad corrugations, leaving narrow uncorrugated connecting portions between the outwardly extending corrugations, reducing the radius of curvature of the bends of said outwardly extending corrugations while transferring into the lateral portions, portions of said bends, and forcing the metal in said narrow uueorrugated portions into inwardly projecting corrugations, and subjecting the curved por-, tions of said first-named bends to swaging pressure to toughen and temper the metal in said curved portions.”
, The invention as stated in the -specification-relates to processes of making, flexible corrugated metal walls for collapsible and expansible vessels, particularly for the class used for confining fluids under pressure and has for its object the production of corrugated metal walls of high resilience and of great strength -and durability and which can be collapsed and expanded many times while confining fluids under pressure without material injury to the wall. The original application filed April 3, 1907, was. a combine)} application for a process and product patent. The Patent Office ordered a division, the examiner saying:
“Since the article may be made by other processes than that claimed, the inventions are, independent and division is accordingly requir-. ed before further action may be taken on the, merits.”
Division resulted accordingly, and the applica-. tion for the patent in suit was filed July,.22, 190-9, and a patent granted October 4, 1910.*
. One of the steps of the patented process,, which is the subject of controversy between the, parties and which will be t&ken up first, is the process of forming first broad, outwardly ex-¡ tending corrugations in which the thin metal tube, is pressed over a die roll and under a matrix, roll, there having been inserted in the tube an expanding brace. In operation the matrix roll, is lowered into contact with the tube and press-, ed toward the die roll. The shafts upon which: the two rolls are mounted are rotated, with the, result that the die roll, operating upon the in-; terior of the tube, presses a portion thereof, outwardly in the form of an outward corrugation into the sinus of the matrix. During this operation the expansion brace is located beneath the flange of the matrix roll,: and, as the, patent puts it, “prevents the unyard swaging; of the tubqlar wall during the action”, of the, rolls. T^e plaintiff h;as long since ..abandoned - the use of the rolls and expansion brace, ;in, forming the first-broad outward corrugations, and uses instead an -expanding mandrel, which; has an. expanding element made up of eight, segments; the mandrel being inserted into the, tub,e and the expanding element .íg , there, ex-( panded, forcing a portion of the tube outwardly into a broad outward corrugation. This is the process which the defendants follow. It is the claim of the defendants that they, as well as the plaintiff, have thus omitted one of the essential steps of the patented process in that: A. By the use of the mandrel no “harrow uncorrugated connecting portions . between the outwardly extending corrugations” are left in the sense in which the phrase last quoted is used in claims 1, 3, and 5 of the patent. 'B. That an excess' of temper and toughness in the outer bends of the outer corrugations over the bends of the inner corrugations is a prime characteristic of the patented process in which the presence of the expansion brace is essential!
As to “A,” it is admitted by the defendants in their answer to the tenth interrogatory that in their use of the mandrel the broad outward corrugations are so located •¿'ith reference to one another as to leave the portions between such corrugations narrower than the outward corrugations. The term “narrow” being a relative one, it is apparent that the use of the mandrel does not prevent the leaving of narrow portions of the tube between the broad corrugations. Nor is any reason perceived for attributing to the word “uncorrugated” any unusual meaning, and while the use of the mandrel may result in the surface of the tube following what is often called a sine curve, nevertheless the portions of the tube between two outward corrugations formed by the mandrel are as clearly uncorrugated in that such portions have not been made the subject of a process of corrugating as though the expanding brace had been used in opposition to the surface of the flange of the matrix roll. True the use o'f the brace serves to prevent the inward forcing of the narrow uneorrugated portions but as will more fully appear later, I deem the use of the brace a part of the illustrative method of following the process rather than an essential thereof.
As to contention “B,” it is to be borne in mind that the means of carrying the process into effect described in the patent is only illustrative. This is common in process patents and in the instant case such description is introduced with the words “the inventive idea is capable of expression in a variety of methods, one of which for the purpose of illustration is hereinafter specifically described.” The conclusion is therefore reached that the use of the expanding mandrel by the parties is not an effective departure from the process of the patent, and that in the process used by the defendant narrow uncorrugated portions are left connecting the broad corrugations, within the meaning of the claims 1, 3; and 5.
In defendant’s process, however; there are no rolls or their equivalent used in opposition to one' another, between which-the metal ofi the tube is rolled, and I therefore find that the defendant does not use a metal rolling operation, as the term! is ii'Sed in claim 1 of the patent.
Considerable testimony and argument has been heard with reference to the meaning of the phrase “subjecting the said curved portions to swaging pressure to toughen and temper the metal in.said curved portions,” found in all of the claims save the first, with particular reference to the meaning of the word “swaging pressure.” The term “swage” is defined in Hawkins Mechanical Dictionary as “a tool, variously shaped or grooved on the end or face, used by blacksmiths or other workers in metals, for shaping their work, whether in sheet metal or forging, by holding the tool upon it. or the work upon the tool, and striking with a sledge.”
Webster’s definition is the same, and the latter says the verb “to swage” means “to shape by means of a swage.” The Century Dictionary’s definition of the noun is “a tool or die for imparting a given shape to metal when laid hot on an anvil, or- in a stamping press or dropping press, or between rollers. It assumes many shapes, as an indenting or shaping tool or as a die for striking up said metal or in stamping or presses. Stamping presses are sometimes called swage machines.”
Whatever may be the lexicographer’s definition of the word “swaging,” it is quite clear that, as used in the patent in suit, the term does not contemplate that such portion of the tube as is being subjected to swaging pressure must be bottomed against an opposing surface. The expanding brace heretofore referred to' is spoken of as preventing the inward swaging of the tubular wall by the opposing surface Of the matrix flange, and the action of the flanges of the matrix roll in subsequent steps of the process where the expanding brace is not used and where no .surface is in apposition to the inner surface of the inward corrugations, is termed swaging. In view of these applications of the term by the patentee, the intent to use the term 'in .a sense limited to pressure of the metal by one roll or tool against the surface of another in the process of swaging is so negatived as not to warrant, much less require, such a limitation. Pressure by' a shaping tool stretching and bending (he metal is-what was intended, as I view it. That the drawings of the patent illustrate the outer corrugations in their extreme positions, bottomed against the curved surface of the sinus of the -matrix, is of no particular moment, inasmuch as there is nothing to indicate that the working of the metal is to continue after such contact is effected. That the defendants avoid such bottoming, does not, in my opinion, differentiate their process from “swaging” as that term is used in the patent in suit. Defendants define their process as “spinning” rather than swaging, but spinning is a process spoken of in the specifications as one which might be used instead of the rolling process, without departure from the essence of the invention.
Thus construed, defendant’s method clearly infringes. It is immaterial that they add steps to the process which they consider improves the product, so long as they slavishly follow the patented process so far as it goes. Tilghman v. Proctor, 102 U. S. 707, 731 et seq., 26 L. Ed. 279; Lalance & Grosjean Mfg. Co. v. Haberman Mfg. Co. (C. C.) 53 F. 380; Ford Morocco Co. v. Tannage Patent Co. (C. C. A.) 84 F. 644. But it is earnestly contended that if the patent be so construed it is invalid, being anticipated, it'is said, by five prior art patents — three United States patents, Daelen No. 266,976, dated November 7, 1882; Emery & Gentner, No. 297,-244, dated April 22, 1884; Hollerith. & Metcalf, No. 349,718, dated September 28, 1880; one English patent, Webster, No. 825, dated October, 1, 1856; and one German, issued to Koffler No. 98,096, April 25, 1897.
No evidence is given tending to show that the methods of these patents have ever been used and the testimony indicates that no one piece flexible corrugated tubular walls were known, having or in any degree approximating the highly sensitive flexibility of the Fulton bellows, prior to Fulton. Four of the above patents relate to the manufacture of expansion joints, indicating the use of comparatively heavy tubes with corrugations comparatively shallow, designed to afford but slight elasticity when compared with that which results from the Fulton process as applied to the type of tube contemplated. When it is borne in mind that the Fulton process is intended to operate on extremely thin tubes, those ordinarily used being .003 to .008 inches in thickness, and that the requisite corrugations must be deep, it is apparent that machines or processes intended to form corrugations in tubes to be used in expansion joints in steam pipes, boiler flues and tubes, condensers, couplings between locomotives and their tenders, hose for fire engines, etc., are not likely to disclose a method of dealing with a tube so frail as that, the forming of which is the first step of the Fulton process. Nor do they. The evidence indicates that Fulton tried out most, if not all, of these processes in his efforts to solve his problem but without success and defendants apparently 'perceive little of virtue in them, if their adherence to the Fulton process be given weight.
The Daelen patent, most relied on, does not deal with expansion joints, however, but covers a machine “for corrugating plates and tubes.” The drawings and specifications disclose a machine for corrugating sheets of metal, but the inventor says that the machine “may also be used for pressing corrugations into tubes.” Some doubt may exist as to whether or not the machine would operate to form corrugations in a tube, except in the form of a helix; but, laying that and other doubts aside, the Daelen machine assuredly does not operate to “reduce the radius of curvature of the bends” during successive operations nor to “transfer into the lateral portions, portions of said bends.” The steps of the Fulton process last above quoted indicate important elements thereof, to wit, the swaging by successive sets of rolls or tools, progressively narrow, so that the corrugations are not only deepened but narrowed, and portions of the bends transferred into lateral portions of the corrugations, thus giving that increase of temper as one approaches the curve of the bend where the maximum of toughness exists. This same distinction exists between the process in suit and the machines or processes disclosed in Emery No. 297,244, Hollerith, No. 349,718, and Koffler, the German patent, No. 98,096, all three of which use hydraulic pressure as a means of forcing the corrugations outward and relate to the manufacture of expansion joints as already indicated.
The Webster patent (English, 1856) discloses a series of operations, using rolls progressively narrow, but applied wholly upon the exterior of the tube to make and deepen inwardly extending corrugations only. This patent discloses no method of preventing the inward crumpling of the tube. Assuming that the Webster machine would successfully corrugate tube for the purposes specified, to wit, for couplings of locomotives with their tenders, hose for fire engines and other like purposes, they being of sufficient thickness and weight to withstand the contemplated operations, I find that this method would not be successfully operative upon the thin tube used in the patented process. In all probability the thin tube of the process in suit would crumple under the pressure, but if not that, I am convinced that body wrinkles, so called, would result, to the serious detriment of the product. Furthermore the ripe age of this patent, the years of which seem barren of actual contribution to the art, lend to deny it a status anticipating the quite substantial contribution of the Fulton process.
Other earlier patents have been referred to but not seriously pressed and it is not thought necessary to' treat them separately. All have been considered.
In accordance with the foregoing, I find claims 2, 3, 4, and 5 of the patent valid and infringed. I find claim 1 is not infringed.
On the issue of unfair competition I find for the defendants. The defendant Laboratories, Company has made and sold thermostatic regulating devices suitable for use in automobiles to automobile manufacturers. These devices combine the tubular wall, a process for making which is the subject of what has been said, with rigid end plates, making a hermetically sealed inelosure in which is confined a volatile fluid. Such devices are not easily distinguishable from those produced by complainant. On the latter’s device for similar purposes the, name “Sylphon” is stamped in the plate at one end of the device, while those of the Laboratories omits any designation or distinguishing mark. Both types of devices are strictly utilitarian and except as just indicated, bear no marks. So far as the tubular wall of the respective devices is concerned, neither concern gives it any distinguishing mark, nor could that well be done, I think, without detriment to the strength or efficiency of tlie wall. However, the defendant Laboratories have sold such devices exclusively to manufacturers of automobiles whom it has informed that the devices were not of complainant’s manufacture, and I find no deception nor confusion of goods has resulted. To the claim of comjflainant that users of automobiles will be likely to attribute failures of the Laboratories device to complainant’s to the injury of the latter, it is sufficient to say that such contention wanders into the field of speculation. Also there is no evidence suggesting much less warranting a conclusion, that the devices of the Laboratories are any less efficient or durable than those of complainant. The conclusion being that there is no deception iior confusion of goods, nor is there any probability of same, it becomes unnecessary to determine the effect of the fact that complainant had a patent, No. 760,443, dated May 24, 1904, and which expired in 1921, prior to defendants’ entry .into the field, which covered “a hermetically sealed expansible and collapsible' vessel containing a saturated vapor and consisting of rigid end walls connected by corrugated walls yielding along the line of one dimension only” (claim 2). For whether or no the issue involves practices during or after the life of a patent,'absence of confusion and deception negatives unfair competition. Burns Co. v. .Automatic Safe Co. (C. C. A.) 241 F. 472, 486.
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.
EUGENE A. WRIGHT, Circuit Judge:
Appellant is the owner of two patents relating to a system of balancing automobile wheels, and of the registered trademarks “Micro” and “Micro-Precision,” applicable to wheel weights and balancers used in the patented system. This action is for infringement of both patents and trademarks, and for unfair competition. The District Court found that the patents were invalid for obviousness, 35 U.S.C. § 103, but that if valid they had been infringed. It held the trademarks valid and infringed, and awarded damages. Defendants’ counterclaim, alleging patent and trademark misuse, was dismissed, and it has been abandoned in oral argument here.
I.
The record shows that plaintiff’s predecessor in title was the inventor of a method for balancing automobile tires covered by patent No. 3,002,388. The patented system involves four steps. First, the wheel is placed horizontally on a balancer equipped with a spirit level and allowed to tilt freely from side to side. The bubble in the spirit level indicates the location of the “light spot” on the wheel — the point of greatest imbalance and the one which tips up the highest when the wheel tilts. Second, four equal weights are placed on the rim of the wheel, two on each side of the light spot and immediately adjacent to it. The weights are of a size such that when all four are placed at the light spot, they are sufficient to correct the tilt of the wheel and just slightly to “overbalance” it. Third, the pairs of weights are moved away from the light spot equal distances along the rim, until the induced overbalance is precisely corrected and the angle of tilt, as shown by the spirit level, is zero. Fourth, one of the weights in each pair is fastened into position; the other is removed, and fastened into the corresponding position on the other (nether) side of the wheel.
The system is simple and easy to apply, and there is no dispute that its application solved what had been a problem in the industry — the development of a speedy method for wheel balancing that could be taught to relatively unskilled workers. Commercial success followed.
The District Court however found, and we agree, that each of the elements in the patented process was covered by the prior art. Thus the Booth patent, British No. 731,459, discloses a static balancer on which the wheel is placed horizontally and which utilizes a spirit level to indicate imbalance. The Booth patent, the Hume patent, No. 2,052,295, and the Morse patent, No. 2,136,633 all involve placing weights at the light spot and “fanning” them out until the wheel is precisely balanced. The Holl patent, No. 2,592,804, and the Lowe pajtent, No. 2,700,892, disclose the division of weights and the attachment of one in each pair to the opposite rim.
The patent in suit, then, is merely a combination of known prior art elements. We are enjoined to scrutinize such patents “with a care proportioned to the difficulty and improbability of finding invention in an assembly of old elements.” Great A. & P. Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147, 152, 71 S.Ct. 127, 130, 95 L.Ed. 162 (1950). To be sure, the combination here filled a long-felt need and enjoyed commercial success. But that is not enough to show patentability. Anderson’s-Black Rock, Inc. v. Pavement Salvage Co., 396 U.S. 57, 90 S.Ct. 305, 24 L. Ed.2d 258 (1969); Carborundum Co. v. Wilbanks, 420 F.2d 43 (9th Cir., 1969). Nor is this a case where a joinder of known elements produced a wholly unanticipated result, cf. United States v. Adams, 383 U.S. 39, 86 S.Ct. 708, 15 L. Ed.2d 572 (1966). On the contrary, the spirit level indicated the light spot, as it had before; moving the weights brought the wheel into static balance, as it had before; and transferring one weight to the other rim achieved dynamic balance, as it had before. “Two and two have been added together, and still they make only four.” Great A. & P. Tea Co., supra, 340 U.S. at 152, 71 S.Ct. at 130.
Essentially the same is true of the device covered by appellant’s patent No. 3,055,221, an improvement to the prior art pivot point wheel balancer. Pivot point wheel balancers áre not different, in their essentials, from a teeter-totter of the old-fashioned type. The wheel to be balanced is placed on a support member, attached in its turn to a metal ball. When the balancer is in the “on” position, the ball pivots on a flat metal platform, tipping to one side or the other if the wheel is imbalanced. When the balancer is in the “off” position, ball and platform are disengaged.
This mechanism occasioned trouble if the operator carelessly loaded a wheel onto the balancer while the latter was in the “on” position. The sudden impact had a tendency to flatten the ball against the platform, impeding the free rotation of the ball and destroying the accuracy of the balance. The patented device consists of a spring and cam arrangement that automatically disengages ball and platform whenever a wheel is removed from the balancer. The effect is to prevent damage to the ball by making it impossible to leave the balancer accidentally in the “on” position.
It is conceded that the pivot point balancer was known to the prior art. We have examined the spring and cam arrangement added to the prior art balancer and we cannot escape the conclusion that it would have been obvious to one skilled in the art. The use of springs and cams to return mechanical devices to their initial positions is old. And we cannot say that more than ordinary skill and ingenuity are shown by the mere fact that the patented device employed the weight of the wheel being balanced to prevent an untimely return to the “off” position, rather than the pressure of the operator’s foot (as did the prior art Holl patent No. 2,592,804). When hoary devices like springs and cams are involved, it will be a rare case indeed when mere artful placement of them will be non-obvious. The improvement, we think, “is the work of the skilful mechanic, not that of the inventor.” Hotchkiss v. M. Greenwood & Co., 52 U.S. (11 How.) 248, 267, 13 L.Ed. 683 (1851).
We affirm the District Court’s conclusion that the patents were invalid.
II.
As to the trademarks, the question is whether the court below erred in finding that they were not merely descriptive of the articles involved.
The law is that a word which is in its primary meaning merely descriptive of the goods to which it is applied may not be appropriated as the exclusive trademark of a single seller, since one competitor will not be permitted to impoverish the language of commerce by preventing his fellows from fairly describing their own goods. Lanham Act § 2(e), 15 U.S.C. § 1052(e); Delaware & H. Canal Co. v. Clark, 80 U.S. (13 Wall.) 311, 20 L.Ed. 581 (1871); Rohr Aircraft Corp. v. Rubber Teck, Inc., 266 F.2d 613, 623 (9th Cir. 1959); Telechron, Inc. v. Telicon Corp., 198 F.2d 903 (3d Cir. 1952).
If, however, a mark which is merely descriptive in its primary meaning acquires over time a secondary and distinctive meaning which serves to identify the goods of a single merchant, then the law will afford protection against unfair appropriation of the benefits resulting from the mark’s secondary meaning. Lanham Act § 2(f), 15 U.S.C. § 1052(f); Armstrong Paint & Varnish Works v. Nu-Enamel Corp., 305 U.S. 315, 59 S.Ct. 191, 83 L.Ed. 195 (1938); Safeway Stores v. Safeway Properties, 307 F.2d 495 (2d Cir. 1962); Wilhartz v. Turco Products, 164 F.2d 731 (7th Cir. 1947).
Applying these principles to the instant case, we have no difficulty concluding that the mark “Micro,” as applied to wheel weights, is merely descriptive. Both in its advertising and in its brief here, plaintiff contends that its system allowed wheels to be balanced with weights of the smallest possible size. “Micro” appears in dictionaries and in common usage as a combining form meaning extremely small, or tiny. Plaintiff’s mark, therefore, is exactly analogous to other marks relating to the size of goods which have been held merely descriptive. George Ziegler Co. v. Tom Huston Peanut Co., 37 C.C.P.A. 947, 181 F.2d 237 (1950); Little Tavern Shops v. Davis, 116 F.2d 903 (4th Cir. 1941); Keller, Inc. v. Chicago Pneumatic Tool Co., 298 F. 52 (7th Cir. 1923).
Equally descriptive is the mark “Micro-Precision,” as applied to wheel balancers and weights. Certainly the element “Precision,” as applied to a balancer or balancing weight, conveys merely that the system of balancing is accurate and precise; the term is descriptive, and it has been so held. Precision Apparatus Co. v. Precision Meter Co., 6 Misc.2d 817, 165 N.Y.S.2d 853 (1956).
The addition of the element “Micro” only strengthens the meaning, and denotes that the system is more than ordinarily accurate and precise. It is true that “micro” in this sense appears in no dictionary, and were we grammarians we should perhaps flinch at its use. Be that as it may, we are required to consider standards of meaning not our own, but prevalent among prospective purchasers of the article. Blisscraft of Hollywood v. United Plastics Co., 294 F.2d 694, 699 (2d Cir. 1961). And, however barbarous the use, we have no doubt that in the jargon of the trade “micro” functions as little more than an inexact intensified for “precision.”
We think, therefore, that the District Court erred in holding the plaintiff's trademarks ■ non-descriptive. Since no showing as to secondary meaning has been made, the judgment as to the validity of the trademarks must be reversed.
Affirmed in part, reversed in part.
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.
PAGE, Circuit Judge.
This is an appeal from a judgment of the District Court dismissing the libel of appellant brought to recover $9,861.71 damages occasioned by failure of appellee to deliver a shipment of 160,000 bushels of com in as good condition as when received. The defense is that the damage resulted from a “peril of the sea.” When appellee’s steamship Chicago, that left Chicago at 4:50 p. m., November 8, 1926^ was out about 100 miles, it ran into a severe storm.
Captain Ebisch of the Chicago testified that for twenty-four hours after 2 o’clock on the morning of the 9th the wind went up and down with varying velocity and as high as sixty to seventy miles per hour, and that the deck that was about twenty feet above the water line was continuously awash. The captain had sailed the inland lakes for nearly thirty years and said it was the heaviest sea he had seen on Lake Michigan, but that he had seen storms that bad on other lakes. He testified that in the month of November they generally got pretty rough weather and there were many serious storms so that loaded boats very frequently had their decks awash. The effect on the ship Ebisch said was: “She strained and labored hard, trembled at times. There was no damage to the upper works but a water tank was carried away — some windows in the fore and aft cabins were blown in and some rivets in the butts were started in the straining of the ship.”
When other witnesses from the Chicago were called, counsel said appellant did not intend to call any witnesses to contradict the testimony of Captain Ebisch, but his testimony was not anywhere admitted to be a true statement of the conditions existing during the storm.
Although Captain Ebisch testified that he knew what a marine protest was and that it was his idea that a protest was entered by a master when he had traversed a sea and sustained weather because of which there was likely to be some damage to the cargo, yet when he tied the Chicago to- the dock in Buffalo on the night of November 12th and notified the representative of appellant thereof, he says he inspected the cargo and found no evidence of water or other damage, and that although he notified appel-lee that he had sustained rough weather he said nothing about it to appellant, and filed no protest until something like twelve days later and after he had been told that the cargo was damaged.
The captain seems to have been honest but careless in his examination, because nearly 10 per cent, of his cargo was then damaged by water.
Appleton & Cox, New York, wrote to ap-pellee on November 15th saying:.
“We insured a considerable quantity of grain on board the SS ‘Chicago’ on her last voyage from South Chisago to Buffalo. We shall continue to insure this cargo during the winter storage period.
“Would you please advise us whether the vessel met with any peril during this last voyage, and whether a protest has been extended or is to be extended covering this voyage. We desire this information in order that we may take steps to minimize damage to the cargo, if any.”
Appellee received that letter on November 16th but made no answer until November 23d, when appellee wired Appleton & Cox as follows: “Please see your letter November fifteenth about storage cargo of com loaded to our Steamer Chicago Stop Vessel encountered heavy weather on the down voyage and we have report from grain inspectors representing consignee that considerable cargo has been damaged. Advise.”
Appellee’s contract was to carry and deliver the cargo in good order and condition (dangers of navigation, fire, and collision excepted). Dangers of navigation are said to mean “perils of the sea.” A “peril of the sea” is that danger that comes when wind and wave in their fury work their will with ship and cargo after the owner has used all reasonable effort to make the ship seaworthy and well qualified to withstand those hazards and perils that the owner knows or has reason to believe must be encountered. The language of Admiral Smyth’s Sailors Word-Book is even stronger. He says it “does not mean danger or hazard but comprises such accidents as arise from the elements and which could not be prevented by any care and skill of the master and crew.” What could, or in the exercise of reasonable care might, have been prevented by the owner, the master, and crew, must be first determined from a consideration of all the facts and circumstances surrounding the service that was to be rendered, before it can be determined whether the admitted damage resulted from a “peril of the sea.” Although Captain Ebiseh testified that the storm was as bad as any he had ever seen on Lake Michigan, he also testified that he had seen as bad or worse storms upon the other lakes, and that during the month of November when such storms are frequent and to be expected the decks of loaded vessels are frequently awash. Appellee and the captain of the Chicago knew that in addition to Lake Michigan it had to traverse Lakes Huron and Erie. The Chieago was a package and not a bulk freighter, and in its sides the openings or gangways necessary in a package freighter are not necessary in a bulk freighter, and when the boat was being used as a bulk freighter they were, because of the liability to permit water to get into the cargo, a menace and a danger to the cargo. Prom the evidence it seems that even in more moderate storms than the one in question there would likely have been some leakage. The gangways should have been made like the solid unbroken side of the ship. The Tenedos (D. C.) 137 F. 443. Opening through the upper deck were nine hatchways thirty feet long, and around the opening were coamings nine inches high, and there were wooden hatches placed over the coamings, closing the hatchways, but as Ebiseh said there were no rubber gaskets as there were at the gangways. Over those hatches were placed tarpaulins which were fastened down and-made' secure by various appliances. The court asked Captain Ebiseh: “Were they watertight?” Answer: “Well, they were as tight as any lake vessel hatches always are.”
Manifestly it was the plain and primary duty of appellee to make those hatchways water-tight, and that with proper care it could have been done would seem to be apparent without the necessity of any evidence. The fact is in the record that there was no leakage at either the sides or ends of any of the hatchways and that five of the nine were made absolutely water-tight. Pour of them leaked, but only at the comers, which indicates negligence or carelessness in the attempt to make them water-tight. Appellee in its answer said that because of the violence of the storm certain of her hatch coverings were loosened and showed that water made its way into the cargo, but the uneontradieted evidence of all those who saw those coverings after the arrival of the Chieago at Buffalo is that they were as they were when put on and that they were not loosened or disarranged in any way.
Captain Ebiseh made a statement about the hatchways, that should have been considered. Speaking of the hatchways, he said: “Well, they are not rubber gaskets like the gangways.” Until the tarpaulins were put over them, the pine board hatches were simply placed over the coamings around the hatchway openings. If there had been what the witness called “rubber gaskets” put around the coamings, there could probably have been made a water-tight joint between the coamings and the hatches. The only other place where it is shown that there was any leakage was in some unidentified butts because of loosened rivets. The witness Smith, who said he knew nothing about the condition of the ship on the day it arrived at Buffalo and did not examine it until the 24th day of November, when asked: “And on the tank top, how do you attribute the water getting in?” Answered: “The rivets in the butts which were started in the straining of the ship.” It is possible that Smith saw that the rivets were “started” and that he might reasonably infer that that came from the straining of the ship, but he did not attempt to say, and could not possibly know, when those rivets were loosened. How many rivets were loosened does not appear. There is no evidence that after the discovery of the damage to the cargo any repairs of any kind were made upon the ship. Much dependence is placed upon examinations made of the ship on October 5, 1926, by the inspector of hulls, and others. It appears from the certificate of inspection and from the testimony of the various persons who made those inspections that no inspection had anything whatever to do with the gangways, the hatches, or, so far as appears, with the butts where it is said the rivets were “started.” Inspection of the whole boat by the person who made the general examination was very cursory. He said he went over the deck, but his whole examination of the boat, that was over 300 feet long, consumed between one-half to one and a half hours. The boat was an old boat, and from anything that appears the rivets in question and many others might have been “started” before, the trip to Buffalo. True, several persons said the ship was seaworthy, but before a ship can be said to be seaworthy there must be more than a tight hull, 'a sound rudder, and a working engine. “Seaworthiness” means such fitness as to structure, lading, captain, crew, etc., as will enable a ship to encounter the winds and battering waves of the seas that must be encountered during the season and in the places where the ship must travel so that its cargo will be carried safely and delivered in good condition, as appellee in this ease contracted to do.
So far as Captain Ebisch knew, appellee’s ships never before carried grain or any other perishable bulk freight in its freighters, but their bulk cargoes were generally of stone or coal.
Early in the summer of 1926 a cargo damage was caused by leakage at loosened rivets, and repairs were made at Buffalo; but it is not even suggested that that damage was from a “peril of the sea.”
We are of the opinion that the ship when it left Chicago had not been made seaworthy for the purpose of carrying a bulk load of grain into the November storms that it was known probably must be encountered upon those lakes, and the damage done was not the result of a “peril of the sea.”
The final decree of the District Court is hereby reversed, and the cause remanded, with directions to enter a decree in favor of appellant for full damages together with costs.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
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