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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.
MAGRUDER, Circuit Judge
(Retired).
This is an appeal by the surety on a contractor’s Miller Act payment bond from a judgment against it in favor of a subcontractor. Roslyn Construction Company, to which the United States had awarded contract No. NOy-88588 for construction of “Crash Facility and Utilities” at the Naval Air Station in Brunswick, Maine, during the years 1956 and 1957, subcontracted the required electrical work to the use plaintiff, Luce, who does business as Northern Electric & Supply Co.
The subcontract between Roslyn and Luce corresponding to contract No. NOy-88588 was dated May 7, 1956. It contained the usual terms, most of which are wholly irrelevant for the present purposes. It required generally that all work described by certain specifications, including the supplying of materials and labor, be performed by Luce to the satisfaction of Roslyn, the United States Government, the Navy, and the architect. The subcontract established a job price of $7,900 and provided a procedure for approval of “extras”; two such “extras” which were thus approved increased the total amount due under the subcontract to $8,582. The payment provisions, which are central to this case, required that 90 per cent of the total value of work done during each month, as shown by a progress billing submitted on or before the last day of that month, and subject to the approval of the architect, be paid by the 15th day of the following month. Final payment (comprising the retained 10 per cent) was due within 60 days after the completion and final acceptance of the work. The entire article governing payments was subject to an overriding proviso (attached as a rider to the printed subcontract form)
“that in no event shall the Roslyn Construction Co., Inc. be Liable (sic) for payments to the sub contractor (sic) prior to 10 days of receipt by the contractor of payment from the owner on such work performed by the sub contractor (sic) under this contract.”
Work under contract NOy-88588 was substantially completed December 17, 1956, and accepted by the Navy on March 18, 1957; final settlement was made between the United States and Roslyn on January 28, 1957, and the final payment was made to Roslyn on February 4, 1957. Meanwhile, Roslyn’s payments to Luce were in arrears. Although Luce made progress billings to Roslyn, no bill was paid within the time allowed. The first payment was about thirteen days tardy. A payment of substantially the total due against the second and third progress billings was made almost three months after the third bill should have been paid. Roslyn failed to make any further progress payments or the final payment, so that $7,000 remains due. Luce, commencing in April, 1957, received a note and subsequent renewal notes for the amount due from Roslyn, which Luce in turn endorsed and discounted at his bank.
If this subcontract had pertained to construction work on property of a private owner, Luce would have a lien against that property of the owner to the extent of the $7,000 owed him for labor and materiel. See Maine R.S.1954, c. 178, § 34. Because the Naval Air Station is the property of the United States Government, however, the statutory lien of a materialman cannot attach. But Congress has provided substitute protection since 1894 (see 28 Stat. 278), which is presently found in the Miller Act, 40 U.S.C.A. § 270a(a) (2). The statute requires that, before any person is awarded any public work or building contract with the United States, and as a prerequisite to such an award, he must furnish (inter alia) a payment bond
“which shall become binding upon the award of the contract to such person, * * * with a surety or sureties satisfactory to [the officer awarding the contract] for the protection of all persons supplying labor and material in the prosecution of the work provided for in said contract for the use of each such person.”
The bond which Roslyn had to furnish in order to secure its contract NOy-88588 was dated April 30, 1956, and the American Auto Insurance Company was the surety thereon. This bond was conditioned that Roslyn “shall promptly make payment to all persons supplying labor and material in the prosecution of the work provided for in said contract, and any and all duly authorized modifications of said contract that may hereafter be made, notice of which modifications to the surety being hereby waived”. The bond contains no provision either requiring or excusing notice to the surety of the making, amendment, completion or discharge of any subcontract, or of the default of Roslyn in any regard.
The present litigation was begun by a complaint filed December 16, 1957, invoking the right of action given by the Miller Act, 40 U.S.C.A. § 270a et seq. Both Roslyn and the surety were named as defendants, but the court ordered Roslyn’s default entered on August 8, 1958, after it failed to appear at the pre-trial conference. The case was tried without a jury, and at the end of the trial the court orally found for Luce against the surety; subsequently findings of fact and conclusions of law were filed and judgment was entered for Luce in the amount of $7,000, with interest from May 17, 1957, “the date when final payment was due under the terms of the contract between the use plaintiff and Roslyn”. The surety has appealed from this judgment, contending that Luce’s failure to obtain prompt payment discharged the surety from liability.
It is obvious that the obligation of a surety on a bond furnished under the Miller Act must be determined by federal law; the rule of Erie R. Co. v. Tompkins, 1938, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, is inapplicable. The Miller Act implements a congressional policy that a bond with surety shall' provide protection for persons supplying labor and materials for the construction or improvement of federal property. A suit under the Miller Act does not depend upon diversity of citizenship but is a special, federal right of action limited to the federal court. Bonds given under the Miller Act are not even in the orait nary forms which would be involved in litigation in the state courts; Congress, specified their conditions, and they are executed on printed blanks prescribed by the General Services Administration (for example, the bond in suit was executed on Standard Form 25a Revised November 1950), the meaning of which should' not vary from state to state. There are-no dangers of forum-shopping or of any unseemly deviation in rules of law which it was the policy of the Erie case to avoid.
It therefore seems that the decision of the Supreme Court in Guaranty Co. v. Pressed Brick Co., 1903, 191 U.S. 416, 24 S.Ct. 142, 48 L.Ed. 242, decided: under a predecessor of the Miller Act, is fatal to the appellant’s position. The subcontractor who furnished the brick to build the Denver Mint sued the contractor and the surety on the payment bond. The surety raised as a defense that it was discharged by the action of the subcontractor “in taking two promissory notes * * * for the amount of the brick company's account, then due and payable, one of said notes running for thirty days and the other for sixty days, and each bearing 10 per cent interest per annum from date”. (191 U.S. at page 417, 24 S.Ct. at page 143.) The surety had not alleged that it had suffered an actual financial loss because of the subcontractor’s accepting these notes. The Supreme Court answered in the negative the certified question whether the action described discharged the surety, holding that the rule automatically absolving a surety from liability because of an alteration in the contract between the principal and the obligee without the surety’s consent is not applicable to bonds such as those under the Miller Act, where the surety has deliberately contracted for an uncertain obligation. This reasoning is clearly applicable to the present case: The bond executed by the surety and Roslyn is dated April 30, whereas Roslyn’s subcontract with Luce was not entered into until May 7, a full week later. Thus the surety cannot ■claim that it entered into its obligation relying on the terms of the subcontract. The only real difference between the cases is that the Pressed Brick contract provided for a single lump sum whereas Luce was entitled to 90 per cent in progress payments, but this is not a meaningful distinction. Both cases involve an ■extension of time for payment, achieved by similar transactions, and the fact that the extension in Luce’s case applied to several partial payments, and in Pressed Brick’s case it only applied to one grand payment, is wholly irrelevant. The final result is even the same. Moreover, when the appellant surety undertook to guarantee the bond, it could not know that Luce and Roslyn would contract for progress payments. See also United States, to Use of J. B. Van Sciver Co. v. United States Fidelity & Guaranty Co., C.C.E.D. Pa.1910, 178 F. 721; United States, to Use of Noland Co., Inc. v. Maryland Casualty Co., D.C.D.Md.1941, 38 F.Supp. 479. Actual prejudice must also be shown under Maine law. Maine Central R. Co. v. National Surety Co., 1915, 113 Me. 465, 94 A. 929, L.R.A.1916A, 881.
In American Bonding Co. of Baltimore v. United States, to Use of Francini, 3 Cir., 1916, 233 F. 364, 368, upon which appellant relies, the contractor and subcontractor agreed shortly after the contract was made that, instead of cash progress payments for the amounts specified, the subcontractor would accept notes for “amounts differing from the sums that would have been due [in cash]”, which new amounts were substantially greater. For example, for work priced in the subcontract at $55,-400, the subcontractor received notes and cash totalling nearly $75,000. That very great augmentation in the price (and consequently in the surety’s risk) and the long extension of time combined might require the inference that there must have been actual harm to the surety; it follows that the case can give no comfort to the appellant here.
Fidelity & Deposit Co. v. Agnew, 3 Cir., 1907, 152 F. 955, and Justice v. Empire State Surety Co., D.C.E.D.Pa. 1913, 209 F. 105, the other federal law cases cited, were suits on performance bonds where there had been anticipatory payments by the obligee-owner to the principal. There is no uncertainty when a performance bond is guaranteed — the owner and contractor are known and the contract terms are ascertainable at least —and the payments run from rather than to the obligee, so that, as long as the obligee retains a certain amount of the contract price in his hands, he cannot lose that sum and the surety cannot become liable for it. The fund created by the amounts retained might be able to make good the whole or a part of any damages for which the surety would otherwise be responsible. See Fort Worth Independent School District v. Aetna Casualty & Surety Co., 5 Cir., 1931, 48 F.2d 1, 77 A.L.R. 222.
The court below found as a fact: “8. There was no actual prejudice to the surety, American Auto Insurance Co., by said extension of time for payment or by any variations in the method of payment required by * * * the subcontract.” [165 F.Supp. 134.] On the record before us, the quoted finding cannot possibly be set aside as clearly erroneous.
The surety produced no direct proof of harm suffered by it because Luce failed to obtain prompt cash progress payments. Its only attempt to meet this burden has been a disingenuous argument in its appellate brief that there must have been prejudice, since strict compliance with the subcontract schedule would have meant that at least 90 per cent of the price would have been paid by early 1957. Actual prejudice might have been proved by evidence that Luce’s failure to insist on prompt cash progress payments left in Roslyn’s hands a sum of money which could have been used to pay Luce or other subcontractors, but was in fact wasted. Compare Piel Construction Co. v. Commonwealth of Pennsylvania, to Use of Hendricks, 3 Cir., 1929, 35 F.2d 265. But there is no such showing. For all that appears in the record, Roslyn may have used all the payments from the Navy to discharge debts for which the surety would have been liable; in fact, the testimony was that the only other claim against the surety on this bond is for a few hundred dollars. It was not even proved that the surety would have been in any better position if Luce had, for example, on June 28 (when Roslyn was first in arrears) stopped work and made claim on the surety, brought suit, or taken other drastic action, and no doubt one reason for the Miller Act’s requirement of a surety bond is to obviate the necessity for such action.
The following were the amounts due and paid under the subcontract:
Date Due Paid Balance
1956, June 27 (approx.) $ 525.45 $ 525.45
July 10 $ 525.45 0
“ 21 “ 696.60 696.60
Aug. 15 361.32 1,057.92
Sept. 15 50.39 1,108.31
Oct. 15 535.23 1,643.54
Nov. 6 1,056.55 586.99
“ 15 804.59 1,391.58
Dec. 15 1,000.11 2,391.69
1957, Jan. 15 2,420.22 4,811.91
Feb. 15 1,329.89 6,141.80
[May 17] 858.20 7,000.00
Total 1,582.00 $1,582.00 $7,000.00
As of November 6, 1956, Luce had received from Roslyn $1,582.00, which was approximately three quarters of the money then due; as of then Luce can scarcely have been expected to take any action against Roslyn. Thereafter the rate of work accelerated and no further payments were made, so that the amount due had increased more than tenfold by February 15, 1957. Luce testified that he frequently protested Roslyn’s failure to pay, but the latter always replied that the Navy had not yet paid it the amount due on its progress billings. Of course the rider to the subcontract made that a good excuse; since Roslyn kept blaming the delay on the Navy and promising that as soon as the Navy would “pay off” Luce would be paid in turn, Luce could not be charged with knowledge that Roslyn was in default unless he knew or should have known that the Navy had actually paid Roslyn. Luce further testified that he tried (with what seems to have been due diligence) to discover whether Roslyn had received payment: In December, 1956, he called the Navy office in Brunswick, and in January or February, 1957, he got in touch with the Navy in Boston, but both times he was refused information on the ground that it was contrary to Navy policy to reveal to a subcontractor the affairs of the contractor. In these circumstances Luce can scarcely be charged with having acted unreasonably in not notifying the surety.
In April, 1957, Luce redoubled his efforts to secure payment from Roslyn; he had exhausted his borrowing power at his bank and needed operating capital. Roslyn still said it did not have the money at that time and offered a promissory note “as a temporary expedient”. Roslyn made a three-month note for $7,000 which, with Luce’s endorsement, the bank discounted; Roslyn reimbursed Luce for the discount expense. Similar renewal notes dated July 2 and October 2 were substituted, but Roslyn paid only another $50 against the discount cost; when the October 2 note came due, the bank was willing to accept only a two-month note (dated December 1) for $5,-000, and Luce held another note for the balance. Of the total discount expense of $365, Roslyn paid $155, or roughly the discount (at six per cent) on $7,000 for 134 days. Luce, however, never assented to these notes as a substitute for cash but continued insisting on payment.
Meanwhile, the work under a second Roslyn-Luce electrical subcontract under another Navy-Roslyn contract at the Brunswick Naval Air Station reached the point at which Luce had to purchase and install special, expensive equipment, and before making this investment Luce wished to be assured that he could collect what Roslyn owed him. There is some dispute as to a notification by telephone, but the surety admits that Luce notified it in writing on October 14, 1957, of Roslyn’s default. In due course the surety refused to pay and the present suit resulted.
Assuming that Luce should have known that Roslyn was technically in default, there certainly was no express requirement of notice to the surety, and none can be implied unless a reasonable man in Luce’s position would have realized that Roslyn would not ever make payment and so would have notified the surety. Luce could well have been acting reasonably in all the circumstances in not making a claim against the surety until October, 1957. Hence it is difficult to say that there was any material variation from the contract, except that Roslyn failed to meet its debts, the risk against which (as the Miller Act requires) the surety’s obligation insured Luce. In any event, the surety completely failed to prove that it was in fact harmed by Luce’s actions.
In one minor respect we must hold that the court below erred, since the judgment awarded interest from the wrong date. The recovery of interest in actions under the Miller Act depends on the law of the state in which the contract is to be performed. Robinson v. United States, for Use of Brown-Ketcham Iron Works, 2 Cir., 1918, 251 F. 461; United States, to Use of Noland Co., Inc. v. Maryland Casualty Co., supra, D.C.D.Md.1941, 38 F.Supp. 479; United States, for the Use of Magnolia Petroleum Co. v. H. R. Henderson & Co., D.C.W.D.Ark.1955, 126 F.Supp. 626, 637. In Maine interest is allowed from the time when the defendant has a duty without further demand to pay over a sum certain to the plaintiff, Bither v. Packard, 1916, 115 Me. 306, 98 A. 929; Hall v. Huckins, 1856, 41 Me. 574. This means that interest can be charged against the surety only from the date of demand on it, because until then the surety is not in default. See United States, for Use of Baltimore Cooperage Co. v. McCay, D.C.D.Md.1928, 28 F.2d 777 (applying Maryland law, which is like the law of Maine). In the ordinary case the surety will also be liable for the interest owed by the principal from the date that the latter is in default, so that the distinction may be academic.
Yet in this case the earliest notice conceded by the surety and found by the district court to have been given by Luce to the surety was the written notice of October 14, 1957. Although as we have held this delay was reasonable, until that time, a period of some months, Luce chose to look to the principal rather than notify the surety and thus disabled the surety from stopping the accumulation of interest. It is clear that under Maine law this delay from May 17 to October 14 was at Luce’s own risk, and the surety cannot be charged with interest then accruing. See Maine Central R. Co. v. National Surety Co., 1915, 113 Me. 465, 94 A. 929, L.R.A.1916A, 881.
The letter of October 14, 1957, was a sufficient demand even though it concluded: “As you stated over the phone, it will take a few days for you to look into the matter, therefore, we will wait a few days to hear from you, before filing a formal claim.” That letter gave notice to the surety of Roslyn’s default, of all relevant details, and of the fact that Luce looked to the surety for payment. The “few days” grace therein referred to seems to have been a mere courtesy in the hope of avoiding some feared “red tape.”
A judgment will be entered vacating the judgment of the District Court and remanding the case to that Court with directions to enter judgment for the use plaintiff in the sum of $7,000.00, with interest at six per cent from October 14, 1957. The appellee will recover the costs of this appeal.
. 40 U.S.C.A. § 270b(b) provides: “Every suit instituted under this section shall be brought in the name of the United States for the use of the person suing, in the United States District Court for any district in which the contract was to be performed and executed and not elsewhere, irrespective of the amount in controversy in such suit”.
. The surety’s attempt to prove on cross-examination that Lnee delayed notification in order to accommodate Roslyn failed completely.
. The subcontract required final payment sixty days after March 18, when it is agreed the work was accepted, or on May 17, 1957. As stated above, Luce had the use of his $7,000 for a period of 1S4 days during which Roslyn paid the discount expense. If interest is recovered for this time it would be in effect a double payment of interest. Therefore, interest could not start before 134 days from May 17, or September 28, 1957; even if there were no further error.
. December 6, 1957, was the date of a letter apparently intended as the “formal claim”, which stated, “we hereby register and enter our claim against your Company for immediate payment of the above $7,000.00, still due us on our Electrical Sub-Contract”.
Question: Were there cross appeals 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 National Labor Relations Board here seeks enforcement of its order, 161 NLRB No. 21, issued on October 18, 1966. Respondent, a manufacturer of textile products, contests the order, and prays that the Board’s petition be denied.
The Board found the company guilty of violating sections 8(a)(1) and 8(a)(3) of the National Labor Relations Act, 29 U.S.C. § 151 et seq., in its opposition to the efforts of the United Textile Workers of America, AFL-CIO, to become the representative of its employees. The company concedes that the Board’s findings of 8(a)(1) violations were, in some instances, supported by substantial evidence, but argues that the 8(a)(3) infractions are without foundation in the record.
The Board concluded that the company had discharged two employees, Russell and Rumfelt, for participating in protected union activities. We cannot say that this conclusion, which establishes 8(a)(3) infractions, is not supported by substantial evidence in the record. Russell was discharged within a week after the company learned of his union activities, in circumstances which provided substantial evidence of improper motive. Rumfelt was discharged for violating the company’s no-solicitation rule. The Trial Examiner found that Rumfelt did not in fact violate the rule, and we cannot conclude that his finding was not supported by substantial evidence. Accordingly, under the doctrine of NLRB v. Burnup & Sims, 379 U.S. 21, 85 S.Ct. 171, 13 L.Ed.2d 1 (1964), the company’s action amounted to an 8(a) (3) infraction. In the circumstances we have no reason to appraise the validity of the rule, and we do not.
Therefore the Board’s petition is granted.
Order 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.
TUTTLE, Circuit Judge:
This appeal and cross appeal raises only fact issues. The litigation arises out of a vessel shifting operation that took place in Tampa harbor on October 28, 1965. On that date, the Vanguard was shifted from what is known as the Tasco slip southward to the dry dock facilities of the shipyard. The Vanguard was a “dead ship”, and motor power was supplied by three tug boats, the Mary, the Edward and the Tony.
As the Vanguard was proceeding into the shipyard dry dock, she struck a piling cluster on her starboard bow, after which her bow struck the dry dock wall and open gate causing damage both to the dry dock facility and to the vessel.
The shipyard sought to recover against the Vanguard, her owner, Penn Marine, the tugs Mary, Edward and Tony, and their owner, St. Philip. Penn Marine answered on behalf of the Vanguard, counterclaimed against the shipyard, cross-claimed against St. Philip and filed a third party complaint against the pilot. St. Philip did the same. The shipyard thus amended its complaint to join the pilot as an additional party defendant.
The trial court found: (1) the shipyard, St. Philip, the tugs Mary, Edward and Tony, the Vanguard and Penn Marine were all exonerated from any liability; (2) the pilot was held liable to Penn Marine for the sum of $6,598, the cost of repair of the damages sustained to the bow of the Vanguard; (3) the pilot was held liable to the shipyard for the sum of $8,590, the cost of repairs of the damaged area of the dry dock and dry dock gate; (4) the shipyard was held not entitled to recover the cost of constructing and installing a U structure designed to permit inspection of underwater areas of the dry dock wall.
The shipyard, plaintiff-appellant and cross-appellee now argues that it is entitled to recover, not only the sum of $8,590 allowed by the trial court, but the total sum of $52,865.61. This difference, it argues, represents the cost of construction and installation of the U structure.
The shipyard did not act reasonably in using the U structure, even for the purpose of underwater inspection, since the Penn Vanguard did not fit in that area, there was no indication of underwater damage reported by the divers in that area, and the shipyard used the dry dock for a year before installing the U structure.
The shipyard argues this finding is clearly erroneous. It also argues that the District Court erred in striking from shipyard’s exhibit No. 18 the cost of ultimate removal of the U structure.
The pilot, the third-party defendant-cross-appellant on whom liability has been imposed, argues: (1) the fact that the ship was not properly aligned with the dry dock was due to the fact that the tugs prematurely cast off their lines without the pilot’s direction. It was not due to any lack of skill on his part; (2) the pilot argues that the district court erred in holding that the make up of the tugs “as actually used in compliance with Williams’ instructions, afforded no stopping or backing power to the object towed, * * * and that, therefore, the pilot proceeded without power to check or stay the forward speed of the vessel, thereby failing to use the necessary degree of skill required of his profession;” (3) he argues that a bailee in possession of a vessel who engages tugs and a non-eompulsory pilot for the shifting of the vessel on the premises of the bailee is not responsible for damage done to the bailee’s facilities by the movement of the vessel; (4) a vessel which receives damages while in the process of being dry docked is not entitled to have the entire cost of the dry-docking attributed to the damage thus sustained.
Appellees simply argue the trial court’s findings‘were not clearly erroneous. (1) He (the pilot) failed to ascertain that the Vanguard “was not aligned with the dry dock axis before the approach to the dry dock was commenced.”
(2) He positioned the tugs so that the Vanguard had no stopping power once the pilot proceeded forward without the proper alignment.
In casting the entire cost on the Pilot Williams, the trial court resolved many disputed facts and theories. We find substantial evidence on the record adequately supports these findings. The record also supports the finding of the trial court that the installation of the U structure was not required to assess the damages. There was, therefore, no error in the court’s ruling out of evidence the exhibit showing the cost of rewiring the structure.
Thus a judgment against one who was not originally a party to the action must stand in the amount found by the trial court.
The judgment is in all respects 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.
CHAPMAN, Circuit Judge:
Michael J. Morrissey, a practicing attorney, brought this action against William Morrow and Company, Inc. and Bantam Books, Inc., publishers of the book Spooks: The Haunting of America — The Private Use of Secret Agents alleging claims of defamation, invasion of privacy and injurious falsehood. Federal jurisdiction is alleged under 28 U.S.C. § 1332(a) — diversity jurisdiction. The district court granted defendants’ motion for summary judgment finding the action barred by the one year statute of limitations, Va.Code 8.01-248. Plaintiff appeals alleging error of the district judge in (1) refusing to allow additional time for discovery after defendants’ motion to dismiss under Federal Rule of Civil Procedure 12(b) had been converted to a motion for summary judgment under Federal Rule of Civil Procedure 56; (2) “ruling on the record then established” that the statute of limitation began to run when the book was generally available to the public; and (3) failing to consider the possible conflict of law problem presented by the plaintiff’s claim of invasion of privacy.
Finding no merit in these exceptions, we affirm.
I
The complaint alleges that Morrissey is an attorney and electrical engineer and that William Morrow published the hardback edition of Spooks and Bantam Books published the paperback edition of the same book. The complaint further alleges that publishing of the “false allegations, malicious statements and innuendo and implications assigning this material in the books has been humiliating and embarrassing to the plaintiff, caused him mental distress and has harmed him in his personal and business relationships and has the potential of causing further harm to him particularly in his profession as a lawyer.” Plaintiff also alleges that he is an attorney admitted to the Bars of Virginia, the District of Columbia and various federal courts including the United States District Court for the Eastern District of Virginia.
His first action against the present defendants was filed in the United States District Court for the Eastern District of Virginia on December 1, 1980 with the plaintiff appearing pro se. On May 21, 1981 defendants filed a motion for summary judgment upon the ground that the Virginia one year statute of limitations applied to the action and that William Morrow’s publication of Spooks occurred in August of 1978 and Bantam Books publication occurred not later than November 20, 1979 and the one year statute of limitations had run before the complaint was filed on December 1, 1980. This motion was accompanied by an affidavit of James D. Landis, vice president and editorial director of William Morrow and an affidavit of Heather Grant Florence, the vice president, secretary and general counsel of Bantam Books. Each affidavit set forth the date that the book was available for sale to the public. The plaintiff filed nothing in response to the motion for summary judgment. The motion was set for hearing on May 29, 1981, but on May 28, 1981, an attorney entered an appearance for Morrissey and obtained a continuance of the hearing on the summary judgment motion until June 5, 1981. A pretrial order had been entered by the district judge on April 1, 1981, establishing a discovery cut off date of June' 12, 1981.
At the June 5, 1981 hearing plaintiffs attorney argued that additional discovery was needed as to the statute of limitations issue and the district court granted this motion and again continued the hearing for summary judgment. Depositions were scheduled with plaintiffs scheduled for June 9, 1981. On that date plaintiff voluntarily dismissed the action without having conducted any discovery.
On November 19, 1981, plaintiff filed the present action, again proceeding pro se, against the same defendants and alleging the same causes of action. On January 7, 1982 defendants filed a motion to dismiss the new action on the ground that it was barred by the statute of limitations. In support of this motion defendants filed affidavits seeking to establish the dates of publication and submitted the same supporting memorandum of law as used in the May 1981 motion. The hearing on this motion was set for January 22, 1982, but at Morrissey’s request the hearing was continued until February 12, 1982. Morrissey did not notice or obtain any discovery in connection with the second action, although he was aware of the grounds for the defendant’s motion and the supporting affidavits. In his opposition to the motion he pointed out that since it was supported by affidavits it must be tested by the standards of Rule 56. ' At the hearing on February 12, 1982 the plaintiff arrived late and argued against the motion and asked for additional time for discovery. He admitted that he had filed no interrogatories in either the first action or the second action, but stated that he had telephoned one of the defendants asking for date of publication information and seemed surprised that this telephone request was denied. He asserted that he had written a letter to the defendants’ attorneys in June 1981 asking certain questions, but admitted that these were not in the form of interrogatories under the Federal Rules.
The district court found that the plaintiff had over six months to conduct discovery in the first action and three months to conduct discovery in the second action, but he had done nothing to create a factual dispute and had submitted nothing in opposition to the defendants’ affidavits, although he had known since May 21, 1981 the defendants’ position as to the statute of limitations and the content of the defendants’ affidavits as to publication dates.
The district court observed that while the Virginia Supreme Court had not decided whether to adopt the “first-publication rule,” the district court would adopt such a rule, but “giving the plaintiff the benefit of treating the paperback edition as perhaps reaching a different audience so that for publication purposes, the paperback publication would be the date of accrual of the cause of action. But I find that it accrued at the latest on November 20, 1979.”
The affidavit of James D. Landis, vice president and editorial director of William Morrow stated in pertinent part:
4. That William Morrow began shipping its publication of the book Spooks to its customers — including retail bookstores— on August 1,1978. Shipments of Spooks were completed by August 4, 1978 and the book was generally available and sold to the public on or before that date.
The affidavit of Heather Grant Florence, vice president, secretary and general counsel of Bantam Books, stated in pertinent part:
4. That Bantam Books began shipping the book SPOOKS from its DesPlains, Illinois warehouse on November 9, 1979, and that the book was generally available for sale to the public in bookstores throughout the United States on or before November 20, 1979.
These affidavits accompanied the motion to dismiss filed in the present action on January 7, 1982.
Finding that the plaintiff had done nothing to establish a factual dispute as to the date of accrual of the cause of action, the court granted summary judgment because the action had not been brought within one year as required by Va.Code 8.01-248.
II
The main thrust of plaintiffs brief and oral argument is that he was not given a reasonable time as provided by Federal Rule of Civil Procedure 12(b) to respond to the defendant’s affidavit when the Rule 12 motion was converted to a Rule 56 motion. The last sentence of Rule 12(b) provides:
If, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.
The first sentence of Rule 56(c) provides: “The motion shall be served at least 10 days before the time fixed for the hearing.”
The last two sentences of Rule 56(e) state:
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.
Morrissey concedes that this is a matter committed to the discretion of the district judge, but argues that it was an abuse of discretion to not allow him additional time for discovery to counter the statements in the defendants’ affidavits and to explore any facts omitted from the affidavits.
The facts do not support this claim of abuse of discretion. It is abundantly clear that plaintiff engaged in no discovery in either his first suit or in the present action. In the original action the motion was set for a hearing on May 29, 1981, and on the day preceding such hearing, the court granted a continuance until June 5, 1981. On that date the court again granted a motion to continue the hearing and allowed plaintiff additional time for discovery, which was not used by the plaintiff, who took a voluntary dismissal on June 9, 1981.
It can be assumed that between June 9, 1981 and the refiling of the case on November 19, 1981, the plaintiff must have given some thought to his lawsuit and how he would respond to the Landis and Florence affidavits. As the trial judge explained to the plaintiff, he could have filed interrogatories immediately upon commencement of the second action. Rule 33(a). But again, nothing was done by the plaintiff.
He argues that during June 1981 he called the offices of one of the defendants to ask for certain information over the telephone. He claimed that he was surprised when defendants’ employees did not furnish this information to him by telephone. It is inconceivable that any attorney, admitted to practice in the courts of Virginia and the District of Columbia, as well as the United States District Courts, would expect to obtain or use information from such a telephone conversation with an adversary.
Morrissey does not claim that he was taken by surprise by the motion to dismiss nor the fact that it was treated as a Rule 56 motion. He filed a 21 page “Memorandum of Points and Authorities in Support of Plaintiff’s Opposition to Defendants’ Motion to Dismiss” in which he discussed Rule 56, but he presented nothing to create an issue of fact.
Plaintiff does not claim that he did not know or believe that he would be required to file counter-affidavits. Nor does he claim that he was denied the opportunity to proceed with the discovery or that he was denied continuances requested from the court. He primarily asserts that he should have been given more time and that the time provided was not reasonable.
Morrissey’s reliance on Johnson v. RAC Corporation, 491 F.2d 510 (4th Cir.1974) is misplaced. In that case the court found that prejudice had resulted from the unexpected treatment of a motion under Rule 12(b)(6) as a summary judgment motion and the plaintiff had not had a “reasonable opportunity” to file material in opposition to a Rule 56 motion. In Johnson the plaintiff had filed extensive interrogatories which sought to counter the defendant’s affidavit, but no discovery was permitted until the motion to dismiss was heard. Thereby the plaintiff was prevented from exercising his rights to discovery which could have produced an issue of fact. By contrast, Morrissey simply did not use the discovery procedures available to him in either the first suit or the present suit, although he was well aware of the defendants’ position as to the statute of limitations and the content of the supporting affidavits. Morrissey, an attorney, knowingly and willfully did not avail himself of the opportunities for discovery, and we cannot say that the district court was in error in finding that he had a reasonable time in which to present affidavits or other materials in opposition to defendants’ motion.
In Clarke v. Volpe, 481 F.2d 634 (4th Cir.1973), this court affirmed the district court’s dismissal of the complaint under Rule 12(b)(6) where the defendants submitted affidavits and moved for judgment on the pleadings or, in the alternative, for summary judgment. This court stated:
The appellate court is not bound by the label that the district court places upon its disposition of the case. Whenever outside matters are presented to and not excluded by the trial court, the motion should be considered on appeal as one for summary judgment even though the trial court characterized its action as a dismissal of the case for failure of the plaintiffs to state a claim upon which relief can be granted. The record reveals that both parties were given a reasonable opportunity to present affidavits and other evidence upon which the trial court could properly determine whether summary judgment should be entered. Only the defendants availed themselves of such opportunity. When such circumstances appear from the record the appellate court, for the sake of judicial economy, should make an immediate determination of the issue rather than remand the case to the trial court for disposition.
481 F.2d at 635-636.
Failure of a litigant to file counter-affidavits may be treated as a conscious waiver. See Hummer v. Dalton, 657 F.2d 621, 626 (4th Cir.1981), which involved a prisoner proceeding pro se. Morrissey is an attorney knowledgeable in the rules of procedure, who took the time to prepare a léngthy memorandum of law in opposition to the defendants’ summary judgment motion. His failure to conduct any discovery or submit any opposing affidavits in either of his cases, given the time available and the continuances granted, can only be viewed as a waiver of such rights.
“Time and tide wait on no man,” and the district court waited long enough for the present plaintiff.
Ill
Appellant’s second point is that based upon the record then before it, the district court erred in finding that the statute of limitations began to run when the books became “generally available” to the public. A large part of this argument is little more than a further complaint that the trial judge did not allow the plaintiff additional time to “test” the defendants’ affidavits. Enough has been said on this point.
The Virginia Supreme Court has consistently applied the one year statute of limitation in Va.Code 8.01-248 to defamation actions. Weaver v. Beneficial Finance Co., 199 Va. 196, 98 S.E.2d 687 (1957); Watt v. McKelvie, 219 Va. 645, 248 S.E.2d 826 (1978).
The district court said that it was adopting the single publication rule even though the Virginia Supreme Court had not yet faced the issue. ’The district court was justified in making this assumption. “The great majority of the States now follow the single publication rule.” Keeton v. Hustler Magazine, Inc., — U.S.-,-n. 8, 104 S.Ct. 1473, 1480 n. 8, 79 L.Ed.2d 790 (1984).
This rule is summarized in Restatement (Second) of Torts § 577A(4) (1977):
As to any single publication, (a) only one action for damages can be maintained; (b) all damages suffered in all jurisdictions can be recovered in the one action; and (c) a judgment for or against the' plaintiff upon the merits of an action for damages bars any other action for damages between the same parties in all jurisdictions.
Since William Morrow published the hardback edition of Spooks and Bantam Books more than a year later published the paperback edition, the district court addressed its attention to the latest date of publication. There is no claim that William Morrow and Bantam Books are affiliated companies and plaintiff does not argue that the act of one is the responsibility of the other. It is alleged that Bantam Books entered into a separate agreement with William Morrow to publish the book in paperback version and thereby Bantam Books restated the malicious falsehoods about the plaintiff. This is not a claim of republication by William Morrow, and it is obvious that from the record before the district court the hardback publication was shipped to bookstores and sold in August 1978, more than two years before plaintiff’s action was brought. The Landis affidavit states that the hardback edition “was generally available and sold to the public on or before that date.” (August 4, 1978). With nothing from the plaintiff to challenge this sworn statement as to the date of sale of the hardback book, there was no dispute as to a material fact and William Morrow was entitled to judgment as a matter .of law.
The date of publication for the Bantam Books paperback edition involved a slightly different question. Neither the paperback nor the hardback editions are in the record, but plaintiff’s brief states as to the paperback edition “The book itself contains the publication date of December 16, 1979.” Argument of counsel is not evidence and although defendants’ acknowledge an “official publication date of December 19, 1979 printed in the paperback book”, it is common knowledge that publications are often in the hands of the public before the date appearing thereon. This is particularly true of magazines. The May issue of a monthly magazine usually arrives on the newsstands and at the homes of subscribers by mid-April. Courts have recognized this as common practice. Hartmann v. Time, Inc., 166 F.2d 127 (3rd Cir.1947); McGlue v. Weekly Publications, Inc., 63 F.Supp. 744 (D.Mass.1946); Khaury v. Playboy Publications, Inc., 430 F.Supp. 1342 (S.D.N.Y.1977).
The use of arbitrary “official publication dates” has been recognized as to books and found not to be determinative of the date of publication. In Fleury v. Harper and Row Publishers, Inc., 698 F.2d 1022 (9th Cir.1983), cert. denied — U.S. -, 104 S.Ct. 149, 78 L.Ed.2d 139 (1983) the court held that the official publication date listed inside the cover of the book is immaterial in determining when the statute of limitations begins to run, stating:
The precedents with almost complete uniformity hold that publication occurs at the time of actual communication of the libel, not the date on the cover of the newspaper, magazine or other printed matter.
698 F.2d at 1028.
Appellant argues that under Gregoire v. G.P. Putnam’s Sons, 298 N.Y. 119, 81 N.E.2d 45, 49 (1948) a test for determining when the statute of limitations begins to run is “when the finished product is released by the publisher for sale in accord with trade practice.” Appellant submits that “trade practice” should have been developed by the district court before granting summary judgment. The record before the district court contained the unchallenged affidavit that the paperback edition was shipped from the warehouse beginning November 9, 1979, and “that the book was generally available for sale to the public in bookstores throughout the United States on or before November 20, 1979.” There was no reason to develop a record on “trade practice” when there was no challenge to the sworn statement that the books were available to the public in bookstores throughout the United States on or before November 20, 1979.
Morrissey submits that there were “a whole host of questions” to be resolved by the district court before deciding the statute of limitations issue. However, the district court was confronted with the single issue of the date of publication and properly resolved this issue based upon the unchallenged sworn statement that this date was not later than November 20, 1979.
IV
Plaintiffs last claim is that the trial court erred in failing to consider the possible conflict of law situation presented in his claim for invasion of privacy. He argues that the common law right of inva,sion of privacy is recognized in the District of Columbia and since he had contacts in the District of Columbia this cause of action should have been recognized.
Virginia has rejected the “most significant relationship” test and applies the substantive law of the place of the wrong. McMillan v. McMillan, 219 Va. 1127, 253 S.E.2d 662 (1979). Plaintiff resides in Virginia, practices law in Virginia, alleges he suffered damages in Virginia and brought his two actions in the United States District Court for the Eastern District of Virginia. There was no reason to consider a conflicts problem, and even if one had been considered, plaintiffs “most significant contacts” were in Virginia.
Under the present facts to allow the plaintiff one more chance to create a factual issue and avoid summary judgment would do violence to Rule 56 and the other Federal Rules of Civil Procedure.
AFFIRMED.
. Rule 56 does not provide limited time to a party opposing a motion. It requires at least 10 days notice by the movant,' but states: "The adverse party prior to the day of hearing may serve opposing affidavits.” Rule 56(c).
. The district court gave plaintiff the benefit of considering the paperback edition as a separate publication for purposes of the statute of limitations.
Question: Were there cross appeals 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.
CUDAHY, Circuit Judge.
Defendant-appellant Lundy challenges his jury convictions of arson, 18 U.S.C.A. § 844(i) (West Supp.1986), and mail fraud, 18 U.S.C. § 1341 (1982). Lundy contends that the district court erred in permitting a government expert to testify regarding the cause of the fire because the expert’s opinion was not based on specialized knowledge, was not helpful to the jury and was unfairly prejudicial. Lundy also contends that the evidence was insufficient to support the jury’s verdict of guilty beyond a. reasonable doubt. We affirm.
I.
In 1957 Lundy purchased the Yale Food & Liquor Mart (“Yale Mart”) located in Chicago, Illinois. Lundy leased the premises of Yale Mart from the building’s owner, James Jordan, Sr., beginning in 1957 for $550 per month, and after 1971 on a month-to-month basis for $650 per month. Lundy insured his business for approximately $400,000, covering personal property and business interruption, with a peak season endorsement. In April, 1982, James Jordan, Sr. died, and ownership of the building passed to his sons (the “Jordans”). After having the building appraised the Jordans decided that the rent should be more than tripled, from $650 per month to $2,200 per month. Lundy and the Jordans negotiated over the rent in early 1983 but could not reach any agreement. In late March the Jordans ordered Lundy to vacate the building by May 4, 1983.
During this period of early 1983 Lundy asked a store employee to check whether Lundy had all the keys needed to open the store and operate the alarm system, and to make copies of any keys he was missing. Lundy also asked the store manager to demonstrate to him how the alarm system worked. On Thursday, March 31, 1983, a $22,500 order of groceries arrived for the Easter weekend. Lundy directed that all of the empty boxes be stored in a shelf area in the back of the store, a practice Lundy previously had been warned constituted a fire hazard.
On Easter Sunday, April 3, Lundy helped close up the store shortly after 5 p.m., and was apparently the last to leave the store. At 5:27 p.m. the fire department received an emergency 911 call reporting a fire at Yale Mart. Firefighters arrived at Yale Mart approximately three minutes after the call was received and found the store “heavily involved in fire.” During the next hour three successive requests for additional firefighters were issued from the scene, and approximately 130 firefighters were required to eventually control the fire by 6:30 p.m.
After the fire Lundy mailed three separate proof-of-loss statements to his insurance company. The first proof-of-loss statement was a sworn statement in which Lundy asserted that he did not cause the fire and had lost $355,000 worth of property. This claim was rejected by the insurance company, and Lundy followed with claims of $296,313 and then $288,452.
Investigations into the cause and origin of the fire suggested the fire was incendiary in nature, and Lundy was charged with one count of arson and three counts of mail fraud. A jury found Lundy guilty on all counts. This appeal followed.
II. Expert Qualifications — Admissibility of Milla’s Testimony
Lundy asserts in this appeal that the district court erred in permitting Detective Milla to testify for the government as an expert regarding the cause and origin of the fire. After qualifying as an expert— Detective Milla was a member of the Chicago Police Department Bomb and Arson unit — Milla testified that in his opinion the fire that destroyed Yale Mart was purposefully set — “incendiary in origin.” See Trial Transcript (“Tr.”) at 97. Lundy asserts that Milla’s expert testimony should have been excluded because it was not based on specialized knowledge that would assist the jury, see Fed.R.Evid. 702, because it was needlessly cumulative and because it was substantially outweighed by the risks of confusing the issues, misleading the jury and prejudicing the defendant unfairly, see Fed.R.Evid. 403.
It appears that Lundy never argued to the district court that Milla’s testimony should have been excluded under Federal Rule of Evidence 403. See Tr. at 2, 20-22, 82. We therefore must determine whether the admission of Lundy’s testimony was plain error in light of Rule 403. See United States v. Zabic, 745 F.2d 464, 471 (7th Cir.1984). Detective Milla was the second of the government’s thirteen witnesses, the first of two arson experts. His testimony combined the results of first-hand investigation of Yale Mart, his experience gained investigating some 800 fires and his interviews with many of the people involved in the Yale Mart fire. His testimony included a detailed rationale for his opinion that the fire was purposefully set. Milla’s testimony was not cumulative — it was the first testimony about the cause and origin of the fire. Nor was there substantial risk that Milla’s testimony would confuse or mislead the jury or unfairly prejudice Lundy. On the contrary, Milla’s testimony, like other such testimony, very likely assisted the jury in more fully understanding the events at issue; any prejudice that resulted from the testimony was caused by the events not the testimony. The district court committed no error at all, certainly no plain error, in admitting Milla’s testimony when viewed under Rule 403’s balancing test.
In admitting or excluding expert evidence under Rule 702 the district court has broad discretion and should be affirmed unless the decision is manifestly erroneous. See United States v. Davis, 772 F.2d 1339, 1343-44 (7th Cir.), cert. denied, — U.S. -, 106 S.Ct. 603, 88 L.Ed.2d 581 (1985); United States v. Watson, 587 F.2d 365, 369 (7th Cir.1978), cert. denied, 439 U.S. 1132, 99 S.Ct. 1055, 59 L.Ed.2d 95 (1979). Nevertheless, the district court must pay special attention to expert testimony. Because experts are given special latitude to testify based on hearsay and third-hand observations and to give opinions, see Fed.R.Evid. 702, courts have cautioned that an expert must be qualified as an expert, provide testimony that will assist the jury and rely only on evidence on which a reasonable expert in the field would rely. See United States v. Buchbinder, 796 F.2d 910, 917-18 (7th Cir.1986); United States v. Windfelder, 790 F.2d 576, 580 (7th Cir.1986); United States v. Davis, 772 F.2d at 1344; United States v. West, 670 F.2d 675, 682 (7th Cir.), cert. denied, 457 U.S. 1124 & 1139, 102 S.Ct. 2944 & 2972, 73 L.Ed.2d 1340 (1982); United States v. Tranowski, 659 F.2d 750, 754-57 (7th Cir.1981). Courts agree that it is improper to permit an expert to testify regarding facts that people of common understanding can easily comprehend. See West, 670 F.2d at 682; Tranowski, 659 F.2d at 755; Bartak v. Bell-Galyardt & Wells, Inc., 629 F.2d 523, 530 (8th Cir. 1980).
Lundy contends on this appeal that Mil-la’s testimony that the fire was purposefully set merely summarized facts fully comprehensible to the lay jury. See Lundy Brief at 27. According to Lundy, Milla’s testimony as to the cause of the fire was based on Milla’s non-expert opinions formed by interviewing various witnesses, nearly all of whom testified at trial. Milla concluded “arson,” Lundy suggests, only by considering evidence of the alleged arsonist’s opportunity, motive and plan (which a jury could equally well comprehend), rather than by evaluating technical or scientific evidence. We are not persuaded by Lundy’s contentions.
A review of the record makes it clear that Milla’s testimony was admissible as expert opinion testimony because of his qualifications as an expert, his presentation of very technical evidence and his reliance on standard investigatory procedures.
Lundy does not challenge Milla's qualifications as an expert in the cause and origin of fires. See Tr. at 2. And a brief review
of Milla’s testimony reveals that Milla presented very technical evidence. Milla testified to the jury about his arrival at the fire and his investigation later that evening. He explained how the burn patterns and the rapid rate of burning indicated the cause and origin of the Yale Mart fire. He testified as to why certain accidental causes were apparently not responsible for this fire. He testified about what his on-site investigation a day or two later revealed about the fire. See Tr. at 77-99, 153-63. Milla’s conclusion that the fire was purposefully set was based on a combination of factors, many of which required a technical understanding of how fires begin and spread under different conditions. Such testimony explaining burn patterns and burn rate, and analyzing possible causes of the fire, is undoubtedly expert testimony utilizing specialized knowledge that assists the jury to comprehend the facts.
Lundy argues, however, that even if some of Milla’s testimony is based on his expertise, his conclusion that it was arson is actually based on hearsay testimony about Lundy’s motives, plan and opportunities. Lundy is correct to suggest that “expert” testimony based solely on hearsay and third-party observations that are adequately comprehensible to lay people would be improper to admit under Rule 702. See, e.g., Salem v. United States Lines, Co., 370 U.S. 81, 35, 82 S.Ct. 1119, 1122, 8 L.Ed.2d 313 (1962). An arson expert cannot testify that he heard from an informant that the defendant torched the building and that thus in his expert opinion the defendant probably set the fire. However, hearsay and third-party observations that are of a type normally relied upon by an expert in the field are properly utilized by such an expert in developing an expert opinion. See Fed.R.Evid. 703; United States v. Lawson, 653 F.2d 299, 301-03 (7th Cir. 1981), cert. denied, 454 U.S. 1150,102 S.Ct. 1017, 71 L.Ed.2d 305 (1982). Milla present ed uncontroverted evidence that interviews with many witnesses to a fire are a standard investigatory technique in cause and origin inquiries. See Tr. at 94-95. In addition, Milla’s opinion was also based heavily on his own investigation, which ruled out most accidental causes and suggested that an accelerant had been used. Milla never testified that Lundy or anyone in particular caused the fire. He only testified that in his opinion the fire was not accidental. District courts must ensure that expert opinion testimony is in fact expert opinion, not merely opinion given by an expert. In this case the district court did not abuse its discretion in admitting Milla’s testimony regarding the cause and origin of the fire as expert testimony.
III. Sufficiency of the Evidence
Lundy also argues in this appeal that the evidence was legally insufficient for the jury to convict him of arson and mail fraud. The standard of review of a district court’s finding that sufficient evidence supports a guilty verdict is well established:
Only when the record contains no evidence, regardless of how it is weighed, from which the jury could find guilt beyond a reasonable doubt, may an appellate court overturn the verdict.
Brandom v. United States, 431 F.2d 1391, 1400 (7th Cir.1970), cert. denied, 400 U.S. 1022, 91 S.Ct. 586, 27 L.Ed.2d 634 (1971). Accord United States v. Thomas, Ilk F.2d 807, 811 (7th Cir.1985), cert. denied, — U.S. -, 106 S.Ct. 1218, 89 L.Ed.2d 329 (1986); United States v. Weihoff, 748 F.2d 1158, 1159 (7th Cir.1984); United States v. Redwine, 715 F.2d 315, 319 (7th Cir.1983), cert. denied, 467 U.S. 1216, 104 S.Ct. 2661, 81 L.Ed.2d 367 (1984). The evidence in this case was sufficient to permit a jury to find beyond a reasonable doubt that Lundy was guilty of the crimes charged.
A. Arson Count
Lundy was convicted of violating 18 U.S.C. § 844(i), which provides:
Whoever maliciously damages or destroys ... by means • of fire ... any building ... or other real or personal property used in interstate or foreign commerce ... shall be imprisoned for not more than ten years or fined not more than $10,000, or both.
The government presented no direct evidence that Lundy set fire to Yale Mart. But viewing all the evidence in the light most favorable to the government, there was substantial circumstantial evidence permitting the jury to find Lundy guilty beyond a reasonable doubt. Cf. United States v. Bradshaw, 719 F.2d 907, 921 (7th Cir.1983) (circumstantial evidence as relevant as direct evidence in establishing guilt or innocence). The government presented evidence of Lundy’s motives to set the fire, his plan and preparation to do so, his opportunity to carry out the plan and evidence that Yale Mart did not burn accidentally.
The government presented evidence of Lundy’s mounting financial difficulties including credit problems, a decline in Yale Mart’s sales and an imminent threefold increase in rent for the store. Tr. at 367, 560-61, 605. The evidence also showed that Lundy could not afford the rent increase and was advised to vacate the premises. Tr. at 367, 373. Evidence showed that Lundy stood to receive up to $416,000 under an insurance policy covering the store and contents. Tr. at 522-24.
Evidence allowed the jury to infer that Lundy planned and had the opportunity to commit arson. Several weeks before the fire Lundy asked for a complete set of keys to the store, including the alarm system, and asked how to operate the alarms. A few days before the fire Lundy ordered that empty cardboard boxes be stored in a place where Lundy knew they created a fire hazard and where in fact the fire apparently originated. All of these actions by Lundy were noticeable changes from his usual practice. See Tr. at 406-09. Lundy was the last person to leave the store immediately before the fire. Tr. at 414-16. One witness testified that as Lundy was locking up the store she helped him remove the key and he cautioned her not to turn the alarm on. Tr. at 504.
Evidence that the fire was not accidental included opinions by two qualified experts, Tr. at 96-97, 271-72, as well as the speed and intensity with which the fire burned.
The parties have stipulated and we agree that Yale Mart operated in interstate commerce by purchasing liquor from outside the state of Illinois.
This evidence is not overwhelming. But it is the jury’s task to weigh the evidence and the credibility of witnesses. There is no suggestion that the jury was improperly instructed. We find that the evidence as a whole, indicating, inter alia, motive, plan, preparation, opportunity and absence of accident, is sufficient to sustain the conviction of arson.
B. Mail Fraud
Lundy challenges the mail fraud convictions under 18 U.S.C. § 1341 apparently on the ground that the alleged fraud was not a fraud — because he did not set fire to Yale Mart, Lundy contends, it was not fraudulent to file the insurance claims for the loss. Section 1341 provides:
Whoever, having devised or intending to devise any scheme ... for obtaining money or property by means of false or fraudulent pretenses ... for the purpose of executing such scheme ... places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service ... shall be fined not more than $1,000 or imprisoned not more than five years, or both.
As outlined above, the evidence permitted the jury to conclude that Lundy set fire to Yale Mart. Accordingly, the jury properly could conclude that Lundy falsely represented to the insurance company that the fire was not purposefully set, see Tr. at 532, and that he caused the mails to be used to further the scheme to obtain money. See Tr. at 529, 557. Again, it is not contended that the jury was improperly instructed on the law. We find the evidence sufficient to sustain the conviction of mail fraud.
Therefore 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.
PER CURIAM.
The B. Siegel Company petitions for review of a National Labor Relations Board order directing it to bargain with the Retail Store Employees’ Union, Local 876, United Food and Commercial Workers International Union, AFL-CIO-CLC. The NLRB cross-petitions for enforcement of its bargaining order and bargaining unit certification. The principal issues before us concern the appropriateness of the bargaining unit certified by the NLRB, and accordingly, whether B. Siegel’s refusal to bargain with its employee certified representative violates sections 8(a)(5) and (1) of the National Labor Relations Act, 29 U.S.C. § 151 et seq.
The company operates seven retail women’s apparel shops in Detroit, Michigan. In June and July of 1979, the union filed three election petitions with the Board, asking for separate elections at the company’s Dear-born, Livernois, and Woodward Avenue stores. The petitions called for three distinct bargaining units, consisting of all full- and part-time employees at each store. The company opposed the petitions, contending that an appropriate bargaining unit must include all seven stores and the company’s central office. After a hearing and a refusal to reconsider, the Board approved the single-store bargaining units and directed three elections. The union won these elections, and the company has refused to bargain with the certified union.
The company now appeals, contending that the Board abused its discretion by certifying three separate bargaining units. The company argues that the Board disregarded facts which compel recognition of a company-wide bargaining unit. First, the company points to the geographic proximity of its stores. All seven stores and the central office are within an eighteen-mile radius. Second, the company’s organizational structure is highly centralized. Management at the central office controls all aspects of merchandising, shipping and receiving, credit and accounting, advertising, data processing, and personnel and employee benefits throughout the network of stores. All supplies are purchased and distributed centrally. Each store must report to the central office daily. Representatives visit each store frequently, often unannounced.
Third, authority over matters of personnel and labor relations rests exclusively with Mr. Levine, the company’s Personnel Director. He controls the number of employees in each store, while the Controller establishes the maximum number of man-hours permitted. Individual store managers have no authority to hire personnel: hiring is the concern of the central office only. Similarly, no store manager has the authority to fire an employee. Although a store manager may suggest initial wage rates, the central office ultimately decides the wage each new employee will receive. All raises or salary adjustments are subject to Mr. Levine’s review and approval. New employees are first trained by Levine’s staff. Finally, the central office establishes all fringe benefits, which apply uniformly to all stores.
Fourth, the company relies on a history of employee transfers from store to store. Company records indicate that 32 current employees have transferred from one store to another at least once. The company frequently transfers employees between stores temporarily, for special sales, holidays, and inventory compilation.
The selection of an appropriate bargaining unit lies largely within the Board’s discretion. Our review is limited to the question whether the Board’s determination was arbitrary or capricious. It is not our responsibility to determine whether the Board certified the best bargaining unit possible. The Union Savings and Trust Co. v. N.L.R.B., 643 F.2d 1249 (6th Cir. 1981); Meijer, Inc. v. N.L.R.B., 564 F.2d 737 (6th Cir. 1977). However, in Wayne Oakland Bank v. N.L.R.B., 462 F.2d 666 (6th Cir. 1972), we recognized that we would not hesitate to disapprove a single store bargaining unit in a retail context if the evidence showed centralized control over the principal aspects of operations and employee relations.
In our view, the evidence supports the NLRB’s findings that the separate stores are sufficiently autonomous to comprise individual bargaining units. The store managers are more closely involved in employees’ daily work than are central office personnel. The manager schedules working hours, and handles schedule complaints. The manager enforces all company rules and policies, and reports infractions. The local manager also evaluates employees and recommends wage increases and promotions. The record convinces us that store managers have discretion to act unilaterally in areas of daily importance to employees.
Reviewing the facts as the Board did, we conclude that substantial evidence supports its findings. The company has no history of collective bargaining, and no other union seeks broader representation. On this basis, we find N.L.R.B. v. Chicago Health & Tennis Clubs, Inc., 567 F.2d 331 (7th Cir. 1977), cert. denied, 437 U.S. 904, 98 S.Ct. 3089, 57 L.Ed.2d 1133 (1978), distinguishable. The Board did not abuse its discretion by concluding that separate stores are appropriate bargaining units.
The company has admitted that it refused to bargain with the union. It therefore violated sections 8(a)(5) and (1) of the Act. We find no merit in the other contentions raised. Accordingly, we grant enforcement of the Board’s order in full.
. The Board’s opinion is found at 250 N.L.R.B. No. 112.
Question: Were there cross appeals 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.
The estate of Emil J. Jeschke appeals from an adverse judgment by the District Court in a federal estate tax refund suit filed by the estate. Upon audit of the federal estate tax return filed by the estate the Internal Revenue Service (“IRS”) assessed a deficiency of $11,297.22 plus $2,766.14 in interest based mainly upon three adjustments: (1) inclusion in the gross estate of interest, unmatured and forfeitable prior to death but maturing on death, arising from certificates of deposit purchased and held by the decedent in joint tenancy; (2) a determination that the interest of decedent’s widow in a bank account held in joint tenancy with the decedent and a surviving son was a terminable interest not qualifying for the marital deduction, due to the continuing joint tenancy of the son; and (3) a reduction of the marital deduction to account for the widow's “share” of funeral expenses, administration expenses, and Kansas inheritance taxes. The IRS held the widow accountable for her share of the expenses, under Kansas law, despite the fact that other family members actually paid those expenses pursuant to an oral agreement made between themselves and decedent’s widow after decedent’s death.
The estate paid the additional taxes and interest and sued for a refund, challenging the legality of the adjustments just enumerated, and raising other, collateral issues. The case was tried to the District Court, without a jury, and judgment was entered in favor of the government, largely dismissing the complaint. The same issues are raised by the estate on appeal. We affirm the judgment of the District Court.
I.
INCLUSION OF INTEREST ON JOINTLY HELD CERTIFICATES OF DEPOSIT
The facts relating to this issue are uncontroverted and notably uncomplicated. During the period April 1971 to September 1976 the decedent purchased with his own funds 334 certificates of deposit from two local banks, the Troy State Bank and First Bank of Troy. The certificates ranged in value from $1,000 to $5,000 with a cumulative total face value at decedent’s death of $460,000. R.Vol. II at 245-53.
Apparently as an estate planning device, each certificate was issued in decedent’s name and the name of one of his seven children, eleven grandchildren, or four great-grandchildren, as joint tenants with rights of survivorship. Id. at 252-53, 255. One certificate designated decedent’s widow as joint tenant. Id. Possession and control over the certificates remained with the decedent, who kept the certificates in his safe deposit box. Id. at 202; R.Vol. V at 27-28. Interest was payable at six month intervals and, at his direction, was all paid to the decedent. R.Vol. II at 201.
The full face amount ($460,000) of these 334 certificates of deposit held by the decedent in joint tenancy was reported on decedent’s estate tax return as an asset of the estate. Id. at 245-53. The issue here concerns the interest accruing on the certificates from the date of the last payment to the date of decedent’s death, amounting to $7,852.94. R.Vol. V at 4. The executor did not include that amount on the estate tax return. Upon audit the IRS determined the amount to be includible, and assessed additional tax and interest thereon.
Just prior to decedent’s death the interest in question was unmatured, unmarketable, and forfeitable upon early redemption of the certificates. See Federal Reserve Banking Regulation, 12 C.F.R. § 217.4 (1977). However, by virtue of the same Federal Reserve Banking Regulation, the accruing interest automatically matured and was payable upon the event of decedent’s death.
The estate contends that the accruing interest on the 334 certificates of deposit is not includible in the gross estate for tax purposes. It emphasizes first that the interest was not an asset of the decedent just prior to death because it was forfeitable. It next emphasizes that although the interest automatically matured upon decedent’s death, it belonged exclusively to the respective surviving joint tenants pursuant to the usual rules governing joint tenancies. See Eastman v. Mendrick, 218 Kan. 78, 542 P.2d 347 (1975); Edwards v. Ledford, 201 Kan. 518, 441 P.2d 834 (1968); In re Estate of Smith, 199 Kan. 89, 427 P.2d 443 (1968). In that connection, the estate points out that the ownership rights of the joint tenants sprang from and related back to the origination of the joint tenancy. Therefore, nothing was transferred from the decedent to the surviving joint tenants by decedent’s death; decedent’s interest was merely extinguished.
Significantly, the estate concedes that none of those arguments standing alone supports its position. It acknowledges, as it must, that the principal of the certificates is includible in the estate, unaffected by the joint tenancies with their resulting automatic ownership in the survivors. Reply Brief for Appellants at 8-9. It also acknowledges that interest forfeitable prior to death but maturing at death is includible in the gross estate of a sole owner of a certificate. Brief for Appellants at 4-7. See Rev.Rul. 79-340, 79-2 C.B. 112; Treas. Reg. § 20.2033-1(b) (1986). Thus, the estate’s position is a narrow one: joint tenancy interests and amounts forfeitable prior to death are includible for estate tax purposes when standing alone, but not when linked together. Not one authority is cited to us by the estate in direct support of such a proposition.
Section 2040 of the Internal Revenue Code of 1954 (“Code”), dealing with jointly held property, provides:
The value of the gross estate shall include the value of all property to the extent of the interest therein held as joint tenants with right of survivorship by the decedent and any other person, or as tenants by the entirety by the decedent and spouse, or deposited, with any person carrying on the banking business, in their joint names and payable to either or the survivor, except such part thereof as may be shown to have originally belonged to such other person and never to have been received or acquired by the latter from the decedent for less than an adequate and full consideration in money or money’s worth____
26 U.S.C. § 2040(a) (1982). While there are statutory exceptions and complexities in operation not relevant here, the statute by its terms is extremely broad in application. Estate taxation under that section is not prevented or affected by state property laws or contract terms which vest ownership in surviving joint tenants immediately upon death pursuant to the original conveyance in joint tenancy. And, it is immaterial that the joint tenancy prevents the decedent’s estate from receiving the property or having an enforceable interest. No “transfer” of property, as defined by usual property law concepts, is required. In United States v. Jacobs, 306 U.S. 363, 59 S.Ct. 551, 83 L.Ed. 763 (1939), the Supreme Court addressed that point and the principle upon which taxes are imposed under the predecessor statute to section 2040:
Death duties or excises imposed upon the occasion of change in legal relationships to property brought about by death are ancient in origin. Congress has the power' to levy a tax upon the occasion of a joint tenant’s acquiring the status of survivor at the death of a co-tenant. In holding that the full value of an estate by the entirety may constitutionally be included in a decedent’s gross estate for estate tax purposes, this Court said: “The question ... is, not whether there has been, in the strict sense of that word, a ‘transfer’ of the property by the death of the decedent, or a receipt of it by right of succession, but whether the death has brought into being or ripened for the survivor, property rights of such character as to make appropriate the imposition of a tax upon that result (which Congress may call a transfer tax, a death duty or anything else it sees fit), to be measured, in whole or in part, by the value of such rights ... “At ... [the co-tenant's] death, however, and because of it, ... [the survivor] for the first time, became entitled to exclusive possession, use and enjoyment; she ceased to hold the property subject to qualifications imposed by the law relating to tenancy by the entirety, and became entitled to hold and enjoy it absolutely as her own; and then, and then only, she acquired the power, not theretofore possessed, of disposing of the property by an exercise of her sole will. Thus the death of one of the parties to the tenancy became the ‘generating source’ of important and definite accessions to the property rights of the other
Id. at 367-68 (emphasis added) (footnotes omitted).
As the quoted language makes clear, the tax is imposed on the shift in rights occasioned by death. It does not depend, as argued by the estate here, on the status of property as choate or inchoate, forfeitable or nonforfeitable, prior to death. See also Treas.Reg. § 20.2040-1(a) (1986) (“A decedent’s gross estate includes under section 2040 the value of property held jointly at the time of the decedent’s death by the decedent and another person or persons with right of survivorship____”) (emphasis added). See generally Estate of Bright v. United States, 658 F.2d 999, 1001 (5th Cir.1981) (en banc).
There is no doubt that there was a shift in rights with respect to the accruing, unmatured interest in question in this case at and by virtue of the decedent’s death. For example, the hazard of forfeitability upon early redemption was removed, as was the hazard of severance, and the possibility of losing the complete estate to the other tenant as survivor. Similar rights, and shifting of rights, were identified by the Supreme Court in Jacobs, as follows:
The “grand incident of joint estate is the doctrine of survivorship, ‘by which, when two or more persons are seized of a joint estate, ... the entire tenancy upon the decease of any of them remains to the survivors, and at length to the last survivor; and he shall be entitled to the whole estate, whatever it may be.’ ” While it is true that until the death of decedent here each joint tenant possessed the right to sever the joint tenancy, each was nevertheless subjected to the hazard of losing the complete estate to the other as survivor. Prior to decedent’s death, his wife had no right to dispose of her interest by will, nor could it pass to her legal heirs. She might survive and thereby obtain a complete fee to the property with attendant rights of possession and disposition by will or otherwise. Until the death of her co-tenant, the wife could have severed the joint tenancy and thus have escaped the application of the estate tax of which she complains. Upon the death of her co-tenant she for the first time became possessed of the sole right to sell the entire property without risk of loss which might have resulted from partition or separate sale of her interest while decedent lived. There was — at his death — a distinct shifting of economic interest, a decided change for the survivor’s benefit. This termination of a joint tenancy marked by a change in the nature of ownership of property was designated by Congress as an appropriate occasion for the imposition of a tax.
306 U.S. at 370-71, 59 S.Ct. at 555 (emphasis added) (footnotes omitted).
Furthermore, from a practical standpoint the contingency relied upon by the estate involves much less uncertainty than the estate implies. Because of the Federal Reserve Regulation previously cited, and bank policy, there was never any uncertainty with respect to the fact that the interest would mature at decedent’s death, and would be payable to the surviving joint tenants along with the principal. Maturity and payment of the interest at death were never discretionary. They were not controlled by third parties or events external to the joint tenancy. Thus, interest accruing prior to death was subject to a settled expectation and planning by the decedent, and was certainly as attributable to him under the source of consideration rule as the principal of the certificates.
Taxation, as it many times has been said, is eminently practical, and a practical mind, considering results, would have some difficulty in accepting the conclusion that the death of one of the tenants in each of these cases did not have the effect of passing to the survivor substantial rights, in respect of the property, theretofore never enjoyed by such survivor.
Tyler v. United States, 281 U.S. 497, 503, 50 S.Ct. 356, 359, 74 L.Ed. 991 (1930). It is beyond question that decedent’s death was the “generating source” of important and definite accessions to the rights of the surviving joint tenants with respect to interest on the certificates of deposit.
The judgment of the district court on this issue is affirmed.
II.
CLASSIFICATION OF MULTIPLE JOINT TENANCY BANK ACCOUNT AS A TERMINABLE INTEREST NOT QUALIFYING FOR THE MARITAL DEDUCTION.
On April 20, 1965, more than twelve years prior to his death, the decedent with his own funds established a checking account at the Troy State Bank. It is undisputed that the account was established as a joint tenancy, fully cognizable as such under Kansas law, with the decedent, his wife, Ida Jeschke, and their son, Myron, as joint tenants with rights of survivorship. See Brief for Appellant at 33; R.Vol. at 202-03, 255.
At decedent’s death the account contained $32,621.62, all deposited by the decedent. The entire amount was treated by decedent’s executor as passing to the surviving widow, as joint tenant, and qualifying in full for the marital deduction pursuant to section 2056 of the Code. On audit the IRS determined that as to the surviving widow the bank account constituted a terminable interest under section 2056(b) of the Code due to the continuing joint tenancy rights of the son, Myron. Therefore, the account did not qualify for the marital deduction.
The estate challenges that determination by the IRS, asserting that Myron was just a convenient signatory who had no legal claim on any of the money in the account during the lives of his parents. Parol evidence directly inconsistent with the joint tenancy terms of the bank account was introduced by the estate to prove that the decedent intended to own all of the account during his life and then for his surviving spouse to be the sole owner. Because the decedent and his wife were elderly, she did not see well, and for other, similar reasons, the decedent included Myron as a joint tenant for ministerial purposes only. Brief for Appellant at 34-35. The issue turns on the rights of the surviving joint tenants under Kansas law.
The estate recognizes that under Kansas law joint tenancies created by a signed joint tenancy agreement with qualifying statutory language, such as the one here, cannot be collaterally attacked by parol evidence in the absence of fraud or mutual mistake. See In re Estate of Girndt, 225 Kan. 352, 590 P.2d 1038, 1041 (1979); Eastman v. Mendrick, 218 Kan. 78, 542 P.2d 347, 350 (1975) (quoting Agrelius v. Mohesky, 208 Kan. 790, 494 P.2d 1095 (1972)); In re Estate of Johnson, 202 Kan. 684, 452 P.2d 286, 295-96 (1969), modified, 203 Kan. 262, 452 P.2d 301 (1969); Edwards v. Ledford, 201 Kan. 518, 441 P.2d 834, 839 (1968); In re Estate of Smith, 199 Kan. 89, 427 P.2d 443, 447-48 (1968). See also In re Estate of Powell, 222 Kan. 688, 567 P.2d 872, 875 (1977); Johnson v. Capitol Fed. Sav. & Loan Ass’n, 215 Kan. 286, 524 P.2d 1127, 1132 (1974). Faced with overwhelming Kansas authority on that point, the estate takes a narrower tack. It acknowledges that a three-way joint tenancy exists but asserts that parol evidence of decedent’s intent can be introduced to establish, contrary to the written agreement, that Myron’s legal claim to funds comprising the joint tenancy estate was zero during the lives of his parents. The estate reasons that if Myron could not touch the account for his own benefit the surviving widow’s interest could not have been terminable. The position is summarized by the estate as follows:
It must be noted that at no time have appellants ever sought to vary terms of the valid joint tenancy bank account contract. Appellants have simply established by parol evidence the relative ownership interests of the joint tenants, including the decedent. This is proper under Walnut Valley State Bank v. Stovall, 223 Kan. 459, 574 P.2d 1382, [1978] and Purma v. Stark, 224 Kan. 642, 585 P.2d 991 [1978].
Reply Brief for Appellants at 13.
The principal cases on which the estate relies, Walnut Valley State Bank and Purma, involved garnishment rights of judgment creditors against joint tenancy interests of a debtor. Referring to Kan. Stat.Ann. § 58-501 (1983) dealing with the “execution, levy and sale of the [joint tenancy] interest of a judgment debtor,” the Kansas Supreme Court held in those cases that “the only interest in the account which can be reached by garnishment is the interest actually owned by the garnishment debtor.” Purma, 585 P.2d at 993. Both cases focused on actual contributions by the judgment debtors to joint tenancy accounts, alternately referring to interests in such contributions as equitable, beneficial, and ownership interests in the joint tenancy account, all of which, in turn, refer to the “interest of a judgment debtor” language of the statute.
The circumstances of the case before us are so different from those addressed by the Kansas Supreme Court in Walnut Valley State Bank and Purma as to merit only slight attention. Neither the surviving widow nor the son, Myron, contributed anything to the bank account. They are surviving joint tenants. No debtor-creditor relationship is involved.
The question is whether Kansas law permits Myron’s rights in and to the joint tenancy estate, as set forth in the written joint tenancy agreement, to be diminished to zero by parol evidence of decedent’s intent. The estate cites no Kansas case in direct support of that proposition, and, as indicated, Walnut Valley State Bank and Purma ave too remote to be helpful. We find the other Kansas cases cited above to be persuasive of the contrary proposition; that is, in the absence of fraud or mistake (neither of which is alleged here), terms of the written joint tenancy agreement prevail despite parol evidence of a different intent. Under terms of the written agreement Myron, as a surviving joint tenant with decedent’s widow, had the power to terminate the interest of decedent’s widow in the joint bank account. Accordingly, the widow’s interest was a terminable interest as defined by section 2056(b)(1) of the Code. We hold, therefore, that the joint tenancy bank account did not qualify for the marital deduction.
III.
EFFECT ON MARITAL DEDUCTION OF FAMILY AGREEMENT TO PAY EXPENSES CHARGEABLE TO THE SURVIVING SPOUSE’S SHARE OF DECEDENT’S ESTATE
Following decedent’s death, his surviving spouse elected, pursuant to Kan. Stat.Ann. § 59-603 (1983), to take against decedent’s will, deriving her share of the estate under the intestate succession provisions of Kansas law. Id. at §§ 59-504, 59-505. Among other things, that statutory scheme provides that the surviving spouse’s share of the property will be subject to “the payment of reasonable funeral expenses, expenses of last sickness and costs of administration, taxes, and debts.” Id. at § 59-502; First Nat’l Bank of Topeka, Kansas v. United States, 233 F.Supp. 19, 23 (D.Kan.1964); Spurrier v. First Nat’l Bank of Wichita, 207 Kan. 406, 485 P.2d 209 (1971). See also In re Estate of Hawes, 235 Kan. 697, 683 P.2d 1252, 1257 (1984); Jackson v. Jackson, 217 Kan. 448, 536 P.2d 1400, 1406-07 (1975).
In order to see their mother better provided for, decedent’s children agreed among themselves and with their mother (the surviving spouse) that they would pay the mother’s share of administration expenses and inheritance taxes, rather than have such amounts taken from her share of the estate. R.Vol. V at 30-31, 45.
Despite that agreement, on audit of the decedent’s estate tax return the IRS reduced the marital deduction by $9,408.81 representing the surviving spouse’s share of administration and funeral expenses, and $1,383.26 representing the surviving spouse’s share of the state inheritance tax. R.Vol. II at 256. The estate challenges that adjustment.
It is an established general rule, uncontested here, that the marital deduction provided by section 2056 of the Code is reduced by expenses of administration and similar obligations which must or may be paid out of property passing from the decedent to the surviving spouse. 26 U.S.C. § 2056(b)(4) (1976); Treas.Reg. § 20.-2056(b)-4(c) (1986); Kan.Stat.Ann. § 59-502 (1983). See Greene v. United States, 476 F.2d 116, 118 (7th Cir.1973); Murray v. United States, 687 F.2d 386, 392-93 (Ct.Cl.1982); Estate of Wycoff v. C.I.R., 506 F.2d 1144, 1147-49 (10th Cir.1974), cert. denied, 421 U.S. 1000, 95 S.Ct. 2398, 44 L.Ed.2d 667 (1975); First Nat’l Bank of Topeka, 233 F.Supp. at 23. It is immaterial that such expenses may actually be paid out of non-marital share funds, so long as there exists discretion or an obligation to charge the marital share. See Murray, 687 F.2d at 393 n. 7; Wycoff, 506 F.2d at 1148-49. If, however, a testator specifically provides by will that administration and similar expenses not be paid out of the surviving spouse’s share qualifying for the marital deduction, then the marital deduction is not reduced by its “share” of the expenses. See Kan.Stat.Ann. § 59-1405 (1983); Wycoff, at 1149-50; Thompson v. Wiseman, 233 F.2d 734, 737 (10th Cir.1956); In re Estate of West, 203 Kan. 404, 454 P.2d 462, 465 (1969).
As indicated, the surviving spouse in this case elected to take under state law which, in addition to prescribing the surviving spouse’s share of the estate, charges the widow’s portion with its share of administration and other expenses. The estate argues that the family agreement overrides the application of state law regarding expenses. It reasons “that a Family Settlement Agreement, being the equivalent of or complete substitute for testamentary provision, may provide that assets constituting a claimed marital deduction shall be free from any liability for payment of a portion of inheritance taxes and expenses of administration, including funeral bill.” Brief for Plaintiffs-Appellants at 43. In other words, the estate contends that power similar to that of a testator devolves upon the family notwithstanding the election to have state law govern the distribution of assets and allocation of expenses.
As with the other issues in this case, there is no authority whatsoever directly supporting the estate’s argument that post-death agreements between the beneficiaries can override state law. What authority we have found suggests a contrary conclusion. See, e.g., Underwood v. United States, 407 F.2d 608, 610 (6th Cir.1969) (dispute over validity of a charitable deduction). The estate’s position on this issue borders on the frivolous. State law subjecting the statutory marital share to expenses controls, unaffected by post-death agreements among the beneficiaries. We hold that the marital deduction was properly reduced in the amount of the expenses and taxes in question.
For the reasons stated herein, the judgment of the district court is affirmed.
. The memorandum and order of the District Court is unofficially reported at 84-1 U.S.T.C. para. 13,562 (Kan. Mar. 1, 1984). The estate was allowed a refund of $61.16 on a minor point.
. Federal Reserve Banking Regulation, 12 C.F.R. § 217.4 (1977), provides: ‘‘Upon the death of any person whose name appears on the time deposit passbook or certificate, a member bank may pay such time deposit before maturity without a reduction of [sic] forfeiture of interest as prescribed in this paragraph.” The parties stipulated that the two banks issuing the certificates of deposit in question adhere to a payment policy, and redeem certificates of deposit upon or after the death of a joint owner without a reduction or forfeiture of accrued interest. R.Vol. V at 3.
. Commentators continue to remark upon the scope, staying power, and anomalies in and arising from the application of this section. See, e.g., B. Bittker, Federal Taxation of Income, Estates and Gifts ¶ 125.11 (1984); Lowndes, Kramer & McCord, Federal Estate and Gift Taxes § 11.1 at 269 (3rd ed. 1974). See also Max-field, Some Reflections on the Gift and Estate Taxation of Jointly Held Property, 34 Tax Lawyer 47-88 (1980).
. The estate attempts to buttress its argument by references to section 2033 of the Code requiring payment to and enforceability by the estate as a prerequisite to taxability. Section 2040 is not controlled by section 2033. It is broader than section 2033 and is specifically not dependent upon payment to the estate. Treasury Reg. § 20.2040-l(b) (1986) states that:
[I]t makes no difference that the survivor takes the entire interest in the property by right of survivorship and that no interest therein forms a part of the decedent’s estate for purposes of administration.
. Joint tenancies are recognized and defined in Kansas by statute, Kan.Stat.Ann. § 58-501 (1983).
. The account card form has three distinct sections. On the face of the card, marked "Checking Account — Individual," several "authorized signature” lines are provided for the signatures of anyone the originator of the account desires to permit to write checks on the account. No joint tenancy is created by such authorization. On the reverse side of the card there are two more plainly marked sections with signature lines provided under each. One is entitled "Joint Account — Two or More Signatures Required;” and, the other is entitled “Joint Account — Payable to Either or Survivor.” It was the latter section which the decedent, Ida, and Myron signed. That section provided as follows:
JOINT ACCOUNT — PAYABLE TO EITHER OR SURVIVOR
We agree and declare that all funds now, or hereafter, deposited in this account are, and shall be, our joint property and owned by us as joint tenants with right of survivorship, and not as tenants in common; and upon the death of either of us any balance in said account shall become the absolute property of the survivor. The entire account or any part thereof may be withdrawn by, or upon the order of, either of us or the survivor.
It is especially agreed that withdrawals of funds by the survivor shall be binding upon us and upon our heirs, next of kin, legatees, assigns and personal representatives.
/s/ EJ. Jeschke_/s/ Ida Jeschke
/s/ Myron Jeschke_
Plaintiffs Exhibit 5.
. The controlling provisions of the statute in effect in 1977, the year of the decedent's death, are as follows:
SEC. 2056. BEQUESTS, ETC., TO SURVIVING SPOUSE
(a) Allowance of marital deduction
For purposes of the tax imposed by section 2001, the value of the taxable estate shall, except as limited by subsections (b) and (c), be determined by deducting from the value of the gross estate an amount equal to the value of any interest in property which passes or has passed from the decedent to his surviving spouse, but only to the extent that such interest is included in determining the value of the gross estate.
(b) Limitation in the case of life estate or other terminable interest (1) General rule
Where, on the lapse of time, on the occurrence of an event of contingency, or on the falure of an event or contingency to occur, an interest passing to the surviving spouse will terminate or fail, no deduction shall be allowed under this section with respect to such interest—
(A) if an interest in such property passes or has passed (for less than an adequate and full consideration in money or money’s worth) from the decedent to any person other than such surviving spouse (or the estate of such spouse); and
(B) if by reason of such passing such person (or his heirs or assigns) may possess or enjoy any part of such property after such termination or failure of the interest so passing to the surviving spouse;
and no deduction shall be allowed with respect to such interest (even if such deduction is not disallowed under subparagraphs (A) and (B))—
(C) if such interest is to be acquired for the surviving spouse, pursuant to directions of the decedent, by his executor or by the trustee of a trust.
For purposes of this paragraph, an interest shall not be considered as an interest which will terminate or fail merely because it is the ownership of a bond, note, or similar contractual obligation, the discharge of which would not have the effect of an annuity for life or for a term.
******
26 U.S.C. § 2056 (1976).
. In fact, the IRS disallowed only one-half of the account, $16,310.81, as qualifying for the marital deduction, apparently on the assumption that under Kansas law the rights of each surviving joint tenant was limited to one-half of the account. The legal issues involved here are unaffected by this point.
. In April 1978 Myron signed a written disclaimer, disclaiming any interest in the account and subsequently his mother signed a new signature card as the sole signatory. R.Vol. V at 46-47, 50; Defendant’s Exhibit A. As a result of this disclaimer, Myron was assessed a gift tax by the IRS which resulted in a reduction in his Unified Gift Tax Credit. In this case, he appeals that holding. Because we hold that Myron was a joint tenant in the account we need not reach the issue regarding restoration of Myron’s Unified Credit, or our jurisdiction to hear that question. Resolution of these issues rested entirely upon a determination that Myron did not have a joint tenancy interest in the account at the decedent’s death.
. The term "taxes” does not include the imposition of federal estate taxes on property qualifying for the marital deduction. First Nat’l Bank of Topeka v. United States, 233 F.Supp. 19, 23 (D.Kan.1964). However, this appeal concerns only the imposition of state inheritance taxes on marital property.
Question: Were there cross appeals 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.
MOTZ, District Judge.
The issue presented in this case is whether a decree entered in an equity suit in the Circuit Court for Calvert County Maryland, barred a subsequent suit for damages in the United States District Court for the District of Maryland. Finding that the decree did have res judicata effect, the District Court entered summary judgment on behalf of the defendant, Harbor Island Marina, Inc. Plaintiff, Neil Abramson, has appealed.
The case arises under a lease which provided that Harbor Island would let certain premises to Abramson to operate a restaurant and bar. The leased premises required substantial repairs, and the lease agreement provided that Abramson was to renovate the property, using materials provided by Harbor Island. The arrangement was less than happy, and, after three weeks, Harbor Island notified Abramson that it wished to terminate the agreement. Abramson responded by instituting suit in the Circuit Court for Calvert County. His prayer for relief included a request for specific performance and an award for damages resulting from the breach of the lease.
The case proceeded to trial before Judge Perry Bowen. Abramson continued to press for specific performance. At the same time he presented some proof of a damage claim in the form of out-of-pocket expenses in the approximate amount of $7,000. At the conclusion of the trial Judge Bowen rendered a bench opinion in which he stated that the lease agreement was so vague that there was “no way on earth” that it could be carried out. Judge Bowen also indicated that the evidence “was very meager in respect to some of ... [the] damages.” Based upon the findings which he made, Judge Bowen entered a decree denying specific performance but ordering that Abramson’s $10,000 deposit held by Harbor Island under the lease be returned. The decree further provided that it was “without prejudice to the right of either party to sue the other for damages in a Court of law.” Several weeks thereafter, Abramson instituted a diversity action against Harbor Island in the District Court, requesting damages for lost profits.
The Calvert County decree — but for its reservation provision — unarguably would have had res judicata effect. Maryland law applies to the question of the preclusive effect of the Maryland decree, see Kutzik v. Young, 730 F.2d 149, 151 (4th Cir.1984), and under Maryland law a final decree in an equity suit generally bars a later action for a monetary claim arising out of the same transaction. See Miller v. Talbott, 239 Md. 382, 392-93, 211 A.2d 741, 747 (1965). Therefore, the question is narrowed to whether or not the reservation provision of the decree limited its preclusive effect.
Maryland law does recognize that under certain circumstances a court, at least a court of equity, may limit the preclusive effect of a. judgment which it enters. See Horowitz v. Horowitz, 175 Md. 16, 27, 199 A. 816, 820 (1938). See generally Restatement Second, Judgments, section 26(l)(b); 18 Wright, Miller & Cooper, Federal Practice & Procedure, section 4413 (1981). However, Abramson has cited no authority to support the proposition that where a plaintiff has prayed for damages as part of his relief and has attempted to prove his damages at trial and where the trial judge has found the proof of some damages insufficient and has entered an award of other damages, the decree entered in that action can, simply by an ipse dixit pronouncement, be limited in its effect. In such a case the actions both of the plaintiff and of the Court are totally inconsistent with the attempted reservation of the right to institute a subsequent suit. To give effect to the reservation provision under these circumstances would totally undermine the sound policies of litigation repose and judicial economy embodied in the doctrine of res judicata.
For these reasons, the judgment of the District Court is affirmed.
AFFIRMED.
. Although the parties have not briefed the issue, a substantial question would seem to be presented as to whether, as a matter of law, Abramson would be able to prove lost profits with reasonable certainty. Putting aside the fact that Abramson’s venture was a new business without any established profit history, see, e.g., St. Paul at Chase Corp. v. Manufacturers Life Ins. Co., 262 Md. 192, 244-47, 278 A.2d 12, 37-38 (1971), cert. denied, 404 U.S. 857, 92 S.Ct. 104, 30 L.Ed.2d 98 (1971), the earning of any profits depended upon his having an enforceable lease. At the least, the decree entered by Judge Bowen would seem to have had a collateral estoppel effect on this issue.
. In the Calvert County proceedings a colloquy occurred between Judge Bowen and Abramson’s counsel in which Judge Bowen expressed his view that Abramson did not have a right to bring a subsequent damages action after having instituted the equity suit. The District Judge inferred from this colloquy that the reservation provision of the decree was not intended to confer independently upon Abramson a right to institute a damages action but simply to preserve his right to bring such an action if Judge Bowen’s view of the law were incorrect. Whether or not this interpretation was correct is a question which this Court need not reach since it finds that the attempted reservation was, in any event, a nullity.
. It is also to be noted that the damages awarded by Judge Bowen — a return of the deposit under the lease — was not ancillary to, but inconsistent with, specific performance. Thus, this is not a case where it might be argued that the damages claimed and awarded were strictly limited to the plaintiffs equitable claim and should therefore not bar an independent action at law.
Question: Were there cross appeals 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 for the Court filed by Circuit Judge WILLIAMS.
STEPHEN F. WILLIAMS, Circuit Judge:
In 1975 Congress designed a system to reduce American energy consumption through corporate average fuel economy (“CAFE”) standards for cars. See Title III of the Energy Policy and Conservation Act, Pub.L. No. 94-163, 89 Stat. 901 (1975), adding § 502 et seq. to the Motor Vehicle Information and Cost Savings Act, 15 U.S.C. § 2002 et seq. (1988) (“the Act”). The National Highway Traffic Safety Administration (“NHTSA”), which administers the CAFE program, assessed a civil penalty against Mercedes-Benz for failing to meet the standard for model year (“MY”) 1985. Mercedes-Benz asks us to reverse the penalty and to require NHTSA on remand to entertain its claim that the standard should be set lower.
The only standard genuinely at issue here was set by Congress itself, against which Mercedes-Benz makes no constitutional claim. Mercedes-Benz’s only attack is on NHTSA, and the only conduct for which NHTSA is even theoretically vulnerable is its failure to amend the congressional standard. As Mercedes-Benz petitioned for an amendment of the 1985 standard only in August 1987 and the NHTSA Administrator lawfully rejected the petition on the ground that retroactive amendment would be inconsistent with the statutory scheme, see Passenger Automobile Average Fuel Economy Standards; Denial of Petitions for Rulemaking, 53 Fed.Reg. 15241, 15243/3 (1988); GMC v. NHTSA, 898 F.2d 165 (D.C.Cir.1990), there is no error in NHTSA’s rejection of Mercedes-Benz’s attack on the standard.
For certain model years, including 1985, Congress set the CAFE standard itself (27.5 miles per gallon); for model years 1981 through 1984, it authorized NHTSA to set standards no later than July 1, 1977. § 502(a)(3), 15 U.S.C. § 2002(a)(3). As to both groups of standards, Congress provided that NHTSA “may, by rule, amend” the previously established standard. § 502(a)(4), 15 U.S.C. § 2002(a)(4) (MY 1985 and later years); § 502(f)(1), 15 U.S.C. § 2002(f)(1) (MYs 1981-84; between “by rule” and “amend”, this latter section inserts “from time to time”). One may obtain judicial review of a rule establishing a CAFE standard by filing a petition in this court within 60 days of promulgation. § 504(a), 15 U.S.C. § 2004(a).
Petitioner Mercedes-Benz’s average fuel economy rating for 1985 was 23.6 mpg, nearly four miles per gallon below the congressional standard. At the conclusion of an enforcement proceeding initiated by NHTSA, see 15 U.S.C. §§ 2007(a)(1), 2008(b) (1988), Mercedes was assessed a civil penalty of $5,509,400, which it appeals. Mercedes does not quarrel with NHTSA’s math; the methodology for calculating fines is quite straightforward. Instead it urges that NHTSA wrongfully refused to entertain its substantive attack on the underlying CAFE standard in the enforcement proceeding.
The parties devote considerable energy to the general question of when a party who is subjected to enforcement proceedings for violating an agency rule, for which Congress has limited the time for challenges, may attack the rule’s validity. NHTSA, for example, reads Raton Gas Transmission Co. v. FERC, 852 F.2d 612, 615-16 (D.C.Cir.1988), as saying that where a party has allowed a statutory period for review to pass, it may attack the rule only under very limited exceptions, not including one for enforcement proceedings themselves. Mercedes-Benz, by contrast, cites NLRB Union v. FLRA, 834 F.2d 191, 195-96 (D.C.Cir.1987), for the view that a party may always, as a defense to an enforcement proceeding, attack the agency’s authority to promulgate the regulations. In an amicus brief, General Motors reminds us that before Abbott Laboratories v. Gardner, 387 U.S. 136, 140, 87 S.Ct. 1507, 1511, 18 L.Ed.2d 681 (1967), pre-enforcement review was normally unavailable altogether. It argues that the combination of Abbott Labs with the congressional practice of imposing time limits should not be taken as forbidding the method of challenging a rule that used to be the only one allowed. As there are plenty of statutes where Congress has coupled a time limit with explicit preclusion of review, see Frederick Davis, Judicial Review of Rulemaking: New Patterns and New Problems, 1981 Duke L.J. 279, 297-308 (charting various congressional treatments of the matter), there is a case for inferring, when Congress provided a time limit but no explicit preclusion, that it intended to leave review open at enforcement — at least as to the rule’s substantive validity. Atlantic & Gulf Stevedores, Inc. v. OSHRC, 534 F.2d 541, 550-51 (3rd Cir.1976).
These authorities are not, ultimately, relevant to the disposition of this case. As to the 1985 model year, Mercedes-Benz objects not to an agency rule but to a congressional standard. NHTSA comes into the picture only because under the Act it “may, by rule, amend the average fuel economy standard ... for model year 1985 ... to a level which [it] determine[s] is the maximum feasible average fuel economy level for [that] model year.” § 502(a)(4), 15 U.S.C. § 2002(a)(4) (1988) (emphasis added). Mercedes-Benz reads this provision as creating a duty in NHTSA “to reevaluate the feasibility of the MYs 1984-1985 CAFE standards in order to ensure their continued validity in light of changing circumstances.” Mercedes-Benz Brief at 42. Mercedes-Benz claims that falling gasoline prices in the early 1980s rendered the 27.5 mpg standard infeasible for 1985 (by raising consumer demand for larger cars), and that NHTSA was bound to change it.
In essence this argument uses congressional provision of an escape hatch (NHTSA’s amendment authority) to (a) turn Congress’s 27.5 mpg standard into the agency’s standard (b) undermine its substantive validity as to any period for which it ceased to be “feasible” as Congress used that term in § 502(a)(4).
This doesn’t add up. A congressional standard is, apart from constitutional infirmities, valid until it is changed. Congress here provided a mechanism for change. Mercedes-Benz failed to invoke that mechanism until after MY 1985 became history. When it did so, NHTSA refused to make the change on the ground that retroactive amendments would disrupt the statutory scheme, and we upheld that refusal. GMC v. NHTSA, 898 F.2d 165 (D.C.Cir.1990). Thus, the standard was lawful unless NHTSA had some duty, in the face of declining gas prices, to amend the 1985 standard on its own initiative.
The statutory text undercuts any argument that NHTSA had such a duty. Congress said that NHTSA “may” amend, not that it “must” or “shall” amend. § 502(a)(4), 15 U.S.C. § 2002(a)(4) (1988). A fortiori, where no one asks for an amendment, NHTSA is not obliged to produce one. Mercedes-Benz argues that because NHTSA must “monitor” the success of the CAFE program and send annual reports to Congress, § 502(a)(2), 15 U.S.C. § 2002(a)(2), it must (therefore) adjust the statutory standard where conditions are appropriate. The conclusion does not follow: requiring NHTSA to monitor and report on the effects of CAFE standards more naturally suggests that Congress simply wished to be kept informed as to the consequences of the law, presumably with a view to making its own adjustments.
Mercedes-Benz also believes that in the proceeding for enforcement of the MY 1985 standard, NHTSA should have entertained Mercedes-Benz’s attack on the MY 1984 standard. The 1984 standard is relevant to the fine for MY 1985 because, had it been lower, Mercedes-Benz would have earned credits that it could have applied against the fine for 1985.
Here, of course, we do not deal with a congressional standard, so we cannot say, as readily as we did for the 1985 standard, that it was valid until amended or until rendered unconstitutional by changed circumstances. But even if we assume Mercedes-Benz’s general claim — that one against whom a NHTSA-promulgated CAFE rule is enforced may challenge its validity at enforcement despite the passage of the statutory time limit — NHTSA prevails anyway, as enforcement of the 1984 standard came and went without Mercedes-Benz’s attacking it. Although Mercedes-Benz was not charged a fine for MY 1984, it was given notice of its shortfall of over $3 million, see J.A. 186 (NHTSA notice to Mercedes-Benz), and it could have seized that occasion for attacking the 1984 standard. See id.; see also § 502(i)(1)(E), 15 U.S.C. § 2002(Z)(1)(E); 49 C.F.R. §§ 511.-11(b)(4), 511.12(a). Although the shortfall produced no fine, being offset by previously accumulated credits, surely that was the moment of enforcement. Any broader view would mean that the object of enforcement of a CAFE standard in any given year (an enforcement) necessarily occurring somewhat after the end of that year) could reach back to attack the standard applying to any past year that directly or indirectly was a source of potential credits. The most expansive view of enforcement challenges could not demand so much.
As Mercedes-Benz’s fine was imposed on the basis of a congressional standard whose constitutionality is not questioned and which has not been amended, the petition for review is
Denied.
. The fine is $5 for every tenth of a mile per gallon by which the manufacturer’s CAFE level falls short of the standard, multiplied by the total number of cars it produced or imported that year. Id.
. In determining feasibility, NHTSA is to consider the "(1) technological feasibility; (2) economic practicality; (3) the effect of other Federal motor vehicle standards on fuel economy; and (4) the need of the Nation to conserve energy.” § 502(e), 15 U.S.C. § 2002(e) (1988).
. When a manufacturer exceeds the applicable CAFE standards in any model year, it earns "credits" that can be used to offset civil penalties in model years in which the manufacturer incurs a shortfall. See § 502(l), 15 U.S.C. § 2002(f). Credits may be carried forward or back for up to three model years. Id.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
HASTIE, Circuit Judge.
This is an appeal by the original plaintiffs from a judgment in favor of an intervening claimant in an action for specific performance of a contract to sell real property.
Charles and Norma Malone, the defendants, are the owners of the parcel in question which adjoins their home site. Both the appellants and the intervenor, Maxwell, claim to have valid contracts with the Malones for the purchase of the land. The Malones recognize that they are obligated to sell to someone and that the essential terms of the alleged contracts with appellants and with the intervenor are the same. We have to decide which of the rival claimants is entitled to buy the property.
The district court’s findings of fact, supplemented by undisputed testimony and exhibits, disclose the following course of events. On May 19,1961, the Malones signed and sent to the plaintiffs a proposed contract to sell Parcel 21B, Estate Mandahl, for a consideration upon which the parties had already agreed in informal negotiation. On May 31, 1961, the plaintiffs signed the agreement but did not inform the Malones of this action pending further discussion of the purchasers’ right to accelerate mortgage payments and their desire to provide in advance for the future release of part of the land from the mortgage after payment of a certain amount of the purchase price. On June 12, 1961, the parties and their attorneys met and reached an agreement on these points, which were to be covered by a separate letter agreement without altering the contract of sale. However, at that meeting the plaintiffs’ attorney stated that he had learned of a recorded agreement between the Malones and a former owner of land adjoining the Malones’ holdings which, among other things, purported to give the neighboring landowner, E. Nicholas Sargent, and his heirs and assigns, an option in the form of a first refusal for the purchase of land which included Parcel 21B. After discussion of this discovery the attorneys parted with a view to further investigating the matter.
The court below found that during the discussion on June 12th, counsel for the Malones expressed the thought that “any further negotiations” between the Malones and the plaintiffs “would have to be discontinued” pending determination of their situation under the Sargent agreement. On this basis the court concluded as a matter of law that “the offer [to sell] was withdrawn * * * or at least was suspended” pending determination of third-party rights.
We think that what was said and done at the June 12th meeting was neither intended nor understood by those who were present to mean that the offer to sell had been revoked. Except for clearing up the question of the option, no further negotiations between the Malones and the plaintiffs were needed. The basic contract had already been signed by the Malones and delivered to the plaintiffs, and the two outstanding matters which had been carried over to the meeting had been resolved, with the parties agreeing to incorporate their understanding in a letter of amendment to the contract of sale. At no time before the bringing of the present suit did the Malones request that the contract be returned or did their counsel offer to return a $2,400 check which had been deposited with him as earnest. Both at the June 12th meeting and in subsequent communications the Malones or their agents expressed continuing willingness to sell to the plaintiffs on the terms which had been mutually agreed. The lawyer who represented the plaintiffs at the June 12th meeting testified, under cross-examination by counsel for the Malones, that he remembered that “the essence of what you said and what I said was that we could not proceed to close until we have resolved the situation with respect to this option and right of way”. We recognize that “to close”, in the context of real property transactions, means to make the formal transfer of title. Finally, the Malones’ attorney took the stand and testified that during the course of the discussion, he said to one of the plaintiffs, “ ‘Well, Doctor Glauner, you certainly don’t want to buy yourself a lawsuit, and here you’ve got a situation which can result in a lawsuit.’ Well, he said he didn’t, and it was agreed that I would try to straighten it out.” There was no evidence of anything said or done which would have led the plaintiffs to believe that the deal was off; on the contrary, the evidence concerning the June 12th meeting clearly indicates that if the plaintiffs wanted to go ahead in spite of whatever litigation they might incur, the Malones’ offer was still outstanding for them to accept.
Thereafter, the Malones’ attorney communicated with the intervenor, to whom Dr. Sargent’s rights under his agreement had been assigned, and learned that the intervenor would like to buy the Malone property on the terms already offered to plaintiffs. Concerned by the course the matter was taking, the plaintiffs demanded that the Malones consummate the proposed sale to them and on August 21, 1961, recorded the contract of sale which they had signed on May 31st. Finally, on September 5th, the Malones and the intervenor, with notice of the plaintiffs’ recorded contract of sale, signed a contract of sale for the same property on essentially the same terms.
To resolve this controversy we must examine the terms and the history of the Sargent agreement. Parcel 21B and other land of the Malones lies between Parcel 22, formerly owned by E. Nicholas Sargent, and a public road. An agreement between these adjoining landowners, executed in April 1957 and amended in June 1957, provided that “in consideration of the promise of Dr. E. Nicholas Sargent, his heirs and assigns to cut, bulldose, and construct a dirt road, at their own expense, from the public road into Plot No. 21 of Estate Mandahl * * * to provide access to Parcel No. 22 of Estate Mandahl”, the Malones undertook to grant Dr. Sargent a perpetual right of way over the new road he was to construct. In addition the right of the owners of Parcel 21 to enjoy the use of the new road was expressly reserved. It was further provided that “for the same consideration, the undersigned, Charles Malone, hereby give [sic] and grant [sic] unto Dr. E. Nicholas Sargent, his heirs and assigns, an Option to Buy the said Plot No. 21 of Estate Mandahl for such price as shall be offered to me by any bona fide purchaser”.
This agreement is clear and explicit in making the construction of a road for the benefit of both parcels of land the performance required in exchange for a first refusal of the Malone land. Four years elapsed between the execution of this agreement in mid-1957 and the emergence of the present controversy in 1961. In the meantime, Dr. Sargent had sold his land without building the proposed access road. His successors took no steps to that end. In this suit the intervenor does not contend that either he or any predecessor in title has ever undertaken to perform the obligation of Sargent under the 1957 agreement. Certainly such non-action over a four year period is an unreasonable delay in the performance of the promise to build a new road.
Here we think is the plainest failure of consideration. The intervenor is asserting a right to the performance of the Malones’ promise to Sargent despite the total failure of either Sargent or his successors to perform or tender performance of the reciprocal promise which was the sole consideration for the Malones’ undertaking. It is clear that under such circumstances the Malones’ promise is unenforceable. Restatement, Contracts, § 274; see 6 Corbin, Contracts, 1962, §§ 1252, 1253, 1255. They were free to sell to any prospective purchaser without according Dr. Sargent or his successor a first refusal.
In these circumstances the contract of sale executed by the plaintiffs and the Malones, as recorded on August 21st, was fully effective. The intervenor could acquire nothing under his subsequent contract, executed on September 5th with notice of the plaintiffs’ prior claim and of the Malones’ obligation to honor it.
The judgment will be reversed and the cause remanded for the entry of an appropriate judgment for the plaintiffs.
Question: Were there cross appeals 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.
BARRETT, Circuit Judge.
After examining the briefs and the appellate record, this three-judge panel has determined unanimously that oral argument would not be of material assistance in the determination of this appeal. See Fed.R.App.P. 34(a); Tenth Circuit R. 10(e). The cause is therefore ordered submitted without oral argument.
This is a diversity case in which Caleb Vincent Swanson, Jr. (Swanson), appeals the district court’s order directing that his complaint be dismissed for failure to state a claim upon which relief can be granted. We will affirm the dismissal.
Swanson is the stepson of Stanley Bixler and the natural son of Stanley’s wife, Florence E. Bixler. Stanley Bixler is approximately ninety-six years of age and a millionaire; Florence E. Bixler is approximately eighty-two years of age. In the fall of 1981, Swanson left his home in California to assist his mother and stepfather, who were “ill and incapacitated and in need of help,” (R.Vol. I at 7), at their home in Deer Tail, Colorado. When Swanson arrived, he discovered that his stepfather was unaware of his ability to pay for medical and other attention which he and his wife needed. Id.
Swanson then accompanied Stanley Bixler to the First National Bank of Strasburg (Bank), one of the appellees herein, where they learned only that Stanley had “plenty” of money. Id. From the First National Bank of Strasburg, Swanson and Stanley Bixler then went to meet with George Epperson, Stanley Bixler’s attorney for some time, who arranged payment for medical and live-in-help expenses for the Bixlers. Id. at 7-8. Following the meeting with Epperson, Swanson learned that the Bank had $209,846.79 of Stanley Bixler’s money in noninterest bearing accounts. Id. at 8.
Believing that the Bank and its principal officers were imprudently managing Stanley Bixler’s financial affairs, Swanson decided to take upon himself the task of managing those affairs. Id. To that end, he requested that the Bank release to him Stanley Bixler’s funds. Id. This request was refused. Id. Thereafter, according to Swanson, the Bank, two of its principals, Epperson, and Epperson’s law firm “conspired to set up a conservatorship against Stanley Bixler based primarily upon Stanley Bixler’s advanced years and to appoint the defendant Bank conservator.” Id. The conservatorship action was to be brought by Stanley Bixler’s brother, Ralph Bixler, and his natural son by a prior marriage, Albert Bixler. Id. at 8-9.
On or about October 26, 1981, Ralph and Albert Bixler, by their attorneys, Epperson, McClary and Zorn, brought conservatorship proceedings pursuant to C.R.S. § 15-14-401 (1973). They also sought to enjoin Swanson from removing any of Stanley Bixler’s assets or from transacting any business on Stanley Bixler’s behalf. The injunction issued, but was vacated on January 20, 1982, with the creation of the conservatorship and the appointment of Swanson as guardian for Stanley Bixler.
Swanson commenced the present action on October 13, 1982, against: Albert Bixler; Ralph Bixler; the First National Bank of Strasburg; its Chairman of the Board, Jerrie Rice; its President, Jerry L. Slagle; and one of its Directors, Richard Price; the law firm of Epperson, McClary, and Zorn, and Epperson, Donald F. McClary, and Edward L. Zorn individually; Hogan, Kumagai, Kane, and Deeke, accountants for Stanley Bixler; and Edward W. Hogan individually. In his complaint, Swanson alleged: willful deprivation of Stanley Bixler’s testamentary wishes; breach of fiduciary duty; abuse of process; libel and slander; false and negligent misrepresentation; outrageous conduct causing emotional distress; invasion of privacy; and civil conspiracy. All of the defendants moved to dismiss for failure to state a claim upon which relief can be granted. The district court granted each of these motions pursuant to Rule 12(b)(6), Fed.R.Civ.P. We have jurisdiction under 28 U.S.C. § 1291.
II.
When a complaint and action are dismissed for failure to state a claim upon which relief can be granted, it must appear beyond doubt that the plaintiff can prove no set of facts that would entitle him to relief. Hospital Building Co. v. Trustees of Rex Hospital, 425 U.S. 738, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976); Chavez v. City of Santa Fe Housing Authority, 606 F.2d 282 (10th Cir.1979). All well-pleaded facts, as distinguished from conclusory allegations, must be taken as true. Mitchell v. King, 537 F.2d 385 (10th Cir.1976). All reasonable inferences must be indulged in favor of the plaintiff, Id., and the pleadings must be liberally construed. Gas-a-Car, Inc. v. American Petrofina, Inc., 484 F.2d 1102 (10th Cir.1973). The district court specifically applied these standards to Swanson’s claims, but concluded that “[e]ven if all of plaintiff’s allegations are true, the Court can envision no set of facts, which, if further established, might support the plaintiff’s claims.” Order Granting Defendants’ Motion to Dismiss, No. 82-F-2132, United States District Court for the District of Colorado, May 13, 1983, at 3 (hereinafter cited as “Order”).
The district court disposed of two of Swanson’s theories of recovery — deprivation of testamentary choice and breach of fiduciary duty — on the grounds that Swanson was not the “real party in interest” under Rule 17(a), Fed.Rule Civ.P., because, under Colorado law, he did not suffer damage to a legally protected interest. Order, at 3, 5. We will consider these two claims together.
In a diversity case, a federal district court must look to the substantive law of the state in which it is located to determine whether a complainant is the real party in interest. 3A Moore’s Federal Practice H 17.07 (1984). Whether a complainant is the real party in interest under state law is generally resolved by inquiring whether he or she has standing under state law. See, e.g., American Nat. Bank & Trust Co. v. Weyerhaeuser Co., 692 F.2d 455, 459 (7th Cir.1982); Dubuque Stone Products Co. v. Fred T. Gray Co., 356 F.2d 718, 723-24 (8th Cir.1966). In order to have standing under Colorado law, as the district court recognized, a complainant must have suffered “injury in fact to an interest which, as a matter of law, is entitled to protection____” Cloverleaf Kennel Club, Inc. v. Colo. Racing Com’n, 620 P.2d 1051, 1057 (Colo.1980).
Swanson, the district court recognized, did not bring this action on behalf of either Stanley or Florence Bixler; he brought it on his own behalf. Order at 3. In his complaint, Swanson repeatedly alleged that the sole object of Stanley Bixler’s affection is Florence Bixler. Thus, even assuming that Stanley Bixler was deprived of his testamentary choice, Swanson, by his own admission, was not injured by such deprivation. This reasoning also applies to his claim of breach of fiduciary duty. Swanson did not allege that a fiduciary duty to him was breached; he alleged that a fiduciary duty to his stepfather was breached. Inasmuch as he is not bringing this action on behalf of his stepfather or mother, he has no standing to allege breach of a fiduciary duty owed to them. It follows, then, as the district court concluded, that Swanson is not the “real party in interest” under Rule 17(a) with regard to either of these claims.
For similar reasons, the district court concluded that Swanson had no standing to allege abuse of process. The elements of abuse of process are, under Colorado law: (1) an ulterior motive in the use of judicial proceedings; (2) willful actions by a party in the use of the process which are not proper in the regular conduct of a civil action; and (3) damages proximately caused by (1) and (2). Aztec Sound Corporation v. Western States Leasing Company, 32 Colo.App. 248, 510 P.2d 897, 899 (1973). Swanson alleges that the petition for a temporary restraining order and the institution of conservatorship proceedings each constituted an abuse of process. We agree with the district court’s conclusion, however, that Swanson has no standing to complain about the institution of these processes. At the time these processes were instituted, Swanson had not been appointed either guardian or conservator for Stanley Bixler. He therefore had no right to use Stanley Bixler’s assets for the benefit of either Stanley or Florence. Consequently, when conservatorship proceedings were instituted against Stanley, and when he was enjoined by the Arapahoe County District Court, he suffered no damage to a legally protected interest. Furthermore, we agree with the district court’s holding that, even if Swanson could prove damages, he still could not succeed in his abuse of process claim because the injunction and conservatorship proceedings were instituted for an entirely “proper” purpose: that of protecting Stanley Bixler and his assets. See C.R.S. § 15-14-401(3) (1973); 15-14-408(2) (1973).
Swanson further alleges he was libeled and slandered as a result of false or negligent representations that he was going to abscond with Stanley Bixler’s assets. The statements Swanson complains of were made during the course of the proceedings seeking a temporary restraining order and a conservatorship. As the district court recognized, “communications made in the course of judicial proceedings, even though they are made maliciously and with knowledge of their falsity, are absolutely privileged if they bear a reasonable relationship to the subject of inquiry.” MacLarty v. Whiteford, 30 Colo.App. 378, 496 P.2d 1071, 1072 (1972). Consequently, statements that Swanson was stealing money, even if false, were absolutely privileged because they were directly related to the question whether Stanley Bixler and his assets were in need of protection. See C.R.S. § 15-14-401(3) (1973).
Swanson also alleges outrageous conduct resulting in the intentional or reckless infliction of emotional distress. The district court recognized that the Colorado Supreme Court has adopted Restatement (Second) of Torts § 46 (1965), thereby recognizing this tort. See Rugg v. McCarty, 173 Colo. 170, 476 P.2d 753, 756 (1970). Yet the district court also recognized, as has the Colorado Supreme Court, that liability has been imposed only where the conduct was so outrageous as “to be regarded as atrocious, and utterly intolerable in a civilized community.” Rugg, supra, 476 P.2d at 756, quoting Restatement, supra, comment d at 73. We agree with the district court that “[t]he acts of enjoining [Swanson] from removing any of his stepfather’s assets and of petitioning for a conservatorship to protect those assets, do not constitute facts sufficient to support a claim for relief.”
The district court also dismissed Swanson’s claim of invasion of privacy, finding that Swanson “failed to state a claim which, in any light, would constitute an action for invasion of privacy.” Order, at 4. In Rugg, supra, 476 P.2d at 755, the Colorado Supreme Court stated that a claim for invasion of privacy may be asserted “when unreasonable action ... is taken, which foreseeably will probably result in extreme mental anguish, embarrassment, humiliation or mental suffering and injury to a person of ordinary sensibilities ____” (Emphasis in original.) Implicit in the district court’s holding was the conclusion that the conduct complained of here by Swanson was not the sort of “extreme” action which would give rise to a claim of invasion of privacy. We agree and hold that the district court did not err in finding that Swanson failed to allege facts sufficient to give rise to a claim for invasion of privacy.
Because Swanson has alleged no set of facts constituting tortious conduct, we agree with the district court’s conclusion that his claim of civil conspiracy must also fail. As the district court aptly recognized, “[a] ‘conspiracy’ which has as its object conduct which is not tortious cannot then form the basis of a cause of action sounding in tort.” Order, at 5-6.
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.
DOBIE, Circuit Judge.
This case is before the Court upon petition of the North Carolina Finishing Company (hereinafter called the Company), to review and set aside an order issued against it by the National Labor Relations Board (hereinafter' called the Board). The Board, in its decision and order, found that the Company had violated Sections 8(1) and 8(3) of the National Labor Relations Act, 29 U.S.C.A. § 158(1, 3), by discriminatorily discharging Annie Mae Evington because of her activity in behalf of, and membership in, the Textile Workers Union of America (hereinafter called the Union), and by various anti-union conduct on the part of two Company supervisors, Clarence Boston and Ed Walser, who questioned employees concerning their Union affiliation, made disparaging remarks about the Union, and openly expressed their hostility and opposition to the Union.
The Board issued the usual order directing the Company to cease and desist from these unfair labor practices, to offer reinstatement with back pay to Annie Mae Evington, and to post appropriate notices. Two questions are now presented for our consideration: (1) are the Board’s findings of fact that the Company has violated Sections 8(1) and 8(3) of the Act supported by substantial evidence, and (2) is the Board’s ordér valid and proper under the Act.
The Company is a North Carolina corporation engaged in the sizing, bleaching and dyeing of cloth near Salisbury, North Carolina. In May, 1941, the Union started a campaign to organize the employees of the Company’s plant. When the management of the Company became aware of the Union’s activities, W. F. Robertson, Jr., Vice-President and General Manager, called a meeting of the overseers of the plant on July 28, 1941, and “told them of the attempts being made to organize the employees, instructed them not to interfere with the employees’ right to self-organization * * * and instructed the overseers to pass this information along to the second hands.” The term “second hands”, refers to supervisory employees who rank immediately below the overseers.
On the very afternoon of the day Robertson called the meeting, Clarence Boston, a second hand in charge of the tender frame department, told one of his subordinates that “Mr. Robertson said he hoped the boys would forget about the Union now and not pay someone to dictate to them.” Then a few days later, second hand Walser (who had charge of approximately 150 employees in the sewing room) stated to a group of 10 or 12 of his subordinates, “Your union is nothing but run by a bunch of Germans to make you go out on strike for 2 or 3 weeks to hamper defense work.” Walser also asked them why they could not bargain for themselves instead of using the Union as an intermediary bargaining agent.
After the formal organization of the Union (of which event the Company supervisors were admittedly aware) Walser told employee Messick that the Union would never get a closed shop in the Company. When Messick stated that the Company could not discharge an employee except for a good reason, Walser replied, “Ellen, don’t get such stuff in your head. Don’t you think the Company has sense enough to give a good reason?” Finally, throughout the month of August, 1941, Walser not only questioned numerous employees concerning their Union affiliations but he also made other disparaging remarks about the Union. We must note in all fairness however, that the Board expressly found that when a group of workers asked Walser, on one occasion, what Robertson thought of the Union, Walser replied: “Robertson has said he had always taken care of the workers and if they wanted to organize and- join the Union and do so themselves to go ahead.”
On the basis of the foregoing facts, the Board found that supervisors Boston and Walser had openly expressed opposition and hostility to the Union and that the Company had thereby violated Sections 8(1) and 8(3) of the Act. The Company now strenuously contends, however, that its management had officially taken an attitude of “no opposition” to the Union and that any statements to the contrary by supervising employees constituted private opinions only, since they were in direct conflict with the Company’s policy of neutrality and with the Company’s specific instructions.
Although the question is not free from doubt, we do not regard these anti-union statements of Boston and Walser as mere expressions of the personal views of the second hands. The remarks may have been unauthorized by the Company but we must remember that Robertson’s instructions to the overseers were never directly communicated to the subordinate employees. Accordingly, the hundreds of employees under the supervision of Boston and Walser could have reasonably believed that the second hands were speaking for the management, and this affords a sufficient basis for liability under the Act. International Association of Machinists v. N. L. R. B., 311 U.S. 72, 61 S.Ct. 83, 85 L.Ed. 50; Hickory Chair Mfg. Co. v. N. L. R. B. 131 F.2d 849, decided by this Court November 12, 1942; Virginia Ferry Corp. v. N. L. R. B., 4 Cir., 101 F.2d 103. We do not feel that the unenforced instructions of the Company issued by Robertson to the overseers that the employees were perfectly free to join the Union if they so desired, served to neutralize the normally coercive effects of the anti-union statements made by the second hands. Cf. H. J. Heinz Co. v. N. L. R. B., 311 U.S. 514, 61 S.Ct. 320, 85 L.Ed. 309; Solvay Process Co. v. N. L. R. B., 5 Cir., 117 F.2d 83, certiorari denied 313 U.S. 596, 61 S.Ct. 1121, 85 L.Ed. 1549; N. L. R. B. v. Chicago Apparatus Co., 7 Cir., 116 F.2d 753.
In H. J. Heinz Co. v. N. L. R. B., 110 F.2d 843, 847, affirmed 311 U.S. 514, 61 S.Ct. 320, 85 L.Ed. 309, the Sixth Circuit Court of Appeals stated: “There was no evidence that petitioner directed any supervisory employee to communicate its alleged neutrality to the employees. If petitioner had really wanted its employees to know that they might with safety join whichever union they desired, the bulletin boards were the obvious and, because direct, the most effective means of assuring them of its impartiality.”
Undoubtedly the posting of notices on the bulletin board in the instant case would have more clearly shown the alleged impartial attitude of the Company towards its employees but it is impossible for us to state, on the basis of the facts before us, that the repeated statements of the supervisory employees had no effect upon the workers in exercising their free choice of bargaining representatives. Nor are we unaware of the principle announced by us in N. L. R. B. v. Mathieson Alkali Works, 4 Cir., 114 F.2d 796, 802, that: “* * * mere isolated expressions of minor supervisory employees, which appear to be nothing more than the utterance of individual views, not authorized by the employer and not of such a character or made under such circumstances as to justify the conclusion that they are an expression of his policy, will not ordinarily justify a finding against him.”
However, the facts of the instant case clearly do not fit within the corners of this doctrine.
The Company also makes the contention in its brief that no supervisors other than Boston and Walser engaged in conduct which might be deemed a violation of the Act. A careful examination of .the entire record before us, though, reveals the fallacy of this assertion. For example, when the Union posted a notice on the plant bulletin board inviting the employees to attend the installation of the Union charter, second hand Adams (in charge of 4 departments) removed the notice and replaced it with a newspaper editorial entitled “A Menace to Labor.” The gist of this clipping was a warning against “a projected labor monopoly” and a “few fat-salaried labor leaders (who) will rule this country as surely as Hitler rules his Reich.” Another supervisory employee named Brinkley, whose official capacity is not altogether clear in the record, made sarcastic remarks about the Union and advised employees not to have anything to do with it.
It is true that the Board did not find that the conduct of Adams and Brinkley constituted an unfair labor practice. However, we feel that we may properly consider it at this, time as a part of the “totality of the Company’s activities” in order to determine whether the Act has been violated. N. L. R. B. v. Virginia & Electric Power Co., 314 U.S. 469, 62 S.Ct. 344, 86 L.Ed. 348; Virginia Electric & Power Co. v. N. L. R. B., 132 F.2d 390, decided by us on December 9, 1942; N. L. R. B. v. Link-Belt Co., 311 U.S. 584, 61 S.Ct. 358, 85 L. Ed. 368; Stewart Die Casting Corp. v. N. L. R. B., 7 Cir., 114 F.2d 849, certiorari denied, 312 U.S. 680, 61 S.Ct. 449, 85 L.Ed. 1119.
Accordingly, without granting express approval to the conclusions reached by the Board, we are of the opinion that there is sufficient evidence in the record before us to warrant our affirming the Board to the effect that the Company has engaged in unfair labor practices within the meaning of Section 8(1) of the Act by interfering with the free exercise of the employees’ right to self-organization and the right to bargain collectively through representatives of their own choosing.
We now turn to the alleged discriminatory discharge of Annie Mae Evington in violation of Sections 8(3) and 8(l)of the Act. This employee was hired by the Company in 1938 as an inspector and folder of sheets. Her duties were to detect and remove defective sheets which were known as “seconds” and “thirds”. On August 1, 1941, she joined the Union and became the most active female employee in its behalf. She wore her Union button to work, served on various Union committees, attended the weekly Union meetings faithfully, and was the only girl bold enough to take the floor “to urge the women in her department to organize.” Indeed, she was successful in “signing up” 12 girls as a result of her forceful Union activity. Then, on August 17, 1941, she was elected recording secretary of the Union, thereby becoming the only female employee to hold office in the Union. The Company’s supervisory employees admittedly were aware of Evington’s Union proclivities and Walser also learned from questioning other employees that she had solicited them for membership in the Union. Evington was finally discharged from the Company on September 25, 1941, by second hand Walser, at the request of overseer Grubb.
On the day of her discharge, Walser told Evington that the action was taken because “her percentage on her ‘thirds’ was higher than any of the other girls.” In support of this contention, the Company introduced records at the Board’s hearing, indicating the total number of “thirds” passed by each inspector in the sewing department. The individual records were as follows:
Name Thirds Passed Days Worked
Mary Doby............. 12 41
Laura McBride......... 11 69
Annie Mae Evington---- 11 46
Frances Bailey ......... 10 64
Ellen Messick .......... 10 59
Hazel Correll........... 10 72
Rozelle Richard ........ 9 67
Nancy Miller............ 9 68
Walser admitted, however, that 2 of the 11 “thirds” charged against Evington were placed on the records subsequent to her discharge. An examination of these records on September 25, 1941, therefore, would have shown only 9 “thirds” listed against Evington. It is thus obvious that at the time of the discharge of Evington, at least 7 other inspectors had records worse than, or equally as bad as, hers (that is, based upon the actual number of “thirds” passed without reference to the number of days worked). Yet Walser made the flat statement to Evington that she was being fired because she had the highest number of “thirds”. Doby, a non-union employee who actually had the highest number of “thirds” was discharged by Grubb on September 26, 1941.
The Company now contends that Robertson had instructed Grubb to decrease the number of “thirds” even “if it is necessary to fire an employee”, that Walser and Grubb had warned the inspectors as a group that some one would be laid off or discharged if the inspection did not improve, and that Evington and Doby were fired because they had the highest percentage of “thirds” according to the official tabulation which was made after the ensuing discharges. We shall discuss this explanation assigned by the Company in the light of the principle that union activity “in itself is no bar to the discharge of an employee for legitimate reasons [but], it may well disclose the real motive actuating an anti-union employer in discharging such an employee when the reasons given for the action do not ring true.” Burk Bros. v. N. L. R. B., 3 Cir., 117 F.2d 686, 687.
At the outset, we wish to recall that Walser is on record as having stated that the Company would have “sense enough to give a good reason” for discharging a Union member. We think it is also significant that the Company’s customary treatment of inspectors who had passed too many “thirds” was merely to discipline them by a 2 weeks’ lay-off, whereas Evington was the first inspector ever to be discharged for this offense, and she had never been laid-off in the past.
Walser admitted that Doby was a poor worker, had been absent on many occasions without notifying the Company, and had also been laid-off once before for passing too many “thirds”. It would therefore seem that the ensuing discharge of Doby was an afterthought on the part of the Company designed to conceal the prior discriminatory treatment of Evington. Moreover, we note erasures of the notations as to the number of days worked by Doby and Messick, and Walser was unable to explain this faulty state of the records.
Walser also testified that in a large number of cases he charged the inspectors with “thirds” without showing them the defective sheets or the records. Indeed, the last time Evington was shown the records there were only 5 “thirds” marked against her. Furthermore, about a month before Evington’s dismissal Walser charged her with 2 “thirds” which had in fact been passed by another inspector. Finally, it appears that while the other inspectors were given individual warnings to improve their inspection, no such notice was given to Evington. And the keystone, we believe, to the entire situation is supplied by the fact that Evington was discharged a scant 10 days after Walser became aware of her election to the office of recording secretary of the Union.
The Company’s attempted justification of Evington’s discharge, in the light of the circumstances we have just outlined, seems to us quite unreasonable. Since the Company’s position does not stand up under scrutiny, we must affirm the conclusion of the Board (which was also reached by the Trial Examiner) that Evington was discharged because of her known Union activities.
In holding that the discharge was illegally motivated, we are not unmindful of the legal 4enet (as well as sound business practice) that the right to hire and fire is still a managerial function. N. L. R. B. v. Rock Hill Printing & Finishing Co., 4 Cir., 131 F.2d 171. But we are not moved by the.reasons for the discharge assigned by the Company in the instant case. We realize that the present day employer is in a precarious position when he attempts to discipline a union employee. And the instant case is a border-line one, inasmuch as Doby, the discharged non-union employee, was given substantially the same -treatment as Evington. Here again, however, as in the Company’s violation of Section 8(1) of the Act, without granting express approval to the conclusions reached by the Board, we feel there is substantial evidence in the record to support the finding that Evington was discharged because of her Union activity.
Accordingly, we are of the opinion that the Board’s findings of fact to the effect that the Company has violated Sections 8(1) and 8(3) are supported by substantial evidence, and that the Board’s order, in -the light of these findings, is valid under the Act and should be enforced as issued.
Affirmed and order 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.
VAN GRAAFEILAND, Circuit Judge:
The government appeals from two orders of the United States District Court for the District of Vermont (Billings, C.J.), the first of which granted Thomas E. Miner’s motion to suppress evidence and the second of which denied the government’s motion for reconsideration. We reverse.
On March 30, 1990, at 5:46 p.m., Miner telephoned the Brattleboro barracks of the Vermont State Police, reported that his pickup truck had been vandalized, and requested that the police come to see what had occurred. Although Miner testified at the suppression hearing that he only telephoned to report the vandalism for insurance purposes, he admitted that he made no mention of this: “I didn’t say for insurance purposes^ I just wanted it investigated and wanted it on report.” Trooper Kraig LaPorte, with whom Miner talked, testified that he understood from the conversation that Miner wanted the vandalism investigated. Trooper LaPorte told Miner that he would be over as soon as he could. He was to meet Miner at the roadway end of Miner’s 1000-foot long driveway where the truck was parked blocking the driveway. Because Miner did not have a telephone in the motorbus where he was staying, which was over a hill at the opposite end of the blocked driveway, Trooper La-Porte was to activate his cruiser’s warning lights and siren when he arrived so that Miner would know he was there and could meet him.
Trooper LaPorte, accompanied by Trooper Thomas Revene, arrived at the scene of the vandalism around midnight. He activated the cruiser’s warning lights and siren, but Miner, having gone to bed, did not respond. The troopers then proceeded with their investigation. They observed, among other things, that the truck’s windshield and a side window had been smashed. The nature of the damage indicated that one or more objects might have been thrown into the car from the outside. In his effort to locate the possible projectiles, Trooper La-Porte reached through the shattered side window and moved a coat on the passenger’s seat.
Q: And what did you do with that coat?
A: I just moved it to the side to see if I could see any items that were possibly used to break the windshield of the truck.
In so doing, LaPorte uncovered an open cardboard box containing ammunition and two handgun holsters. Finding no projectiles or other pertinent evidence, the troopers photographed the truck and concluded their investigation.
Because the troopers knew that Miner had prior felony convictions, they reported what they had seen to the Bureau of Alcohol, Tobacco and Firearms. On April 5, 1990, Agent Forrest H. LeMoine submitted an application for a warrant to search Miner’s vehicles and residence, incorporating therein the facts concerning the troopers’ investigation and discovery. The search pursuant to this warrant resulted in the seizure of various firearms, and Miner was indicted for alleged violations of firearm statutes.
Miner moved to suppress evidence of the firearms, arguing that the troopers had unlawfully searched his truck without a warrant and that the subsequent warrant-authorized search was a fruit of this illegality. Accepting both prongs of this argument as valid, the district court granted the motion.
In support of its holding that the troopers’ investigation constituted an unlawful search, the district court cited United States v. Mapp, 476 F.2d 67 (2d Cir.1973) and United States v. Smith, 308 F.2d 657 (2d Cir.1962), cert. denied, 372 U.S. 906, 83 S.Ct. 717, 9 L.Ed.2d 716 (1963), in which this court discussed the government’s “particularly heavy” burden of showing the vol-untariness of a consent given by one who at the time was subject to actual or implied duress or coercion. This is not such a case. Miner voluntarily called the state police and told them that he wanted the vandali-zation of his truck investigated and on report.
Because of Miner’s testimony that he wanted the investigation and report for insurance purposes and that he did not give the troopers consent to enter the truck, the district court held that the troopers made an unlawful search. This was error. Miner said nothing to the troopers about insurance purposes and never forbade them from entering his truck. As is true of most jural relationships, it is a person’s manifest, rather than undisclosed, intention that determines his rights and obligations. See 9 Wigmore, Evidence § 2413, at 40 (Chadbourn rev. 1981); 1 Williston on Contracts § 21, at 42 (3d ed. 1957); Atlantic Lines Ltd. v. American Motorists Ins. Co., 547 F.2d 11, 13 (2d Cir.1976).
We may take it as a given that vandalization of motor vehicles often involves the removal of radios and other interior appliances. It is not surprising therefore that the district court found the interi- or search of such a vehicle to be the “usual police procedure in an investigation request.” The police officer making such inspection is performing his “community caretaking functions”, Cady v. Dombrowski, 413 U.S. 433, 441, 93 S.Ct. 2523, 2528, 37 L.Ed.2d 706 (1973), and his duty to protect the lives and property of citizens, United States v. Markland, 635 F.2d 174, 176 (2d Cir.1980), cert. denied, 451 U.S. 991, 101 S.Ct. 2332, 68 L.Ed.2d 851 (1981). There was no showing that the troopers who were following standard procedures in the instant case acted in bad faith for the purpose of investigating Miner rather than his vandalized vehicle. See Colorado v. Bertine, 479 U.S. 367, 372, 107 S.Ct. 738, 741, 93 L.Ed.2d 739 (1987); South Dakota v. Opperman, 428 U.S. 364, 375-76, 96 S.Ct. 3092, 3100-01, 49 L.Ed.2d 1000 (1976). Under the circumstances, Miner had no objectively reasonable and justifiable expectation of privacy in his damaged vehicle. See Smith v. Maryland, 442 U.S. 735, 740, 99 S.Ct. 2577, 2580, 61 L.Ed.2d 220 (1979); United States v. Metzger, 778 F.2d 1195, 1200 (6th Cir.1985), cert. denied, 477 U.S. 906, 106 S.Ct. 3279, 91 L.Ed.2d 568 (1986).
Our holding that Trooper LaPorte did not conduct an unlawful search of Miner’s truck disposes of the district court’s holding that the subsequent warrant search was tainted.
The district court’s orders are 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.
PETERS, District Judge.
This appeal is from a judgment of the United States District Court in Rhode Island entered after a jury verdict.
It appears from the evidence that in January, 1933, Ferro Concrete Construction Company, appellant, made a contract with the United States for the construction of a public building at Newport, Rhode Island, and gave the bond required by the Hurd Act. U.S.C.Tit. 40, Section 270, 40 U.S.C.A. § 270. L. Luchini & Son, appellees, as sub-contractors, agreed with the Ferro Company to furnish the stone for the building for the specified sum of $30,000. The stone called for by the sub-contract was furnished after some-delay due to financial embarrassment of the Luchinis. During the progress of the work Ferro Company made various payments to the Luchinis and on their account aggregating $3,892.73 more than the contract price. Proceedings under the Hurd Act were brought by other sub-contractors and Luchini & Son came in as intervenors claiming under an abrogation or modification of the contract a larger sum due them than they had received; and, after a trial by jury lasting several days, they recovered a verdict for $27,-282.07 which represented the difference between $56,082.08, the amount of their claim, and the total amount they had been paid.
Objections were made by the Ferro Company to the admission and exclusion of evidence, to some parts of the judge’s charge to the jury, and to the denial of motions for a directed verdict.
It will not be necessary to consider the objections to the other rulings at the trial, as we think that the motion for a directed verdict should have been granted.
It may be convenient to refer to the partnership of the Luchinis as “Luchini”, or the plaintiff, and to the Ferro Company as “Ferro” or the defendant For the purposes of the trial they occupied substantially that relationship.
No question was made that the parties deliberately entered into an agreement, evidenced by a written contract in duplicate, dated March 25, 1933, to the effect that Luchini was to furnish and deliver at the building site, finished and ready to set, the granite necessary to complete the building in accordance with the general plans and specifications, and that in return Ferro was to pay Luchini $30,000, payable in instalments, at certain stages of the work. Luchini claimed that after the execution and delivery of this written contract it was modified or rescinded with respect to the sum of $30,000 to be paid for the work, and that in lieu of the contract price Ferro agreed to pay him “what it was worth to do the job”. Denial by Ferro raised the issue of fact which was decided adversely to- Ferro by the jury.
Counsel for Ferro claim that there was before the jury no credible or substantial evidence of any modification of the contract in respect of the price, and also that there was no evidence that the person alleged to have made the modification of the contract in behalf of Ferro had any authority, express or implied, to do so.
As we agree with the defendant’s position on the question of the authority of the alleged agent to modify the written contract, and as a decision on that point is decisive of the case, we will not consider the other points raised.
The only evidence befor.e the jury of any agreement with the defendant, or anyone in its behalf, by which the plaintiff could be considered released from his obligation to furnish the stone for the contract price, is the testimony of the younger Luchini as to a conversation some time in the summer of 1933 with Starr, the superintendent of construction. Luchini was uncertain as to when the conversation occurred, but finally fixed it as “a couple of weeks, I would say, from memory” after August 8, 1933, the date of a letter written by Luchini to Ferro authorizing the latter to place' an additional man on the job to expedite the progress of the work at the quarry. The recital by Luchini of his conversation with Starr is as follows:
“I told him that I was having too great difficulty carrying on under the conditions as they existed and told him that he knew I couldn’t get any money or raise any money and that I couldn’t go on with an arrangement like that. And he asked me what I wanted. Well, we discussed the thing and I said ‘You know that I am supposed to double this plant and I am supposed to — I am supposed to double the men at the plant and increase the plant machinery itself. You want me to do all this and I can’t move a leg without going through you. So I don’t see how I can carry on. I just can’t go on and do what you want me to do. You can’t speed up this thing unless you buy more machinery or rent it and put on more men, find more men in other locations, other granite areas, and maybe we might have to increase the stationary plant * * * the stationary plant, the machines at the plant. And I am working for you for nothing and my father is, and my brother, and you are getting the use of everything we have got and I still don’t get any money for it. Now, I can’t go on unless you come with me and help to get this equipment and pay me what it is worth to do the job, and pay me and my father’s time and my brother’s time.
“Q. 212. What did he say to that? A. Why that — well, he said, ‘We can’t change now and you go ahead. You do all you can and I will come with you and, if necessary, we will go together to these equipment places, and I will tell them that we will see that they get paid.’
“Q. 213. And what did he say about payment to you? A. He said, ‘I will see that you get paid for your trouble and pay you what it is worth to do the job.’
“Mr. Edwards: Well, which is it?
“Q. 214. Now he asks you which it was. What do you say to us? A. Pay what it was worth to do the job.”
Assuming that the conversation above quoted was had between the individuals, as stated by the witness Luchini, and that it was sufficient, if authorized, to bind the Ferro Company to “change the contract price from payment of a flat sum of thirty thousand dollars to a payment upon a quantum meruit basis”, as plaintiff’s counsel puts it, it is necessary to determine the extent of the authority vested in Starr to make such a change in the contract and whether, in the absence of actual authority, Ferro was bound by his action under the circumstances of the case.
In considering evidence as to the authority of Starr to make the alleged new contract with Luchini the rule as to the burden of proof is important. It was thus stated in the case of Owens Bottle-Machine Co. v. Kanawha, B. & T. Co., 4 Cir., 259 F. 838, 842:
“It is of course an elementary rule of law that a person dealing with an alleged agent is bound to ascertain his authority, and that, when suit is brought against the principal in respect of an act of such agent, the burden is upon the plaintiff to establish, not only the fact of agency, but that the act upon which he relies was within the agent’s authority.”
“A party who seeks to charge a principal for the contracts made by his agent must prove that agent’s authority; and it is not for the principal to disprove it.” Schutz v. Jordan, 141 U.S. 213, 11 S.Ct. 906, 907, 35 L.Ed. 705.
Persons who rely upon the authority of an agent to modify by parol a written contract entered into by his principal, do so at the risk of being bound by the contract as it was made. Dudley v. Perkins, 235 N.Y. 448, 139 N.E. 570.
The written contract here was a formal one entered into in behalf of the Ferro Company in Ohio by its vice president who had conducted the previous negotiations between the parties.
The evidence is clear to the effect that so far as actual, express authority in Starr to change the contract was concerned, he had none.
There is some claim of a ratification, but the record is barren of evidence by which a ratification could be established. To constitute a ratification the principal must have knowledge of all the material facts and circumstances relating to the unauthorized act of the person who assumed to act as agent. In this case the evidence was to the effect that the principal knew nothing about the alleged act of the agent until the year following, when a claim was made against the principal which was immediately rejected. The facts relied upon, from which it is claimed that knowledge by Ferro of a changed contractual relationship should be inferred, had no necessary connection with a changed price for the work.
The only arguable question relating to the evidence on the point whether the act of Starr in altering the contract, as alleged, under the circumstances, was binding on his employer, is whether the evidence showed that such an act was within the scope of his apparent authority.
Such acts of an agent as are within the apparent scope of authority conferred upon him are binding upon the principal; the apparent authority being that which, though not actually granted, the principal knowingly permits the agent to exercise under such circumstances as to preclude a denial of its existence. If the principal places an agent in such a situation that a person of ordinary prudence and discretion is justified in assuming that the agent is authorized to perform, in behalf of his principal, the particular act in question, and such act has been performed, the principal is bound by what his agent did. Frye v. E. I. Du Pont De Nemours & Co., 129 Me. 289, 151 A. 537.
The record is somewhat lacking in evidence as to the status of Starr. It shows that, although not an officer of the corporation, he had been in its employ for some years as superintendent of construction and had acted as such on many building jobs. He had nothing to do with the negotiations preceding or the making of the original contract. The evidence was to the effect that matters of the handling of bids and making contracts were always exclusively attended to by the officers of the company. Plaintiff points to the statement of Starr that his job was “to see that the building was erected within the time allotted by our contract with the Government”.
It appears from the evidence that, after Ferro made the contract with the Government to erect the building and the subcontract with Luchini to furnish the stone, Starr was sent to Newport to manage the construction, his job being to see that the work was done according to the contract with the Government and the stone furnished according to the sub-contract with Luchini. Starr did whatever he considered necessary to that end. in each case. He went to the quarry in Massachusetts occasionally. He originated the arrangements with Luchini whereby the latter agreed that an “expeditor” should be put on the quarry to forward the work and to see that the money which Ferro advanced went into Ferro stone. This incident is much relied upon by the plaintiff as showing the authority, or ostensible authority, by Starr to change the contract. It is apparent, however, that such action was more in furtherance of the performance óf the contract than anything else, and the rule is that it is the conduct of the principal and not that of the agent which must he looked to in determining whether apparent authority exists. Chesapeake & O. Ry. v. Ringstaff, 6 Cir., 67 F.2d 482.
While Starr took the initiative in mak- • ing the arrangement with .Luchini about expediting the work, it is significant that it was submitted to an officer of the company for approval and action. There was no appearance of independent authority there to warrant Luchini, presumably a reasonably prudent and discreet man, in believing that Starr had any general authority to contract for his principal.
The evidence does not show that the apparent scope of authority given Starr as superintendent of construction was any greater than that title would imply.' He was held out as an agent in matters pertaining to carrying out the contract and the construction of the building, but surely that does not justify a prudent business man in assuming that his authority extended to making a new contract as to the price. It would certainly not justify this particular business man in so assuming, because he was not in the position of a stranger. He himself, after negotiations, made the contract in writing with an officer of the company and also knew that that officer closely followed the work being done and came to the quarry when trouble arose and it seemed that he might not get the granite according to contract.
The exhibits in the case show that the correspondence between Luchini and the home office of the company was on letterheads which carried the printed statement that “All agreements are subject to the approval of one of the officers of the company”.
The evidence shows that Luchini had every reason to believe that Starr’s authority was limited to construction and the carrying out of the contract after it was made, and for that reason Luchini at his own peril dealt with Starr on any other basis. Kyte v. Commercial Union Assurance Co., 144 Mass. 43, 10 N.E. 518.
The information obtained by Luchini in his dealings with the company was amply sufficient to put him on notice that Starr had no general authority to act for the company outside of the particular sphere of activity indicated by his title, particularly where Luchini was the person who made the original contract with the company through one of its officers and the alleged change increased a considerable contract price by about eighty-five per cent. Southwestern Bell Telephone Company v. Coughlin, 5 Cir., 40 F.2d 349; Coal & Iron R. Co. v. Reherd, 4 Cir., 204 F. 859; Baltimore & O. Ry. Co. v. Jolly Brothers & Co., 71 Ohio St. 92, 72 N.E. 888.
“Authority in an agent to carry out or to perform a contract already made by his principal does not include authority to change the contract or to waive any of its provisions, especially where, as here, the provision is one which was intended for the benefit, of the principal. Presumptively, an agent is employed to acquire interests, not to give them up.” Morton v. Albers Milling Co., 66 Cal.App. 391, 226 P. 809, 812, and cases cited.
For reasons given, without touching upon others advanced by counsel for the defendant, which may well have merit, we are satisfied that the law applicable to the case requires that the motion made at the close of the evidence that a verdict be directed for the defendant on the claim made against it by Luchini & Son should have been granted.
The case having been tried after the Federal Rules of Civil Procedure had gone into effect, the denial of the defendant’s motion for a directed verdict was equivalent to a submission of the action to the jury “subject to a later determination of the legal questions raised by the motion”. Rule 50, 28 U.S.C.A. following section 723c. The defendant having moved seasonably that the verdict and judgment thereon be set aside and to have judgment entered in accordance with its motion for a directed verdict, there is no occasion for a new trial of the issues involved in the plaintiff’s claim. The verdict for the plaintiff should be set aside, the judgment vacated and judgment for the defendant entered.
As to the defendant’s counterclaim for the amount paid to the appellee in excess of the contract price the circumstances are not such as to permit a decision as a matter of law that the counterclaim is valid or invalid. Questions of fact requiring determination by a fact finding tribunal are here involved.
Accordingly, the verdict of the jury for the intervening petitioners and the judgment thereon are set aside, and the case is remanded to the District Court with directions to enter judgment for the defendants upon the intervening petition of L. Luchini & Son et al. and for a new trial upon the counterclaim of the Ferro Concrete Construction Company. The appellants recover costs of appeal against said L. Luchini & Son and Milford National Bank & Trust Company, intervening petitioners.
Question: Were there cross appeals 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.
JON 0. NEWMAN, Circuit Judge:
The extent to which banks should be permitted to engage in nonbanking activities is a major controversy in this country, attracting the increasing attention of Congress, administrative agencies, and courts. This petition for review of an order of the Board of Governors of the Federal Reserve System (“the Board” or “the Fed”) brings before us one facet of that controversy. The issue is whether the Fed was entitled to conclude that section 4 of the Bank Holding Company Act of 1956 (“the Act” or “BHCA”) does not restrict bank subsidiaries of a bank holding company from selling insurance. The issue arises on a petition filed by the Independent Insurance Agents of America (“IIAA”) challenging the Board’s March 3, 1989, order, which permitted two Indiana state banks acquired by the Merchants National Corporation, a bank holding company, to resume specified insurance activities permitted under Indiana law. Merchants National Corp., 75 Fed.Res.Bull. 388 (1989) (“Merchants II”). The Board’s order rested upon a determination that the nonbanking prohibitions of section 4 of the Act, as amended, 12 U.S.C. § 1843 (1988), do not apply to the activities of the bank subsidiaries of a bank holding company. Concluding that this construction of section 4 is within the range of reasonable interpretation that the pertinent administrative agency is entitled to make, we deny the petition for review and leave this long-simmering controversy for such further consideration as Congress cares to give it.
Background
Litigation history. This matter is before this Court for the second time. On the prior occasion, we granted IIAA’s petition for review after concluding, contrary to the Board’s prior decision in this matter, Merchants National Corp., 73 Fed.Res. Bull. 876 (1987) (“Merchants I”), that the Board’s authority to permit insurance activities by the bank subsidiaries of Merchants National was temporarily precluded by the moratorium provisions of the Competitive Equality Banking Act of 1987 (“CEBA”), Pub.L. No. 100-86, 101 Stat. 552 (1987), reprinted in 12 U.S.C. § 1841 note (1988). See Independent Insurance Agents of America, Inc. v. Board of Governors, 838 F.2d 627, 633-34 (2d Cir.1988). The moratorium, which was effective from March 6, 1987, to March 1, 1988, prohibited the Fed from issuing any order “that would have the effect of increasing the insurance powers” of a bank holding company or its banking or nonbanking subsidiaries. CEBA § 201(b)(3).
In anticipation of the expiration of the moratorium, Merchants National renewed its request that the Board authorize its Indiana banking subsidiaries to engage in insurance activities. After providing notice of this request, 52 Fed.Reg. 8966 (1987), and assessing the comments that were received, the Board issued the order that is the subject of the pending petition for review. This Court granted a stay of the order pending oral argument and continued the stay pending decision.
The statutory framework. Before introducing the facts, it will be helpful to outline briefly the pertinent statutory provisions of the Bank Holding Company Act. The principal regulatory powers of the Fed concerning bank holding companies are set forth in sections 3 and 4 of the Act. 12 U.S.C. §§ 1842, 1843. Section 3 requires Board approval of the acquisition of ownership or control of any bank by a bank holding company, with narrow exceptions not here relevant. Section 3 sets forth factors governing acquisition approval, focusing on the competitive effect of the proposed acquisition, the financial and managerial resources of both the holding company and the acquired bank, and the convenience and needs of the community served. 12 U.S.C. § 1842(c).
Section 4 of the Act, the focal point of the Board’s order in this case, contains two sets of prohibitions. First, it specifies, in what might be called the “ownership clause,” that a bank holding company may not “retain direct or indirect ownership or control of any voting shares of any company which is not a bank or bank holding company.” 12 U.S.C. § 1843(a)(2). Second, it provides, in what might be called the “activities clause,” that a bank holding company may not “engage in any activities other than (A) those of banking or of managing or controlling banks ... and (B) those permitted under [section 4(c)(8) of the Act].... ” Id. Section 4(c)(8) sets forth the so-called “closely related to banking” exception to the nonbanking provision. Id. § 1848(c)(8). In relevant part, section 4(c)(8) states that the section 4(a) nonbank-ing prohibitions shall not bar ownership by a bank holding company of:
shares of any company the activities of which the Board after due notice and opportunity for hearing has determined (by order or regulation) to be so closely related to banking or managing or controlling banks as to be a proper incident thereto, but for purposes of this subsection it is not closely related to banking or managing or controlling banks for a bank holding company to provide insurance as a principal, agent or broker....
Id.
Facts. A number of states, including Indiana, historically have authorized state-chartered banks to provide insurance services to their customers. On July 1, 1986, Merchants National Corporation, a bank holding company within the meaning of the BHCA, 12 U.S.C. § 1841(a), sought permission from the Fed to acquire the stock of two banks chartered under the laws of the State of Indiana, the Anderson Banking Company (“Anderson Bank”) and the Mid State Bank of Hendricks County (“Mid State Bank”). Both of these state banks had engaged in general insurance activities prior to the date of Merchants National’s applications, Anderson Bank directly since its incorporation in 1916, and Mid State Bank since its purchase of an insurance agency in 1985. Merchants National subsequently made a commitment that Mid State Bank would transfer to itself all insurance activities from its insurance agency subsidiary and thereafter conduct all such activities directly in the bank.
The initial Merchants National applications were protested by various insurance industry trade groups, including the IIAA, on the ground that the provisions of section 4 of the Act apply to the insurance activities of state banks owned by bank holding companies and therefore that the acquisitions of Anderson Bank and Mid State Bank could not be approved without termination of their insurance activities to the extent required under section 4. In response to the protests, Merchants National committed that it would cause the banks to divest their insurance agency activities within two years unless, within that time, it received Board approval for the banks to retain their insurance activities. Merchants National agreed that, prior to such approval, the banks would limit their insurance activities to the renewal of existing policies. In light of these commitments, the Board approved the applications on October 29, 1986. 72 Fed.Res.Bull. 838 (1986).
On February 5,1987, Merchants National filed an application seeking Board approval for Anderson Bank and Mid State Bank to resume the insurance activities that had just been suspended pursuant to the acquisition commitments. Merchants National sought permission on two alternative grounds. First, it contended that Anderson Bank and Mid State Bank were exempt from the insurance provisions of section 4 of the Act pursuant to the “grandfather” provision of section 4(c)(8)(D), as amended, 12 U.S.C. § 1843(c)(8)(D), under which a bank holding company or any of its subsidiaries is permitted to engage in insurance agency activity in which the holding company or the subsidiary was engaged on May 1, 1982, subject to certain geographical and functional limitations. Second, Merchants National sought more broadly a determination that the nonbanking prohibitions of section 4 of the Act do not apply to activities conducted directly by banking subsidiaries of a bank holding company. In Merchants /, the Board rejected the first contention but agreed with the second one. After the prior appeal to this Court and the expiration of the moratorium, the Board issued the decision challenged on this petition for review. Merchants II.
The Board’s Decision
The core of the Board’s decision in Merchants II was its conclusion, previously expressed in Merchants I, that the provisions of section 4 limiting the nonbanking activities of bank holding companies do not apply to bank subsidiaries of a bank holding company. Consistent with this view, the Board also ruled, as it had in Merchants I, that section 4's prohibition upon a bank holding company’s acquisition of a nonbanking entity (unless that entity engages only in activities “closely related to banking”) does not apply to a holding company’s acquisition of a bank. The Board recognized an exception to this latter conclusion in those instances, illustrated by the Citicorp (South Dakota) case, 71 Fed.Res. Bull. 789 (1985), where the Board finds an evasion arising from a holding company’s acquisition of an entity that purports to be a “bank” but engages in insignificant banking activities, indicating that the acquisition is “primarily, if not solely” for the purpose of enabling the holding company to engage in the target’s nonbanking activities. Merchants II, Fed.Res. slip op. at 8 n. 11.
The Board grounded its conclusions on several considerations. First, the Board pointed out that the limitations of section 4(a)(2) apply in express terms to “bank holding companies, not to “banks. Id. at 11. Second, the Board relied on what it considered a structural argument: the “ownership clause” of section 4 restricts the entities that a bank holding company may acquire or retain, and the “activities clause” restricts the activities that the bank holding company itself may engage in. In the Board’s view, if the restriction on activities applied to the activities of subsidiaries of a bank holding company, the restriction on acquisition or retention of nonbank entities would be superfluous. Id. at 11-13. Third, the Board emphasized that the restriction on acquisition or retention was broadly phrased to prohibit “direct or indirect” ownership, whereas the restriction on engaging in activities omitted the comparable adverbs “directly or indirectly,” words the Board appears to acknowledge would have made the restrictions of section 4 applicable to activities of a bank holding company’s subsidiaries. Id. at 12-13. Fourth, the Board asserted that since the enactment of the Bank Holding Company Act, it has consistently declined to read the activities restriction of section 4 as applicable to bank subsidiaries of a bank holding company. Id. at 15-16. Fifth, the Board found in the legislative history of the Bank Holding Company Act and its subsequent amendments a congressional purpose to leave the scope of permissible activities of bank subsidiaries of a bank holding company subject only to the authority that issued the banks’ charter, without any further restriction from the Act itself. Id. at 17-20.
The Board also reckoned with and rejected an argument based on section 101(d) of CEBA, which amends section 3 of BHCA to permit qualified state-chartered savings banks to engage in any activity permitted by state law, but prohibits such banks from violating the insurance restrictions of section 4(c)(8). 12 U.S.C. § 1842(f). It was contended that if section 4 did not restrict the nonbanking activities of bank subsidiaries of a bank holding company, an exemption for savings banks would not have been necessary. The Board responded that this amendment may have been adopted to confirm the Board’s view in the face of arguments advanced by insurance trade associations and to provide special limitations applicable only to savings bank subsidiaries of a bank holding company. In this connection, the Board emphasized that Congress had considered and declined to enact legislation to extend the restrictions on savings bank subsidiaries to all bank subsidiaries of a bank holding company. Merchants II, Fed.Res. slip op. at 23-24; see H.R. Conf.Rep. No. 261, 100th Cong., 1st Sess. 130 (1987), U.S.Code Cong. & Admin.News 1987, pp. 489, 588, 599; S.Rep. No. 19, 100th Cong., 1st Sess. 33 (1987), U.S.Code Cong. & Admin.News 1987, pp. 489, 523.
Finally, the Board noted that its decision leaving the activities of bank subsidiaries to regulation by the chartering authority applied only to activities carried on directly by those banks and did not insulate from section 4 the activities of subsidiaries of the bank subsidiaries. This application of section 4 to third generation entities, those owned by the subsidiaries of a bank holding company, was based on section 2(g)(1) of the Act, 12 U.S.C. § 1841(g)(1), which provides that shares of such third generation entities are deemed to be held indirectly by the bank holding company; as a result, whether such entities may be owned by a subsidiary of a bank holding company is governed, in the Board’s view, by section 4’s limitation on entities that may be owned by a bank holding company. Merchants II, Fed.Res. slip op. at 25.
Discussion
There can be no doubt that the Bank Holding Company Act is “intended to implement a congressional policy against control of banking and nonbanking enterprises by a single business entity.” See Lewis v. BT Investment Managers, Inc., 447 U.S. 27, 46, 100 S.Ct. 2009, 2020, 64 L.Ed.2d 702 (1980). What is less clear is the extent to which Congress has decided to implement that policy. IIAA contends that Congress has required a nearly complete separation of banking and nonbanking activities, precluding bank holding companies and all entities within their systems from engaging in nonbanking activities other than the “closely related to banking” activities specifically identified in section 4(c)(8) of the Act. The Board believes that Congress has not gone so far. In its view, Congress required a significant degree of separation with respect to bank holding companies themselves, but did not wish to displace the traditional authority of state and national bank chartering authorities to determine what nonbanking activities could appropriately be engaged in by banks that are subject to their jurisdiction, even though such banks were owned by a bank holding company under the jurisdiction of the Fed.
In resolving this dispute, we must keep in mind that we are not making an initial construction of a statute, but rather reviewing a construction made by an expert regulatory agency. In that context, our task is to determine whether Congress has “directly spoken to the precise question at issue,” and, if so, to give effect to any “unambiguously expressed intent of Congress,” or, if not, to determine “whether the agency’s answer is based on a permissible construction of the statute.” Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781, 81 L.Ed.2d 694 (1984). Though both sides support their views of the statute by relying on some of the statutory language, we cannot say that the provisions of the Act reveal an unambiguous congressional intent concerning the precise question at issue. We find no provision that says, in substance, “The Board may not regulate the activities of bank subsidiaries of bank holding companies,” or “Bank subsidiaries of bank holding companies may engage in nonbank activities to the extent permitted by their chartering authorities.” The Board reads the Act as if it contained such language. On the other hand, we find no provision that says, in substance, “Bank subsidiaries of bank holding companies may not engage in nonbank activities.” The IIAA reads the Act as if it contained this wording. The question for us is whether the Board’s interpretation of the language that does appear in the Act is reasonable, an inquiry we undertake by examining all relevant sources, including such clues as the statutory language may provide.
Both sides claim that the text of the Act supports their interpretations, and each can find some, but not overwhelming, support in various words and phrases. As the Board noted in its decision, the limitations of section 4(a)(2) apply in terms to “bank holding companies,” not to “banks.” However, that observation somewhat begs the question, which is whether the limitations upon bank holding companies should be interpreted to restrict the activities those entities may engage in indirectly through their banking subsidiaries. Of similarly little, if any weight, is the argument that because the “ownership clause” of section 4(a)(2) does not bar a bank holding company from owning subsidiary banks, the “activities clause” should be interpreted not to apply to activities of subsidiary banks. The argument is a non sequitur. It would be entirely sensible for Congress, if it wished, to bar a bank holding company from owning nonbanks and also prohibit a bank holding company from engaging indirectly in nonbank activities conducted by its bank subsidiaries. For its part, the IIAA points to the language prohibiting bank holding companies from engaging in nonbank activities and assumes that this language means “engage in directly or through subsidiaries.”
Somewhat more supportive of the Board’s position are textual arguments arising from comparisons of the “activities clause” with other language in section 4(a)(2). First, the grandfather proviso of section 4(a)(2) permits a bank holding company to engage in those activities “in which directly or through a subsidiary” it was engaged in at designated times and under designated circumstances. The Board points out that no similar phrase modifies the “activities clause.” Second, the “ownership clause” prohibits the retention of “direct or indirect” ownership of nonbanks, and no similar phrase modifies the prohibition on engaging in nonbank activities. The use of these phrases in section 4(a)(2) and their absence from the “activities clause” might imply a deliberate congressional choice not to restrict the activities of bank subsidiaries, cf. Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 300, 78 L.Ed.2d 17 (1983) (significance of different wording in statute), but might also result from drafting different clauses at different times and assembling them without intending differences in phrasing to have significance.
The Board derives a somewhat stronger argument for its interpretation from the structure of the Act. It points out that if the “activities clause” applied to subsidiaries of a bank holding company, the “ownership clause” would be virtually superfluous, since, under that reading, the “activities clause” alone would preclude a bank holding company from owning a nonbank. Moreover, as the Board further points out, such a reading would appear to create some internal inconsistencies. For example, section 4(c)(14) permits a bank holding company, under specified circumstances, to own an export trading company; however, this would be prohibited if the “activities clause” applied to subsidiaries of a bank holding company since that clause exempts only the “closely related to banking” activities set forth in section 4(c)(8), which do not include export trading. IIAA’s only response is that the (e)(14) exemption would control over the (a)(2) “activities clause” since it comes later in the statute. See Lodge 1858 v. Webb, 580 F.2d 496, 510 (D.C.Cir.), cert. denied, 439 U.S. 927, 99 S.Ct. 311, 58 L.Ed.2d 319 (1978). That canon of construction may sometimes be helpful in resolving irreconcilable inconsistencies, but it need not be invoked where the statute may be interpreted to avoid the inconsistency in the first place.
However, IIAA also finds support for its interpretation in the structure of section 4. As IIAA points out, section 4(c)(8), establishing the circumstances for exempting various entities from the restrictions of section 4, including the “activities clause” of section 4(a)(2), uses the term “company” to describe those entities, and “company” is defined by section 2(b) broadly enough to include a bank. See 12 U.S.C. § 1841(b). Moreover, section 4(c)(8) instructs the Board, in deciding whether a particular activity is “a proper incident to banking,” to assess whether the performance of that activity “by an affiliate of a holding company” will produce public benefits, and “affiliate” is defined by section 2(k) to include a “company” and, hence, a bank. See 12 U.S.C. § 1841(k). The available inference is that subsidiary banks are subject to the “activities clause” because they are within the category of entities exempted from that clause by section 4(c)(8).
Perhaps the most perplexing aspect of the structural arguments concerns the Board’s contention that though it has no authority to preclude bank subsidiaries of a bank holding company from engaging in nonbank activities, it does have authority to preclude the subsidiaries of a bank subsidiary from engaging in nonbank activities. Thus, the Board adopts a generation-skipping approach: It may prohibit nonbank activities by bank holding companies and by their “grandchildren,” i.e., the subsidiaries of their bank subsidiaries, but not by their bank “children,” i.e., the holding companies’ immediate bank subsidiaries. The Board’s rationale is that the prohibition in the “ownership clause” on “direct or indirect” ownership of nonbank entities precludes a bank holding company from indirectly owning the nonbank subsidiary of its own bank subsidiary.
This contention elicits conflicting responses from IIAA and Merchants National. IIAA contends that the Fed can prohibit nonbanking activities at all three levels and cites the apparent awkwardness and perhaps illogic of the Board’s generation-skipping approach as evidence that the Board’s interpretation of the “activities clause” is incorrect. As IIAA points out, under the Board’s reading of section 4(a)(2), a holding company’s bank subsidiary that owns a nonbank subsidiary can escape the prohibition of the “ownership clause” by merging the “grandchild” into the bank subsidiary and operating the non-bank activities itself. That is precisely what Mid-State Bank did in this proceeding. For its part, Merchants National argues that the Fed may bar nonbanking activities only of a holding company itself and may not preclude those of either second generation bank subsidiaries or their third generation subsidiaries.
IIAA's position has the virtue of consistency in reading the Act to preclude non-bank activities throughout a bank holding company’s system. Moreover, if the Board is correct that Congress wished to leave the activities of bank subsidiaries subject to the regulation of only their chartering authorities, one is left to wonder why those authorities were not relied on to control all of a bank subsidiary’s activities, whether conducted directly by the bank subsidiary itself or indirectly through its own subsidiary. On the other hand, if the Board is right that the Act leaves the nonbank activities of bank subsidiaries within the control of bank chartering authorities but precludes nonbank activities by holding companies and by the subsidiaries of their bank subsidiaries, this would not be the first time that Congress has adjusted the competing positions of strong forces with a compromise of imperfect symmetry. See Board of Governors v. Dimension Financial Corp., 474 U.S. 361, 374, 106 S.Ct. 681, 689, 88 L.Ed.2d 691 (1986). We think it prudent not to resolve the issue of the Board’s authority over the nonbank activities of subsidiaries of bank subsidiaries until that issue is squarely presented.
IIAA endeavors to support its interpretation of the “activities clause” with isolated quotations from the legislative history of the Act. Some members of Congress expressed the view that the Act was intended to keep “banks” out of nonbank activities. As Congressman O’Hara put it, “I do not think, however, that any of my colleagues will question the soundness of the rule that banks should stick exclusively to banking and should be as free of nonbanking interests as C[ae]sar’s wife from suspicion.” 101 Cong.Rec. 8033 (1955). See also 102 Cong.Rec. 6853 (1956) (statement of Sen. Barkley); 101 Cong.Rec. 8030 (1955) (statement of Rep. Rains); id. at 8035 (statement of Rep. Multer); id. at 8184 (statement of Rep. Smith).
These remarks do not provide unambiguous support for IIAA’s interpretation for several reasons. First, in some instances, it is not clear if the legislator is referring to bank subsidiaries of bank holding companies or to the holding companies themselves. Second, many expressions condemning nonbank activities, including one that explicitly mentions banks and bank holding companies, see 102 Cong.Rec. 6853 (1956) (statement of Sen. Barkley), focus on ownership interests, rather than the business activities that a bank subsidiary may conduct. Plainly, as the “ownership clause” commands, Congress did not want bank holding companies to own nonbanks. The legislative history, however, is remarkably free of clear statements indicating disapproval of nonbanking activities engaged in directly by bank subsidiaries. If such were the intent of Congress, one would expect to find a clear statement of such purpose in the key House and Senate reports. Finally, during the hearings the attention of Congress was specifically called to the range of activities that state chartering authorities were permitting for bank subsidiaries of bank holding companies, see Control and Regulation of Bank Holding Companies: Hearings on H.R. 2674 Before the House Comm, on Banking and Currency, 84th Cong., 1st Sess. 536, 553 (1955) (testimony of Ellery C. Huntington), and some Congressmen expressed the view that the holding company bill would not modify such state regulatory authority, id. at 553 (statements of Rep. Spence and Rep. Brown).
Subsequent legislative forays into the field, though an uncertain source of prior congressional intent at best, see Russello v. United States, 464 U.S. at 26, 104 S.Ct. at 302, reveal primarily that Congress finds this a difficult area in which to provide clear answers. In connection with the 1970 amendments to the Act, the House Committee on Banking and Currency reported a bill that, among other things, explicitly excluded insurance activities from the “closely related to banking” activities permitted under section 4(c)(8). H.R.Rep. No. 387, 91st Cong., 2nd Sess. 9 (1969), U.S.Code Cong. & Admin.News 1969, p. 5519. Referring to the effect of this and another prohibition concerning sale of mutual funds, the Committee stated:
It should be emphasized that these two prohibitions apply only to the bank holding company and its nonbanking subsidiaries and not to the bank subsidiaries of bank holding companies whose insurance agency and mutual fund operations are governed by other Federal and State laws. This is in keeping with the original concept of the 1956 act, which was to regulate bank holding companies and not subsidiary banks.
Id. at 15. The House then went further and amended the bill to identify a list of activities explicitly prohibited both to bank holding companies and all of their subsidiaries, including banks. 115 Cong.Rec. 33133-35. The Senate disagreed with this approach, see S.Rep. No. 1084, 91st Cong., 2d Sess. 12-16 (1970), U.S.Code Cong. & Admin.News 1970, p. 5519, and it was rejected in conference. H.R.Conf.Rep. No. 1447, 91st Cong., 2d Sess. 13-16 (1970).
Finally with respect to subsequent legislative attention, some significance must be attached to the fact that Congress specifically called to its own attention the correctness of the Board’s interpretation of the “activities clause” in Merchants I by enacting the moratorium provisions of CEBA and providing itself with a one-year opportunity to determine whether to legislate contrary to the Board’s view. The moratorium expired without the passage of new legislation on this subject.
Case law has not directly focused on the issue now before us, but two decisions provide the Board with some comfort. When investment companies challenged the Board’s determination that the services of an investment adviser to a closed-end investment company were “closely related to banking” under section 4(c)(8), they argued that the Board was allowing subsidiary banks to render such services. See Board of Governors v. Investment Company Institute, 450 U.S. 46, 59 n. 25, 101 S.Ct. 973, 983 n. 25, 67 L.Ed.2d 36 (1981). The Supreme Court disagreed and noted with apparent approval the Board’s view that whether such services could be rendered by subsidiary banks depended solely on the decisions of their chartering authorities:
The simple answer to this argument is that not only does the interpretive ruling confer no authorization to undertake any activities, but also the Board does not have the power to confer such authorization on banks. As the Board’s opinion in this case stated:
“[T]he Board’s regulation ... authorizes investment advisory activity to be conducted by a nonbanking subsidiary of the holding company. The authority of national banks or state member banks to furnish investment advisory services does not derive from the Board’s regulation; such authority would exist independently of the Board’s regulation and its scope is to be determined by a particular bank’s primary supervisory agency.”
Id. Tilting in the same direction is Cameron Financial Corp. v. Board of Governors, 497 F.2d 841, 848 (4th Cir.1974), which ruled that a bank subsidiary is not included within the term “subsidiary” for purposes of the grandfather provisions of section 4(a).
After assessing all of the relevant considerations, we are satisfied that the Board, acting within its sphere of competence, has made a reasonable interpretation of section 4(a)(2), one that confides decisions concerning the scope of insurance and other non-bank activities of bank subsidiaries to their national and state chartering authorities. If that interpretation is to be altered, Congress will have to enact suitable legislation.
The petition for review is denied.
. Ind.Code § 28-1-11-2 provides: “Any bank or trust company shall have power ... to solicit and write insurance as agent or broker for any insurance company authorized to do business in this state, other than a life insurance company.”
. The Board decided Citicorp in the exercise of its authority under section 5 of the Act, 12 U.S.C. § 1844. The Supreme Court subsequently ruled that section 5 "only permits the Board to police within the boundaries of the Act.” Board of Governors v. Dimension Financial Corp., 474 U.S. 361, 373 n. 6, 106 S.Ct. 681, 688 n. 6, 88 L.Ed.2d 691 (1986). We do not decide whether, in light of Dimension Financial, Citi-corp was a proper exercise of the Commission’s authority under section 5 or any other provision of the Act.
. Though concluding that the provisions of section 4 do not apply to bank subsidiaries of a holding company, the Board somewhat inconsistently also concluded, as it had in Merchants I, that neither Anderson Bank nor Mid State Bank qualifies under the grandfather provision of the Garn-St. Germain Depository Institutions Act of 1982, which is section 4(c)(8)(D) of the Bank Holding Company Act. The Board pointed out that Anderson Bank did not become a subsidiary of a bank holding company and Mid State Bank did not start selling insurance until after the May 1, 1982, grandfather date. If, as the Board concluded, section 4 is inapplicable to bank subsidiaries of a bank holding company, it is not readily apparent why the grandfather clause of section 4(c)(8) was inapplicable on the narrow ground that its precise terms were not met, rather than the broader ground that section 4, to which the clause is an exception, has no application to banking subsidiaries. Indeed, it is the Board’s position that “the Garn-St. Germain Act has no applicability to situations ... where the nonbanking provisions of section 4 of the [Bank Holding Company] Act do not apply." Merchants II, Fed.Res. slip op. at 8 n. 10. Perhaps the Board simply felt it prudent to reckon with the first of Merchant National’s alternative arguments and reject it on a narrow ground before proceeding to the second argument, which presented the broader ground.
Question: Were there cross appeals 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.
BOREMAN, Circuit Judge.
Plaintiff, Robert Lee Mason, was a seaman oiler on the tanker “Mission Capistrano,” owned by the United States Navy but operated under license by the defendant, Mathiasen Tanker Industries, Inc. On September 29, 1958, plaintiff fell while aboard and was injured. In his action to recover damages, he complains, (1) under the Jones Act, that his injuries were caused by the negligence of the employer-defendant and (2) by the unseaworthiness of the vessel.
During a trial which lasted several days, the jury heard much conflicting evidence on the issue of defendant’s liability for negligence and unseaworthiness. It was shown that Mason’s work required him to hourly oil the bearings on two blowers located on a platform near the top of the multilevel engineroom. Plaintiff’s witnesses testified that the blower bearings leaked oil and that there was, during a great part of every day, excessive oil on the deck of the blower platform and that plaintiff was required to wade through this oil in the performance of his regular duties. Defense witnesses either denied the presence of any oil on the blower platform or questioned the amount of oil there. Plaintiff claimed that his shoes became soaked with oil from the blower platform deck and this oil in his shoe soles caused him to slip while descending the steep steel stairs (called ladders aboard ship) connecting the several levels of the engineroom and to fall down an inclined ladder, equipped with handrails, landing on the steel evaporator flat which is one level below the floor of the main engineroom. There were no eye witnesses to the accident. It is undisputed, however, that plaintiff sustained serious injuries in the fall and that he had to be removed from the ship at sea to a hospital in Charleston, South Carolina, and from there transferred to the United States Public Health Service Hospital in Savannah, Georgia. He was hospitalized from the time of the injury until October 21, 1958, when he was discharged and certified as fit for duty within a week’s time. Mason returned to Norfolk, Virginia, and was there examined by a psychiatrist. He was again certified as fit for duty on November 3, 1958, by the Norfolk Marine Hospital where he was an out-patient. After filing this action on November 14, 1958, Mason returned to the Norfolk Marine Hospital for further out-patient treatment. He was again discharged as fit for duty on December 24, 1958.
A special verdict was returned by the jury as follows:
“VERDICT OF JURY
“1. Were the defendant, its officers or crew members (other than plaintiff) guilty of any negligence which was a proximate cause of the accident and injuries sustained by plaintiff on September 29,1958 ?
YES [x] NO [ ]
“2. Was the vessel MISSION CAPISTRANO unseaworthy as defined in the charge of the Court and was such unseaworthiness a proximate cause of the accident and injuries sustained by plaintiff on September 29, 1958?
YES [x] NO [ ]
“3. Was the plaintiff guilty of any contributory negligence which was a contributing proximate cause of the accident and injuries sustained by plaintiff on September 29, 1958?
YES [x] NO [ ]
“4. On the claim for damages, including any claim for loss of wages, if you conclude that plaintiff is entitled to recover, what amount is the plaintiff entitled to recover?
$2,000.00
“5. On the claim for maintenance, on what date did the plaintiff obtain his maximum recovery following his injuries on September 29, 1958, as defined in the charge of the Court?
December 24, 1958”
Plaintiff appeals from the jury’s determination of damages, claiming that the $2000 award is inadequate in view of the serious nature of his injuries, his loss of wages over an extended period of time (he claims that he was able to work less than three months during the period from the date of injury to the trial in January 1960) and his pain and suffering at the time of the accident. He contends that the alleged inadequate verdict was the result of errors committed during the course of the trial. We do not express any opinion on the adequacy of the award as found by the jury, but we conclude that the plaintiff is entitled to a new trial on the sole issue of damages. The jury determined the issue of liability against the defendant and the court entered judgment thereon. The defendant has not appealed.
Plaintiff first argues that the District Judge abused his discretion in permitting defendant’s counsel to ask him (Mason), on cross-examination, if he had ever been convicted of a felony in Virginia. The judge, who had been forewarned that defense counsel would ask such a question and that plaintiff’s counsel would object, prepared a written statement which he read to the jury after the question was asked and the plaintiff was required to answer. A portion of the record is reproduced below.
We find no abuse of discretion in permitting defense counsel to attack the credibility of the plaintiff by inquiring about an earlier felony conviction. Certainly, the credibility of the plaintiff was very much in issue because there were no eye witnesses and he was presenting his own version of the accident. The District Judge carefully pointed out to the jurors that a long period of years had elapsed since the conviction and that plaintiff had paid his debt to society for that violation of the law; the conviction was to be considered by the jury only as affecting the plaintiff’s credibility and was not to be used as a basis for penalizing him in the determination of damages. Goddard v. United States, 131 F.2d 220 (5th Cir. 1942), involved a criminal prosecution, but there a witness was questioned about a felony conviction some twelve years earlier. Appropriate in this case is the language of that court as follows:
“ * * * It is well settled that such evidence is admissible for purposes of impeachment, and whether the circumstance of the conviction was such that the fact ceased to have probative value was a question addressed to the sound discretion of the trial court. That discretion was not abused by the admission of this evidence.” 131 F.2d at 221.
Cf. Sinclair Refining Co. v. Southern Coast Corp., 195 F.2d 626 (5th Cir. 1952) ; Fire Ass’n of Philadelphia v. Weathered, 62 F.2d 78 (5th Cir. 1932). The fact that here the witness is a party to the litigation is immaterial. Where a party elects to make himself a witness he may be cross-examined as such. Simon v. United States, 123 F.2d 80, 85 (4th Cir.), cert. denied, 314 U.S. 694, 62 S.Ct. 412, 86 L.Ed. 555 (1941).
Plaintiff next contends that the court erred in submitting to the jury the issue of plaintiff’s contributory negligence. We have read the entire record of the trial and we fail to find any evidence of contributory negligence on the part of plaintiff. During the course of the trial in response to questions propounded by his own counsel, Mason testified that on several occasions, from ten months to many years earlier, he had fainted while on duty as oiler in a ship’s engineroom. Mason explained the reason he had fainted on each occasion: Once he had influenza; on another occasion while his ship was operating in the tropics he was overcome by the heat in the engineroom; a third fainting spell was caused by food poisoning; once he was “lightheaded” because of the “grippe.” Plaintiff also introduced into evidence two small bottles of pills which had been prescribed for him by the United States Public Health Service Hospital for a nervous condition six months prior to the accident and which were found in his locker aboard ship after the accident. Mason testified that he had not taken any of the pills for the past several months preceding the accident. There was no evidence to indicate that Mason was taking the pills or was subject to their effect in any way just prior to the accident. Mason was cross-examined at length concerning these matters but the defendant was unable to show any specific connec-
tion between the earlier fainting spells and the pills, and the accident. Mason steadfastly denied that he fainted at the time of the accident. It was, to some extent, apparent that the defendant, by insinuation, would have the jury infer that a fainting spell caused the plaintiff to fall.
The District Judge carefully instructed the jury that all evidence as to the pills should be disregarded. However, the court charged the jury concerning contributory negligence and the effects of such negligence on its verdict if it should find that the plaintiff’s own negligence contributed to his injury. There was no attempt to call to the jury’s attention any evidence which might tend to prove contributory negligence, and our inspection of the record has failed to reveal any such evidence which the court might properly have told the jury to consider. It was clear to the court that the evidence did not disclose any relationship between the pills and accident and the jury was told, in effect, that it could not find that plaintiff’s injury was in part caused by taking the medicine which had been prescribed for him. There was no evidence tending to show even the remotest connection between the earlier fainting spells experienced by the plaintiff and his fall down the ship’s ladder. Nor was there evidence to link the accident with Mason’s sickness some five months earlier, diagnosed as “anxiety reaction,” a symptom of which, according to testimony may be faintness. After treatment in March 1958, Mason was declared fit for duty, and there is no evidence to show that he knew or had reason to believe that he was subject to fainting spells as a result of the illness experienced in the spring before the accident.
No witness testified that plaintiff failed to grasp the handrail which was provided for anyone using the ladder, or that he failed, in any respect, to take proper precaution to insure his own safety. Juries cannot be permitted to speculate on what might or could have happened without supporting evidence. Here defendant had the burden to prove by a preponderance of the evidence Mason’s contributory negligence. United States v. Smith, 220 F.2d 548 (5th Cir. 1955). No direct evidence was introduced to meet this burden. It cannot be reasonably argued that the physical facts involved in the fall could be accepted as evidence of Mason’s failure to grasp the handrails or take other precautionary measures. It is a matter of common experience that a person can slip on a stairway, due to extremely slippery conditions, with such force that his hands would be loosened from the rail. No inference to the contrary could properly have been drawn by the jury from the evidence in this record. Counsel for the plaintiff requested the court to charge the jury that there was no showing of any connection between the fainting spells and the accident and no evidence whatever of any negligence on the part of the plaintiff which contributed to his injuries. Instead, the charge was given concerning contributory negligence and the jury was permitted to speculate that in some way the plaintiff’s own negligence may have caused him to fall. We believe this was error which may have affected the amount of the verdict.
Defendant contends that if a new trial is awarded there must be a relitigation of the liability issue as well as the issue of damages. No authority is cited to support this contention. Rule 59(a), Federal Rules of Civil Procedure, 28 U.S.C.A., expressly provides for the granting of a new trial “on all or part of the issues * * * in an action in which there has been a trial by jury * * It is well settled that, in admiralty cases, contributory negligence may minify plaintiff’s damages but a finding of such negligence does not automatically defeat plaintiff’s claim of liability against the defendant for injuries resulting from unseaworthiness or negligence. The issues of liability and damages are clearly separable although this court has indicated cognizance of the fact that the size of the verdict may, in itself, indicate a jury compromise of the liability issue and a finding for plaintiff based primarily on sympathy. Mason here appeals from the finding of contributory negligence resulting in a verdict of challenged adequacy and the defendant has not appealed from the adverse determination of the liability issue. There was ample evidence to support the jury’s finding of defendant’s liability and nothing to point the finger of suspicion to the verdict on that issue as a compromise. Where the issues are separable and error is found in the trial of only one, a new trial may be had as to that issue alone where no injustice will result therefrom. Indamer Corp. v. Crandon, 217 F.2d 391 (5th Cir. 1954); Yates v. Dann, 11 F.R.D. 386 (D.Del. 1951); 6 Moore, Federal Practice, para. 59.06, p. 3759 ff. (1953); cf. Gasoline Products Co. v. Champlin Refining Co., 288 U.S. 494, 51 S.Ct. 513, 75 L.Ed. 1188 (1931). Defendant’s liability having been determined, we are of the opinion that the plaintiff is entitled to a new trial on the sole issue of damages.
Reversed and remanded for new trial on damage issue alone.
. “(By Mr. McCoy) Mr. Mason, have you ever received a criminal conviction of a felony in Virginia?
“MB. KELSEY: If Your Honor please, this is very unfair. I want to make an objection to this.
“THE COURT: Now, let’s not make a speech. We have been over this before.
“MR. KELSEY: I raise my objection and ask the Court to instruct the jury about such a question.
“THE COURT: All right. Get your objection in first.
“MR. KELSEY: I object to the Court’s admitting any conviction of a felony in this case, the proposed or proffered offer to prove such a felony being almost twenty years ago, on the grounds that it has no probative value, it is immaterial and irrelevant in every way and, further, upon the objection and ground that his own watch officer has testified, and will testify in a deposition to be introduced in this case, that the man is an honest or truthful man, so far as he knows, and that something that happened twenty years ago has nothing whatsoever .to do with this case and I object to it.
“THE COURT: The objection is overruled. After you get the answer, though, I want to tell the jury something.
“MR. McCOY: I understand that. BY MR. McCOY:
“Q. I ask you the question, Mr. Mason, have you ever received a criminal conviction of a felony in Virginia?
“A. I have, and also—
“MR. KELSEY: Just a moment. You have, and that is all.
“THE COURT: Ladies and Gentlemen of the Jury, I would like to make a few comments with respect to that portion of this evidence. In a conference prior to the trial of this case, counsel for the defendant advised the Court and opposing counsel that they intended to introduce in the record the plaintiff’s prior conviction of a felony during the year 1939, I believe.
“Is that correct, Gentlemen?
“MR. McCOY: Yes, sir.
“MR. KELSEY: Yes, sir.
“THE COURT: It is a generally accepted rule that where a witness or a party litigant testifies in a case, evidence of a prior conviction of a felony involving moral turpitude may be considered by the jury in determining the credibility of the evidence of the party testifying. The Court has examined the conviction in question and it does involve a crime involving moral turpitude.
“MR. KELSEY: May we ask the Court to state what that conviction was?
“THE COURT: Yes, sir, if you want it. The conviction was for store breaking. It is solely for this purpose that this evidence is admissible. The person charged with a crime in 1939 has paid his debt to society and under no circumstances should you as jurors hold against him the fact that he may have erred or committed a crime approximately twenty years ago — in fact, now, I guess, almost twenty-one years ago — at a time when he was then approximately nineteen years old; you may, however, consider the fact of a prior conviction of a felony in determining the extent of the credibility of the plaintiff’s testimony as given by him from the witness stand. Of course, Ladies and Gentlemen, we are not concerned with the plaintiff’s credibility in 1939; what we want to ascertain is his worthiness of belief in the year 1960, that is, today as he testifies, and the fact that the conviction took place a little more than twenty years ago, at a time when the plaintiff was of a youthful age, may be considered by you in determining whether this prior conviction has any bearing upon Ms present credibility.
“Finally, may I say to you, if you ultimately conclude that this plaintiff is entitled to recover in this case, he should not be penalized one cent for the fact that he has previously been convicted for a crime in 1939.
“All right. You may proceed with the next question.”
. The testimony revealed that the tranquilizer drugs in the pills are known as “Reserpine” and “Belbarb.”
. It is explained that plaintiff’s counsel was aware of defendant’s knowledge of the fainting spells and the discovery of the pills; also, he had reason to believe that if the plaintiff failed to mention these facts on his direct examination, defense counsel would bring them out on cross-examination and thus create the false impression with the jury that the plaintiff was deliberately concealing information.
. See Schuerholz v. Roach, 58 F.2d 32 (4th Cir.), certiorari denied, 287 U.S. 623, 53 S.Ct. 78, 77 L.Ed. 541 (1932); Southern Ry. v. Madden, 224 F.2d 320 (4th Cir. 1955); Southern Ry. v. Madden, 235 F.2d 198 (4th Cir.), certiorari denied, 352 U.S. 953, 77 S.Ct. 328, 1 L.Ed.2d 244 (1956). See also as to separability of awards for compensatory and punitive damages Atlantic Coast Line R. R. v. Bennett, 251 F.2d 934 (4th Cir. 1958).
. On a retrial, proper evidence, if any, of plaintiff’s contributory negligence may be presented to the jury in mitigation of damages.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
CUMMINGS, Chief Judge.
On January 9, 1979, Charles H. Hammil, doing business as Hammil Equipment Company (HEC), and Browntown Mill, Inc., a Wisconsin corporation located in Milton, Wisconsin, sued Rickel Manufacturing Corporation (RMC), a Kansas corporation located in Kansas City, Missouri. Defendant and HEC, a division of Browntown Mill, Inc., entered into a dealership agreement on June 1, 1976, entitling that division to distribute defendant’s goods. After one year either party was entitled to terminate the agreement on 30 days’ notice. On October 14,1977, the defendant terminated the dealership, effective February 1, 1978. The plaintiffs charged that the termination was without good cause and that the notice of termination was defective in that it was unconditional and failed to provide a time period within which they could rectify any claimed deficiency. They sought $1,000,000 in damages plus costs and attorneys’ fees and requested a jury trial. Defendant’s answer asserted that (1) the contract was properly terminated under Kansas law, which was the law specified in the contract, (2) plaintiffs failed to mitigate damages, (3) plaintiffs defaulted in payments under the contract, (4) plaintiffs failed to submit appropriate financial documents and (5) plaintiffs failed to pursue the promotion and sale of defendant’s products with their best efforts.
In an amended answer, defendant asserted the following additional affirmative defenses: (1) failure to take action called for in the notice of termination and to comply, with the contract, thus estopping plaintiffs from suit, (2) insolvency at time of notice, which, under the Wisconsin Fair Dealership Law (WFDL), estopped plaintiffs from proceeding, (3) bar of one-year statute of limitations, (4) waiver and (5) failure to state a claim. Next defendant moved for partial summary judgment, urging that Kansas law was applicable rather than the WFDL. Subsequently defendant moved for judgment on the pleadings and for summary judgment (1) because of the one-year statute of limitations contained in Wisconsin Statute § 893.93(3)(b) and (2) because the dealership agreement gave defendant an immediate right to terminate without liability therefor.
The district court handed down four memoranda and orders. In the first, the court ruled that Wisconsin law governed this diversity action because the WFDL represented fundamental policy of that state “to protect dealers from the unjust termination of their dealership agreements” (No. 79-C-77 at 6 (W.D.Wis. Sept. 10, 1980)).
In its second decision, the court granted defendant’s motion for summary judgment with respect to plaintiffs’ second claim (which arose under Wis.Stat. § 135.04 (1979) setting forth the notice requirements for terminating or changing a dealership) on the ground that a statutory violation occurs when a defective notice is sent to a dealer, so that the one-year statute of limitations contained in Wisconsin Statutes § 893.93(3)(b) barred that cause of action. However, as to plaintiffs’ claim under § 135.03 for termination without good cause, the court held no violation occurred under § 135.03 until termination so that the cause of action under that provision was timely and had to be tried.
In his third decision and order, which was a pre-trial ruling, Judge Warren permitted defendant to introduce good cause evidence regarding plaintiffs’ insolvency despite no reference thereto in the termination notice, on the ground that the statutory notice requirements specifically exempted a reference to dealer insolvency.
' The court’s final decision and order were handed down after the jury trial on the § 135.03 claim resulted in a special verdict that defendant had good cause for terminating the dealership. The court held that adequate evidence of plaintiff Hammil’s precarious financial situation permitted the jury to infer that he was insolvent, in bad faith, and in noncompliance with “reasonable and nondiscriminatory requmements of the dealership agreement” (No. 79-C-77 at 3 (W.D.Wis. Jan. 17, 1983)), any of which, he said, would constitute good cause for termination under Section 135.03. Judge Warren also held that under the WFDL, defendant need only prove good cause for termination by a preponderance of the evidence. He concluded that issues of insolvency and financial status were material to the issue of good cause for termination and that the evidence of plaintiffs’ financial dealings enabled the jury to consider the issue of their bad faith as well. Therefore, plaintiffs’ motions for judgment n.o.v. and for a new trial were denied. Plaintiffs no longer challenge defendant’s good cause for termination.
On appeal, plaintiffs argue that the district court erred in granting defendant’s motion for summary judgment on the claim arising under § 135.04. That Section provides as follows:
135.04 Notice of termination or change in dealership. Except as provided in this section, a grantor shall provide a dealer at least 90 days’ prior written notice of termination, cancellation, nonrenewal or substantial change in competitive circumstances. The notice shall state all the reasons for termination, cancellation, nonrenewal or substantial change in competitive circumstances and shall provide that the dealer has 60 days in which to rectify any claimed deficiency. If the deficiency is rectified within 60 days the notice shall be void. The notice provisions of this section shall not apply if the reason for termination, cancellation or nonrenewal is insolvency, the occurrence of an assignment for the benefit of creditors or bankruptcy. If the reason for termination, cancellation, nonrenewal or substantial change in competitive circumstances is nonpayment of sums due under the dealership, the dealer shall be entitled to written notice of such default, and shall have 10 days in which to remedy such default from the date of delivery or posting of such notice.
Another provision of the WFDL covers damage actions and provides as follows:
135.06 Action for damages and injunctive relief. If any grantor violates this chapter, a dealer may bring an action against such grantor in any court of competent jurisdiction for damages sustained by him as a consequence of the grantor’s violation, together with the actual costs of the action, including reasonable actual attorney fees, and the dealer also may be granted injunctive relief against unlawful termination, cancellation, nonrenewal or substantial change of competitive circumstances.
At the time this lawsuit was filed in 1979, § 893.14 together with § 893.22 of the Wisconsin Statutes provided that an action under the WFDL must be commenced within one year “after the cause of action has accrued.” Their successor, § 893.93(3)(b), became effective on July 1, 1980, and provides that an action under the WFDL “shall be commenced within one year after the cause of action accrues or be barred.” Plaintiffs contend that the court below should not have found the § 135.04 claim barred by the statute of limitations, because that claim did not accrue until the dealership actually terminated on February 1, 1978. Judge Warren had found that the action accrued at the time the defective notice was given in October 1977. For the reasons stated below, we affirm that the § 135.04 claim was barred because not filed within the statute of limitations period.
Under Wisconsin law, a cause of action accrues when “there exists a claim capable of present enforcement, a suable party against whom it may be enforced, and a party who has a present right to enforce it.” Wisconsin Natural Gas v. Ford, Bacon and Davis Construction, 96 Wis.2d 314, 323, 291 N.W.2d 825, 830 (1980) (quoting Holifield v. Setco Industries, Inc., 42 Wis.2d 750, 756, 168 N.W.2d 177, 179 (1969)).
According to § 135.06 a dealer has a claim under the WFDL capable of present enforcement when his or her grantor’s violation of a provision of the WFDL has caused the dealer to incur damages. In the case before us, both RMC’s alleged violation of § 135.04 and HEC’s resulting damages occurred before January 9, 1978, or more than one year before HEC commenced its action.
RMC has suggested that HEC was insolvent, so that RMC was not required to provide HEC with notice of an opportunity to cure and hence was not in violation of § 135.04. We cannot accept this suggestion for two reasons. First, the fact of HEC’s insolvency has not really been established in the record before us. It is true that Judge Warren indicated that there was evidence from which the jury could have decided that HEC was insolvent. However, the jury’s verdict that there was good cause for HEC’s termination did not depend on a decision that HEC was insolvent; that verdict may have been based solely on the existence of two delinquent accounts. The existence of two delinquent accounts themselves, of course, does not give rise to the necessary conclusion that a delinquent payor is insolvent. The verdict may also have been based on HEC’s bad faith or failure to comply with RMC’s essential, reasonable and nondiscriminatory requirements (RMC App. 117).
Secondly, even if the jury had found that HEC was insolvent, that finding alone would not have been sufficient under § 135.04 to exempt RMC from the opportunity-to-cure requirement. That Section’s exceptions come into play only “if the reason for termination * * * is [dealer’s] insolvency, the occurrence of an assignment for creditors or bankruptcy” (emphasis added). The record before us simply does not show that RMC’s reason for termination was HEC’s insolvency, nor is either of the other exceptions claimed.
RMC’s termination notice stated that HEC was being terminated because HEC’s failure to pay two delinquent accounts, failure to submit financial statements to RMC, and failure to use best efforts to promote and sell RMC’s machinery constituted specific defaults under the Dealership Agreement (HEC App. 37-38). Further, RMC does not claim that HEC’s insolvency was a reason for the termination. The most RMC asserts is that it presented sufficient evidence from which the jury could find insolvency. We cannot assume that RMC terminated HEC for insolvency when RMC has never contended that this was its reason and when in its notice RMC instead gave other reasons for the termination.
Because RMC’s reasons for termination contained in the notice did not fall within the three exceptions to § 135.04’s requirements language, RMC’s notice was required to “state the grantor’s reasons for termination and the time within which the dealer may rectify or remedy the grantor’s stated grievance.” White Hen Pantry v. Buttke, 100 Wis.2d 169, 174, 301 N.W.2d 216, 219 (1981), and § 135.04. RMC violated § 135.-04 in October 1977 when it provided HEC with the unconditional and therefore deficient notice.
As soon as HEC incurred damages as a result of RMC’s violation, its cause of action under § 135.04 accrued and the one-year statute of limitations period began to run. It is clear that these damages were incurred more than one year before January 9, 1979, the date plaintiffs commenced their cause of action. This record shows that the parties ceased doing business together right after the notice of termination in October 1977, and plaintiffs were given no time to cure their deficiencies. At the same time, RMC expanded its business operations with Fertilizer Application Systems, Inc. (FAS), its Watseka, Illinois dealer, to include the Wisconsin area that was previously HEC’s primary responsibility. Commencing in October 1977 at the time of the termination notice RMC no longer allowed HEC to order parts at the dealer discount rate (HEC App. 30). From thenceforward, customers who needed parts not available in HEC’s remaining inventory were told by HEC to obtain them from FAS (HEC App. 54). About November 11, 1977, RMC removed the dealership floor plan equipment from HEC’s premises and immediately transferred it to FAS (HEC App. 31). RMC authorized FAS, not HEC, to make contacts with potential Wisconsin customers at a major trade show in late November 1977 (HEC App. 32). Finally, on December 5,1977, RMC paid HEC the final balance due to the terminated dealer (HEC App. 35). It is clear, then, that RMC substituted FAS for HEC as its Wisconsin dealer when it provided HEC with the termination notice in October 1977. It is at that time that HEC first incurred damages as a result of RMC’s arguably defective notice and not, as HEC argues, at the February 1, 1978 termination date.
Plaintiffs’ cause of action for damages resulting from defendant’s violation of § 135.04 was barred by the Wisconsin statute of limitations because it was brought more than one year after the cause of action accrued. Therefore, the district court’s judgment is affirmed.
. The lawsuit was initially filed in the Circuit Court for Rock County, Wisconsin, but was removed by defendant under 28 U.S.C. § 1441 to the court below as a diversity case.
. The dealership agreement entitled defendant to terminate immediately a dealer subject to insolvency proceedings. The record does not reveal that HEC was subject to insolvency proceedings at the time the termination notice was issued nor at any time thereafter.
. Defendant’s motion to dismiss the appeal is denied. In view of our disposition, we have found it unnecessary to address other contentions of 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.
PER CURIAM.
We perceive no error in the action of the District Court. Before the filing of petition in bankruptcy, the appellants had filed their same wage claims in a proceeding in the state court wherein H. A. Harris had brought suit to require the alleged bankrupt, Archibald Harris Company, to turn over to him its property, on the allegation that the corporation acquired it from him by fraud. In that action a receiver had been appointed for the property of the corporation, and appellants intervened, contending that out of the property under the jurisdiction of that court their claims for wages should first be paid.
The state court has jurisdiction of the intervening petition, and in its decree finding that as against the corporation Harris was entitled to the property it distinctly reserved for further adjudication the intervening wage claims there filed by these appellants. So far as here appears, the intervening claims are still there pending for adjudication, and we are of opinion that these appellants have no proper ground of complaint of the order of the District Court directing the receiver in bankruptcy, who had acquired certain assets apparently theretofore undiscovered by the receiver of the state court, to turn over those assets, less certain expenses, to the state court receiver.
The order of the District Court is affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
GILBERT, Circuit Judge (after stating the facts as above).
The defendants assign error to certain of the findings of fact of the trial court, certain of the rulings of that court upon the admission of evidence, and certain of the court’s conclusions of law. We find no ground for disturbing the findings of fact which we deem essential to the decision of the ease, and, while the evidence may he insufficient to support certain contested findings, the disputed facts, in view of our conclusions up on the law applicable to the case, become of little importance.
Partiehlar objection is made to the admission in evidence of statements made by Doheny before the Senate Committee. Those statements were offered in evidence after Doheny had been called as a witness for the plaintiff to testify as to the $100,000 payment to Fall by him, and had availed himself of his constitutional privilege by declining to answer on the ground that his testimony might tend to incriminate him. The offer in evidence of the statements so made before the Senate Committee was accompanied with a proffer of proof that Doheny had voluntarily appeared and made the statements before the committee. Objection was interposed, on the ground that the said statements were not shown to have been made as part of any transaction of the defendant corporations, or as part of the res gestas of any corporate transaction, or under circumstances showing that Doheny had any express or implied authority to appear before the Senate Committee and speak for said corporations. The court held that, at the time of making the declarations, Doheny was acting within the scope of his authority as an agent of his corporations and admitted the testimony. There having been a preliminary showing before the court that the leases were negotiated by Doheny on behalf of the defendants, and as their agent and that those matters were the very matters brought for investigation before the Senate Committee, we are not <eonvinced that the court’s ruling was erroneous.
There can be no question but that the declarations of an officer or agent of a corporation, even though they consist of a narrative of past facts, may, under appropriate circumstances, be admitted in evidence against the corporation, nor does the admissibility of such declarations necessarily depend upon the length of time that has elapsed between the occurrences and the declarations, 10 R. C. L. 978. Clearly if any officer of the defendant corporations was authorized to bind them by declarations after the event, it was Doheny. As president of both companies, he had negotiated the agreements and had executed the same. The scheme to pay for tankage facilities construction and fuel oil by government royalty oil originated with him and Fall. He was the dominating figure and the administrative officer by whom the business of the corporations was conducted, and acts done by him within the scope of the corporate powers were presumably duly authorized. At the time when the declarations were made, there were pending transactions between the plaintiff and the defendants to which the declarations were pertinent, for the contracts and leases were in active operation, and their validity was being investigated by the Senate Committee. The defendants were interested in vindicating the contracts, and it was to their interest to show that the $100,000 transaction was a purely personal one, and in no way related to the procurement of the contracts. The declarations were also against the interest of the declarant, and no other means of obtaining the evidence were available to the plaintiff. Among the cases tending to support the ruling of the trial court are Chicago v. Greer, 9 Wall. 726, 19 L. Ed. 769; Xenia Bank v. Stewart, 114 U. S. 224, 5 S. Ct. 845, 29 L. Ed. 101; Fidelity & Deposit Co. v. Courtney, 186 U. S. 342, 22 S. Ct. 833, 46 L. Ed. 1193; Joslyn v. Cadillac Automobile Co., 177 F. 863, 101 C. C. A. 77; C., B. & Q. R. R. Co. v. Coleman, 18 Ill. 298, 68 Am. Dec. 544. In Rosenberger v. H. E. Wilcox M. Co., 145 Minn. 408, 177 N. W. 625, the court said:
“The fact that this transaction occurred some time after the contract of sale of the stock, and that the statement was an admission as to facts existing when the contract was made, is not decisive. An agent of a corporation, if acting within the scope of his authority, may make an admission in behalf of the corporation as to a past transaction, just as a natural person or his authorized agent may do so.”
It is contended that the Act of June 4, 1920 (41 Stat. 812), conferred upon the Secretary of the Navy ample authority to enter into the exchange contracts of April and December, 1922. We cannot think that by the use of the word “exchange” in the act, which was a rider to the appropriation bill of June 4, 1920, it was the intention of Congress to bestow upon the Secretary of the Navy power to dispose of the oil products of the naval reserves in the manner in which it was done in the contracts and leases here in question. The act, after giving the secretary possession of the naval reserve lands, 'etc., authorized him “to conserve, develop, use, and operate the same in his discretion, directly or by contract, lease, or otherwise, and to use, store, exchange, or sell the oil and gas products thereof, and those from all royalty oil from lands within the naval reserves, for the benefit of the United States. * * * Provided further, that such sums as have been or may be turned into the Treasury of the United States from royalties on lands within the naval petroleum reserves prior to July 1, 1921, not to exceed $500,000, are hereby made available for this purpose until July 1, 1922.” Section 1 (Comp. St. Ann. Supp. 1923, § 2804Í).
The power to lease, following as it does-the authority to conserve, was evidently to be used as a protective measure to prevent drainage of the naval reserve lands from adjacent oil drilling. The power to sell, so conferred, necessarily carried with it the legal obligation to turn into the Treasury of the United States the proceeds of sales. If anywhere in the act there is authority to justify the execution of the contracts and leases in question here, it must be found in the word “exchange.” The opinion of the Judge Advocate General of the Navy was that the authority thus granted to exchange was “unrestricted,” which could only m.ean that the' Secretary of the Navy could exchange all oil in the naval reserve and all royalty oils for any purpose for which he saw fit. The defendants do not go so far as that. They assume that the authority to exchange is limited to exchanges for fuel reserve purposes. We find nothing in the act which imposes such a limitation, and we think it clear that the word “exchange” embraces either the broad authority which was found by the Judge Advocate General, or that the intention was to limit the exchange by the words of the accompanying proviso “not exceeding $500,000,” and that the exchange intended was an exchange of crude oil for fuel oil for the current use of the navy; the then existing depots of fuel oil for current use having been authorized by express acts of Congress. The Act of June 4, 1920, bestows no express authority to create fuel depots. If the power to exchange be extended beyond exchange for current fuel oil or facilities for the storage of royalty oils not to exceed $500,000, there is no limit to it. There can be no middle ground. Either the intention was that the power was thus to be limited, or it was absolutely without limit, and under it the Secretary of the Navy might have exchanged crude oil for battleships or airplanes, or anything else which he deemed to be of benefit to the navy, and all this in addition to the millions contracted to be expended for the storage facilities at Pearl Harbor and the filling of the same, the total estimate for which, according to the testimony of Admiral Robison, was $103,000,000.
As early as August 31, 1842, Congress, under its constitutional authority to provide and maintain a navy, enacted that “the Secretary of the Navy may establish, in such places as he may deem necessary, suitable depots of coal, and other fuel, for the supply of steamships of war.” Rev. Stat. § 1552. On March 4,1913, 37 Stats.' 898, oh account of the establishment of fuel depots by the Secretary of the Navy, which had subsequently befen abandoned, Congress, on the recommendation of the House Committee on Naval Affairs, “in the interest of economy,” repealed section 1552, R. S1., and at the same time made an appropriation for the completion of a coaling plant and oil tanks at Pearl Harbor. Thereafter annual appropriations were made for fuel oil storage at various points; the largest appropriation for that purpose being $200,000. Eor the year 1921 an appropriation of $1,000,000 for storing oil at Pearl Harboy was requested by the Chief of the Bureau of Yards and Docks of the Navy, but the request was denied, and no appropriation for that purpose was made for that year; nor was any made for any subsequent year, obviously for the reason that none was applied for.
It is not conceivable that by the rider to the appropriation bill Congress intended in that casual way to surrender its legislative functions as to the control and disposition of the naval oil reserves and the establishment of fuel oil depots for the navy, to revolutionize the t established method of transacting the public business of the United States, and to repeal, so far as they relate to the oil reserves, sections 3732 and 3733, Rev. Stat., and sections 6884, 6885, 6886 and 6873, Comp. St., which forbid the making of contracts to bind the government beyond the amount appropriated therefor, unless otherwise specifically provided, 'and section 3709, Rev. Stat., being Comp. St. § 6832, which makes competitive bidding and advertising indispensable to the making of all such contracts, and sections 3617 and 3618 of Rev. Stat., being Comp. St. §§ 6606, 6609, which make it obligatory to turn into the Treasury of the United States all proceeds of sales of royalty oils as was done prior to June 4, 1920, and as was expressly provided by the Act of February 25, 1920 (Comp. St. Ann. Supp. 1923, §§ 4640%-4640%ss). If such had been the intention, it is but reasonable to assume that it would have been expressed in terms so clear as to exclude all doubt.
The construction placed upon the act by the officers of the government, to whom were delegated the powers conferred thereby, is of no value as indicating the meaning of the act. The evidence is that the Secretary of the.Interior and the representatives of the Department of the Navy, who were most interested «and active in furthering the Pearl Harbor scheme, were doubtful of their authority to engage in it, and intentionally refrained from giving out information concerning the same, and withheld from members of Congress knowledge of their action, through fear that they would encounter trouble from Congress. Clearly any such contract is illegal, unless made in pursuance of authority previously given by Congress. It is no answer to these considerations to say that the contracts were beneficial, and that the United States received full value for every dollar expended thereunder. Said the court in Filor v. United States, 9 Wall. (76 U. S.) 45, 19 L. Ed. 549:
“The officers at Key West did not represent the United States, except in their military capacity, though assuming to do so. In signing the agreement, and in taking possession of the premises claimed by the petitioners, they acted on their own responsibility. Their unauthorized acts cannot estop the government from insisting upon their invalidity, however beneficial they may have proved to the United States. If the petitioners are entitled to compensation for the use of the property they must seek it from Congress.”
The defendants, referring to the fact that the record contains no finding that the contracts or leases were harmful, or that the government was damaged thereby, contend that the suit may not be maintained without, proof of pecuniary damage to the United States. To that we cannot agree. As indicating pecuniary damage, ,the trial court directed attention to the fact that the government had for a period of fifteen years parted with possession of the oil and petroleum products of its naval oil reserves, and had been deprived of its right to make more valuable contracts and leases than those which were made with the defendants, and to obtain the benefits of competition for leases, and, passing by those considerations as not necessarily pertinent to the case, the court based its decree upon the right of the United States to be restored to the use and possession of its naval oil reserves, which, through fraud, undue favoritism, and misconduct of its officers, had been relinquished to private enterprises. We think the ground so taken by the trial court was justified. Applicable to this question are the authorities cited later in this opinion on the question of the obligation of the United States to accord the defendants equity. In Heckman v. United States, 224 U. S. 413, 439, 32 S. Ct. 424, 432 (56 L. Ed. 820), upon the right of the United States to invoke the equity jurisdiction of its courts, the court said: “It was not essential that it should have a pecuniary interest in the controversy.” In United States v. Carter, 217 U. S. 286, 30 S. Ct. 515, 54 L. Ed. 769, 19 Ann. Cas. 594, it was held that the fact that the United States had suffered no pecuniary damage from a fraud committed against it did not prevent recovery. In Hammerschmidt v. United States, 265 U. S. 182, 188, 44 S. Ct. 511, 512 (68 L. Ed. 968) the Chief Justice said:
“To conspire to defraud the United States means primarily to cheat the government out of property or money, but it also means to interfere with or obstruct one of its lawful governmental functions by deceit, craft, or trickery, or at least by means that are dishonest. It is not necessary that the government shall be subjected to property or pecuniary loss by the fraud, but only that its legitimate official action and purpose shall be defeated by misrepresentation, chicane, or the overreaching of those charged with carrying out the governmental intention.”
We are unable to affirm the court below in holding that the United States, in order to obtain the relief which it sought, is required to credit the defendants with the sums which they expended under the leases and contracts, and in holding applicable to the case the maxim that he who seeks equity must do equity. That maxim is as old as equity itself, and is of almost universal application. It means that he who seeks the aid of an equitable court subjects himself to the imposition of such terms as the settled principles of equity require. But the maxim is only a guiding principle and not an exact rule governing all cases. Hanson v. Keating, 8 Jur. 949.’ In that case the Vice Chancellor said:
“It is a rule which per se can by no possibility decide what the rights of the defendant are. It only raises the question what equity, if a,ny, the defendant has against the plaintiff in the circumstances of the' case to which the rule is sought to be applied.”
And it is held that the maxim is restricted to cases where the plaintiff is wholly without remedy at law, and is entirely dependent upon a suit in equity for relief. Gilliat v. Lynch, 2 Leigh. (29 Va.) 493; Scott v. Scott, 18 Grat. (59 Va.) 150; Dranga v. Rowe, 127 Cal. 506, 59 P. 944. Here the plaintiff had a remedy at law, but resorted to equity to avoid a multiplicity of suits. It is well settled also that the maxim is not applicable in the case of a suit by the United States to vindicate its dominion over the public lands and to avail itself of substantial rights under statutory provisions. In United States v. Trinidad Coal Co., 137 U. S. 160, 170, 11 S. Ct. 57, 61 (34 L. Ed. 640) Mr. Justice Harlan said:
“If the defendant is entitled, upon a cancellation of the patents fraudulently and illegally obtained from the United States, in the name of others, for its benefit, to a return of the moneys furnished to its agents in order to procure such patents, we must assume that Congress will make an appropriation for that purpose, when it becomes necessary to do so. The proposition that the defendant, having violated a public statute in obtaining public lands that were dedicated to other purposes, cannot be required to surrender them .until it has been reimbursed the amount expended by it in procuring the legal title, is not within the reason of the ordinary rule that one who seeks equity must do equity; and, if sustained, would interfere with the prompt and efficient administration of the public domain.”
In Heckman v. United States, 224 U. S. 413, 447, 32 S. Ct. 424, 435 (56 L. Ed. 820), Mr. Justice Hughes, answering the contention that there should be equitable restoration before enforcement of the law in a case involving the violation of statutory restrictions on the alienation of Indian lands, said:
“The effectiveness of the acts of Congress is not thus to be destroyed. The restrictions were set forth in public laws, and were mat-^ ters of general knowledge. Those who dealt with the Indians contrary to these provisions are not entitled to insist that they should keep the land if the purchase price is not repaid, and thus frustrate the policy of the statute.”
In Causey v. United States, 240 U. S. 399, 402, 36 S. Ct. 365, 367 (60 L. Ed. 711), Mr. Justice Yan Devanter, after observing that the public lands are held in trust for all the people, and that, in providing for their disposal, Congress has sought to advance the interests of the whole country by opening them to entry under restrictions, said:
“And when a- suit is brought to annul a patent obtained in violation of these restrictions, the purpose is not merely to regain the title, but also to enforce a public statute and maintain the policy underlying it. Such a suit is not within the reason of the ordinary rule that a vendor suing to annul a sale fraudulently induced must offer and be ready to return the consideration received. That rule, if applied, would tend to frustrate the policy of the public land laws; and so it is held that the wrongdoer must restore the title unlawfully obtained and abide the judgment of Congress as to whether the consideration paid shall be refunded.”
In line with the foregoing decisions are Washington Sec. Co. v. United States, 234 U. S. 76, 34 S. Ct. 725, 58 L. Ed. 1220, United States v. Poland, 251 U. S. 221, 40 S. Ct. 127, 64 L. Ed. 236, and Diamond Coke & Coal Co. v. Payne, 271 F. 362, 50 App. D. C. 288.
To the proposition that the equitable claims of the government appeal to the conscience of a chancellor with no greater force than do those of private citizens under like circumstances, the defendants cite, among other cases, United States v. Stinson, 197 U. S. 200, 25 S. Ct. 426, 49 L. Ed. 724, and United States v. The Thekla, 266 U. S. 328, 45 S. Ct. 112, 69 L. Ed. 313. In the first of these cases, a suit was brought by the United States to set aside patents alleged to have been fraudulently acquired. The decision was that in such a suit the .government is subjected to the same rules as is an individual respecting the burden of proof, quantity and character of evidence, and presumptions of law and fact, and that in a ease of that kind equity will protect the rights of an innocent purchaser for value and without notice. In the second case, a libel had been filed by the owners of the Luekenbach against the bark Thekla for damages resulting from a collision. The owners of the bark filed a cross-libel. The United States became a party libelant as owner pro hac vice of the Luekenbach, and made claim thereto, and filed a stipulation to pay any amount awarded against that vessel by the final decree. Concerning the effect of the claim and the stipulation, the Supreme Court said:
“When the United States comes into court to assert a claim, it so far takes the position of a private suitor as to agree by implication that justice may be done with regard to the subject-matter. The absence of legal liability in a ease where, but for its sovereignty, it would be liable, does not destroy the justice of the claim against it.”
The propositions involved in those cases are not in dispute here. But the defendants cite also eases such as United States v. Debell, 227 F. 775, 142 C. C. A. 299, and United States v. Midway Northern Oil Co. (D. C.) 232 F. 619, which apply the equitable maxim to the United States when it resorts to equity in suits of the kind there involved. There can be no doubt that, where a patent to public land has been acquired by fraud, and the patentee has conveyed the land to an innocent purchaser for value, the remedy of the United States is to resort to a suit in equity tó set aside the patent, the patent having1 been issued in due and proper form and under authority of law as attested by the action of the officials of the Land Office. In so doing the government, being required to seek equitable relief, must, as incident thereto, deal equitably with defendants, who in good faith have acquired title from the patentee, and there can be no doubt that in a suit brought by the United States for accounting against trespassers who entered upon public lands in good faith, through a mistake of law, and in the belief that they could acquire title under the mineral laws, the plaintiff will he required to do equity. But, in the present case, although the suit is in form a suit to cancel leases of the public domain, the United States is not seeking equity. It is hut fulfilling its duty to protect the public domain and to compel compliance with fundamental laws of the United States. To do what the defendants here claim to be equity would be to require the court to exercise functions which belong to the legislative branch of the government, to legalize demands founded upon violations of the laws of the United States, and to make judicial disposition of the public resources of the United States.
To hold in the present case that the defendants have equities which demand the protection of the court would be to ignore the fundamental distinction between cases brought to determine rights as between the United States and citizens depending upon contracts made under the authority of the laws of the United States and cases in which the contracts have been made without authority of law or in violation thereof. In The Floyd Acceptances, 7 Wall. (74 U. S.) 666, 680 (19 L. Ed. 169), it was said:
“Our statute books are filled with acts authorizing the making of contracts with the government through its various officers and departments, but, in every instance, the person entering into such a contract must look to the statute under which it is made, and see for himself that his contract comes within the terms of the law.” That doctrine is exemplified in numerous decisions. Whiteside v. United States, 93 U. S. 247, 23 L. Ed. 882; Hooe v. United States, 218 U. S. 322, 31 S. Ct. 85, 54 L. Ed. 1055; Chase v. United States, 155 U. S. 489, 15 S. Ct. 174, 39 L. Ed. 234; Sutton v. United States, 256 U. S. 575, 41 S. Ct. 563, 65 L. Ed. 1099, 19 A. L. R. 403.
Credit for moneys expended by the petroleum company in drilling and operating oil wells and making improvements on Naval Reserve No. 1 could bo allowed only on the theory that said^ corporation committed innocent trespass upon the naval reserve and in good faith expended said money and made said improvements. The mala fides of the trespasses, however, follows from the findings of the court below. That such credits could lawfully be decreed only in a ease where the trespass upon the lands was innocently made in good faith is well established. Pine River Logging Co. v. United States, 186 U. S. 279, 22 S. Ct. 920, 46 L. Ed. 1164; Wooden Ware Co. v. United States, 106 U. S. 432, 1 S. Ct. 398, 27 L. Ed. 230; Union Naval Stores v. United States, 240 U. S. 284, 36 S. Ct. 308, 60 L. Ed. 644.
The decree of the court below, so far as it awards affirmative relief to the United States in ordering the cancellation of the leases and contracts, and commands the defendants to surrender possession of the lands mentioned in the bill of complaint, and enjoins them against trespassing thereon or removing property therefrom, is affirmed. That portion of the decree which directs that the 'defendants be credited with the cost price of the storage facilities for crude oil products at Pearl Harbor and the cost price of the fuel oil contents thereof and the actual expenditures of money in drilling and putting on production any wells drilled under the leases is reversed, and the cause is remanded to the court below for further proceedings in accordance with the .foregoing 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.
Opinion for the Court filed by Circuit Judge SENTELLE.
SENTELLE, Circuit Judge:
This appeal is from a judgment entered on a jury’s verdict in a case of negligence arising from a rear-end collision. Because liability was admitted by defendants, Rocky Alan Day and Giant Food, Inc. (collectively “appellants”), the sole issue at trial was damages. The jury awarded plaintiff Anna May Wood (“Wood” or “ap-pellee”) damages of $100,000 via a general verdict. Appellants argue that the verdict was based on erroneous instructions allowing recovery for elements of damages not supported by the evidence. We agree, vacate the award, and remand for further proceedings.
Factual Background
The facts, considered in the light most favorable to the appellee, are as follows:
Appellee, a woman of approximately fifty-two years of age, had been living asymp-tomatically with a degenerative spinal condition known as spondylolisthesis, the breaking down or slipping of the vertebral column. On November 17, 1983, a taxi cab occupied by Ms. Wood was struck from behind by a tractor-trailer driven by appellant Day, an employee of the trailer’s owner, appellant Giant Food, Inc. Ms. Wood was taken from the scene to Prince George’s General Hospital, where she was examined, x-rayed, and released shortly thereafter.
Beginning on November 28, 1983, and over the next three years, Ms. Wood made 22 visits to an orthopedist, Dr. Rida Azer. Dr. Azer initially recommended physical therapy and prescribed medication, opining that further testing would be required if her condition did not improve. For approximately three years, Ms. Wood underwent numerous tests and treatments, including regular participation in physical therapy. Over the years, the frequency of her consultations and treatment tapered off, so that by May 1987, Ms. Wood had seen Dr. Azer only twice in the preceding eleven months, and had been advised by him to cease therapy.
At trial Ms. Wood testified that prior to the accident she had been a cashier at a department store for more than twenty years, and that, though limited to “light duties” after the accident, she remained employed by the company in an associated store. Ms. Wood testified that she was in constant pain and that her range of activities was considerably diminished. Although appellee introduced no evidence as to her pre-accident earnings, she testified that her new position paid $6.80 per hour.
The evidence at trial established that Ms. Wood had sustained permanent injury to the lumbosacral spine and a narrowing of the intervertebral disc space as a result of the accident, causing further spinal degeneration. Though Dr. Azer testified that Ms. Wood’s condition worsened from a grade one to a grade two spondylolisthesis within two weeks of the accident, appellants’ expert witness, Dr. Edward Anthony Rankin, testified that Ms. Wood’s preexisting vertebral condition eventually would have become symptomatic had the accident not occurred.
Dr. Azer testified that in his opinion Ms. Wood’s injury was permanent, would result in continued spinal deterioration, and would permanently restrict her ability to engage in a range of endeavors, including strenuous activity and prolonged sitting or standing, limitations “that she will have to abide by for the rest of her life.” Dr. Azer also testified that while surgery would normally be the optimal course of action, he did not believe it was appropriate for Ms. Wood because of her significant heart and weight problems. For these reasons, Dr. Azer was “very reluctant” to recommend surgery, as Ms. Wood could “end up by having a blood clot or a heart attack, or something.” In his opinion, surgery should be “avoid[ed] as long as possible, until it becomes almost an emergency.” Though Dr. Azer stated that Ms. Wood would need further medical attention, upon appellants’ objection the District Court ruled that Dr. Azer was not able to render an opinion as to the likelihood of surgery with the requisite degree of certainty. Though the Court indicated its willingness to permit the introduction of evidence pertaining to prospective non-surgical medical attention, none was offered.
In its original charge, the Court instructed the jury over appellants’ objection that “you should award such a sum as will reasonably and adequately compensate the plaintiff for any loss of earnings which you find that the plaintiff will probably suffer in the future.” Appellants took exception to the instruction, arguing that the only evidence tending to show a loss of future earnings — that relating to a convalescence period following surgery — had been stricken. The Court disagreed, stating that “I heard something about having to go to the doctor.”
During its deliberations, the jury inquired of the Court as follows: “Can we consider probable future medical costs related to Miss Wood’s condition if we determine defendant is at fault?” Despite a previous statement by appellee’s counsel that such expenses were no longer sought, and over appellants’ objection, the District Court instructed the jury that “you may consider probable future medical expenses, if any, except that you may not consider the cost of surgery.” The Court did so because, in its opinion, the jury (1) could “extrapolate” the number of visits Ms. Wood would make for treatment based on the frequency of her visits in the past; and (2) it could “infer” from the evidence regarding Ms. Wood’s pain that a doctor “will be giving her aspirin or valium, or whatever.”
Before trial, appellants stipulated that as of September 1986, Ms. Wood had accumulated $1,459.90 in lost wages, and medical bills totalling $6,199.13 as a result of the accident. By way of a general verdict, the jury awarded appellee $100,000. After appellants’ motions for a new trial and for remittitur were denied, this appeal followed.
Analysis
The primary purpose of compensatory damages in personal injury cases “is to make the plaintiff whole.” Kassman v. American University, 546 F.2d 1029, 1033 (D.C.Cir.1976). Accordingly, if properly proved at trial, both future medical expenses and loss of future earnings are recoverable. Cf. District of Columbia v. Barriteau, 399 A.2d 563, 567 (D.C.1979).
It is well established that notwithstanding the jury’s broad discretion in awarding damages, its award must be supported by substantial evidence. Doe v. Binker, 492 A.2d 857, 860 (D.C.1985). Damages may not be based on mere speculation or guesswork. Eureka Invest. Corp., N.V. v. Chicago Title Ins. Co., 743 F.2d 932, 939 (D.C.Cir.1984); Romer v. District of Columbia, 449 A.2d 1097, 1100 (D.C.1982); Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 563, 51 S.Ct. 248, 250-51, 75 L.Ed. 544 (1931). Thus, “[w]hile damages are not required to be proven with mathematical certainty, there must be some reasonable basis on which to estimate damages.” Romer, 449 A.2d at 1100 (citing Designers of Georgetown, Inc. v. E.C. Keys & Sons, 436 A.2d 1280, 1281 (D.C.1981); District Concrete Co. v. Bernstein Concrete Corp., 418 A.2d 1030, 1038 (D.C.1980)).
And despite the jury’s discretion, “[i]t is elementary that an instruction should not be given if there is no evidence to support it.” Ceco Corp. v. Coleman, 441 A.2d 940, 949 (D.C.1982); Kasmer v. Sternal, 165 F.2d 624, 626 (D.C.Cir.1948). The evidence presented must be more than a “scintilla,” Doe, 492 A.2d at 860, and, indeed, when recovery is sought for future consequences of a tort, damages are “available only if such consequences are reasonably certain. Unless there is nonspeculative evidence demonstrating that future suffering, additional medical expense, and loss of income will occur, the question should not be submitted to the jury.” Curry v. Giant Food Co., 522 A.2d 1283, 1291 (D.C.1987) (citing American Marietta Co. v. Griffin, 203 A.2d 710, 712 (D.C.1964); Wilson v. Johns-Manville Sales Corp., 684 F.2d 111, 119 (D.C.Cir.1982)). This Circuit has previously stated that damages for future consequences are recoverable only if plaintiff establishes that it is “more likely than not (a greater than 50% chance) that the projected consequence will occur.” Wilson, 684 F.2d at 119. See also Griffin, 203 A.2d at 712.
While errors limited to individual components of an instruction must be viewed in context, and not in isolation, Ceco Corp. v. Coleman, 441 A.2d at 950, and may be ignored if they are “immaterial” in light of the jury’s verdict, 11 C. Wright & A. Miller, Federal Practice & Procedure § 2886, 290-91 (1973) (“Wright & Miller”), a reviewing court should not turn its back on significant errors that may have substantially prejudiced a party’s rights. Cf. Ceco, 441 A.2d at 950; Wright & Miller, supra, at 291-92.
Appellee’s pretrial and trial documents undeniably demonstrate an intention to recover for future medical expenses and loss of future earnings. The sole theory upon which such recoveries were predicated was the possibility of future surgery, and a concomitant convalescence period. When asked by the Court whether he intended to introduce evidence of loss of future earnings, appellee’s counsel responded that “the doctor will testify that if the surgery is performed, [Ms. Wood] will be out of work for a six-month period of time. So there will be evidence of that.” Likewise, the only evidence offered regarding future medical expenses was Dr. Azer’s estimation of expenses associated with orthopedic surgery. However, the Court ultimately disallowed the introduction of Dr. Azer’s testimony as to the likelihood of surgery, ruling that Dr. Azer lacked the requisite degree of certainty to give an expert opinion. That decision is not challenged herein.
A careful search of the record reveals no word of testimony from any witness that would otherwise support an award of future medical expenses or loss of future earnings. Indeed, after his attempts to introduce evidence as to future surgery were rebuffed, appellee’s counsel abandoned his quest for future medical expenses, indicating to the Court that “we are not going to be arguing ... future medical expenses,” and thus requested that the Court omit a portion of the previously agreed-to jury instructions that would have allowed appellants to comment on Ms. Wood’s failure to call the physician who would perform the contemplated surgery. The Court consented. As noted above, it was only after the jury later inquired that the Court gave its instruction that permitted the jury to consider future medical expenses.
While it is true that evidence was introduced regarding past expenses and lost wages, this was not sufficient to support the Court’s instruction on the future elements. Appellee’s reliance on American Marietta Co. v. Griffin, 203 A.2d 710 (D.C.1964), is misplaced. In Griffin, the Court rejected an appellant’s argument that because there was no medical testimony indicating that plaintiff’s injury was permanent, the jury should not have been allowed to award permanent residual damages. The Court concluded that “when the bad effects of an injury have continued for years, laymen may reasonably infer permanence, even though there is no expert prediction that these injury residuals will continue,” and that “[ejvidence of pain and suffering in existence at the time of trial has been held sufficient to take the question of permanence to the jury.” Id. at 712 (citations omitted). Griffin has been interpreted as standing for the proposition that “absent medical testimony that injuries are temporary, a plaintiff's testimony concerning continuing pain and suffering will be sufficient to send the issue of permanency to the jury.” Davis v. Abbuhl, 461 A.2d 473, 476 n. 5 (D.C.1983) (latter emphasis added). Griffin did not discuss — and we do not interpret it to imply — what quantum of evidence is sufficient to send the issues of future lost wages and medical expenses to the jury. More germane to the present case is Curry v. Giant Food Co., 522 A.2d at 1291, where the Court affirmed the trial judge’s refusal to submit the issue of future loss of income to the jury. After noting that only “reasonably certain” future damages are recoverable, the Court stated that “[ujnless there is nonspecula-tive evidence demonstrating that future suffering, additional medical expenses, and loss of income will occur, the question should not be submitted to the jury.” Id. See also Snead v. United States, 595 F.Supp. 658, 667 (D.D.C.1984) (allowing a claim for future damages on the basis of “the reasoned and persuasive testimony ... as to [plaintiff’s] life expectancy and anticipated medical needs, including the likelihood of future radiation, therapy, chemotherapy and surgery”).
Even if the trial judge were correct that he “heard something about having to go to the doctor,” this was not sufficient to submit appellee’s claim of loss of future earnings to the jury. Similarly, even if it was reasonable to surmise that Ms. Wood would require “aspirin or valium, or whatever,” this would not be sufficient to submit her claim for future medical expenses to the jury. Neither amounts to the “reasonable certainty” required under District of Columbia law to take these elements out of the realm of speculation. In short, there was no substantial evidence upon which the jury could “extrapolate” Ms. Wood’s future medical expenses.
Conclusion
As we have shown, once the testimony as to the possibility of surgery was excluded, there was no evidence in 'the record to support instructions as to loss of future earnings or future medical expenses. In such a case a jury may not be allowed to speculate, and this, under the instructions it was given, is what this jury was allowed to do.
Vacated and remanded for a new trial, limited to the issue of damages.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
SOPER, Circuit Judge.
This appeal is taken from a decree of the District Court in an equity proceeding, whereby a plan for the reorganization of the Seaboard Air Line Railway Company, prepared by a special master, was approved after it had been modified in certain particulars in accordance with proposals of a Conference Committee of representative secured creditors appointed by the court.
The Railway Company has been in receivership for more than thirteen years. On December 23, 1930 receivers were appointed in the District Court of the United States for the Eastern District of Virginia in an equity suit brought by an unsecured creditor; and on the same day the same receivers were appointed in ancillary proceedings in the District Court of the Southern District of Florida. During this period bills for foreclosure have been filed in the cause by the trustees under various mortgages secured by Seaboard property and all of these proceedings have been consolidated in the cause pending in the Virginia District.
Several efforts have been made to effect a plan of reorganization. In 1935 at the instance of the court the receivers made studies and proposals looking toward a reorganization, but the earnings of the Railway were so poor that the principal secured creditors opposed the formulation of a plan at that time. On October 27, 1939 the court appointed Tazewell Taylor of Norfolk, Virginia, special master to prepare and submit a plan of reorganization. He conducted exl ended hearings during forty days at various times in 1940, 1941 and 1942, took evidence, received statistical studies, plans submitted by parties in Interest, and finally on July 20, 1943, after a prolonged study of the complex factual material, submitted his report. Proposed plans were filed with the special master by the Consolidated Committee, representing the holders of the First and Consolidated Mortgage, one of the general mortgages of the system, and by the Underlying Committee representing the bonds under ten separate underlying mortgages on the Seaboard system. The Consolidated Committee employed Miles C. Kennedy, an expert engineer or statistician, and the Underlying Committee employed William Wyer, likewise an expert in railroad accounting and reorganization. Both experts testified as witnesses in the case. Hearings in the District Court upon exceptions to the master’s report took place at three sessions, aggregating thirteen days in October, November and December, 1943. In the interval between the second and third sessions a Conference Committee appointed by the court considered the testimony that had been offered, conferred with interested parties and recommended modifications of the master’s plan, which the court approved.
The Séaboard’s Secured Debt.
The extent of the railway system and the many kinds of indebtedness including sccurities issued under numerous mortgages covering all or a part of the property have greatly increased the difficulties of reorganization. The Seaboard owns about 3300 miles of railroad and operates an additional 844 miles under leases or operating agreements with subsidiary corporations in Virginia, North Carolina, South Carolina, Georgia, Alabama and Florida. Two thousand miles are subject to ten separate underlying divisional mortgages on which $ 48,549,767.20
in principal and interest was owing on January 1, 1943. There are also four general mortgages aggregating 160,439,473.33
in principal and interest on that date, which are subject to the underlying divisional mortgages but constitute first liens on certain portions of the system. There are 36,806,862.55
O'f collateral trust obligations. There is in addition the debt of subsidiary railroad and terminal companies which amounts, principal and interest, to the sum of 55,059,209.16;
and additional indebted-, ness and unpaid accrued interest not included in the above amounting to 983,290.03.
There were also outstanding on January 1, 1943 38,412,882.37
in obligations of the receivers consisting of receivers’ equipment trust certificates, receivers’ certificates and other indebtedness. Thus the grand total of the principal and interest of the secured debt was $340,251,484.64
During the receivership the receivers have purchased approximately $34,000,000 of outstanding receivers’ certificates and other secured obligations of the system, most of which were acquired under orders of the court without prejudice to the claims of the parties as to the application of the funds. The receivers have also spent more than $50,000,000 in improvements to the system.
The unsecured claims, principal and interest, amount to $1,193,723.97 as of August 1, 1942. The par value of the outstanding capital stock, preferred and common, aggregates $85,110,662.21.
The insolvency of the Railway Company is not disputed and the plan makes no provision for the participation in the new company of the preferred or common stockholders or the unsecured creditors of the old company. No objection to the plan on this account is raised on this appeal.
The New Capitalization.
The special master’s plan of reorganization proposes that all of the properties owned by the Seaboard, all the wholly owned or partly owned subsidiaries, and all the leased lines shall be included in one railroad system. The plan involves two fundamental features: (1) A reduced capitalization for the new company composed of various kinds of securities; and (2) the allocation of these securities among the many classes of secured creditors of the present company. The proposed new capitalization is based upon the earnings, history and prospects of the Railway, as found by the special master. The operating revenues during the fifteen year period ending in 1940 were greatest in the year 1926 when $71,274,835 with a total gross income of $14,640,842 was received. The lowest receipts occurred in 1932 when these figures were $30,791,618 and $720,031 respectively. In 1940 they were $48,596,779 and $4,761,-958 respectively. The average annual gross income for the ten year period 1931-1940 was $2,936,004 and for the five year period 1936-1940 $3,718,053. A marked increase occurred in the succeeding three years as is shown by the following tabulation.
Gross
Operating Gross
Revenues Income
1941........... $ 64,729,178 $10,664,016
1942........... 110,467,787 34,566,102
1943 (estimated) 137,000,000 28,000,000
It is of course recognized that this great increase is due to war activities which will not continue and that upon the recurrence of normal times a very great shrinkage is inevitable. With these facts in view the capitalization finally proposed by the special master as of January 1, 1944 is as follows :
Title of Issue To Be Assumed or Issued on Reorganization Annual Charges, Interest and Dividends
Rentals and mise, charges, undisturbed................... $ 110,000
Undistributed Receivers’ Equipment Trusts.............. $ 11,870,000 336,000
First Mortgage Forty Year 4% Bonds, Series A (distribution)......................................... 32,500,000 1,300,000
Total fixed interest debt........................... $ 44,370,000
Total annual fixed charges.........'................ $1,746,000
Capital Fund (discretionary, not in excess of 3%% of Total Railway Operating Revenues or $1,625,000, whichever is greater...................................... 1,625,000
Sinking Fund for First Mortgage Bonds Series A (1%).. 325,000 Total Annual Charges prior to interest on Income Mortgage Bonds......................................... 3,696,000
Income Mortgage 50-Year 4%% Bonds, Series A......... 52,500,000 2,362,500
Sinking Fund for Income Mortgage Bonds, Series A ($262,500)..........................................
Total fixed and contingent debt......................■ $ 96,870,000
Total annual charges before dividends............... $6,058,500
Preferred stock 5% ($100 par value).................... 15,000,000 750,000
Total par value of securities........................ $111,870,000
Total annual charges against income through preferred stock dividends............................ $6,808,500
Common Stock — 850,000 shares of no par value (at $100).. 85,000,000
Total capitalization............................... $196,870,000
Under this set-up, the total of the interest on the first mortgage bonds and fixed annual charges prior to interest on the income bonds and dividends will be $3,696,-000. The interest on the income bonds if earned will be $2,362,500, making a total annual charge before dividends of $6,058,-500 on a principal indebtedness fixed and contingent of $96,870,000. If the net earnings exceed $7,000,000, a contingency not unlikely during the present emergency, it will be possible not only to pay a dividend on the 5% preferred stock but also some dividend on the no par capital stock.
The District Judge recognized that the proposed new capitalization must receive the approval of the Interstate Commerce Commission under 49 U.S.C.A. § 20a, before it can become effective; but finding it to be reasonably conservative and to have received the approval of all the interested parties except certain stockholders and certain unsecured creditors, he overruled all exceptions thereto. No appeal from this ruling has been taken.
Allocation of New Securities.
The allocation of the new securities to the secured creditors of the insolvent corporation presents a more difficult problem. In general the modified plan provides for the distribution of new securities and cash among eight underlying bond issues, three general mortgage issues, two collateral trust issues and four leased line issues, that is, seventeen issues in all. During the course of the receivership two of the underlying mortgage issues, one of the general mortgage issues and one of the leased line mortgage issues, have been excluded from participation in the distribution and certain receivers’ certificates and other obligations have been paid off so that the total claims, principal and interest as of January 1, 1944, to which securities or cash are allocated under the plan, were reduced to the sum of $284,511,000, not including $11,870,000 of equipment obligations to be assumed by the new company. It is obvious that the new capitalization of $196,-870,000, including the $11,870,000 of equipment obligations, even if worth its -face value,.is insufficient to pay the secured creditors in full. It is not reasonable, however, to suppose that the new securities will be worth par; and it has been assumed by the master and this court, for comparative purposes, in fixing the relative 'values of the new securities, that the first mortgage bonds will' be worth par, the income mortgage bonds $500, the preferred stock $25 a share and the common stock $12.50 a share.
A principal difficulty consists in the apportionment of the securities among the holders of first liens on separate divisions of a railroad system which includes wholly owned mileage, leased lines and independently operated mileage. An apportionment is necessary because the value of the first lien in any case depends upon the value of the property upon which it is based; and the difficulty is especially acute in the case of certain divisions which during the test period made no net earnings but only deficits in operation when considered independently.
The Secondary Allocation.
The complexity of the calculation is increased by the fact that the master first made a primary allocation on the assumption that the total issue of first mortgage bonds would be $40,000,000 and that of the income mortgage bonds $45,000,000; and then made a more conservative allocation on the assumption, which was finally adopted, that the total issue of first mortgage bonds should be reduced to $32,500,000 and the total issue of income mortgage bonds should be increased to $52,500,000. A secondary allocation was also necessary because after the first proposed capitalization had been generally accepted, it became clear that due to the heavy increase in the revenues of the system a substantial part of the funds in the hands of the receivers could be used in the retirement or acquisition of certain outstanding obligations; and in consequence the court directed the receivers to acquire certain receivers’ certificates in the hands of the public so that the principal amount thereof outstanding as of March 1, 1943 was reduced to the sum of $12,841,600. There were also purchases of two issues of underlying first mortgage bonds, bonds of one of the leased lines and the acquisition of certain collateral pledged for loans. The purchased securities were not canceled but held for the benefit of the remaining Seaboard security holders. These circumstances necessitated the reallocation of securities previously allotted to the holders of the purchased securities.
Principles of the Plan.
The amount of new securities allotted to any division was made to depend upon the relative value of the divisional property considered as a separate entity; and this value was determined principally by the earnings of the division calculated by a method which gives rise to an important controversial question that will be discussed hereafter. After the value of the division is ascertained in relation to the value of the whole system an equal proportionate amount of the new securities at their estimated market value is allocated thereto to be distributed: (1) To the holders of the first lien thereon to the extent of the principal and interest of their claims; and (2) the excess is awarded to the holders of the second and subsidiary lines in their respective order. In this way the principle of priority to which first liens are entitled was observed; and no objection on -this point is made.
While the master gave predominant weight to the respective earning capacities, of the several divisions, he did not disregard other criteria. He took into consideration the net value to the system of the freight contributions made by each of the divisions; and also the reproduction cost new thereof less depreciation. He also gave heed to certain “severance studies” whose purpose was to estimate the effect upon a division of the system and upon the-system as a whole that would flow from the severance of the division from the system. These studies, however, were not made upon the Georgia and Alabama line and the South Bound line because the evidence showed that these lines would be without substantial value in case of severance from, the system.
By adopting these principles of capitalization and allocation the master acted in accord with the decision of the Supreme Court in Group of Investors v. Chicago, Milwaukee, St. P. & P. R. Co., 318 U.S. 523, 540, 63 S.Ct. 727, 738, 87 L.Ed. 959, where it is said:
“ * * * a basic requirement of any reorganization is the determination of a capitalization which makes it possible not only to respect the priorities of the various classes of claimants but also to give the new company a reasonable prospect for survival. See Commissioner Eastman dissenting, Chicago, M. & St. P. Reorganization, 131 I.C.C. 673, 705. Only ‘Meticulous regard for earning capacity’ (Consolidated Rock Products Co. v. DuBois, supra, 312 U.S. 510, 525, 61 S.Ct. 675, 685, 85 L.Ed. 982) can afford the old security holders protection against a dilution of their priorities and can give the new company some safeguards against the scourge of over-capitalization. Disregard of that method of valuation can only bring, as stated by Judge Evans for the court below, ‘a harvest of barren regrets.’ 124 F.2d [754], page 765, Certainly there is no constitutional reason why earning power may not be utilized as the criterion for determining value for reorganization purposes. And it is our view that Congress when it passed § 77 [11 U.S.C.A. § 205] made earning power the primary criterion. The limited extent to which § 77, sub. e, provides that reproduction cost, original cost, and actual investment may be considered indicates that (apart from doubts concerning constitutional power to disregard them) such other valuations were not' deemed relevant under § 77 any more than under § 77B, 11 U.S.C.A. § 207, ‘except as they may indirectly bear on earning capacity.’ Consolidated Rock Products Co. v. DuBois, supra, 312 U.S. page 526, 61 S.Ct. [675], 85 L.Ed. 982. In this case the Commission followed the statute. While it made earning power the primary criterion, it did not disregard the other valuations. It considered them and concluded in substance that they afforded no reasonable basis for believing that the probable earning power of the road was greater than what the Commission had found it to be by the use of other standards. The Commission need not do more.”
While earnings do not furnish an exclusive test, they are recognized as a most important criterion in determining the values of the several divisions of a railroad system when it becomes necessary to apportion amongst them the new securities of a reorganized company. See the Milwaukee case, 318 U.S. 523, 540, 559, 63 S.Ct. 727, 87 L.Ed. 959; New York, N. H. & H. R. Co. Reorganization, 239 I.C.C. 337, 406, 407. It was therefore necessary to segregate the earnings of the mortgage divisions of the Seaboard system in accordance with some reasonable method. There is no fixed or inflexible rule for such a calculation when, as in this case, a railroad system has been operated as a whole and there has been no need to segregate the earnings of the several parts. The difficulties inherent in such a situation are aptly described in the Milwaukee case, 318 U.S. 523, 561 to 564, 63 S.Ct. 727, 747, 87 L.Ed. 959, where it is said:
“The problem in such a case is not a simple one. The contribution which each division makes to a system is not a mere matter of arithmetical computation. It involves an appraisal of many factors and the exercise of an informed judgment. Furthermore, an attempt to put precise dollar values on separate divisions of one operating unit would be quite illusory. As the Commission recently stated, ‘The properties comprise one operating unit; a complete separation of values would necessarily have to be based on extensive assumptions of unprovable validity; and any attempt at such a separation would in the end serve no purpose except to present an apparent certainty in the formulation of the plan which does not exist in fact.’ St. Louis Southwestern Ry. Co. Reorganization, 252 I.C.C. 325, 361. In the present case the Commission and the District Court were satisfied that they had adequate data based on earning power to make a fair allocation of new securities between the General Mortgage bonds and the 50-year bonds. We cannot say that it was inadequate. Sec. 77 contains no formula for the making of such an allocation nor for the determination of the earning power of the entire system or parts thereof. The earnings periods to be chosen, the methods to be employed in allocating system earnings to the various divisions arc matters for the informed judgment of the Commission and the Court. * * * We are not dealing here merely with a first mortgage and a second mortgage on a single piece of property. For each of the two groups of bondholders has a first lien on a part of the Milwaukee properties. In case of first and second liens on the same property, senior lienors of course would be entitled to receive in case the junior lienors participated in the plan, not only ‘a face amount of inferior securities equal to the face amount of their claims’ but in addition, ‘compensation for the senior rights’ which they surrendered. Consolidated Rock Products Co. v. DuBois, supra, 312 U.S. 510, 529, 61 S. Ct. 675, 686, 85 L.Ed. 982. But where, as here, each group of bondholders is contributing to a new system mortgage separate properties from old divisional mortgages, it is necessary to fit each into the hierarchy of the new capital structure in such a way that each will retain in relation to the other the same position it formerly had in respect of assets and of earnings at various levels. If that is done, each has obtained new securities which are the equitable equivalent of its previous rights and the full priority rule of the Boyd case [Northern Pacific R. Co. v. Boyd, 228 U.S. 482, 33 S.Ct. 554, 57 L.Ed. 931], as applied to the rights of creditors inte se, is satisfied. * * * No fixed rule supplies the method for bringing two divisional mortgages into a new capital structure so that each will retain in relation to the othT er the same position it formerly had in respect of assets and of earnings at various levels. The question in each case is one for the informed discretion of the Commission and the District Court. We cannot say that that discretion has been abused here.”
The master took the five year period, 1936 to 1940, for the test and he adopted, with certain modifications, what has come to be known in this case from the name of its author as the Kennedy Segregation Formula. It was devised by Miles C Kennedy, the expert employed to assist the Consolidated Committee. He suggested certain important modifications of a general formula which had been prepared by the receivers. The basic principle of the general formula is that freight revenues on traffic local to one line should be allocated thereto; but where the freight revenues are applicable to two or more lines, they are allocated thereto on a pro rata basis subject to an allowance of 10 per cent of the revenues from each shipment to the line originating, terminating or interchanging it. Passenger revenue local to one line is allocated thereto; and passenger revenue applicable to two or more lines is divided pro rata on a mileage basis. Operating expenses and other income debits and credits are allocated to the lines by which they are incurred. Routine expenses, such as wages and fuel, are apportioned pro rata on a mileage basis. A rental charge for system equipment at the rate of 3% per cent of its average annual depreciated book value is allocated to the several divisions.
The Kennedy modifications of the general formula consist principally in adding a “constructive mileage block” to the actual mileage on the originating, terminating and interchanging lines and dividing the revenue of each shipment among the particular lines in proportion to the total mileages of the respective lines thus obtained. The mileage block was ascertained by finding the system cost of originating and terminating a car of freight or interchanging it with another road. The cost of originating and terminating a car of freight was found to be equal to the cost of hauling it a distance of 58 miles and the cost of interchanging a car was found to be equal to hauling it a distance of 16 miles.
Under the Kennedy formula the revenue from the passenger traffic was apportioned on the basis of actual mileage that each passenger was hauled. The master departed from this method in the treatment of passenger losses which he apportioned to all of the lines of the system in the relation that the gross freight revenue of each line bore to the total freight revenue of the entire system. He calculated for each line the percentage which its loss from passenger operations bore to the total loss from passenger operations of the whole system and also the percentage which the revenue from freight operations on each line bore to the-total revenues from freight operations on, the entire system. If the percentage of the-revenue from freight operations was less, than the percentage of loss from passenger operations on any line, it wa's given, credit for this difference to compensate it for the excess loss from passenger operations; and, on the other hand, if the percentage of freight revenues was relatively-higher on the individual line it was charged with the difference in order to make its fair contribution to the total loss sustained from passenger operations.
The Kennedy formula of segregated earnings was not the only basis used in the allotment of securities to the several lines. In the primary allocation the first mortgage bonds, other than those allotted on account of receivers’ indebtedness, investment securities and cash on deposit with the trustees, were allotted solely on the basis of earnings with certain adjustments; but the income mortgage bonds, other than those allotted on account of investment securities and a special allotment to the South Bound to be later discussed, were allocated one-half thereof on the basis of segregated earnings and one-half on the basis of the net value of freight contributions. Both preferred and common stocks, other than the allotment thereof on account of investment securities, were allocated one-third on the basis of segregated earnings, one-third on the basis of net contributions of freight traffic and one-third on the basis of the value of the property determined by the estimated cost of reproduction new less depreciation.
It therefore appears that in making the allocation of new securities the special master recognized that the value of the particular line rests not only in the earnings it produces as a separate unit, but also in the contribution that it makes by originating, terminating and interchanging freight moving over the system as distinguished from local freight traffic. Effect was given to this contribution in the allocation of new securities by calculating the net freight contributions of the several lines and giving to each its proportionate share of the securities allocated on this basis. The amount of the net contributions was ascertained by determining the gross earnings which the system derived from traffic originating or terminating on the various mortgage divisions, including traffic interchanged by a mortgage division with a foreign line and determining the net value to the system of those contributions after deducting out-of-pocket expenses. Twice the weight was given to each dollar of freight contributions resulting from termination or origination as is given to contributions resulting from interchange.
The master also recognized the element of value based on reproduction cost new less depreciation. This was ascertained in the case of each division from valuations furnished by the Interstate Commerce Commission; and each division was given its proportionate share of that portion of preferred and common stocks allocated on this basis as above set out.
The secondary allocation was based solely on segregated earnings. It consisted of first mortgage bonds which had been allotted in the primary allocation to certain receivers’ certificates and bond issues subsequently acquired by the receivers. Since the deficit lines received no segregated earnings under the Kennedy formula, they did not share in the secondary allocation.
The allocation of first mortgage bonds to earning lines exclusively finds support in the fact that the total annual fixed charges under the new capitalization are substantially the same as the average earnings of the Seaboard system during the test period 1936 to 1940. The master estimated that the total annual charges (including interest on the first mortgage) of the reorganized company prior to interest on the income mortgage bonds will be $3,696,000. The average gross income for the Seaboard system during the test period was $3,718,053, an amount sufficient to pay only the annual charges and interest of the senior securities of the reorganized line.
There was no year after 1930 and before the war in which the earnings of the Seaboard system were sufficiently high to have permitted the payment of the full amount of the interest on the new income mortgage bonds. Consequently the junior securities of the new system could not be allocated entirely on the basis of segregated earnings and the master, as we have seen, also took into consideration other methods in allocating these securities.
Tertiary Allocation.
The allocations of the special master were the subject of critical examination in the extended hearings in the District Court and in the conferences between the several classes of secured creditors with the result that additional modifications of the plan were made by a reallocation of securities derived from several sources. Funds in the receivers’ hands were used to purchase receivers’ certificates to which first mortgage bonds had been allotted in the prior allocation; first mortgage bonds and junior securities allotted to certain underlying mortgage divisions were released, when their claims were otherwise satisfied; prior allocations as between underlying and general mortgages on the same division were rearranged in certain instances; and other securities were shifted ■ as, the result of a more equitable accounting with respect to deficits. The total securities in cash released by these changes approximated $15,-000,000.''
The allocation of this amount gave recognition.to an argument strongly urged upon the court and the Conference Committee and finally accepted, that since the deficit lines had becpme earning lines during the war years 1942 and 1943, they should share in the distribution of the accumulated funds in the receivers’ hands. It was therefore decided to make the tertiary allocation in accordance with a method suggested by Mr. Wyer, the expert of the underlying mortgage lines. First it was ascertained what amount would have been necessary to pay interest and dividends, including a dividend of $3.50 per share qn the common stock, on the total amount of securities allocated by. the special master) as if his plan had gone into' effect..on January 1, 1942. The percentage,of this total to which each line would have.been entitled-upon the securities allocated to it was then ascertained, and the line was then given the same percentage of the securities, available for. the tertiary allocation. The result was that all the deficit lines shared in the allocation, and the allocations to the appellant deficit lines were materially increased.
This final allocation, arrived at by the. modification of the..special master’s report' recommended by :the Conference Committee and approved by the. court, embodies the labor of many persons for many months. It represents an adjustment of complex and conflicting claims that cannot. be worked out' in precise figures without certain assumptions that must be based on business adjustment rather'than upon mathematical certainty;. and it has received the approval of the experts employed by opposing interests as a, fair and business like solution that will do substantial.justice and.effectuate the reorganization without further un7 due delay.. ■
The Appellants’ Contentions.
A preliminary procedural question fundamental to the case is raised by the appellants. It is said that upon the enactment of § 77 of the Bankruptcy Act in 1933, 11 U.S.C.A. § 205 which-provided for railroad reorganizations in bankruptcy, the Seaboard equity proceeding should have been dismissed and the reorganization of the railroad should have been conducted by the bankruptcy court. The purpose of.§ 77 to vest important functions in railroad reorganization in the Interstate Commerce Commission in cooperation with the bankruptcy court, as expounded in Ecker v. Western Pacific R. Corp., 318 U.S. 448, 63 S.Ct. 692, 87 L.Ed. 892, is stressed; and special reliance is placed on the decision in New England Coal & Coke Co. v. Rutland Ry. Co., 2 Cir., 143 F.2d 179. In the latter case the District Court had before it an equity receivership begun in 1938 after the enactment of § 77, and it denied a peti: tion of the Railroad Company for reorganization under the bankruptcy statute. The Court of appeals reversed. It said that before the enactment.of § 77 railroad reorganization in equity was approved be-; cause the Bankruptcy Act was not applicable to railroad corporations and reorganization in equity was necessary in the public interest; but after the enactment the reason vanished and equity reorganization is now merely, a means for the frustration of the public policy of the United States embodied in the statute. A petition for rehearing was filed, calling attention to the action of Judge Chesnut in approving the reorganization of the Seaboard in equity for the reasons expressed in his opinion in the pending Case at 53 F.Supp. 697, 700. The petition for rehearing also referred to subsection p of § 77 which expressly recognizes eql uity reorganization by making it unlawful for any person in a receivership in a state or federal court to solicit proxies from creditors without the prior approval of. the Interstate Commerce Commission; and to § 506 of the Revenue Act of 1942, 56 Stat. 798, 26 U.S.C.A. Int.Rev.Acts and § 1808 (e) of the Internal Revenue Code, 26 U.S. C.Á. Int.Rev.Code, § 1808(e) which exempted from stamp taxes any securities issued in the reorganization of a railroad in an equity proceeding.
In overruling the petition for rehearing, the court pointed out that the Seaboard receivership had been begun in 1930, when railroad'reorganizations in bankruptcy were impossible, so that there was no irregularity in the institution of the suit; and that the pendency of proceedings of this sort gave full scope to the cited statutory provisions which recognize equity receivership. Therefore, the court reiterated its holding that the passage of § 77 makes it improper for an equity court to entertain a suit for railroad reorganization and such a proceeding should be dismissed if the irregularity is called to the attention of the court by the filing of a petition under § 77 or otherwise.
We have no occasion to go so far in the pending case. Neither the insolvent corporation nor creditors holding five per cent of the indebtedness of the corporation have filed a petition in bankruptcy, as provided in § 77, sub. a. When the question of bankruptcy was broached before the special master, the interested parties expressed a desire to continue in equity and when the court of its own motion invited a discussion on the point all the parties in interest very definitely preferred continuation of the equity proceeding. See 53 F.Supp. 698. The reasons for this attitude on the part of the creditors are obvious. If the present proceeding were dismissed and the parties were relegated to the bankruptcy court, the whole matter of the plan would necessarily be reopened, further rehearings would have to be held, and a protracted delay of months, if not years, would probably occur. In the meantime, the golden opportunity would have been lost. In view of the long and careful investigation and study by the special master and the District Judge, and the constant examination and criticism of every step of the procedure by the interested parties, it is obvious that the public interest will be sufficiently protected in the present case by the requirement that the approval of the Interstate Commerce Commission to the new capitalization be obtained. Under these circumstances there was clearly no error when the District Judge failed to dismiss the proceeding of his own motion and permitted the creditors who alone are interested in the distribution of the securities to consummate the plan of reorganization during the present period of prosperity.
Georgia and Alabama Appellants.
Among the numerous classes of interested parties, which include the holders of bonds issued under seventeen separate mortgages, unsecured creditors and stockholders, there are two appellants. One of these is the Protective Committee for the Georgia and Alabama Railway First Consolidated Mortgage 5% bonds due 1945. This committee has filed an affidavit in this court stating that it represents $671,000 bonds out of a total of $6,085,000 bonds outstanding. The bonds are secured by an underlying divisional mortgage on a part of the system. The Underlying Committee represents bondholders under all of the ten underlying divisional mortgages and this committee has assented to the plan. Its representatives stated at the hearing in the District Court that 61% of the Georgia and Alabama bonds had been deposited with it and that it still represented more than 50% of these bonds, after deducting the bonds held by the Georgia and Alabama appellants. Many of the arguments urged in this court by these appellants were presented to the District Court by the Underlying Committee. The Georgia and Alabama appellants made no appearance before the special master and appeared in the case lor the first time at the hearings before the District Court in October, 1943. They presented no new evidence at these hearings.
The Georgia and Alabama bonds are a first lien on 393.55 miles of railroad extending westerly from Savannah, Georgia, to Montgomery, Alabama.' The mortgage also covers equipment subsequently acquired for use on the railroad. The principal of the outstanding bonds amounts to $6,085,000 and accrued interest to $3,803,125, a total indebtedness of $9,888,125.
No first mortgage bonds were originally allocated to the Georgia and Alabama line by the special master since it was a deficit line in the test period. Junior securities allotted with the estimated values were as follows :
These amounts were determined on the basis of the freight contributions and the reproduction cost new less depreciation of the line as follows:
The line received no part of the secondary allocation made necessary by the acquisition of receivers’ certificates by the receivers because this allocation was based on segregated earnings for the test period. The line, however, did share in the tertiary allocation and as the result its total allocation at estimated values is as follows:
Par Estimated Value Value
First Mortgage bonds..........$ 357,408 $ 357,408.00
Income Mortgage bonds....... 1,597,627 798,863.50
Preferred stock................ 656,461 164,115.25
Common stock................. 3,739,875 467,484.37
$6,351,371 $1,787,871.12
It thus appears that as the result of the tertiary allocation the securities originally allocated in the Master’s plan were increased by the following amounts:
Par Estimated
Value ■ Value
First Mortgage bonds............$357,408 $357,408.00
Income Mortgage bonds........ 13,983 6,996.50
Preferred stock.................. 3,262 815.50
Common stock...J............... 28,614 3,578.00
$403,267 $368,798,00
The attack of the Georgia and Alabama appellants upon this allocation is directed chiefly at the use of the Kennedy segregation formula to arrive at the relative values of component parts of the system for reasons which may be summarized as follows: The formula, they say, is basicly wrong in that it proceeds upon the false assumption that each mortgage line operates as a separate railroad whereas it actually operates as part of a single system. The problem is to ascertain the relative value of each of the mortgage divisions (bearing in mind that all of the underlying mortgages are liens of the first rank) to the end that in the allocation of the new securities each mortgage division shall receive the- equitable equivalent of that which it now possesses. Earning power is the primary test of value and must be used to determine the capitalization of the reorganized corporation. It does not follow, however, that earning power must be used to ascertain the relative values of separate parts of the system, for as pointed out in the Milwaukee case, 318 U.S. 561, 563,
Question: Were there cross appeals 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, Senior Circuit Judge.
This diversity action for breach of contract involves issues which require us to explore some relatively uncharted areas of Article Two of the Uniform Commercial Code, Ohio Rev.Code Sec. 1302.01 et seq. We vacate the district court’s judgment, however, to the extent that it concludes that adequate notice of breach was given in 1974 and remand this question for more comprehensive findings of fact.
I.
The plaintiffs-appellees (cross-appellants), Roth Steel Products Company and Toledo Steel Tube Company, are subsidiaries of Roth Industries, Inc. Roth Steel produces welded straight tubing for a variety of uses; Toledo Steel Tube produces fabricated steel tubing for use in automobile exhaust systems. Mr. Howard Guerin, vice-president for purchasing, Roth Industries, served as the purchasing agent for both corporations until April, 1973, when he was replaced by Mr. Richard Mecaskey.
Sharon Steel Corporation, defendant-appellant (cross-appellee), is a subsidiary of NVF Corporation. In 1973, Sharon was an integrated steel producer which accounted for approximately one percent of the steel produced in this country. It produced hot rolled and cold rolled sheet steel in carbon and alloy grades, as well as pickled and oiled sheet steel. The plaintiffs used sheet steel to produce tubing. Mr. Frank Metzger, Sharon’s Northern Ohio Sales Manager, was responsible for all sales to the plaintiffs.
A. In 1972, the steel industry operated at approximately 70% of its capacity. Steel prices were highly competitive and discounts from published prices were given customers in an effort to increase the productive use of steel making capacity. On November 14, 1972, Metzger, Sharon’s representative, met with Guerin and offered to sell the plaintiffs specific quantities of hot rolled, cold rolled and pickled steel at prices substantially lower than Sharon’s “book price”. Testimony indicated that these prices and quantities were to be effective from January 1 until December 31, 1973.
On November 17,1972, Metzger forwarded a communication in the form of a letter to Guerin confirming the discussions of November 14. The letter indicated that Sharon would sell the plaintiffs 200 tons of hot rolled pickled steel each month for $148.00 per ton and that it would sell plaintiffs hot rolled black steel on a open schedule basis for $140.00 per.ton. The letter also discussed “the probability” that Sharon could sell 500 tons of cold rolled to both Roth Steel and Toledo at varying prices depending on the type of cold rolled steel ordered. Metzger testified that a few days after the letter was sent, the plaintiffs agreed to purchase 1,000 tons of cold rolled steel (500 tons each) at the prices indicated in the letter.
On February 15, 1973, Metzger and Guerin met to discuss the tonnages of hot rolled steel mentioned in the November 17 letter. During the meeting, Metzger and Guerin agreed to increase the monthly tonnage of hot rolled pickled steel that Sharon would sell to the plaintiffs from 200 tons to 300 tons each month. Metzger also agreed, on behalf of Sharon, to sell the plaintiffs 300 tons of hot rolled black steel until May, 1973, when the monthly tonnage would be increased to 400 tons per month for the remainder of 1973. To confirm the agreement, Metzger noted these increased tonnages on Guerin’s copy of the November 17 letter.
In early 1973, several factors influenced the market for steel. Federal price controls discouraged foreign producers from importing steel; conversely, domestic producers exported a substantial portion of the steel produced domestically, in an effort to avoid federal price controls. Thus, the domestic steel supply was sharply reduced. In addition, the industry experienced substantial increases in demand as well as increases in labor, raw material, and energy costs. These increased labor, raw material, and energy costs compelled steel producers to increase prices. The increased demand and the attractive export market caused the
entire industry to operate at full capacity in. 1973 and 1974. Consequently, nearly every domestic producer experienced substantial delays in delivery..
As a result of the changed market conditions, Sharon decided to withdraw all price concessions, including those it had given the plaintiffs. The plaintiffs were notified of this decision on March 23, 1973 and they immediately protested, asserting that the price increase was a breach of the November, 1972 agreement, as modified in- February. As a result of this protest, discussions ensued and Sharon agreed to continue to sell steel to the plaintiffs at the discount prices of November, 1972 until June 30, 1973. For the remainder of 1973, Sharon proposed to sell rolled steel to plaintiffs at modified prices; these prices were higher than the prices set forth in the November 17 letter, but were lower than the published prices which Sharon charged its other customers. Sharon clearly indicated to plaintiffs that Sharon would sell no steel to plaintiffs after June 30, 1973 except at modified prices. Although plaintiffs initially were reluctant to accept Sharon’s compromise, they finally agreed to Sharon’s compromise proposal primarily because they were unable to purchase sufficient steel elsewhere to meet their production requirements.
In the second half of 1973, Sharon also experienced difficulties in -filling orders in a timely fashion. In most of 1973 and 1974, Sharon’s mill was operating at full capacity; because it could not produce any more steel, Sharon implemented a “blanking” policy in an effort to reduce the backlog of orders. Pursuant to the blanking policy, Sharon would refuse to accept purchase orders that requested delivery for a particular “blanked” month and all the steel produced that month was used to fill overdue orders. Because of this policy Sharon refused several purchase orders issued by plaintiffs: it refused to book Roth’s orders of 300 tons of hot rolled pickled steel and 400 tons of hot rolled black steel for delivery in October, 1973 and Toledo’s order of 425 tons of cold rolled steel for delivery in December, 1973. Both October and December were “blanked” months.
B. Sharon and the plaintiffs conducted business differently in 1974. In 1974, contracts were formed separately on an order-by-order basis. Normally, the plaintiffs issued a purchase order which indicated the type and amount of steel sought, and the requested delivery date; the purchase orders were offers to purchase steel and were not effective until accepted by Sharon. Sharon accepted an offer by issuing an acknowledgment form; in this form, Sharon agreed to ship a quantity of steel by a specific date, usually the date requested by the purchaser. The acknowledgment form indicated that the price for the shipment would be the “[s]eller’s prices prevailing at the time of shipment.”
In 1974, the steel market became even less predictable than in 1973: overall demand increased, deliveries of steel became more erratic, and acknowledged delivery dates were rarely observed. Sharon’s actual delivery dates were three to five months after the promised delivery dates. Throughout 1974, the price of steel steadily rose; as a consequence, Sharon’s late deliveries had the effect of increasing the price of the goods.
Although Sharon’s shipments to the plaintiffs were consistently delinquent throughout 1974, the plaintiffs continued to accept the late shipments and to place new orders with Sharon. The plaintiffs apparently acquiesced in this pattern of late shipments and higher prices.for two reasons: they had no practical alternative source of steel and they believed Sharon’s assurances that the late deliveries resulted from the general shortage of raw materials and the need to equitably allocate its limited production among all of its customers.
In May, 1974, the plaintiffs discovered facts that caused them to believe that the delays in shipment were not entirely the result of raw material shortages and Sharon’s allocation system. Specifically, the plaintiffs learned on May 9, 1974, that Sharon was selling substantial amounts of rolled steel to its subsidiary Ohio Metal Processing Company. Ohio Metal Processing was operating as a warehouse and selling steel at premium prices. By selling through its warehouse-subsidiary, Sharon was able to obtain higher prices than federal price controls otherwise permitted. In 1974, approximately fifteen percent (20,000 tons per month) of Sharon’s monthly steel production was sold to Ohio Metal Processing. Thus, the plaintiffs assert that they first learned that Sharon’s late deliveries were not entirely the result of raw material shortages and an allocation system when they learned that steel was being sold to Ohio Metal Processing.
The plaintiffs did not immediately act upon this information. Instead, they allowed the remaining unfilled orders to pend during the summer. In September, 1974, Roth’s orders were placed on “hold” due to the labor dispute. Most of plaintiffs’ orders were cancelled October, 1974. One final delivery was made by Sharon on October 31,1974; although this order had been inadvertently overlooked by the plaintiffs and thus not cancelled, the plaintiffs rejected this shipment because delivery had been made nearly one year after the agreed delivery date.
C. The plaintiffs commenced this action in April, 1975, alleging breach of contract and seeking to recover their expenses in “covering”. In March, 1976, the plaintiffs sought leave to file an amended complaint. The complaint, as amended, asserted 41 counts; plaintiffs sought damages based on the difference between the contract price and the market price for the goods at the time breach was discovered. The amended complaint sought total damages of $896,-174.60. Sharon’s answer denied the existence of a contract for the calendar year 1973 and raised several defenses: the statute of frauds, modification of the oral contract, commercial impracticability and failure to give notice of breach. It also counterclaimed for damages based upon the steel shipment which was rejected by Toledo Steel in October, 1974.
Following discovery, the district court granted plaintiffs’ motion for partial summary judgment, concluding that the statute of frauds did not bar the enforcement of the November, 1972 oral agreement. Following a five day trial, the district court issued a lengthy and exhaustive memorandum of opinion. In the opinion, the district court concluded that an oral contract was formed in November, 1972; that Sharon’s attempt, in June, 1972, to modify the contract was ineffective; and that Sharon had breached the contract by charging prices higher than agreed upon in the November, 1972 contract, by refusing to sell steel in October and December, 1973, and by failing to make timely delivery of some orders issued pursuant to the 1972 agreement. With regard to the 1974 transactions, the district court concluded that Sharon had breached several contracts for delivery of steel by failing to make a timely delivery or by failing to make delivery at all. It also concluded that the plaintiffs had given adequate notice of breach with regard to those late shipments which they accepted. It granted the plaintiffs damages of $555,-968.46, but denied their motion for prejudgment interest. Finally, it dismissed Sharon’s counterclaim, because it concluded that Toledo properly rejected the late shipment.
Sharon has appealed from the district court’s order granting the plaintiffs claim for damages and the order dismissing its counterclaim. The plaintiffs have cross-appealed from the district court’s order denying prejudgment interest.
II.
A. The threshold question is whether an oral contract for the sale of goods in excess of five hundred dollars which cannot be performed within one year is subject to the requirements of both O.R.C. Sec. 1302.04 (U.C.C. Sec. 2-201) and O.R.C. Sec. 1335.-05. The district court, in response to cross-motions for partial summary judgment, concluded that O.R.C. Sec. 1302.04 (U.C.C. Sec. 2-201) must be viewed as an exception to the requirements of O.R.C. Sec. 1335.05, the general statute of frauds provision, and that the November 17, 1972 confirmation letter, coupled with certain admissions on the part of Frank Metzger, satisfied O.R.C. Sec. 1302.04 (U.C.C. Sec. 2-201). Because we believe that O.R.C. Sec. 1302.04 (U.C.C. Sec. 2-201) and O.R.C. Sec. 1335.05 present an irreconcilable conflict, we agree with the district court that only the uniform commercial code’s statute of frauds is applicable. We also believe that the admissions made by Frank Metzger satisfy the special requirements of O.R.C. Sec. 1302.04 (U.C.C. Sec. 2-201) and, thus, that the oral contract is enforceable.
The uniform commercial code is a comprehensive statutory scheme regulating commercial sales transactions. See O.R.C. Sec. 1301.04 (U.C.C. Sec. 1-104). As part of that scheme, O.R.C. Sec. 1302.04(C)(2) (U.C.C. Sec. 2-201(3)), provides that a contract for the sale of goods in excess of five hundred dollars need not be evidenced by a writing “if the party against whom enforcement is sought admits in his pleading, testimony, or otherwise in court that a contract was made.” O.R.C. Sec. 1335.05, however, contains no exception to its requirement that contracts which cannot be performed within one year must be in writing. Consequently, an irreconcilable conflict exists when a contract falls within the scope of both O.R.C. Sec. 1302.04 (U.C.C. Sec. 2-201) and O.R.C. Sec. 1335.05; not all contracts which are enforceable under O.R.C. Sec. 1302.04 satisfy the requirements of O.R.C. Sec. 1335.05. Either the writing requirements of O.R.C. Sec. 1335.05 must be viewed as an exception to O.R.C. Sec. 1302.-04(C)(2) or O.R.C. Sec. 1302.04 (U.C.C. Sec. 2-201) must be interpreted as an exception to mandates of O.R.C. Sec. 1335.05.
Generally, when an irreconcilable conflict exists between a special statute and a general statute, the special statute prevails as an exception unless the legislature has expressly manifested a contract intent. E.g., State ex rel. Myers v. Chiaramonte, 46 Ohio St.2d 230, 237, 348 N.E.2d 323, 328 (1976). O.R.C. Sec. 1302.04 (U.C.C. Sec. 2-201) is a special legislative attempt to tailor the statute of frauds to the unique characteristics of a commercial sales transaction. Conversely, O.R.C. Sec. 1335.05, is the “general” statute of frauds provision encompassing a wide variety of contractual obligations which must be evidenced by a writing. Because of Ohio’s policy of interpreting special statutes as exceptions to more general provisions, and because the transactions between plaintiffs and Sharon are squarely within the scope of Article 2 of the uniform commercial code, we believe that the November oral contract need only satisfy the requirements of O.R.C. Sec. 1302.04 (U.C.C. Sec. 2-201).
The district court held that the deposition testimony of Frank Metzger satisfied the judicial admission exception to the statute of frauds established by O.R.C. Sec. 1302.-04(C)(2) (U.C.C. Sec. 2-201(3)(b)). The primary dispute on appeal concerns the scope of a representative admission under O.R.C. Sec. 1302.04(C)(2) (U.C.C. Sec. 2-201(3)(b)). The question is whether agents with authority to contract on behalf of their principals can make an admission which satisfies O.R.C. Sec. 1302.04(C)(2) (U.C.C. Sec. 2-201(3)(b)).
The uniform commercial code should be liberally construed and ought to be applied to promote its underlying purposes, O.R.C. Sec. 1301.02 (U.C.C. Sec. 1-102). The primary purpose of the statute of frauds is to protect parties from unfounded parol assertions of contractual obligation. See e.g., Dehahn v. Innes, 356 A.2d 711, 717 (Me.1978). Before the judicial admission section was enacted, parties enjoyed the protection afforded by the statute of frauds even though they admitted the existence of a contract in their pleadings or in their testimony. The judicial admission exception to the statute of frauds represents a specific legislative response to this anomaly: no longer may a party admit the existence of a contract, or facts which may establish existence of a contract, and simultaneously claim the benefits of the statute of frauds. Eg., Dehahn v. Innes, 356 A.2d 711 (Me.1978) (the enactment of the judicial admission exception to the statute of frauds was designed to prevent unscrupulous litigants from using the statute of frauds in a manner inconsistent with its intended purpose); Packwood Elevator Company v. Heisdorffer, 260 N.W.2d 543 (Iowa 1977). The question whether a representative admission by an agent with authority to bind his principal satisfies the judicial admission exception to the uniform commercial code’s statute of frauds provision, therefore, must be analyzed in light of these policy considerations.
The judicial admission exception to the statute of frauds is based on the maxim that principals rarely act in a manner inconsistent with their own interests. The statute, therefore, assumes that a principal’s admission regarding the existence of a contract is certain to be well founded. We believe that an admission by an agent with authority to bind his principal to the disputed contract is equally reliable. Agents owe a duty to their principals to act in a manner consistent with the principal’s interests. Moreover, the agent’s interest in continued employment assures that the agent will act in the principal’s best interest. In short, both the principal and his agent have an identity of interest in protecting the principal from unfounded oral assertions of obligation. Because the principal retains the ability to choose the individuals able to contract on his behalf, an interpretation which recognizes as admissions those statements made by agents with authority to contract does not unduly burden the principal’s interest in being protected from unwarranted assertions of contractual obligation. For these reasons we hold that agents with authority to bind their principals to the disputed contract may admit the existence of an oral contract for the purposes of O.R.C. Sec. 1302.04(C)(2) (U.C.C. See. 2-201(8)(b)), see Alter & Sons, Inc. v. United Engineers & Constructors, Inc., 366 F.Supp. 959, 966 (S.D.Ill.1973), and that the admissions by Metzger of the existence of a contract satisfied the requirements of O.R.C. Sec. 1302.04(C)(2) (U.C.C. Sec. 2-201(3)(b)).
B. The district court found that during the November, 1972 negotiations between plaintiffs and Sharon, plaintiffs promised to purchase and Sharon promised to sell specific quantities of steel throughout the calendar year 1973. The existence and scope of promises made by the plaintiffs and Sharon during the November negotiations present factual questions wholly separate from the legal consequences which attach to such subsidiary findings. Although this Court may freely review the district court’s legal conclusion concerning the existence of an enforceable oral contract, its subsidiary factual determinations must be upheld unless they are clearly erroneous. Sufficient evidence supports the district court’s findings regarding what the parties actually agreed upon. Moreover, we believe that the district court properly applied the controlling principles of law; thus, we hold that the November negotiations resulted in a contract, to be performed in 1973, for the sale of fixed quantities of steel.
The district court relied primarily upon the testimony of Frank Metzger, to support its finding that the November negotiations resulted in an agreement concerning the issuance and acceptance of monthly purchase orders for specific tonnage of steel: two hundred tons per month of hot rolled pickled and oiled and five hundred ton per month of cold rolled steel. Metzger testified that on November 14, 1972, an agreement concerning the quantity and price of hot rolled pickled and oiled steel was reached between Guerin, and Sharon representatives and that the confirmation letter dated November 17,1972 reflects the terms of that agreement. Metzger’s testimony and the terms of the November 17 letter indicate that the quantity of cold rolled steel was initially a tentative figure. Metzger admitted, however, that both parties agreed upon the proposed tonnage stated in the November 17 confirmation letter. Although credible evidence exists which might support a different conclusion, we cannot conclude, in light of Metzger’s testimony, that the district court’s subsidiary finding that plaintiffs promised to purchase and that Sharon promised to sell specific tonnages of steel is clearly erroneous.
Sharon argues that the November, 1972 agreement is unenforceable because the plaintiffs’ promise to purchase specific quantities of steel from Sharon is illusory. Sharon argues that it was not obligated to ship steel unless a purchase order was first issued and that the decision to issue a purchase order was wholly within the control of the plaintiffs. This argument assumes that the plaintiffs were obligated to buy steel only if they chose to issue a purchase order and that the plaintiffs were not obligated to issue purchase orders for a specific quantity of steel each month. The district court, however, found that the plaintiff's promise to buy a specific amount of steel per month was unconditional and concluded that the promise provided adequate consideration to support Sharon’s promise to sell steel. We believe that this finding is not clearly erroneous and, therefore, that the plaintiff’s promise to purchase steel is not illusory. E.g., Davis Laundry & Cleaning Co. v. Whitmore, 92 Ohio St. 44, 110 N.E. 518 (1915) (exchange of promises to buy and sell represents sufficient consideration).
C. In March, 1973, Sharon notified its customers that it intended to charge the maximum permissible price for all of its products; accordingly, all price concessions, including those made to the plaintiffs, were to be rescinded effective April 1, 1973. On March 23,1973, Guerin indicated to Metzger that the plaintiffs considered the proposed price increase to be a breach of the November, 1972 contract. In an effort to resolve the dispute, Guerin met with representatives of Sharon on March 28, 1973 and asked Sharon to postpone any price increases until June or July, 1973. Several days later, Richard Meeaskey, Guerin’s replacement, sent a letter to Sharon which indicated that the plaintiffs believed that the November, 1972 agreement was enforceable and that the plaintiffs were willing to negotiate a price modification if Sharon’s cost increases warranted such an action. As a result of this letter, another meeting was held between Sharon and the plaintiffs. At this meeting, Walter Gregg, Sharon’s vice-president and chairman of the board, agreed to continue charging the November, 1972 prices until June 30, 1973 and offered, for the remainder of 1972, to charge prices that were lower than Sharon’s published prices but higher than the 1972 prices. Although the plaintiffs initially rejected the terms offered by Sharon for the second half of 1973, Meeaskey reluctantly agreed to Sharon’s terms on June 29, 1973.
Before the district court, Sharon asserted that it properly increased prices because the parties had modified the November, 1973 contract to reflect changed market eonditions. The district court, however, made several findings which, it believed, indicated that Sharon did not seek a modification to avoid a loss on the contract. The district court also found that the plaintiffs’ inventories of rolled steel were “alarmingly deficient” at the time modification was sought and that Sharon had threatened to cease selling steel to the plaintiffs in the second-half of 1973 unless the plaintiffs agreed to the modification. Because Sharon had used its position as the plaintiffs’ chief supplier to extract the price modification, the district court concluded that Sharon had acted in bad faith by seeking to modify the contract. In the alternative, the court concluded that the modification agreement was voidable because it was extracted by means of economic duress; the tight steel market prevented the plaintiffs from obtaining steel elsewhere at an affordable price and, consequently, the plaintiffs were forced to agree to the modification in order to assure a continued supply of steel. See e.g. Oskey Gasoline & Oil Co. v. Continental Oil Co., 534 F.2d 1281 (8th Cir.1976). Sharon challenges these conclusions on appeal.
The ability of a party to modify a contract which is subject to Article Two of the Uniform Commercial Code is broader than common law, primarily because the modification needs no consideration to be binding. O.R.C. Sec. 1302.12 (U.C.C. Sec. 2-209(1)). A party’s ability to modify an agreement is limited only by Article Two’s general obligation of good faith. Ralston Purina Company v. McNabb, 381 F.Supp. 181, 183 (W.D.Tenn.1974); Official Comment 2, O.R.C. Sec. 1302.12 (U.C.C. Sec. 2-209). See O.R.C. Sec. 1302.01(A)(2) (U.C.C. Sec. 2-103). Erie County Water Authority v. Hen-Gar Construction Corp., 473 F.Supp. 1310, 1313 (W.D.N.Y.1979); Ralston Purina Co. v. McNabb, 381 F.Supp. at 1821-83. In determining whether a particular modification was obtained in good faith, a court must make two distinct inquiries: whether the party’s conduct is consistent with “reasonable commercial standards of fair dealing in the trade,” U.S. for Use and Benefit of Crane Co. v. Progressive Enterprises, 418 F.Supp. 662, 664 n. 1 (E.D.Va.1976), and whether the parties were in fact motivated to seek modification by an honest desire to compensate for commercial exigencies. See Ralston Purina Co. v. McNabb, 381 F.Supp. at 183 (subjective purpose [to maximize damages] of extending time of performance under contract indicates bad faith and renders modification invalid); O.R.C. Sec. 1302.01(A)(2) (U.C.C. Sec. 2-103). The first inquiry is relatively straightforward; the party asserting the modification must demonstrate that his decision to seek modification was the result of a factor, such as increased costs, which would cause an ordinary merchant to seek a modification of the contract. See Official Comment 2, O.R.C. Sec. 1302.12 (U.C.C. Sec. 2-209) (reasonable commercial standards may require objective reason); J. White & R. Summers, Handbook of Law under the U.C.C. at 41. The second inquiry, regarding the subjective honesty of the parties, is less clearly defined. Essentially, this inquiry requires the party asserting the modification to demonstrate that he was, in fact, motivated by a legitimate commercial reason and that such a reason is not offered merely as a pretext. Ralston Purina Co. v. McNabb, 381 F.Supp. at 183-84. Moreover, the trier of fact must determine whether the means used to obtain the modification are an impermissible attempt to obtain a modification by extortion or overreaching. Erie County Water Authority v. Hen-Gar Construction, 473 F.Supp. at 1313; Official Comment 2, O.R.C. Sec. 1302.12 (U.C.C. Sec. 2-209). See J. White and R. Summers, Handbook of the Law under the Uniform Commercial Code, at 40-41 (1972).
Sharon argues that its decision to seek a modification was consistent with reasonable commercial standards of fair dealing because market exigencies made further performance entail a substantial loss. The district court, however, made three findings which caused it to conclude that economic circumstances were not the reason that Sharon sought a modification: it found that Sharon was partially insulated from raw material price increases, that Sharon bargained for a contract with a slim profit margin and thus implicitly assumed the risk that performance might come to involve a loss, and that Sharon’s overall profit in 1973 and its profit on the contract in the first quarter of 1973 were inconsistent with Sharon’s position that the modification was sought to avoid a loss. Although all of these findings are marginally related to the question whether Sharon’s conduct was consistent with reasonable commercial standards of fair dealing, we do not believe that they are sufficient to support a finding that Sharon did not observe reasonable commercial standards by seeking a modification. In our view, these findings do not support a conclusion that a reasonable merchant, in light of the circumstances, would not have sought a modification in order to avoid a loss. For example, the district court’s finding that Sharon’s steel slab contract insulated it from industry wide cost increases is correct, so far as it goes. Although Sharon was able to purchase steel slabs at pre-1973 prices, the district court’s findings also indicate that it was not able to purchase, at those prices, a sufficient tonnage of steel slabs to meet its production requirements. The district court also found that Sharon experienced substantial cost increases for other raw materials, ranging from 4% ton nearly 20%. In light of these facts, the finding regarding the fixed-price contract for slab steel, without more, cannot support an inference that Sharon was unaffected by the market shifts that occurred in 1973. Similarly, the district court’s finding that Sharon entered a contract in November, 1972 which would yield only a slim profit does not support a conclusion that Sharon was willing to risk a loss on the contract. Absent a finding that the market shifts and the raw material price increases were foreseeable at the time the contract was formed — a finding which was not made— Sharon’s willingness to absorb a loss cannot be inferred from the fact that it contracted for a smaller profit than usual. Finally, the findings regarding Sharon’s profits are not sufficient, by themselves, to warrant a conclusion that Sharon was not justified in seeking a modification. Clearly, Sharon’s initial profit on the contract is an important consideration; the district court’s findings indicate, however, that at the time modification was sought substantial future losses were foreseeable. A party who has not actually suffered a loss on the contract may still seek a modification if a future loss on the agreement was reasonably foreseeable. Similarly, the overall profit earned by the party seeking modification is an important factor; this finding, however, does not support a conclusion that the decision to seek a modification was unwarranted. The more relevant inquiry is into the profit obtained through sales of the product line in question. This conclusion is reinforced by the fact that only a few product lines may be affected by market exigencies; the opportunity to seek modification of a contract for the sale of goods of a product line should not be limited solely because some other product line produced a substantial profit.
In the final analysis, the single most important consideration in determining whether the decision to seek a modification is justified in this context is whether, because of changes in the market or other unforeseeable conditions, performance of the contract has come to involve a loss. In this case, the district court found that Sharon suffered substantial losses by performing the contract as modified. See note 29, supra. We are convinced that unforeseen economic exigencies existed which would prompt an ordinary merchant to seek a modification to avoid a loss on the contract; thus, we believe that the district court’s findings to the contrary are clearly erroneous. See, e.g., U.S. for Use and Benefit of Crane Co. v. Progressive Enterprises, 418 F.Supp. 662, 664 (E.D.Va.1976); Official Comment 2, O.R.C. Sec. 1302.12 (U.C.C. Sec. 2-209); White & Summers, supra, at 41.
The second part of the analysis, honesty in fact, is pivotal. The district court found that Sharon “threatened not to sell Roth and Toledo any steel if they refused to pay increased prices after July 1, 1973”' and, consequently, that Sharon acted wrongfully. Sharon does not dispute the finding that it threatened to stop selling steel to the plaintiffs. Instead, it asserts that such a finding is merely evidence of bad faith and that it has rebutted any inference of bad faith based on that finding. We agree with this analysis; although coercive conduct is evidence that a modification of a contract is sought in bad faith, that prima facie showing may be effectively rebutted by the party seeking to enforce the modification. E.g., Business Incentives, Inc. v. Sony Corp. of America, 397 F.Supp. 63, 69 (S.D.N.Y.1975) (in context of economic duress, coercive conduct permissible in light of contractual right to terminate). See Jamestown Farmers Elevator, Inc. v. General Mills, 552 F.2d 1285, 1290 (8th Cir.1977) (“good faith insistence upon a legal right [with coercive effect] which one believes he has usually is not duress, even if it turns out that that party is mistaken and, in fact, has no such right”); White & Summers, supra, at 41 (good faith exists if a party believes that contract permits party seeking modification to refuse to perform if modification not effected). Although we agree with Sharon’s statement of principles, we do not agree that Sharon has rebutted the inference of bad faith that rises from its coercive conduct. Sharon asserts that its decision to unilaterally raise prices was based on language in the November 17, 1972 letter which allowed it to raise prices to the extent of any general industry-wide price increase. Because prices in the steel industry had increased, Sharon concludes that it was justified in raising its prices. Because it was justified in raising the contract price, the plaintiffs were bound by the terms of the contract to pay the increased prices. Consequently, any refusal by the plaintiffs to pay the price increase sought by Sharon must be viewed as a material breach of the November, 1972 contract which would excuse Sharon from any further performance. Thus, Sharon reasons that its refusal to perform absent a price increase was justified under the contract and consistent with good faith.
This argument fails in two respects. First, the contractual language on which Sharon relies only permits, at most, a price increase for cold rolled steel; thus, even if Sharon’s position were supported by the evidence, Sharon would not have been justified in refusing to sell the plaintiffs hot rolled steel because of the plaintiffs’ refusal to pay higher prices for the product. More importantly, however, the evidence does not indicate that Sharon ever offered this theory as a justification until this matter was tried. Sharon’s representatives, in their testimony, did not attempt to justify Sharon’s refusal to ship steel at 1972 prices in this fashion. Furthermore, none of the contemporaneous communications contain this justification for Sharon’s action. In short, we can find no evidence in the record which indicates that Sharon offered this theory as a justification at the time the modification was sought. Consequently, we believe that the district court’s conclusion that Sharon acted in bad faith by using coercive conduct to extract the price modification is not clearly erroneous. Therefore, we hold that Sharon’s attempt to modify the November, 1972 contract, in order to compensate for increased costs which made performance come to involve a loss, is ineffective because Sharon did not act in a manner consistent with Article Two’s requirement of honesty in fact when it refused to perform its remaining obligations under the contract at 1972 prices.
III.
A. The district court concluded that Sharon’s refusal to accept certain purchase orders requesting delivery during the months of October and December of 1973 resulted in a breach of the November 14, 1972 oral agreement. Sharon asserted the affirmative defense of commercial impracticability, arguing that demand far surpassed its decreasing production capabilities. Because the oral contract of November 14, 1972 was based upon the presupposed condition that raw materials sufficient to meet Sharon’s contractual obligations would be available, and because sufficient raw materials were unavailable to meet demand, Sharon claims that strict performance of the contract is excused by O.R.C. Sec. 1302.73 (U.C.C. Sec. 2-615). The district court, however, found that Sharon’s policy of accepting more purchase orders than it was capable of filling was the direct cause of Sharon’s inability to perform pursuant to the terms of the November 14, 1972 oral agreement and rejected Sharon’s commercial impracticability defense.
Generally, a party asserting the defense of commercial impracticability must prove that an unforeseeable event occurred, that the non-occurrence of the event was a basic assumption underlying the agreement, and that the event rendered performance impracticable O.R.C. Sec. 1302.73 (U.C.C. Sec. 2-615). See, e.g., Neal-Cooper Grain Company v. Texas Gulf Sulfur Company, 508 F.2d 283, 293 (7th Cir.1974). The evidence in this case supports Sharon’s assertions that an unforeseeable raw material shortage occurred and that the non-occurrence of such a shortage was a basic assumption underlying the November 14,1972 oral contract. The primary dispute involves the question whether the raw material shortage rendered Sharon’s ability to perform the November, 1972 contract commercially impracticable. We believe that Sharon failed to affirmatively demonstrate that its alleged inability to perform was caused by the existing raw material shortage. Therefore, we affirm the district court’s decision denying Sharon relief under O.R.C. Sec. 1302.73 (U.C.C. Sec. 2-615).
To successfully assert the affirmative defense of commercial impracticability, the party must show that the unforeseeable event upon which excuse is predicated is due to factors beyond the party’s control. Chemetron Corp. v. McLouth Steel Corp., 381 F.Supp. 245 (N.D.Ill.), aff’d, 522 F.2d 469 (7th Cir.1974). This rule of law is simply a restatement of the causation requirement of O.R.C. Sec.
Question: Were there cross appeals 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.
ALTIMARI, Circuit Judge:
Defendants-appellants Thomas Mickens, Anthony Jacobs, Shelby Kearney, and Bet-tina Jacobs Celifie appeal from judgments of conviction, entered in the United States District Court for the Eastern District of New York (Thomas C. Platt, Chief Judge).
Following a four-month jury trial, Mick-ens was convicted of conspiracy to distribute and to possess with intent to distribute cocaine, in violation of 21 U.S.C. § 846 (1988); conspiracy to defraud the United States, in violation of 18 U.S.C. § 371 (1988); four counts of income tax evasion, in violation of 26 U.S.C. § 7201 (1988); one count of filing a perjurious income tax return, in violation of 26 U.S.C. § 7206(1) (1988); eight counts of money laundering, in violation of 18 U.S.C. § 1956(a)(l)(B)(i) & (ii) (1988); and, one count of structuring a financial transaction as part of a pattern of illegal activity, in violation of 31 U.S.C. § 5324(3) (1988). Shelby Kearney and Bet-tina Jacobs Celifie were each convicted of conspiracy to defraud the United States, in violation of 18 U.S.C. § 371, and one count of money laundering, in violation of 18 U.S.C. § 1956(a)(l)(B)(i). Celifie was also convicted of one count of structuring a financial transaction as part of a pattern of illegal activity, in violation of 31 U.S.C. § 5324(3). Anthony Jacobs pleaded guilty to conspiracy to distribute cocaine, in violation of 21 U.S.C. § 846; conspiracy to defraud the United States, in violation of 18 U.S.C. § 371; and, two counts of distributing cocaine, in violation of 21 U.S.C. § 841(a)(1) & (b)(1)(C).
On appeal, defendants-appellants Mick-ens, Kearney, and Celifie contend that comments made by the district court during trial deprived them of their constitutional right to a fair trial. They also challenge the court’s denial of a motion to suppress certain evidence, its rulings on various evi-dentiary questions posed during the course of the trial, and its instructions to the jury regarding the elements of a section 1956 violation. Moreover, they question the constitutionality of the currency reporting requirements of 31 U.S.C. § 5313 (1988). Defendant-appellant Jacobs appeals from his sentence of imprisonment. He contends that, in calculating his offense level, the district court improperly attributed to him the entire quantity of narcotics for which Mickens was found responsible. The government cross-appeals from the district court’s decision to downwardly depart in sentencing defendant-appellant Celifie.
For the reasons set forth below, the judgments of the district court are affirmed in part, reversed in part, and remanded.
BACKGROUND
Between 1984 and 1988, defendant-appellant Thomas Mickens directed a lucrative cocaine distribution network in Queens, New York. At trial, two law enforcement officers testified about numerous undercover cocaine purchases from individuals identified as Mickens’ underlings. For example, on two separate occasions undercover officer Austin Fields purchased cocaine from defendant-appellant Anthony Jacobs, a reputed “lieutenant” in the Mickens organization. On another occasion, surveillance agents spotted Mickens in the vicinity of a narcotics transaction between undercover Officer Terance Miller and another Mick-ens’ associate, George Jenkins. Officer Miller also purchased cocaine directly from Mickens while both men were seated in an undercover police car.
In addition to the direct evidence of narcotics activity, the prosecution presented evidence of Mickens’ lavish spending. The testimony of several automobile salesmen and insurance agents connected Mickens to the purchase of eighteen automobiles, costing a total of approximately $556,000. Trial evidence also established that Mickens purchased some sixteen properties, including commercial property in Queens, a $730,-000 residence in Dix Hills, New York, a residence in Miami, Florida, and a condominium in California. Mickens’ former attorney testified that he assisted Mickens in purchasing several properties using cash and money orders. He also testified that he helped Mickens launder money by preparing contracts and closing documents that significantly understated the properties’ actual purchase prices.
Additional evidence of Mickens’ automobile and real estate purchases was obtained during a warrant-authorized search of the Dix Hills residence. The warrant permitting the search was obtained on the basis of observations made by FBI agent Nerisa Pilafian during a “protective sweep” of the premises in connection with Mickens’ arrest. Mickens moved before the district court to suppress the evidence obtained from the Dix Hills residence, claiming that Agent Pilafian’s protective sweep was not justified by the circumstances of the arrest. This motion was denied.
Many of Mickens’ automobile and real estate purchases were accomplished through the use of nominees, including defendants-appellants Kearney and Celifie. For example, trial evidence established that Kearney, who was Mickens’ girlfriend, acted on Mickens’ behalf in the purchases of property in Hempstead, New York and the residence in Dix Hills, New York. The prosecution also presented evidence that Bettina Jacobs Celifie acted as Mickens’ nominee in purchasing the California condominium, as well as a $133,350 yacht.
Following a four-month jury trial, defendant-appellant Mickens was convicted of, inter alia, conspiracy to distribute and to possess with intent to distribute cocaine, conspiracy to defraud the United States, income tax evasion, and money laundering. He was sentenced to an aggregate term of imprisonment of thirty-five years, a fine of $1,000,000, and a special assessment of $800. Defendants-appellants Kearney and Celifie were each convicted of conspiracy to defraud the United States and money laundering, and Celifie was also convicted of structuring a financial transaction as part of a pattern of illegal activity. Kearney was sentenced to concurrent five-year terms of imprisonment on each count, to be followed by two years’ supervised release, a fine of $200,000, and a $100 special assessment. Celifie was sentenced, pursuant to a downward departure, to concurrent eighteen-month terms of imprisonment on each count, to be followed by two years’ supervised release, and a $150 special assessment. Defendant-appellant Anthony Jacobs, who pleaded guilty to conspiracy to distribute cocaine, conspiracy to defraud the United States, and distributing cocaine, was sentenced to 327 months’ imprisonment, to be followed by a five-year term of supervised release, and a special assessment of $200. This appeal and cross-appeal followed.
DISCUSSION
I. The Unfair Trial Claim.
Defendants-appellants Mickens, Kearney and Celifie claim that the district court’s admonitions to counsel and questions of witnesses deprived them of a fair trial. Defendants-appellants claim that the court “poisoned the courtroom atmosphere and prevented a fair trial.” We disagree.
While many of the court’s remarks were unfortunate, their cumulative effect was not a deprivation of the right to a fair trial. A trial judge “ ‘need not sit like a “bump on a log” throughout the trial.’ ” United States v. Bejasa, 904 F.2d 137, 141 (2d Cir.) (quoting United States v. Pisani, 773 F.2d 397, 403 (2d Cir.1985)), cert. denied, — U.S. -, 111 S.Ct. 299, 112 L.Ed.2d 252 (1990). As this Court recently stated:
Judges, being human, are not immune to feelings of frustration at the occasional antics or inartfulness of attorneys or impatience at the evasiveness of witnesses. Such feelings may give vent to remarks which, judged in isolation from the totality of the record through the dispassionate looking glass of hindsight, “would better have been left unsaid.” Yet, analysis of such comments, taken out of context of the entire record, is not the proper basis for review. Rather, we must make “an examination of the entire record,” in order to determine whether the defendant received a fair trial.
Id. at 141 (quoting United States v. Robinson, 635 F.2d 981, 985 (2d Cir.1980), cert. denied, 451 U.S. 992, 101 S.Ct. 2333, 68 L.Ed.2d 852 (1981), and United States v. Mazzilli, 848 F.2d 384, 389 (2d Cir.1988)). Viewing the record in the present case in its entirety, it is clear that defendants-appellants received a fair trial. The district court’s occasional intemperate remarks did not substantially taint defendants-appellants’ trial. It must be noted that these remarks were provoked to some extent by one defense counsel’s despicable verbal assault on the court. That attorney’s conduct was so egregrious that, after verdict, the court advised counsel that it intended to file a complaint with the Grievance Committee of the Eastern District of New York. Moreover, any possible prejudice to defendants-appellants was cured by the court’s cautionary instruction. See United States v. Bejasa, 904 F.2d at 141; United States v. Gurary, 860 F.2d 521, 527 (2d Cir.1988), cert. denied, 490 U.S. 1035, 109 S.Ct. 1931, 104 L.Ed.2d 403 (1989).
II. The Motion To Suppress.
Defendant-appellant Mickens argues that the district court erred in denying his motion to suppress evidence obtained in the warrant-authorized search of the Dix Hills residence. He claims that the warrant was issued on the basis of information gathered during an improper “protective sweep” of the residence, conducted by FBI agent Nerisa Pilafian in the process of arresting Mickens. Again, we disagree.
Law enforcement officers may conduct a protective sweep of a residence during the course of an arrest if they possess “a reasonable belief based on specific and articulable facts that the area to be swept harbors an individual posing a danger to those on the arrest scene.” Maryland v. Buie, 494 U.S. 325, 110 S.Ct. 1093, 1099-1100, 108 L.Ed.2d 276 (1990). This standard was satisfied in the present case. The arresting officers had reason to believe that defendant-appellant Kearney and her mother—both of whom resided in the house—were on the premises. Moreover, as the district court found, "agents had reason to believe that Mickens was a drug dealer who was known to be violent and who travelled with others.” Thus, Agent Pilafian had a reasonable basis to conduct the protective sweep of the Dix Hills residence. See United States v. Escobar, 805 F.2d 68, 71-72 (2d Cir.1986); United States v. Jackson, 778 F.2d 933, 937 (2d Cir.1985), cert. denied, 479 U.S. 910, 107 S.Ct. 308, 93 L.Ed.2d 282 (1986). Moreover, the scope of Agent Pilafian’s protective sweep did not extend beyond the “cursory inspection” deemed proper by the Supreme Court. Buie, 110 S.Ct. at 1099. Accordingly, the district court properly refused to suppress the evidence yielded by the warrant-authorized search of the Dix Hills residence.
III. The Evidentiary Rulings.
A. The admission of threat evidence.
Defendant-appellant Mickens challenges the district court’s decision to permit Mickens’ former attorney to testify that Mickens had made a hand gesture in the shape of a gun as the former attorney entered the courtroom to testify. Mickens argues that this testimony lacked probative value and that the former attorney’s testimony that Mickens had pointed at the court, not at the attorney, was unduly prejudicial. This challenge lacks merit.
Evidence, such as the former attorney’s testimony, offered under Fed.R.Evid. 404(b) may be admitted if the court: 1) determines that the evidence is offered for “a purpose other than to prove the defendant’s bad character or criminal propensity,” United States v. Colon, 880 F.2d 650, 656 (2d Cir.1989); 2) determines that the evidence is relevant under Fed.R.Evid. 401 & 402, and is more probative than unfairly prejudicial under Fed.R.Evid. 403, id. (quoting United States v. Ortiz, 857 F.2d 900, 903 (2d Cir.1988), cert. denied, 489 U.S. 1070, 109 S.Ct. 1352, 103 L.Ed.2d 820 (1989)); and 3) provides an appropriate limiting instruction to the jury, if one is requested, id. (citing Huddleston v. United States, 485 U.S. 681, 691-92, 108 S.Ct. 1496, 1502, 99 L.Ed.2d 771 (1988), and United States v. Ortiz, 857 F.2d at 903).
In the present case, the standards for admission of Rule 404(b) evidence were satisfied. The testimony about the hand gesture was not offered to prove Mickens’ bad character or criminal propensity, but rather to prove his consciousness of guilt. See United States v. Bein, 728 F.2d 107, 114 (2d Cir.), cert. denied, 469 U.S. 837, 105 S.Ct. 135, 83 L.Ed.2d 75 (1984). The testimony was relevant since an effort to intimidate a key prosecution witness was probative of Mickens’ state of mind. Mickens argues that, because the testimony was that the threat was not directed at his former attorney, but at the court, the evidence should have been excluded under Rule 403. However, the fact that Mickens’ hand gesture was directed at the court does not disprove that he attempted to threaten the witness. Indeed, Mickens’ former attorney testified that he felt intimidated by the gesture. Moreover, only a preliminary hearing on the details of the witness’ proposed testimony would have avoided the unanticipated statement that Mickens’ gesture was directed at the court. While, in retrospect, such a preliminary hearing may have been helpful, it is simply not required by Rule 404(b). See Huddleston, 485 U.S. at 686-89, 108 S.Ct. at 1499-1501. We also note that Mickens’ acquittal of two counts of distributing cocaine belies the argument that admission of the threat evidence was unduly prejudicial to Mickens. In sum, the district court’s decision to admit the testimony about Mickens’ apparent threat was not an abuse of discretion. See United States v. Qamar, 671 F.2d 732, 736 (2d Cir.1982); see also United States v. Jamil, 707 F.2d 638, 642 (2d Cir.1983).
B. The evidence of a prior narcotics conviction.
Mickens contends that the district court erred in admitting evidence, pursuant to Fed.R.Evid. 404(b), of Mickens’ prior involvement in narcotics activity, including his 1983 conviction for possessing and selling cocaine. Defendant-appellant Kearney also argues that the court improperly admitted evidence that she visited Mickens while he was serving his prison term for the 1983 conviction. We reject both challenges.
Applying the standards discussed above, we hold that this evidence was properly admitted under Rule 404(b). Mickens’ pri- or involvement in narcotics activity was relevant to the prosecution’s tax evasion and money laundering theory that narcotics sales provided the cash which Mickens spent so lavishly. In addition, Kearney’s visits to Mickens while he was incarcerated were relevant to the second element of the money laundering charge, i.e., that Kear-ney knew that the laundered funds derived from an unlawful source. The district court’s judgment that the probative value of this evidence was not substantially outweighed by its potential prejudicial effect was not an abuse of discretion. See United States v. Smith, 727 F.2d 214, 220 (2d Cir.1984); United States v. Birney, 686 F.2d 102, 106 (2d Cir.1982). Moreover, the court provided a limiting instruction to the jury, informing them of the appropriate use of this evidence. See United States v. Ortiz, 857 F.2d at 903.
C. The in-court identification.
Defendant-appellant Mickens contends that the court erred in permitting various automobile salesmen to identify him in court because those witnesses were previously shown unduly suggestive photo arrays. This contention is unpersuasive.
The pre-trial photo array procedure which Mickens challenges was not “unduly suggestive of the suspect’s guilt.” Dickerson v. Fogg, 692 F.2d 238, 244 (2d Cir.1982). Mickens’ arguments notwithstanding, the fact that his picture was the only photocopy in the array is insignificant. Cf. United States ex rel. Cannon v. Montanye, 486 F.2d 263, 267 (2d Cir.1973), cert. denied, 416 U.S. 962, 94 S.Ct. 1982, 40 L.Ed.2d 313 (1974); United States v. Fernandez, 456 F.2d 638, 641 (2d Cir.1972). Indeed, this difference was so minor that the district court did not notice that Mick-ens’ picture was a photocopy until the defense pointed it out. See United States v. Archibald, 734 F.2d 938, 940 (2d Cir.1984); see also Jarrett v. Headley, 802 F.2d 34, 41 (2d Cir.1986). Even if Mickens’ argument was accepted, it would be of little import since Mickens does not contest his involvement in the transactions in which he was identified. Mickens’ defense is not mistaken identity, but that the various purchases were not made using the proceeds of narcotics activity. Accordingly, it was not error to permit the automobile salesmen who had spotted Mickens in the array to identify him in court.
IV. The Jury Instruction Claim.
Defendants-appellants Mickens, Kearney and Celifie contend that the district court’s instructions to the jury regarding the elements of money laundering, 18 U.S.C. § 1956, constructively amended the indictment against them. We disagree.
To prove a violation of section 1956, the government must establish that a financial transaction “involves the proceeds of specified unlawful activity.” 18 U.S.C. § 1956(a)(1) (emphasis added). The government is further required to demonstrate that the defendant knew that “the property involved in [the] financial transaction represents the proceeds of some form of unlawful activity.” Id. (emphasis added). The indictment counts charging defendants-appellants with money laundering, in pertinent part, stated:
[Defendants-appellants] did knowingly and wilfully conduct and attempt to conduct a financial transaction which involved the proceeds of a specified unlawful activity, to wit: narcotics distribution, knowing that the property involved in such financial transaction, to wit: United States currency, represented the proceeds of some form of unlawful activity and knowing that the transaction was designed in whole or in part to conceal and disguise the nature, the source, the ownership and the control of the proceeds of a specified unlawful activity.
Paralleling the indictment, the district court instructed the jury, inter alia:
The first element of the offense which the government must prove beyond a reasonable doubt is that the defendant you are considering in the count you are considering conducted or attempted to conduct a financial transaction involving property constituting the proceeds of specified unlawful activity, specifically, narcotics distribution.
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The second element of the offense which the government must prove beyond a reasonable doubt is that the defendant you are considering in the count you are considering knew that the property involved in the financial transaction was the proceeds of some form of an unlawful activity.
This instruction accurately stated the applicable law and conformed to the terms of the indictment.
The defendants-appellants focus, however, on the court’s explanation of the second element of section 1956. In this regard, the court instructed:
I instruct you that this [second] element refers to a requirement that the defendant knew the property involved in the transaction represented proceeds from some form, though not necessarily which form, of activity that constitutes a felony under state or federal law.
I instruct you as a matter of law that narcotics distribution is a felony, as is, for example, gambling.
Again, this instruction adheres to the indictment. Moreover, since the challenged instruction pertained only to the second element of section 1956, it did not enlarge the prosecution’s theory regarding the first element, i.e., that the laundered money represented proceeds from narcotics activity. Accordingly, defendants-appellants’ contention that the indictment charging them with violating section 1956 was constructively amended must be rejected. See United States v. Weiss, 752 F.2d 777, 787-88 (2d Cir.), cert. denied, 474 U.S. 944, 106 S.Ct. 308, 88 L.Ed.2d 285 (1985).
V. The Constitutionality of 31 U.S.C. § 5313.
Defendants-appellants Mickens and Celifie moved before the district court for the dismissal of indictment counts alleging violation of 18 U.S.C. § 1956(a)(l)(B)(ii) and 31 U.S.C. § 5324 (1988), claiming that the domestic currency transaction report (“CTR”) requirements giving rise to those charges are unconstitutional. Specifically, Mickens and Celifie argued that the CTRs required under 31 U.S.C. § 5313(a) (1988) violate the fifth amendment privilege against self-incrimination. The district court denied this motion, and defendants-appellants now challenge that denial. We reject this challenge.
The fifth amendment privilege against self-incrimination protects against governmental compulsion of self-incriminating testimonial communication. See Fisher v. United States, 425 U.S. 391, 397, 96 S.Ct. 1569, 1574, 48 L.Ed.2d 39 (1976); Couch v. United States, 409 U.S. 322, 328, 93 S.Ct. 611, 615, 34 L.Ed.2d 548 (1973). Section 5313(a) and its implementing regulations, 31 C.F.R. § 103.22 (1990), require financial institutions to report certain transactions. See United States v. St. Michael’s Credit Union, 880 F.2d 579, 581-82 (1st Cir.1989). Individuals, including defendants-appellants, are not themselves compelled to report their transactions. See United States v. Hoyland, 914 F.2d 1125, 1130 (9th Cir.1990). Absent such compulsion, Mickens, Kearney, and Celifie may not complain that their fifth amendment rights were violated. See Couch v. United States, 409 U.S. at 328, 93 S.Ct. at 616 (“The Constitution explicitly prohibits compelling an accused to bear witness ‘against himself’; it necessarily does not proscribe incriminating statements elicited from another.”); see also Hoyland, 914 F.2d at 1130.
Moreover, even if 31 U.S.C. § 5313(a) were construed to compel reporting by defendants-appellants, we would find no fifth amendment violation. Reporting requirements have been considered vio-lative of the fifth amendment if they “would almost necessarily provide the basis for criminal proceedings against [the reporting individual] for the very activity that he was required to disclose.” United States v. Dichne, 612 F.2d 632, 640 (2d Cir.1979), cert. denied, 445 U.S. 928, 100 S.Ct. 1314, 63 L.Ed.2d 760 (1980); see Grosso v. United States, 390 U.S. 62, 67-68, 88 S.Ct. 709, 713, 19 L.Ed.2d 906 (1968); Marchetti v. United States, 390 U.S. 39, 55-57, 88 S.Ct. 697, 706-07, 19 L.Ed.2d 889 (1968). By contrast, section 5313(a) is a legitimate reporting requirement which targets transactions without regard to the purposes for which they are undertaken. See Dichne, 612 F.2d at 639-41. Section 5313(a) does not require the reporting of information that would necessarily be criminal. Like the foreign CTR requirements considered in Dichne, section 5313(a)’s reporting requirements do not violate the fifth amendment privilege against self-incrimination. See United States v. Kaatz, 705 F.2d 1237, 1242 (10th Cir.1983); United States v. Keller, 730 F.Supp. 151, 156 (N.D.Ill.1990); United States v. Kimball, 711 F.Supp. 1031, 1032-34 (D.Nev.1989); United States v. Scanio, 705 F.Supp. 768, 778-79 (W.D.N.Y.1988).
VI. Anthony Jacobs’ Sentence.
Defendant-appellant Anthony Jacobs, who pleaded guilty to conspiracy to distribute cocaine, conspiracy to defraud the United States, and distributing cocaine, challenges the sentence imposed on him by the district court. He contends that his sentence, which exceeds twenty-seven years’ imprisonment, resulted from misapplication of the Sentencing Guidelines. We agree and, accordingly, remand to Chief Judge Platt for resentencing.
The district court’s computation of Jacobs’ offense level followed a two-step analysis in which, (1) the court approximated that the Mickens conspiracy distributed in excess of fifty kilograms of cocaine, based on Mickens’ unexplained income of over $2,000,000 during the operation of the conspiracy; and,- (2) the court attributed the full approximated amount distributed by the conspiracy to Anthony Jacobs. This quantity was added to the 24.4 grams of cocaine that Jacobs admitted to selling, and resulted in an offense level of 36. Matching Jacobs’ Criminal History Category I with this offense level resulted in a sentence range of 262 to 327 months. The court sentenced Jacobs to the high end of that range.
The district court’s initial step in calculating Jacobs’ sentence was proper, as the commentary to the Guidelines reveals:
Where ... the amount [of drugs] seized does not reflect the scale of the offense, the sentencing judge shall approximate the quantity of the controlled substance. In making this determination the judge may consider, for example, the price generally obtained for the controlled substance, financial or other records....
U.S.S.G. § 2D1.4, application note 2. In theory, the court’s second step was also proper. Pursuant to Guidelines § 1B1.3, one convicted of a narcotics conspiracy may be sentenced on the basis of “conduct of others in furtherance of the execution of the jointly-undertaken criminal activity that was reasonably foreseeable by the defendant.” U.S.S.G. § 1B1.3, application note 1; see United States v. Schaper, 903 F.2d 891, 897-99 (2d Cir.1990); United States v. Candito, 892 F.2d 182, 185 (2d Cir.1989). However, as applied to Jacobs, attribution of the full approximated amount of cocaine distributed by the Mickens conspiracy was improper. See United States v. Cardenas, 917 F.2d 683, 687 (2d Cir.1990). As Jacobs contends, such attribution
unfairly [holds him] accountable for the narcotics equivalent of four years’ worth of unreported income of another, whose funds may have been accumulated at any prior time, and may have come from any source—including Mickens’ independent, personal transactions in the early 1980’s ..., or some other narcotics conspiracy in which Mr. Jacobs played no part, or even from some altogether different activity such as gambling.
Absent reliable evidence connecting Jacobs to the quantity of narcotics extrapolated from Mickens’ unreported income, Jacobs’ 327-month sentence is unsupportable. Moreover, ascribing “managerial” status to Jacobs without conducting a hearing— something which the probation department and prosecution originally agreed was necessary—was erroneous. See United States v. Lanese, 890 F.2d 1284, 1293 (2d Cir.1989), cert. denied, — U.S. -, 110 S.Ct. 2207, 109 L.Ed.2d 533 (1990).
VII. Bettina Jacobs Celifie’s Sentence.
In sentencing defendant-appellant, cross-appellee Bettina Jacobs Celifie to a term of imprisonment of eighteen months, the district court downwardly departed twenty-three months from the applicable sentencing range. The government cross-appeals from that sentence, contending that the departure was improperly based on Celi-fie’s acceptance of responsibility and on the request for leniency made by the jury in announcing its guilty verdict. We agree and remand to Chief Judge Platt for resen-tencing.
A sentencing court may downwardly depart if it finds “an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the guidelines.” 18 U.S.C. § 3553(b) (1988). Whether a particular factor is a permissible ground for departure is a legal issue, which we review de novo. United States v. Joyner, 924 F.2d 454, 459 (2d Cir.1991); United States v. Barone, 913 F.2d 46, 50 (2d Cir.1990). “Departure authority, though not designed to prevent a sentencing judge from exercising ‘discretion, flexibility or independent judgment,’ is nonetheless a device for implementing the guideline system, not a means of casting it aside.” United States v. Joyner, at 460 (quoting United States v. Lara, 90S F.2d 599, 604 (2d Cir.1990)).
In the present case, the district court apparently believed that the two-point reduction awarded for Celifie’s acceptance of responsibility, U.S.S.G. § 3E1.1, did not adequately reflect the degree of her contrition. We do not foreclose the possibility that this rationale may, in an appropriate case, support a downward departure. However, in sentencing Celifie, the district court made no finding that the circumstances justified a departure for Ce-lifie beyond the two-point reduction she received under the guidelines.
Moreover, the court erred in relying on the jury’s recommendation of leniency for Celifie as a basis for downward departure. Sentencing decisions are solely the province of the judge. See United States v. Romo, 914 F.2d 889, 895 (7th Cir.1990); see also United States Sentencing Commission, Guidelines Manual, Introduction (Nov. 1990) (“Pursuant to the [Sentencing Reform] Act, the sentencing court must select a sentence from within the guideline range.”) (emphasis added). The jury’s sympathy for Celifie may reflect circumstances that the court could appropriately consider in granting a downward departure. However, reliance on the jury’s request for lenient sentencing treatment of Celifie, without more, is an insufficient basis to justify a downward departure.
CONCLUSION
We have examined each of defendants-appellants’ remaining arguments and find them to be without merit. In light of the foregoing, the district court’s judgment is affirmed in part, reversed in part, and remanded to Chief Judge Platt.
. Chief Judge Platt charged:
During the course of the trial, I have had to admonish or reprimand attorneys on both sides of the case because I did not believe that what one or more of them was doing was proper. You should draw no inference against an attorney or his or her client.... It is irrelevant whether you like a lawyer or whether you believe I like a lawyer. The issue before you is not which attorney is more likeable or the better attorney. The issue is whether or not the government has sustained its burden of proof.
The fact that the Court has asked one or more questions of a witness for clarification or admissibility of evidence purposes is not to be taken by you in any way as indicating that the Court has any opinion as to the guilt or lack thereof of a defendant in this case, and you are to draw no such inference therefrom. That determination is up to you, and you alone, based on all of the facts in this case and the applicable law in these instructions.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
BRATTON, Circuit Judge.
Saul Folsom, a full-blood enrolled Choctaw Indian, was allotted certain tribal land in Bryan County, Oklahoma. The allottee died in June, 1904, at less than three years of age. The patent issued in December, 1904. Though then deceased, the allottee was named as the grantee in the patent. The heirs of the allottee at the time of his death were his father, Joseph Folsom, and his mother, Sissie Folsom. Joseph Folsom died in 1905, and his interest in the land descended to his widow, Sissie Folsom, and his sons, Wilson Folsom, Louie Folsom, and Joe Mitchell Folsom. Joe Mitchell Folsom died in 1906, and his interest in the land passed by descent to his mother, Sissie Folsom, and his brothers, Wilson Folsom and Louie Folsom. In 1920, Wilson Folsom and Louie Folsom filed in the state court an action against Sissie Folsom to partition the land; and, by decree entered in 1921 it was partitioned in kind, the part in controversy in this action being set aside to Sissie Folsom. Sissie Folsom married M. L. Pierce; and in 1927, they executed a mortgage covering the land in controversy to the State of Oklahoma and the Commissioners of the Land Office of the state to secure payment of a promissory note. The mortgage was not approved by the county court or the county judge of Bryan County, or by the county court or county judge of any other county in Oklahoma. The State and the Commissioners of the Land Office filed 'in the state court an action to foreclose the mortgage; the United States was not a party; a decree of foreclosure was entered ; the land- was sold to the State; the sale was confirmed; a sheriff’s deed was issued; and the State took possession of the land.
The United States, in its own behalf and on behalf of Sissie Pierce, nee Folsom, instituted in the United States Court this action against the tenant of the State for possession of the land. Sissie Pierce, nee Folsom, died; and her heirs were substituted as parties plaintiff. By leave of court, the State on relation of the Commissioners of the Land Office intervened; denied ownership of the land in Sissie Pierce, nee Folsom; pleaded adverse possession; and by cross complaint sought to quiet its title. By amended complaint the United States sought judgment against the State and the Commissioners of the Land Office quieting title in the heirs of Sissie Pierce, nee Folsom. Judgment was entered quieting title in the State. The judgment was reversed and the cause remanded. United States v. Fuston, 143 F.2d 76, certiorari denied 323 U.S. 768, 65 S.Ct. 121, 89 L.Ed. 614. Thereafter, the State filed an amended answer and cross complaint in which it was alleged among other things that restrictions against alienation of the land were removed by operation of law upon the death of the allottee, and in the alternative that if the land was not free of restrictions by operation of law, the restrictions were removed by order of the Secretary of the Interior prior to the execution of the mortgage to the State. Judgment was entered quieting title in the heirs of Sissie Pierce, nee Folsom, and the State appealed.
The first contention argued is that the decree rendered by the state court in the action to foreclose the mortgage is res judicata here in respect to the validity of the mortgage. It is the general rule that where a second suit between the same parties or their privies is on the same cause of action as the first, the final judgment in the prior action is conclusive as to all matters actually litigated and as to every issue, claim, or defense which might have been presented; and that where the subsequent suit between the same parties or their privies is on a different cause of action, the judgment in the earlier action operates as an estoppel only in respect to the issues, claims, or defenses which were actually litigated and determined. Crowe v. Warnarkee, 114 Okl. 153, 244 P. 744; Brown-Crummer Investment Co. v. City of Purcell, Okl., 10 Cir., 128 F.2d 400; Bowles v. Capitol Packing Co., 10 Cir., 143 F.2d 87.
A judgment entered in an action brought by the United States in its own behalf and on behalf of an Indian ward is binding upon the United States and the Indian whom it represents in the litigation. Heckman v. United States, 224 U.S. 413, 32 S.Ct. 424, 56 L.Ed. 820; Vinson v. Graham, 10 Cir., 44 F.2d 772, certiorari denied 283 U.S. 819, 51 S.Ct. 344, 75 L.Ed. 1435; White v. Sinclair Prairie Oil Co., 10 Cir., 139 F.2d 103, certiorari denied 322 U.S. 760, 64 S.Ct. 1278, 88 L.Ed. 1588. But in the absence of notice served in accordance with section 3 of the Act of April 12, 1926, 44 Stat. 239, 240, a judgment in an action involving property in Oklahoma of a member of the Five Civilized Tribes of Indians is not binding upon the United States in its capacity as guardian of the Indian unless the United States is a party to the action. Bowling v. United States, 233 U.S. 528, 34 S.Ct. 659, 58 L.Ed. 1080; Privett v. United States, 256 U.S. 201, 41 S.Ct. 455, 65 L.Ed. 889; Sunderland v. United States, 266 U.S. 226, 45 S.Ct. 64, 69 L.Ed. 259; United States v. Hellard, 322 U.S. 363, 64 S.Ct. 985, 88 L.Ed. 1326; Drummond v. United States, 324 U.S. 316, 65 S.Ct. 659, 89 L.Ed. 969; Town of Okemah, Okl., v. United States, 10 Cir., 140 F.2d 963.
Coming to the question whether the land was restricted against alienation at the time of the execution of the mortgage to the State, it is conceded by the Government that no restrictions existed prior to April 26, 1906. Harris v. Bell, 254 U.S. 103, 41 S.Ct. 49, 65 L.Ed. 159. But in presently material respect, section 22 of the Act of April 26, 1906, 34’ Stat. 137, 145, provided in effect that the heirs of a deceased member of the Five Civilized Tribes to whom a patent had issued for his share of the land of the tribe to which he belonged could sell and convey the land inherited from the decedent, but that conveyances by heirs who were full-blood Indians were subject to the approval of the Secretary of the Interior. All members of the Folsom family, to whom reference has already been made, were Choctaws of the full-blood; -and after the Act of 1906, supra, became effective, the land was subject to the restrictions against alienation prescribed in section 22. Brader v. James, 246 U.S. 88, 38 S.Ct. 385, 62 L.Ed. 591; Talley v. Burgess, 246 U.S. 104, 38 S.Ct. 287, 62 L.Ed. 600.
Section 9 of the Act of May 27,1908, 35 Stat. 312, 315, provides that the death of any allottee of the Five Civilized Tribes shall operate to remove all restrictions upon alienation of the allottee’s land “Provided, That no conveyance of any interest of any full-blood Indian heir in such land shall be valid unless approved by the court having jurisdiction of the settlement of the estate of said deceased allottee * * And it contains a second proviso, but it does not have material bearing here. That section is practically a substitute for section 22 of the Act of 1906. Stewart v. Keyes, 295 U.S. 403, 55 S.Ct. 807, 79 L.Ed. 1507. And after it became effective, the land involved in this action, being owned by full-blood Indian heirs of the allottee, was subject to the qualified restrictions against alienation which it created. Parker v. Richard, 250 U.S. 235, 39 S.Ct. 442, 63 L.Ed. 954; Harris v. Bell, supra; Stewart v. Keyes, supra; Holmes v. United States, 10 Cir., 53 F.2d 960; United States v. Mid-Continent Petroleum Corporation, 10 Cir., 67 F.2d 37, certiorari denied Hosey v. Mid-Continent Petroleum Corp., 290 U.S. 702, 54 S.Ct. 346, 78 L.Ed. 603; United States v. Goldfeder, 10 Cir., 112 F.2d 615.
The State argues however that in the circumstances present here, the land was neither allotted land nor inherited land in the ordinary sense of those terms; that it was land which would have been allotted to a certain Indian had he lived; that because of his death, it was granted to certain other Indians in his stead; that at his death, title vested in such other Indians free and clear of restrictions; and that subsequent legislation could not affect the title in respect of its freedom of restrictions against alienation. But these contentions are untenable. The heirs of this allottee took the land as an inheritance from him, not as allottees in their own right, or otherwise, even though the patent issued after his death. Harris v. Bell, supra; Stewart v. Keyes, supra. And Congress in the exercise of its plenary authority as guardian of its Indian wards has power to impose or reimpose restrictions against alienation of land owned by full-blood Indian heirs. Tiger v. Western Investment Co., 221 U.S. 286, 31 S.Ct. 578, 55 L.Ed. 738; Brader v. James, supra; McCurdy v. United States, 246 U.S. 263, 38 S.Ct. 289, 62 L.Ed. 706; Taylor v. Tayrien, 10 Cir., 51 F.2d 884, certiorari denied 284 U.S. 672, 52 S.Ct. 127, 76 L.Ed. 569; Hickey v. United States, 10 Cir., 64 F.2d 628; Whitchurch v. Crawford, 10 Cir., 92 F.2d 249; Murray v. Ned, 10 Cir., 135 F.2d 407, certiorari denied 320 U.S. 781, 64 S.Ct. 188, 88 L.Ed. 469.
The remaining contention advanced by the State is that if the Act of 1908, supra, has application, under section 1 thereof the Secretary of the Interior has power to remove restrictions against alienation, and that in respect of this land he did remove the restrictions by order issued in 1916 — prior to the execution of the mortgage to the State. Sissie Pierce, nee Folsom, submitted an application for the removal of restrictions and the Secretary issued an order of removal. But the application and the order, considered together, make it crystal clear that they related solely and exclusively to land which had been allotted to Sissie Folsom, as allottee, and did not concern themselves in anywise with the land allotted to Saul Folsom. Since the order of the Secretary, did not apply to the land in controversy, we pretermit to a necessitous occasion in the future the exploring of the question whether after the Act of 1908 became effective the Secretary was vested with authority to remove restrictions against alienation upon allotted lands owned by full-blood Indian heirs of the deceased allottee.
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: | 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 for the Court filed by Circuit Judge SILBERMAN.
SILBERMAN, Circuit Judge:
Transwestern Pipeline Company petitions for review of a FERC order permitting Williams Natural Gas Company to unconditionally abandon its certified obligation to purchase gas from Transwestern. Petitioner asserts that FERC should hold Williams responsible for “its share” of Transwestern’s take-or-pay costs incurred after Williams terminated its contractual relationship with Transwestern. We deny the petition.
I.
Section 7(c) of the Natural Gas Act requires natural gas companies to receive a certificate from FERC before they may sell or transport gas. 15 U.S.C. § 717f(c). A certificate creates two obligations, one on the part of the seller, and one on the part of the buyer. The seller must maintain the ability to supply the buyer with the amount of gas specified both in the certificate and in the seller’s contract with the buyer. As a corollary, the buyer is obliged to buy the gas from the seller.
The Natural Gas Act also requires that FERC review any attempt or agreement to terminate service under a certificate. “No natural gas company shall abandon all or any portion of its facilities subject to the jurisdiction of the Commission, or any service rendered by means of such facilities, without the permission and approval of the Commission.” Id. at § 717f(b). In 1988, in accordance with its general deregulatory policies, FERC promulgated rules that inter alia allowed automatic abandonment of service by purchasers either when their underlying contract had expired, or when they had terminated their purchases pursuant to contract or agreement. Order No. 490, 53 Fed.Reg. 4121 (Feb. 12, 1988) (codified at 18 C.F.R. § 157.21). The pertinent part of Order No. 490 states that:
(a) ... a purchaser ... is authorized, upon 30-days written notice to (or from) the seller, or any longer notice period required by contract, to abandon purchases of natural gas from any first seller or pipeline: (1) Permanently, under a contract that has expired, or (2) To the extent that the obligation of the purchaser to take or pay for gas (or both), or of the seller to deliver gas, is unilaterally reduced, suspended or terminated by either party in accordance with a provision of an unexpired contract. Id.
The order also requires that the abandoning purchaser notify FERC within 30 days of the abandonment. In a change from previous policy, the new order does not require that FERC specifically authorize the abandonment, but instead permits abandonment automatically once a purchaser has satisfied the order’s terms.
In the case before us, Transwestern and Williams entered into an agreement in 1986 to settle various rate and purchase obligation issues. The settlement also gave Williams the option of terminating its sales service agreement with Transwestern on February 1, 1989, 1990, or 1991, after one year’s notice. Although the settlement did not refer to Transwestern’s take-or-pay costs (under its contracts with producers) or Williams’ liability for those costs, Article XVII of the contract did provide that:
[t]he provisions of this settlement are intended to relate only to specific matters referred to herein, and by agreeing to this settlement, no party waives any claim or right which it may otherwise have with respect to any matters not expressly provided for herein.
In accordance with the settlement, on February 1, 1988 Williams gave Transwest-ern one year’s notice of its intent to abandon service. Only 11 days later, FERC issued Order No. 490 to take effect on April 12, 1988. On January 5, 1989, Transwestern filed both its application to abandon sales service to Williams, and— pursuant to Williams’ request — an application on Williams’ behalf to abandon Williams’ purchase obligation. Transwest-ern also requested that FERC condition Williams’ abandonment to allow Transwest-ern to continue to recover a share of its take-or-pay costs.
In October 1989, FERC rejected Trans-western’s request to condition Williams’ abandonment. The agency held that Williams had “already obtained unconditional authorization to abandon its purchases from Transwestern pursuant to [Order No. 490], and that the authorization is final.” Transwestern Pipeline Co., 49 F.E.R.C. ¶ 61,021 (1989). FERC decided that it lacked the authority to impose any conditions on Williams because as of February 1, 1989 Williams had abandoned unilaterally in accordance with both the 1986 settlement and Order No. 490. FERC then held that Williams’ “compliance” with Order No. 490 made Williams’ formal application for abandonment — filed on its behalf by Transwestern — moot because Trans-western had filed its petition less than one month before the February 1, 1989 abandonment date. In short, Trans western’s delay foreseeably led to FERC’s not considering the ease before Williams had effected its abandonment. With Trans western’s application for abandonment of its service obligation the only matter still before the Commission, FERC held that “Transwest-ern’s abandonment authorization only applies to Transwestern, and any conditions on that authorization would only bind Transwestern — not Williams who has not been a customer since February 1, 1989.” Id.
Based on these findings, FERC decided that Williams was only liable for take-or-pay costs filed when still a Transwestern customer — up to February 1, 1989. FERC denied Transwestern’s petition for rehearing on April 30, 1991. This appeal followed.
II.
Transwestern’s underlying claim is that Williams should be held responsible for its share of the take-or-pay costs Transwest-ern incurred after February 1, 1989. These costs are attributed to amounts Transwestern was obliged to pay to buyout, buydown, or reform long-term gas contracts with take-or-pay provisions that were entered into, in part, to provide service to Williams. Petitioner therefore argues that it was arbitrary and capricious for FERC to permit Williams to abandon its certified purchaser status without meeting its obligations as to these costs.
Although Transwestern approaches its claim from several different directions, it is important to note, at the outset, what is not at issue. Transwestern does not directly challenge Order No. 490. A petition for review of the order is currently before the Sixth Circuit in Marathon Oil Co. v. FERC, No. 88-3666, but no stay of the order was granted so we must assume its validity for purposes of this case. 15 U.S.C. § 717r(c). Nor does Transwestern challenge the propriety of applying Order No. 490 to the transactions in this case on retroactivity grounds. Transwestern does not argue that FERC could not properly determine that when Williams gave notice under the contract on February 1, 1988, it had “complied with the requirements of Order No. 490.” Order No. 490 did not issue until February 12, 1988, and did not take effect until April 12 of that year, well after Williams had given notice.
Instead, Transwestern contends that Order No. 490 should not have governed FERC's decision. FERC assertedly misreads Transwestern’s settlement agreement with Williams as authorizing Williams to discontinue purchases without liability for subsequent take-or-pay costs. And, even if Williams had no continuing contract obligation to share Trans western’s take-or-pay costs, FERC did have “jurisdiction” over Williams (at least until February 1, 1989, when the one-year notice period had expired) when Transwestern filed its petition for a conditional abandonment. FERC could, and therefore should, have recognized Trans western’s regulatory claim against Williams by conditioning the abandonment. Without overtly challenging Order No. 490, Transwestern nevertheless argues that FERC should make an individualized determination under the Natural Gas Act that any particular abandonment is justified by the public interest. According to Transwestern, abandonment here was not so justified — at least without a condition — because the resulting mismatch between cost incurrence and cost responsibility is contrary to FERC’s traditional policy.
We turn first to the dispute over FERC’s interpretation of the settlement agreement between Transwestern and Williams. It will be recalled that Order No. 490 permits automatic abandonment of the purchaser’s certified duty to take gas if the purchaser’s contract with the seller has expired or the purchaser has given notice, pursuant to the contract, to terminate its purchase obligation. Upon examination of Transwest-ern’s petition, FERC observed that Williams had given the one year notice and that the purchaser’s obligation had expired by the time FERC considered the matter. The contract contained no provision that, on its face, contemplated any continuing obligation on Williams’ part to pay for Transwestern’s take-or-pay costs filed after February 1, 1989. Accordingly, FERC determined that Williams met Order No. 490’s criteria for automatic abandonment.
Transwestern argues that FERC’s examination of the settlement agreement was too cursory. Although Transwestern concedes that there is no specific language in the agreement continuing Williams’ liability, it points to the general reservation of rights clause set forth above. Transwest-ern contends that the clause preserves its claim because the settlement does not affect Transwestern’s “right” to recover Williams’ share of Trans western’s take-or-pay costs. Transwestern, however, does not identify the source of the alleged contract right supposedly preserved by the settlement agreement. Be that as it may, FERC has not purported to resolve definitively whether Transwestern has any continuing contractual claim for take-or-pay liability against Williams. When FERC issued Order No. 490, it said “the nature of the rights granted and whether the right was properly exercised are contractual issues to be determined by a court of competent jurisdiction.” 53 Fed.Reg. 4121 (February 12, 1988). As we understand FERC’s approach under the Order then, it will take only a quick look at a submitted agreement to determine whether the notifying purchaser’s obligation to purchase has ceased. If so, FERC will certify the abandonment, which simply means that the purchaser’s statutory obligation to continue purchasing gas ends. FERC’s order to that effect does not prejudice a seller’s claim under contract law. There is, in other words, no claim preclusion by reason of FERC’s Order.
FERC contends that it is entitled to deference in interpreting the contract for these purposes. To be sure, the contract term was not filed with, and approved by, a regulatory commission — a situation where we would normally afford deference. Cf. Cajun Elec. Power Coop., Inc. v. FERC, 924 F.2d 1132, 1135 (D.C.Cir.1991); National Fuel Gas Supply Corp. v. FERC, 811 F.2d 1563, 1569-71 (D.C.Cir.1987). Still, we defer to FERC because it is reading the contract term for a limited regulatory purpose, almost as an extension of its regulation, and not to determine the parties’ ultimate contractual rights and responsibilities. FERC’s interpretation does not give rise to the specter of res judicata, or the prospect of conflicting decisions in different forums. See Litton Financial Printing Div. v. NLRB, — U.S. -, -, 111 S.Ct. 2215, 2223-24, 115 L.Ed.2d 177 (1991); Local Union 1395, Int’l Bhd. of Electrical Workers v. NLRB, 797 F.2d 1027, 1030 (D.C.Cir.1986).
In the alternative, Transwestern claims that even if Order No. 490 governs, FERC still had the authority to condition Williams’ abandonment. Transwestern did file its abandonment petition a little less than a month before February 1, 1989 (the contract termination date and therefore presumably the effective date of Williams' abandonment). FERC determined, however, that by the time, in the ordinary course of events, it had examined Trans western’s petition, it was moot; the agency blamed Transwestern for having waited 11 months to take action. It would appear that FERC nevertheless could have asserted “jurisdiction” over Williams, but the Commission may well have been entitled to determine that it did not need to do so, given Transwestern’s long delay and its failure either to explain the delay or to bring the petition on an expedited basis. In any event, petitioner does not claim that FERC lacked the authority to decide as it did, so we need not resolve the scope of FERC’s discretion.
Transwestern’s real quarrel with FERC’s application of Order No. 490 is that, notwithstanding FERC’s generic approach, the Commission must still conduct an individualized abandonment proceeding. Of course, if Transwestern’s argument were accepted, Order No. 490 would be a dead letter. Its affirmance by the Sixth Circuit would be meaningless, due to our evisceration of the order. It should be obvious, therefore, that petitioner has brought an impermissible collateral attack on the regulation. This is not a case where a petition plausibly asserts that a rule should not be applied in the case because of unforeseen circumstances or special factors. Panhandle Eastern Pipe Line Co. v. FERC, 907 F.2d 185, 188 (D.C.Cir.1990).
There remains only petitioner’s claim that, even assuming the general propriety of FERC’s generic approach, this case calls for particularized attention because the result deviates from FERC's long-held policy that cost responsibility should match cost incurrence. Transwest-ern contends that if Williams avoids its share of Transwestern’s take-or-pay liability, Williams would escape responsibility for costs incurred on its behalf. FERC, however, correctly responds that in solving the unusual and vexing take-or-pay problems of the 1980s, FERC is authorized to depart from the matching principle. See K N Energy, Inc. v. FERC, 968 F.2d 1295, 1301-02 (D.C.Cir.1992). We see no reason why its application of Order No. 490, as in this case, should be thought an unreasonable extension of this notion.
* * * * *
For the foregoing reasons, we conclude that FERC acted properly when it refused to condition Williams’ abandonment. Thus, the Commission’s decision is affirmed.
So Ordered.
. In an earlier proceeding, the Commission had held that Williams also would remain liable for its share of take-or-pay costs arising from contracts in litigation as of March 31, 1989, because Transwestern had included a "litigation exception” in its tariff filings.
. That is how FERC describes Williams’ actions in its brief. From the context, it is apparent that FERC is referring to February 1, 1988, the date Williams gave the year’s notice (although FERC's order is less clear). Order No. 490, issued subsequently, thereby gives a legal significance to that act, which it arguably did not have at the time it was taken.
. With the exception of the litigation claims.
. Although FERC did approve the main elements of the settlement, see Transwestern Pipeline Co., 38 F.E.R.C. ¶ 61,061 (1987), reh’g granted in part and denied in part, 41 F.E.R.C. ¶ 61,-178 (1987), the Commission did not specifically discuss Art. XVII.
.FERC did not decide whether it might have acted differently if Transwestern’s petition had been filed at the time of Williams’ notice under the contract (or perhaps immediately thereafter).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
Opinion for the Court filed by Circuit Judge HARRY T. EDWARDS.
HARRY T. EDWARDS, Circuit Judge:
James Wilkett seeks an award of attorney fees and expenses under the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412 (1982 & Supp. Ill 1985), as the prevailing party in a case against the Interstate Commerce Commission (“ICC”). See Wilkett v. ICC, 710 F.2d 861 (D.C.Cir.1983). The disposition of this case has been long delayed because the original request for fees languished unnoticed in the Clerk’s Office for almost four years. We express our regrets for this unfortunate situation, especially since there is no good excuse for the mishandling of Wilkett’s initial application for fees.
Albeit belatedly, we now conclude that a fee award is appropriate, because the position of the United States in agency proceedings and in litigation before this court lacked substantial justification and because no special circumstances render an award unjust. We find, however, that two of the Government’s objections to the amounts claimed by Wilkett are valid. We have therefore modified the requested award accordingly.
I. Background
Wilkett Trucking Company (“Wilkett Trucking”), a family business owned by James Wilkett, began operations in 1975 and received its first ICC license in 1978. In March 1981, it applied to the ICC for expanded authority to transport coal from all points in Oklahoma to any point in Texas. The ICC denied Wilkett Trucking’s license application because James Wilkett had been convicted in 1981 of second-degree murder under Oklahoma law and conspiracy to distribute a controlled substance in violation of 21 U.S.C. § 846 (1976). In the ICC’s judgment, Wilkett’s evident disregard for the law rendered him unfit to hold a license, and his ownership of Wilkett Trucking in turn rendered the company unfit for the ICC authorization it had requested.
Wilkett appealed the ICC’s decision to this court. The ICC thereupon requested us to remand the case for reconsideration, which we did. Upon reconsideration, the ICC affirmed its earlier denial of Wilkett Trucking’s license application. Wilkett again appealed.
This time we reached the merits and reversed. Finding that the ICC’s decision constituted “an unexplained departure from previously applied standards,” we ruled that the ICC’s denial of Wilkett Trucking’s application was arbitrary and capricious. Wilkett v. ICC, 710 F.2d 861, 865 (D.C.Cir.1983). Accordingly, we remanded the case to the ICC “for the purpose of promptly issuing the authority with such reasonable time limitations as it deems necessary.” Id.
On July 22, 1983, Wilkett filed a timely application for attorney fees and other expenses under the EAJA, including fees and expenses incurred in making the fee application. The Government opposed Wilkett’s application. Wilkett submitted a reply to the Government’s objections (for the preparation of which Wilkett also requested attorney fees and expenses), and the Government responded with a second memorandum. Due to a clerical error in the Court Clerk’s Office, the panel that decided Wilk-ett’s appeal was not notified of his attorney fee application until four years later, when Wilkett inquired into the delay. On October 14, 1987, we directed the parties to submit supplemental memoranda addressing the ramifications for Wilkett’s application of the 1985 amendments to the EAJA and of pertinent judicial decisions issued since the time of Wilkett’s initial application.
II. Analysis
Section 2412(d)(1)(A) (Supp. Ill 1985) provides:
Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses, in addition to any costs awarded pursuant to subsection (a), incurred by that party in any civil action (other than cases sounding in tort), including proceedings for judicial review of agency action, brought by or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.
The Government does not deny that Wilkett meets the statutory definition of a “party” or that he prevailed in his appeal. Nor is there any longer reason to doubt that Wilkett’s suit constituted a “civil action” not sounding in tort. To be sure, in 1983 the Government contended that judicial review of an agency licensing decision was not a “civil action” for purposes of 28 U.S.C. § 2412 because another provision of the EAJA, codified at 5 U.S.C. § 504(b)(1)(C) (1982), explicitly precluded an award of attorney fees in connection with agency proceedings “for the purpose of granting or renewing a license.” The 1985 amendments to the EAJA, however, added the phrase “including proceedings for judicial review of agency action” to clarify the unexplained existing reference to “any civil action.” Equal Access to Justice Act, Extension and Amendment of 1985, Pub.L. No. 99-80, § 2(a)(2), 99 Stat. 183, 184. The Government apparently concedes that this addition eviscerates its former objection. See Respondents’ Supplemental Memorandum in Opposition to Petitioner’s Application for Fees and Other Expenses at 4 n. 3. In light of the change, Wilkett’s suit plainly falls within the statutory definition of “any civil action.”
Because these prerequisites have been met, our analysis must proceed in three stages. First, we must ascertain whether the Government’s position was “substantially justified.” If it was not, then we must further ask whether “special circumstances” would render an award of attorney fees unjust. If the answer to this question is also negative, we must, finally, consider the Government’s objections to the amount of the fees Wilkett claims.
A. Was the Position of the United States “Substantially Justified”?
In determining whether the Government’s position was substantially justified, we must examine the ICC’s actions and explanations as well as the Government’s arguments before this court. The EAJA, as amended, defines the “position of the United States” to mean, “in addition to the position taken by the United States in the civil action, the action or failure to act by the agency upon which the civil action is based.” 28 U.S.C. § 2412(d)(2)(D) (Supp. Ill 1985). The EAJA further provides that “[wjhether or not the position of the United States was substantially justified shall be determined on the basis of the record (including the record with respect to the action or failure to act by the agency upon which the civil action is based) which is made in the civil action for which fees and other expenses are sought.” 28 U.S.C. § 2412(d)(1)(B) (Supp. Ill 1985). The burden of proving that its position was substantially justified both in agency proceedings and in litigation rests with the Government. See Federal Election Comm’n v. Rose, 806 F.2d 1081, 1086-87 & n. 12 (D.C. Cir.1986); Spencer v. NLRB, 712 F.2d 539, 557 (D.C.Cir.1983), cert. denied, 466 U.S. 936, 104 S.Ct. 1908, 80 L.Ed.2d 457 (1984).
Under the law of this circuit, the Government’s position was “substantially justified” if the Government “acted slightly more than reasonably, even though not in compliance with substantive legal standards applied in the merits phase” of the litigation. Rose, 806 F.2d. at 1087; see also Baker v. Commissioner, 787 F.2d 637, 643 n. 10 (D.C.Cir.1986); Blitz v. Donovan, 740 F.2d 1241, 1244 (D.C.Cir.1984); Spencer, 712 F.2d at 558. A finding that an agency acted arbitrarily and capriciously within the meaning of the Administrative Procedure Act, 5 U.S.C. § 706(2)(A), does not preclude the Government from demonstrating that the agency’s actions and its conduct in litigation were “substantially justified.” Some types of arbitrary and capricious behavior, such as an agency’s failure to provide an adequate explanation for its actions or its failure to consider some relevant factor in reaching its decision, may not warrant a finding that an agency’s action lacked substantial justification under applicable statutes or regulations. See, e.g., Rose, 806 F.2d at 1087-89. However, a finding that an agency acted arbitrarily and capriciously by denying equal treatment to two similarly situated parties, or by failing to enforce a rule in a situation to which it plainly applied, renders it much more likely that the Government’s action was not substantially justified. See Rose, 806 F.2d at 1089.
On the facts of this case, we find that the Government has failed to satisfy its burden of showing that its position was substantially justified. The ICC’s actions and the Government’s arguments before this court clearly fail this circuit’s test of “slightly more stringent than ‘one of reasonableness.’ ” Spencer, 712 F.2d at 558. Indeed, they do not even deserve the appellation “reasonable.”
In denying Wilkett Trucking’s license application, the ICC considered only the owner’s fitness for the expanded authority. Moreover, it based its decision solely on James Wilkett’s criminal convictions, not on his record of compliance with ICC regulations. We described this approach as “misdirected” and “unreasonable” in overturning the ICC’s decision:
Notwithstanding the fact that the grant of authority will be issued to the [Wilkett Trucking] Company, the Commission focused solely upon the fitness of the individual proprietor, James Wilkett. Such an inquiry is misdirected. While the proprietor’s fitness may be relevant, the primary focus should be upon the Company’s record of operations. In this instance, the record reveals and the Commission acknowledges that since commencing operations in 1978, Wilkett Trucking has never been cited for violation of Commission rules or regulations. The Company has demonstrated its commitment to continued lawful service_■
There is no record evidence to suggest that the company would operate unlawfully in the future.... The Commission based its conclusion that the Company was unfit solely upon its view that James Wilkett’s convictions were indicative of a predisposition on the part of the Company to violate trucking statutes and regulations. That conclusion is unreasonable.
Wilkett, 710 F.2d at 863-64.
We further noted that, “[i]n addition to improperly equating James Wilkett’s fitness with that of the Company, the Commission also disregarded its own standards for evaluating fitness.” Id. at 864. The ICC’s decision betrayed a gross failure to use the test it had “consistently” applied “[w]hen judging a carrier’s fitness in light of past violations.” Id. We concluded:
In its Wilkett decisions, the Commission did not apply its aforequoted standards and philosophy in evaluating the fitness issue. Such an unexplained departure from previously applied standards suggests that the Commission’s decision in this case is arbitrary and capricious. The Commission’s decisions in [Allan B. Robbins, d/b/a Robbins Trailer Service, No. MC-160342 (I.C.C. Oct. 13, 1982),] and Wilkett are difficult to reconcile and, at the least, suggest an inconsistency in decision-making.
Id. at 865 (citations omitted).
The Government suggests that the agency’s position was substantially justified, and that our opinion not only recognizes the arguable merit in the agency’s position by describing the ICC’s actions as merely “misdirected,” but faults it primarily for its failure to offer a justification for its actions, not for their being unjustifiable. The Government’s reading of our opinion, however, is untenable. We described the ICC’s exclusive focus on James Wilkett’s criminal offenses not only as “misdirected,” but as positively “unreasonable.” And while our opinion ádmittedly focused on the ICC’s failure to explain its decision, particularly in light of clearly contrary agency precedent, our holding perforce assumed that no adequate explanation was possible. We did not simply remand the case to the ICC for a fuller statement of reasons on behalf of its decision. Rather, we granted Wilkett Trucking’s petition for review and reversed the ICC’s decision “because the Commission failed to apply its usual standards in adjudging fitness.” 710 F.2d at 865. “As the finding of unfitness is clearly in error,” we said, “the Commission is directed to issue the authority requested.” Id. We could not have stated more plainly that the ICC’s actions lacked substantial justification.
A cursory review of the relevant factors listed in Spencer, 712 F.2d at 559-61, buttresses this conclusion. Although those factors were designed to guide a court in determining whether the Government’s stance in litigation, as opposed to the underlying agency action, was substantially justified, they remain relevant to our inquiry, both because the “position of the United States” includes its litigating posture and because two of these factors may be used to assess the justifiability of agency action as well. One of the factors mentioned in Spencer — the clarity of the governing law — certainly militates in favor of awarding attorney fees. In Wilkett, we found that the ICC failed to apply the test of fitness it had “consistently” applied in the past, and that when the test was properly applied, the ICC’s “finding of unfitness [was] clearly in error.” Wilkett, 710 F.2d at 865. A second factor discussed in Spencer — the consistency of the Government’s position — again favors Wilkett’s application. The ICC’s decision in Wilkett cannot easily be reconciled with its ruling in Robbins. We were unable to square the two cases when we reached our decision on the merits, and the Government has never offered a plausible demonstration of their consistency. We must therefore conclude that both the Government’s position in litigation and the ICC’s decision were not “substantially justified.” They did not even pass the test of “reasonableness” the Government has urged us to adopt.
B. Do “Special Circumstances” Make a Fee Award Unjust?
Even if the position of the United States was not substantially justified, a fee award is inappropriate if “special circumstances make an award unjust.” 28 U.S.C. § 2412(d)(1)(A). The legislative history of the provision indicates that this “safety valve” was designed to “insure that the Government is not deterred from advancing in good faith the novel but credible extensions and interpretations of the law that often underlie vigorous enforcement efforts” and to permit courts to rely on “equitable considerations” in denying a fee award. H.R.Rep. No. 1418, 96th Cong., 2d Sess. 11, reprinted in 1980 U.S.Code Cong. & Admin.News 4953, 4984, 4990. We emphasized in Spencer, however, that fees should ordinarily be awarded if the Government loses a “test case” in which it argued that controlling precedent should be overruled, not merely that precedent should be extended or reinterpreted in a novel way. A possible award of fees should not deter the Government from bringing a “test case” if it deems the matter sufficiently important; more significantly, it would be unjust to compel the private party, chosen arbitrarily by the Government, to incur the full cost of reconsidering an established rule when the benefits of doing so redound to the community as a whole. See Spencer, 712 F.2d at 558-59 & n. 72.
The Government contends that in Wilk-ett the ICC considered an issue of first impression — whether a trucking company might lawfully be denied a license based upon the proprietor’s criminal convictions for nontransportation offenses — and resolved it by extending the criteria it routinely used to assess an applicant’s fitness. We find this characterization dead wrong. As we said when rendering judgment on the merits, the ICC’s decision did not constitute a plausible extension of prevailing standards of fitness. Rather, it marked “an unexplained departure from previously applied standards” that was inconsistent with the ICC’s decision in a similar case. Wilkett, 710 F.2d at 865. We concluded, moreover, that the Government’s position was “misdirected,” indeed flatly “unreasonable.” In the face of these findings, the Government can hardly argue that it advocated not only a novel but also a “credible” extension of existing law, which the legislative history establishes as a precondition to a denial of fees when the Government’s position lacked substantial justification. Wilkett is clearly entitled to an award of attorney fees.
C. Calculation of the Fee Award
Wilkett requests $71,561.41 in fees and expenses, apportioned as follows:
Fees associated with merits litigation $40,125.00
Photocopying 445.01
Fees associated with initial fee application 5,988.00
Fees associated with reply memorandum 14,418.00
Photocopying 192.20
Fees associated with supplemental memorandum ordered by court on 10/14/87 10,125.00
Photocopying 268.20
TOTAL $71,561.41
We consider in turn the Government’s various objections to the amounts requested.
1. The Availability of a Fee Award for the 1987 Memorandum
The Government contends that, even if Wilkett has a right to attorney fees in connection with the merits litigation and his 1983 memoranda in support of his fee application, he may not recover for the 1987 memorandum this court ordered him to submit. The Government notes that Wilkett waited four years from the time he filed his fee application before inquiring into its status. The Government conjectures that the supplemental memorandum we requested would not have been necessary had Wilkett earlier directed the court’s attention to the delayed processing of his application. It therefore claims it ought not have to pay for Wilkett’s indolence. See Respondents’ Supplemental Memorandum in Opposition to Petitioner’s Application for Fees and Other Expenses at 10 n. 12.
This argument is baseless. A court has authority to require supplemental briefing by the parties as it deems helpful. Indeed, we do so frequently, particularly where, as here, the law is and has been in a state of flux. As the Government recognizes, if the EAJA applies to the merits litigation of a case, it applies equally to work done in connection with the prevailing party’s fee application. Any work ordered by this court is similarly compensable.
Furthermore, we are unwilling to hold Wilkett responsible for an error committed in our Clerk’s Office. The blame for the delay in this case lies with the court, not the parties, and we will not penalize Wilk-ett for our error.
Finally, the rapidly developing case law and the statutory changes wrought by the 1985 EAJA amendments would likely have prompted us to request additional assistance from the parties even if Wilkett had inquired about the processing of his fee application after only a couple of years. Hence, we see no reason whatever to deny Wilkett recompense for work done on his 1987 memorandum.
2. Cost-of-Living Adjustments to the Maximum Statutory Fee
Section 2412(d)(2)(A) reads in part:
The amount of fees awarded under this subsection shall be based upon prevailing market rates for the kind and quality of the services furnished, except that... (ii) attorney fees shall not be awarded in excess of $75 per hour unless the court determines that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys for the proceedings involved, justifies a higher fee.
This provision unambiguously licenses cost-of-living adjustments (“COLAs”) to the $75 per hour ceiling established by the EAJA. In computing a COLA, however, we must answer two questions. First, what should serve as the baseline date in measuring the COLA? Second, should an adjustment be made to the year in which legal services were rendered, or to the year in which the fee award is paid?
The first of these questions was answered by our decision in Hirschey v. FERC, 777 F.2d 1, 5 (D.C.Cir.1985). The baseline date for measuring an adjustment to the statutory cap is 1981, the year in which the EAJA became effective. The fact that this provision was not amended in 1985 when the sunset provision of the EAJA (which was initially to remain in force only three years) was repealed, does not entail that the $75 per hour cap should form a new baseline in 1985. There is no indication in the legislative history that Congress intended the 1985 EAJA amendments to have this consequence. In addition, our adoption of a new $75 per hour baseline in 1985 would have the anomalous result of entitling parties to collect larger fee awards for work done in 1984 than in 1986, since the former could obtain a three-year adjustment to the $75 per hour cap, whereas the latter could only receive a one-year adjustment to the same cap. We therefore adhere to our view in Hirschey that a COLA to the $75 per hour ceiling should be measured from 1981.
The second question has also been answered already by this court. In Massachusetts Fair Share v. Law Enforcement Assistance Administration, 776 F.2d 1066 (D.C.Cir.1985), we refused to allow a COLA to the $75 per hour cap for work performed in 1981, even though fees were not awarded until 1985. See id. at 1069. We are constrained to follow that holding in reviewing Wilkett’s fee request.
The adjustment to the $75 per hour maximum statutory fee is relevant to two elements of Wilkett’s request. First, one of Wilkett’s lawyers billed at a rate of $85 per hour for work done in 1982-83. That hourly rate exceeds the cap of $75 per hour even with a COLA. Unless the “special factors” exception applies, that amount is not fully compensable under the EAJA.
Second, Wilkett requests reimbursement for work performed on his 1987 Supplemental Memorandum at hourly rates of $100 and $125. These figures far exceed the $75 per hour cap with a COLA to November 1987, when most of the work on the Supplemental Memorandum was performed. According to the U.S. Department of Labor Consumer Price Index, the cost of living increased in the Washington, D.C.Maryland-Virginia urban area by 27.77% between October 1981 and November 1987. This produces an adjusted cap of $95.83. Unless “special factors” justify increasing this amount, Wilkett’s request for complete reimbursement for these services must be denied. Wilkett’s attorneys billed 47.3 hours at a rate of $125 per hour, and 39.5 hours at a rate of $100 per hour, resulting in a total bill for the two attorneys involved of $9,862.50. If the adjusted cap of $95.83 is applied to these services, the fee award must be reduced to $8,318.04.
3. Unusual Delay as a “Special Factor”
Section 2412(d)(2)(A) limits awards of attorney fees to the $75 per hour cap adjusted for increases in the cost of living “unless the court determines that... a special factor, such as the limited availability of qualified attorneys for the proceedings involved, justifies a higher fee.” In the past, we have increased the adjusted cap to compensate parties for the cost of foregone investment attributable to delayed payment of the award, on the assumption that delay may be counted as a “special factor” justifying a higher award. See Hirschey, Til F.2d at 5 (award calculated on basis of current billing rates rather than rates when services performed because processing of fee award was greatly delayed by clerical error in Clerk’s Office); Action on Smoking & Health v. Civil Aeronautics Bd., 724 F.2d 211, 219 (D.C. Cir.1984) (slight increase in cap allowed because payment of award occurred four years after services were rendered, where delay was partly attributable to agency’s six requests for stays).
We continue to believe that delay may be regarded as a “special factor” under the EAJA. The Supreme Court’s decision in Library of Congress v. Shaw, 478 U.S. 310, 106 S.Ct. 2957, 92 L.Ed.2d 250 (1986), does not alter the law of the circuit on this point. The Court in Shaw held that, in the absence of express congressional consent, a fee award may not be adjusted upward to take account of inflation or the opportunity cost of capital. However, the statutory provision considered by the Court in Shaw was 42 U.S.C. § 2000e-5(k), which only allowed an award of “a reasonable attorney’s fee.” By contrast, the EAJA explicitly permits a court to raise the $75 per hour ceiling if it determines “that an increase in the cost of living or a special factor... justifies a higher fee.” Therefore, we adhere to the holdings enunciated in Hirschey and Action on Smoking, which read section 2412(d)(2)(A) to allow increases in the statutory cap to compensate parties for prolonged delay in payment when a court deems such increases equitable. In reaching this conclusion, we think it significant that the Supreme Court has said, after its decision in Shaw: “We do not suggest... that adjustments for delay are inconsistent with the typical fee-shifting statute.” Pennsylvania v. Delaware Valley Citizens’ Council for Clean Air, — U.S. —, 107 S.Ct. 3078, 3082, 97 L.Ed.2d 585 (1987).
We emphasize, however, that no adjustment of the $75 cap other than that necessary to compensate for an increase in the cost of living is available in routine cases. Some delay in payment is inevitable, given the strain under which almost all courts labor. The normal delay attendant on litigation of a fee request can hardly be called a “special factor.” Nor will we permit an increase in the cap in every instance when there has been a delay in payment that is unusually long. If, for example, a prolonged delay is attributable to the negligence of the party requesting fees, an upward revision of the adjusted cap might not be warranted. Where the delay is exceptional and not attributable to negligence or improper conduct by the prevailing party, however, an increase might be appropriate where the prevailing party is able to justify the increase it seeks.
In the instant case, we find that Wilkett has made the requisite showing with regard to work billed by one of his attorneys at $85 per hour in 1982-83. The small increase in the adjusted cap that Wilkett has requested for this work is amply justified by the exceptional delay, through no fault of his own, in our consideration of his application. We therefore allow recovery at a rate of $85 per hour for the attorney’s services over five years ago.
We refuse, however, to allow Wilkett to obtain attorney fees at hourly rates of $100 and $125 per hour for work performed in late 1987. Wilkett contends that we should permit recovery of fees in excess of the adjusted cap of $95.83 per hour, in order to compensate him to some extent for delayed payment of the fee award for services performed in 1982-83. See Petitioner’s 1987 Supplemental Memorandum at 20-21. However, Wilkett asks us to do what the law plainly forbids. Our award of fees for work performed in 1987 is not tardy. Hence, the statute does not permit us to order reimbursement for this work at a rate above the adjusted cap of $95.83 per hour. Because we lack statutory authorization to grant Wilkett’s illogical request for a roundabout, partial adjustment for the unusual delay in compensating him for his attorneys’ earlier services, we cannot award him compensation for the “special factor” of protracted delay except to the extent that we permit recovery of hourly rates of $85 billed in 1982-83.
4. Allegations of Excessive Fees
The Government contends that several of the amounts claimed by Wilkett are excessive, and thus not permitted under the statutory allowance of “reasonable” attorney fees “based upon prevailing market rates for the kind and quality of the services furnished.” 28 U.S.C. § 2412(d)(2)(A).
(a)The $75 Per Hour Rate for a First-Year Associate in 1983
The Government asserts that an hourly rate of $75 for work performed by a new associate in 1982-83 is unduly high. After reviewing the affidavits submitted by Wilkett’s attorneys and evidence of local billing rates submitted in connection with the fee claim in Laffey v. Northwest Airlines, 572 F.Supp. 354 (D.D.C.1983), which Wilkett has also supplied, we conclude that the $75 per hour rate charged by one of Wilkett’s attorneys in 1982-83 is not unreasonable.
(b) Thirteen Hours Spent Researching Scope of Review
The Government charges that thirteen hours was an excessive amount of time for an experienced attorney to spend researching the scope of review of ICC licensing decisions, and that Wilkett should not be permitted to recover the entire amount his attorneys billed for this service. We reject the Government’s contention. The portion of the fee request to which the Government points covers not only research concerning the scope of review, but also client conferences, the preparation of a timetable, and the drafting and filing of the Petition for Review. Moreover, only one-half hour was billed by a senior attorney. The bulk of the time — 12.6 hours — was billed at a lower rate by a law clerk. We therefore grant Wilkett full recovery of the cost of this work.
(c) Total Hours Billed for Merits Brief
Wilkett requests $16,599 for 146.9 lawyer hours and 143.1 law clerk hours spent preparing the merits brief in this case. The Government argues that this bill is inflated, because the issues in the case were simple, the administrative record short, and the arguments before this court almost identical to those made before the ICC. Wilkett’s attorneys, however, have prepared a detailed itemization of their work on the brief. Because we have no reason to question their probity, and because the number of hours billed does not strike us as unreasonable, we decline the Government’s invitation to allow only partial recovery.
(d)The $1,950 Unopposed Motion to Expedite
The Government notes that Wilk-ett’s attorneys billed $1,950 for 24.8 hours spent in connection with Wilkett’s unopposed motion to expedite his appeal. The Government considers this amount excessive, particularly in view of the fact that the short memorandum in support of the motion cited no cases. Wilkett’s attorneys replied that because Wilkett Trucking’s business was deteriorating, expedited consideration was important. They therefore thought it essential to prepare the motion carefully, even though it was unopposed. The absence of citations, they say, stems from the simple fact that their research failed to uncover authority on point.
In light of Wilkett’s explanation and documentation in support of this work, we have no reason to question the hours submitted. The hours would seem unduly high only if counsel had prepared the motion with no effort at legal research. The fact that their legal research bore no fruit is no reason to deny them fees for the time spent on this work. Furthermore, counsel correctly recognized that there was no guarantee that their motion would be granted merely because it was unopposed. Therefore, it made good sense for them to research the issue.
(e)72.9 Hours Spent Preparing for and Participating in Oral Argument
Wilkett asks for $5,941.50 for 72.9 hours billed by his attorneys for their preparation for oral argument and participation therein. The Government decries this claim as unreasonable. It notes that each side was allotted only fifteen minutes for oral argument, and that the attorney who argued the case billed 51.4 hours, even though he had written the brief the previous year and had spent almost 65 hours drafting the reply brief two months prior to oral argument.
We agree with the Government that this bill is plainly excessive. Although seventy hours' preparation might be justified in a complex case, particularly when the lawyer arguing the case on appeal has not done considerable work on it in its earlier stages, this case did not warrant so great an expenditure of time. The issues it presented were not especially complicated and Wilk-ett’s lead attorney had directed the litigation from start to finish. The normal amount of time for average cases was allotted for oral argument. We therefore grant an award of $2,970.75, which represents half the amount Wilkett requested.
(f)The $14,418 Reply Memorandum Supporting Wilkett’s Fee Application
Wilkett requests $14,418 in fees incurred in preparing the reply memorandum in support of his fee application. When Wilkett made this request initially, the Government suggested that the amount claimed was unduly high, given that the arguments largely tracked those presented in the memorandum accompanying his fee application. The Government acknowledged, however, that its allegation was necessarily speculative, since Wilkett had failed to itemize the work performed by his attorneys in connection with the reply memorandum.
On February 5,1988, we directed Wilkett to provide an itemized bill for this work. Wilkett has done so, and his request seems to us adequately documented and not patently unreasonable. We therefore grant this request in full.
III. Conclusion
For the foregoing reasons, we accede to Wilkett’s fee request with the following modifications. First, the $40,125 requested for work done on the merits phase of the litigation is reduced by $2,970.75, because the amount of time claimed in preparation for oral argument is unreasonably high. Second, the amounts claimed in fees associated with Wilkett’s 1987 Supplemental Memorandum must be lowered, in accordance with the $95.83 per hour cap on attorney fees, from $10,125 to $8,580.54.
Accordingly, we award Wilkett $67,-046.20 in attorney fees and other expenses, calculated as follows:
Wilkett’s Request $71,561.41
MINUS:
Excess Oral Argument 2,970.75
Excess 1987 Memorandum 1,544.46
TOTAL $67,046.20
So Ordered.
. The 1985 amendments unquestionably apply to this case. The Extension and Amendment Act of 1985 provides that "the amendments... shall apply to cases pending on... the date of enactment of this Act.” Pub.L. No. 99-80, § 7(a), 99 Stat. 183, 186. This court has held that a case was pending on the date of enactment — August 5, 1985 — even if only the fee petition, but not the merits of the underlying case, awaited judicial resolution on that date. Center for Science in the Public Interest v. Regan, 802 F.2d 518, 524 & n. 10 (D.C.Cir.1986).
. Thus, even if the Supreme Court should endorse a weaker test of "reasonableness” in deciding Underwood v. Pierce, 761 F.2d 1342 (9th Cir.1985), cert. granted, — U.S. —, 107 S.Ct. 2177, 95 L.Ed.2d 834 (1987), the Government’s position in this case would still fail.
. In Library of Congress v. Shaw, 478 U.S. 310, 106 S.Ct. 2957, 92 L.Ed.2d 250 (1986), the Supreme Court stated that, "[i]n the absence of express congressional consent to the award of interest separate from a general waiver of immunity to suit, the United States is immune from an interest award." Id, at 2961. This rule applies "whether the loss to be compensated by an increase in a fee award stems from an opportunity cost or from the effects of inflation." Id. at 2965. The principle enunciated in Shaw, however, does not bar a COLA to the?75 per hour cap in this case, because section 2412(d)(2)(A) explicitly permits adjustments to the cap to compensate attorneys for "increases in the cost of living."
. Our holding in Hirschey, decided the same day as Massachusetts Fair Share, is not to the contrary. We wrote in Hirschey:
We recognize that there is arguably a question whether we should limit the fees for the hours billed each year by the adjusted statutory maximum applicable for that year, or rather limit them only by the current statutory maximum. We will adopt the latter approach, in order to compensate petitioner for delay, as we are authorized to do under the "special factors” criterion in EAJA.
777 F.2d at 5 (emphasis in original). As the final sentence of this passage makes clear, the COLA to the date of the award (rather than to the date when services were rendered) that we granted in Hirschey was justified under the "special factors" exception, not the EAJA’s express allowance for enhancements to the cap to compensate for "increases in the cost of living.” There is thus no inconsistency between our decisions in Hirschey and Massachusetts Fair Share.
. Because we conclude that "special factors” justify awarding the full $85 per hour
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
OAKES, Circuit Judge:
This appeal raises the question whether the Double Jeopardy Clause prohibits the conviction and imposition of a sentence for an offense where the same offense was used in a prior proceeding to increase the defendant’s offense level under the United States Sentencing Guidelines (“U.S.S.G.” or the “Guidelines”). Defendant John McCormick appeals and the government cross-appeals an order by the United States District Court for the District of Vermont, Franklin S. Billings, Jr., Judge, granting in part and denying in part a motion by McCormick to dismiss a 41-count indictment on double jeopardy grounds. The district court determined that those counts, and only those counts, of the Vermont indictment that had been used to determine McCormick’s sentence in a separate Connecticut proceeding had to be dismissed. United States v. McCormick, 798 F.Supp. 203 (D.Vt.1992). For the reasons set forth below, we affirm.
BACKGROUND
McCormick was charged in the District of Connecticut with bank fraud and related crimes in a 31-count indictment. The loss resulting from these crimes totaled approximately $75,000. A few months later, McCormick was charged in the District of Vermont with bank fraud, mail fraud, and related crimes in a 41-count superseding indictment. The losses resulting from these alleged crimes exceeded $4 million. Following a jury trial, McCormick was convicted on all counts in the Connecticut indictment.
At sentencing, the government filed a sentencing memorandum describing not only McCormick’s fraudulent conduct in Connecticut but similar schemes to defraud that allegedly took place in other states, including Vermont. These other schemes were offered as relevant conduct pursuant to Guidelines § 1B1.3(a)(2). This section directs the sentencing court, when determining the amount of loss for the purpose of calculating the offense level for fraud, to consider acts “that were part of the same course of conduct or common scheme or plan as the offense of conviction____” U.S.S.G. § lB1.3(a)(2). Accordingly, the government argued that the loss arising from McCormick’s conduct fell between the $25& million to $5 million range, calling for a 13-level increase from the base offense level of six for fraud convictions. See U.S.S.G. § 2F1.1(b)(1)(N).
In the government’s communications with the Connecticut district court concerning sentencing, the government addressed the possibility several times that the use of the Vermont conduct in sentencing would preclude further prosecution of McCormick in Vermont for that conduct. For example, the United States Attorney’s Office for the District of Connecticut represented in a letter to the court that “[a] sentence based in part on the Vermont conduct will have the effect of barring further prosecution on the Vermont charges.” The letter further stated that, if the district court accepted the offense level enhancement based on the Vermont conduct, the “United States Attorney’s Office for the District of Vermont feels that although such a sentence would preclude the defendant’s conviction on additional felony counts in their District, the ends of justice will have been served....” At the sentencing hearing, the government partially retreated from these statements, claiming that the U.S. Attorney’s Office in Vermont was unsure whether it would be barred from further proceedings but that it would “not be likely to pursue their charges____”
The Connecticut court accepted the government’s argument and increased McCormick’s offense level by 13. Moreover, the court added two more offense points for “more than minimal planning,” pursuant to U.S.S.G. § 2F1.1(b)(2), creating a total offense level of 21. The Guidelines sentencing range based on an offense level of 21 and a criminal history category of I, McCormick’s category, is 37 to 46 months. The court sentenced McCormick to the top of this range, ordering him to serve concurrent terms of 46 months on each count of the conviction, in addition to a 3 year term of supervised release and restitution. This court by summary order affirmed McCormick’s sentence, thus holding that the district court in Connecticut did not err by considering the Vermont frauds in calculating McCormick’s sentence. United States v. McCormick, 969 F.2d 1042 (2d Cir.1992) (Table).
Following the Connecticut sentencing, McCormick submitted a motion to the Vermont District Court requesting that the Vermont indictment be dismissed on the grounds that prosecution would violate the Double Jeopardy Clause of the Fifth Amendment. The district court found that further prosecution was barred by the Double Jeopardy Clause only on those counts that were used by the Connecticut court in raising the offense level. On appeal, McCormick argues that all counts should be covered by the Double Jeopardy Clause and, on cross-appeal, the government challenges the district court’s finding that there is any double jeopardy problem at all.
DISCUSSION
The Double Jeopardy Clause provides that no one shall “be subject for the same offense to be twice put in jeopardy of life or limb.” U.S. Const. amend. V. The Clause protects against both a subsequent prosecution for the same offense after acquittal or conviction as well as multiple punishments for the same offense. North Carolina v. Pearce, 395 U.S. 711, 717, 89 S.Ct. 2072, 2076, 23 L.Ed.2d 656 (1969); see also Ex parte Lange, 85 U.S. (18 Wall.) 163, 173, 21 L.Ed. 872 (1873) (“[T]he Constitution was designed as much to prevent the criminal from being twice punished for the same offense as from being twice tried for it.”). At issue in this case is whether the prosecution of conduct that has already been used to determine a Guidelines offense level violates the multiple punishments prong of the Double Jeopardy Clause.
New courts have addressed this particular question. The district court and McCormick rely on the reasoning of United States v. Koonce, 945 F.2d 1145 (10th Cir.1991), cert. denied, — U.S. —, 112 S.Ct. 1695, 118 L.Ed.2d 406 and cert. denied, — U.S. —, 112 S.Ct. 1705, 118 L.Ed.2d 413 (1992). The Koonce court identified three issues to be considered in determining whether the Double Jeopardy Clause prohibited the defendant’s prosecution for possession of a controlled substance in the District of Utah, given that the drug possession had already been used to increase the defendant’s offense level in sentencing for a separate offense in the District of South Dakota. The court considered whether increasing the offense level in light of the related conduct is “punishment” within the meaning of the Double Jeopardy Clause, whether Congress intended a defendant to be subjected to two punishments for that conduct, and whether the imposition of concurrent rather than consecutive sentences avoids double jeopardy issues. The court ultimately found that prosecution on the possession charge in Utah would violate the defendant’s constitutional rights.
The district court in Vermont applied the Koonce analysis to McCormick’s case and found that the Double Jeopardy Clause would be violated if McCormick were punished additionally for any of the counts that the Connecticut court considered in raising McCormick’s offense level. We agree with the district court’s analysis and findings: prosecution of McCormick in Vermont for conduct that was already incorporated into his Connecticut sentence would be a second punishment, Congress did not intend to allow multiple punishments for this type of conduct, and the availability of concurrent sentences does not eliminate this double jeopardy problem.
Application of the first part of the Koonce analysis is straight-forward and resolves McCormick’s contention that the district court should have granted his motion to dismiss every count of the Vermont indictment. McCormick was punished for the Vermont conduct that was taken into account by the Connecticut court when it determined the amount of loss for which McCormick was responsible. The government requested that the court take this conduct into account, the court explicitly stated that it was taking the conduct into account, and the ultimate sentence reflects part of McCormick’s Vermont conduct. Thus, any further prosecution of McCormick for this conduct would subject him to the possibility of multiple punishments for the same conduct. However, those counts of the indictment that did not affect the Connecticut court’s Guidelines calculations are not similarly barred from use. McCormick offers no evidence that the Connecticut court did in fact incorporate the counts that were not dismissed into its calculations and, therefore, prosecution for those counts cannot constitute a second punishment in violation of the Double Jeopardy Clause.
The second step of the Koonce analysis, determining whether Congress intended to allow the same conduct to be punished under both the Guidelines and a subsequent prosecution, raises the most difficult issue of this case. To begin with, Congress may authorize several penalties for the same act. The multiple punishments prong of the Double Jeopardy Clause limits prosecutorial and judicial action but does not prevent the legislature from assigning multiple punishments for the same conduct. Brown v. Ohio, 432 U.S. 161, 165, 97 S.Ct. 2221, 2225, 53 L.Ed.2d 187 (1977). As stated by the Koonce court, “[i]f Congress did intend multiple punishments for a single act, then for the purposes of Double Jeopardy analysis the combined punishment would simply be viewed as the appropriate punishment determined by Congress to represent the gravity of the offense and it would be upheld.” Koonce, 945 F.2d at 1150. However, “[ajbsent evidence to the contrary, it is assumed ‘that Congress ordinarily does not intend to punish the same offense under two different statutes.’ ” Id. at 1151 (quoting Ball v. United States, 470 U.S. 856, 861, 105 S.Ct. 1668, 1671, 84 L.Ed.2d 740 (1985)).
An examination of the Guidelines suggests that Congress did not intend to allow additional punishment for conduct that was used to enhance a defendant’s offense level. Congress authorized the creation of the Guidelines in significant part to respond to the lack of consistency in sentences imposed by the federal courts and supervised by the Parole Commission. S.Rep. No. 225, 98th Cong., 2d Sess. 38-39 (1984), reprinted in 1984 U.S.C.C.A.N. 3182, 3221-22. See also U.S.S.G., Ch. 1, Pt. A(3), policy statement (“Second, Congress sought reasonable uniformity in sentencing by narrowing the wide disparity in sentences imposed for similar criminal offenses committed by similar offenders.”). As part of the effort to achieve consistency in sentencing, the Guidelines attempt to group similar harms and to standardize the punishment that is to be applied to the conduct as a whole. See U.S.S.G. Ch. 1, Pt. A(4)(e), policy statement (multi-count convictions); cf. United States v. Merritt, 988 F.2d 1298, 1307-08 (2d Cir.1993) (comparing Guidelines “highly detailed categorization of offense conduct” with the minimal direction provided for evaluating the character of the defendant).
The District of Connecticut’s use of McCormick’s Vermont conduct to determine McCormick’s sentence was accomplished under U.S.S.G. § 1131.3(a)(2), the Guidelines provision designed to allow courts to account for similar conduct and punish for the aggregate relevant conduct. See U.S.S.G. § 1B1.3, comment, (n. 3); see also U.S.S.G. § 3D1.2 (“All counts involving substantially the same harm shall be grouped together into a single Group.”). This approach of determining a single punishment for a set of similar acts is specifically called for in cases of fraud. See U.S.S.G. § 2F1.1, comment, (n. 6) (“The cumulative loss produced by a common scheme or course of conduct should be used in determining the offense level....”). Fraud cases require this special treatment because “federal fraud statutes are so broadly written” that “a single pattern of offense conduct usually can be prosecuted under several code sections, as a result of which the offense of conviction may be somewhat arbitrary.” U.S.S.G. § 2F1.1, comment, (backg’d.). Thus, the Guidelines achieve consistency in sentencing for fraud cases by grouping all of the relevant conduct and applying a single offense level to the whole course of conduct.
In light of the purpose and careful shaping of the Guidelines, we do not believe that Congress or the Guidelines Commission intended to allow a defendant to be prosecuted for conduct already used to enhance his or her offense level. To rule otherwise would undermine the purpose of the Guidelines and introduce additional possibilities for inconsistent sentences. As the Koonce court stated, “[i]t is difficult to believe that Congress would have intended the punishment to be larger if the government chose to proceed with two different proceedings ... than if it chose to consolidate all of the counts in one proceeding.” Koonce, 945 F.2d at 1152. Furthermore, consolidation of punishment in a single proceeding avoids the problem of requiring a sentencing court to anticipate whether it is punishing conduct that may also be punished in another proceeding.
The third step in the Koonce analysis considers whether double jeopardy questions may be avoided if a second punishment consists of a concurrent rather than a consecutive sentence. As the district court and Koonce court realized, this issue was resolved by the Supreme Court in Ball v. United States, 470 U.S. 856, 105 S.Ct. 1668, 84 L.Ed.2d 740 (1985). The Ball Court recognized that even if a second conviction results in no greater sentence, a “separate conviction, apart from the concurrent sentence, has potential adverse collateral consequences that may not be ignored.” Ball, 470 U.S. at 865. Among the potential collateral consequences of conviction the Court mentioned are increased sentences under recidivist statutes and the extra societal stigma that comes from conviction, including possibly effects upon other state proceedings, past or present. Therefore, the availability of concurrent sentences does not eliminate double jeopardy concerns.
Although we find that the Double Jeopardy Clause precludes McCormick from being prosecuted for conduct that was used to enhance his offense level under the Guidelines, we recognize that at sentencing “justice generally requires consideration of more than the particular acts by which the crime was committed and that there be taken into account the circumstances of the offense together with the character and propensities of the offender.” Pennsylvania ex rel. Sullivan v. Ashe, 302 U.S. 51, 55, 58 S.Ct. 59, 61, 82 L.Ed. 43 (1937). Accordingly, there are a number of cases which have upheld a conviction and punishment for conduct that was previously used to enhance a defendant’s sentence for other conduct. Indeed, nothing we have said should be read as undermining the historic authorization of a sentencing judge “to consider all of the aggravating and mitigating circumstances involved in the crime.” Williams, 358 U.S. at 585, 79 S.Ct. at 427.
The critical distinction between these other cases and McCormick’s case is found in our analysis of congressional intent. If Congress intends to allow the same conduct to be used to enhance a sentence and to serve as the basis for a separate prosecution, the Double Jeopardy Clause does not stand in the way. However, as we have discussed, there is much evidence to suggest that Congress intended to consolidate the punishment for certain conduct, such as fraud, when it created the Guidelines scheme that allows for changes to a defendant’s offense level based on related acts. For this reason, the Double Jeopardy Clause precludes any prosecution of McCormick in Vermont based on the conduct used by the Connecticut court to increase his offense level.
CONCLUSION
Accordingly, the order of the district court is affirmed.
. Excluding the Vermont conduct, McCormick’s offense level would have been subject to a 5-level increase for a loss exceeding $40,000. U.S.S.G. § 2F1.1(b)(1)(F).
. The policy of grouping similar harms established in the Guidelines also serves to minimize the risk of prosecutorial manipulation of the counts charged in an indictment. The Guidelines state that "the Commission has written its rules for the treatment of multicount convictions with an eye toward eliminating unfair treatment that might flow from count manipulation." U.S.S.G. Ch. 1, Pt. A.4(a), policy statement.
. The dissent suggests that "§ 5G1.3 recognizes and explicitly addresses the sentencing problem posed by successive prosecutions in which an overall course of conduct is segmented into separate criminal charges....” The problem with this analysis is that § 5G1.3 does not apply to McCormick's situation. Section 5G1.3(b), the relevant provision of § 5G1.3, applies where a defendant’s offense level in a second prosecution is set taking into account conduct that has already been the subject of a conviction and sentencing. In contrast, McCormick’s first conviction and sentencing took into account conduct that is now the subject of a second prosecution. In the first case, covered by § 5G1.3(b), the Sentencing Commission requires concurrent sentencing in order to avoid multiple punishments. In the second case, presented by McCormick, multiple punishments can only be avoided by precluding a second prosecution.
. The government's conduct in this case lends additional support to the district court’s decision to dismiss those counts of the Vermont indictment that were used to enhance McCormick's offense level. Although it is true that at sentencing the government retracted its earlier categorical claim that the U.S. Attorney’s Office in Vermont would not pursue additional felony counts in Vermont, the government continued to make statements that may have confused the Connecticut court. For example, after retreating from its earlier claims, the government nonetheless stated that ”[i]t would appear that [the U.S. Attorney’s Office in Vermont] would not be likely to pursue their charges....” As a result, the Connecticut court may have sentenced McCormick with the understanding that McCormick would face no other punishment for that conduct.
It is thus unfortunate that the double jeopardy issue need be addressed by this court at all. As we have said before, the double jeopardy concerns brought forward by this case would not have arisen if the United States Attorneys’ offices in Connecticut and Vermont had followed the customary and better practice of making an agreement that sentencing would be resolved entirely in Connecticut. United States v. McCormick, 969 F.2d 1042 (2nd Cir.1992).
. See, e.g., Williams v. Oklahoma, 358 U.S. 576, 79 S.Ct. 421, 3 L.Ed.2d 516 (1959) (no constitutional bar to considering at sentencing for one offense criminal conduct that was the subject of a separate offense); United States v. Carey, 943 F.2d 44 (11th Cir.1991), cert. denied, — U.S. —, 112 S.Ct. 1676, 118 L.Ed.2d 394 (1992) (two-level increase for obstruction of justice based on defendant's failure to appear does not preclude later prosecution for this act); United States v. Mack, 938 F.2d 678 (6th Cir.1991) (defendant's failure to appear for sentencing, for which he was later indicted, resulted in sentence in high end of guidance range); United States v. Williams, 935 F.2d 1531, 1539 (8th Cir.1991), cert. denied, — U.S. —, 112 S.Ct. 1189, 117 L.Ed.2d 431 (1992) (enhancement of defendant’s criminal history category and imposition of a sentence based on the same conduct does not violate the Double Jeopardy Clause).
Question: Were there cross appeals 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.
FLOYD R. GIBSON, Senior Circuit Judge.
The defendant, the City of Little Rock (City), appeals from a jury verdict in favor of the prevailing plaintiff, Debbie Williams, awarding her compensatory damages under 42 U.S.C. § 1983 (1982), for a violation of her First Amendment rights by defendant Butler, a municipal judge. We affirm, but remand for a consideration by the district court of the supplemental motion for costs and attorneys’ fees submitted by the plaintiffs.
I. Facts
Butler was a duly elected municipal judge for the traffic court of the City of Little Rock. The plaintiffs in this action, Debbie Williams and Linda Stanley, were hired by Butler as clerks for his court. All three parties were employees of the City. Both of the plaintiffs, at different times, saw Butler deliberately destroy traffic tickets. Williams disclosed this event to the police. After Butler became aware that Williams had made a statement to the police, he fired her. Stanley was subpoenaed before a grand jury which was investigating possible corruption in the municipal traffic court, and she disclosed that she had seen Butler destroy traffic tickets. Stanley made two other appearances before the grand jury. Allegedly, after these appearances, Stanley was harassed by her coworkers to such an extent that she felt compelled to resign.
Both plaintiffs filed § 1983 actions against Butler in his official capacity. Butler brought a third party complaint against the city, seeking judgment against the City for any sums adjudged against him. The jury returned a verdict in favor of Williams, awarding her $40,000.00 in compensatory damages and $60,000.00 in punitive damages. The jury returned a verdict in favor of Butler on Stanley’s § 1983 claim, and the court found in favor of Butler on his third party complaint against the City. The district court awarded Williams attorney fees, but did so only after reducing the award by 25% to account for Stanley’s complete failure to prevail on her claim. On the basis of Newport v. Fact Concerts, Inc., 453 U.S. 247, 101 S.Ct. 2748, 69 L.Ed.2d 616 (1981), the district court set aside the punitive damage award the jury had returned for Williams. The City is appealing the district court’s finding in favor of Butler on his third party complaint, and Williams is appealing the dismissal of the punitive damage award and the reduction in the requested amount of attorney fees.
II. Discussion
A. The City’s liability.
The City argues that it is not liable for the unconstitutional acts of its employee, Butler. It is not disputed that, by firing Williams, Butler violated Williams’ First Amendment rights. Rather, the City argues that Butler’s action was not taken pursuant to City policy, nor was Butler a city “official” for purposes of § 1983. We hold that, under our reading of Monell v. Department of Soc. Servs., 436 U.S. 658, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978), the City is liable for Butler’s unconstitutional act.
In Monell, the Supreme Court reversed, in part, its earlier decision in Monroe v. Pape, 365 U.S. 167, 81 S.Ct. 473, 5 L.Ed.2d 492 (1961), and held that local governments are not “wholly immune from suit under § 1983.” Monell, 436 U.S. at 663, 98 S.Ct. at 2021. The Court held as follows:
Our analysis of the legislative history of the Civil Rights Act of 1871 compels the conclusion that Congress did intend municipalities and local government units to be included among those persons to whom § 1983 applies. Local governing bodies, therefore, can be sued directly under § 1983 for monetary, declaratory, or injunctive relief where, as here, the action that is alleged to be unconstitutional implements or executes a policy statement, ordinance, regulation, or decision officially adopted and promulgated by that body’s officers. Moreover, although the touchstone of the § 1983 action against a government body is an allegation that official policy is responsible for a deprivation of rights protected by the Constitution, local governments, like every other § 1983 “person” by the very terms of the statute, may be sued for constitutional deprivations visited pursuant to governmental “custom” even though such a custom has not received formal approval through the body’s official decisionmaking channels.
Id. at 690-91, 98 S.Ct. at 2035-36. However, the Court upheld the part of Monroe which held that a municipality will not be liable “solely because it employs a tortfeasor — or, in other words, a municipality cannot be held liable under § 1983 on a respondeat superior theory.” Id. at 691, 98 S.Ct. at 2036. “Instead, it is when execution of a government’s policy or custom, whether made by its lawmakers or by those whose edicts or acts may fairly be said to represent official policy, inflicts the injury that the government as an entity is responsible under § 1983.” Id. at 694, 98 S.Ct. at 2037.
Thus, under Monell, we need to address two questions in order to determine the City’s liability in this case. First, we need to determine whether Butler’s act of firing Williams implemented or executed a policy statement, ordinance, regulation, or decision adopted and promulgated by the City’s governing body. If not, we need to decide whether his unconstitutional act was taken “pursuant to governmental ‘custom’ even though such a custom” had not received formal approval through the City’s official decisionmaking channels. Id. at 691, 98 S.Ct. at 2036 (emphasis added). In other words, we need to determine whether, in executing a City custom, Butler inflicted an injury of constitutional dimensions. See id. at 694, 98 S.Ct. at 2037.
As a threshold matter, we note that we must view the evidence in the light most favorable to Williams, the party for whom the jury returned its verdict. Trace X Chem. Inc. v. Canadian Indus. Ltd., 738 F.2d 261 at 265 (8th Cir.1984). At trial, Williams did not introduce any evidence of a formal policy statement, ordinance, regulation, or decision adopted and promulgated by the City’s governing body. Thus, it is clear that Butler did not act pursuant to any of those modes of authority when he fired Williams.
Williams was the only party who introduced evidence regarding whether Butler acted pursuant to governmental custom when he fired Williams. Butler had been elected as a municipal court judge in 1969. He has served in that capacity for fifteen years. In 1969, according to his own testimony, Butler went to see the City’s personnel director regarding how he was to go about getting a staff. The personnel director told him that traditionally the courts had been responsible for hiring and firing their own employees.
The district court found specifically that even though Butler’s employees were processed through the City personnel office when they were hired, paid by the City, given City parking places, and worked in City buildings — Butler hired his own employees, and controlled and supervised their work. In other words, Butler was making employment decisions for the City. The district court also found that the City personnel office had given Butler authority to make employment decisions when he had assumed his office. There was no evidence to the contrary. Thus, we think it is clear that the City, by custom and practice for at least fifteen years, had established a policy of giving municipal judges carte blanche authority to make their own personnel decisions. It equally is clear that Butler acted pursuant to this policy when he fired Williams.
The determinative issue in this case is whether Butler’s unconstitutional decision and act were sufficient to -render the City liable under § 1983. In other words, we must determine whether Butler’s unconstitutional act was within the meaning of the language used by the Supreme Court when it wrote: “... it is when execution of a government’s policy or custom... inflicts the injury that the government as an entity is responsible under § 1983.” Monell, 436 U.S. at 694, 98 S.Ct. at 2037 (emphasis added). This precise issue is a difficult one, and appears to be a novel question in this circuit. The Fifth Circuit appears to have been the first circuit to address this question squarely and, indeed, it paved a path which several other circuits have chosen to follow.
In Familias Unidas v. Briscoe, 619 F.2d 391 (5th Cir.1980), the Fifth Circuit considered the liability of a state and a school board for a county judge’s enforcement of an unconstitutional state statute. Because the county judge drew his authority from the state, only the school board could be held liable for the judge’s actions. Id. at 404. In the process of reaching this conclusion, the court considered under what circumstances a county official’s actions could be said to represent “official policy” for purposes of liability under § 1983. The court concluded that, at least in the areas in which a local governmental official, alone, is the “final authority or ultimate repository of... power,” that official’s “conduct and decisions must necessarily be considered those of one ‘whose edicts or acts may fairly be said to represent official policy’ ” for purposes of § 1983.: Id. The Second, Third, Fourth, Ninth, and Eleventh Circuits have followed the lead of the Fifth Circuit and adopted this legal position. However, the Fifth Circuit recently reversed its position, at least as applied to non-personnel situations or third parties. In Bennett v. Slidell, 728 F.2d 762 (5th Cir.1984) (en banc), the court held that for purposes of liability under § 1983, the local governing body itself must have acted unconstitutionally, or must have been directly responsible for the formal policy or custom pursuant to which the unconstitutional act was taken. Id. at 767. Further, unless a local governing body has expressly or impliedly appointed an official to act in its place, that body cannot be held responsible for the acts of that official. Id. at 769. Thus, even though, in Bennett, the acts taken by the city officials may have been unconstitutional, and even though those authorities were final authorities on the decisions in question, the city was not liable for those acts. See id. at 770.
In a dissenting opinion to Bennett, Judge Politz offered the following reflections on the majority’s opinion:
In essence, the majority holds that any action by an appointed official that is inconsistent with the city’s written ordinance is an aberrant act attributable only to that official and, therefore, that such action can never constitute official policy within the meaning of Monell. This restrictive interpretation effectively negates the possibility that municipal liability will ever be imposed for the unconstitutional actions of an appointed official. Indeed, under the contours defined by the majority, the instances in which an edict or act of any person not a “lawmaker” may “fairly be said to represent official policy” will seldom arise. That result is totally at odds with Monell’s mandate that municipalities be subjected to § 1983 liability for more than the mere written words of their ordinances.
Id. at 771 (Politz, J., dissenting). Although we might be inclined to agree with Judge Politz’ reasoning, we need make no decision on the validity of Bennett, as that case applied to an apparent aberrant act by a city official against a third party. The case at bar deals with a City personnel decision made by a City official. However, in Monell, it is clear that the Supreme Court was concerned with more than the policies, including customs with the force of policy, promulgated formally by the rulemaking body of a local government, and concerned with more than the acts taken by a local governing body itself. See Monell, 436 U.S. at 685-86 n. 45, 691 n. 56, 98 S.Ct. at 2033 n. 45, 2036 n. 56. Indeed, the culprit for whom the city could be held liable in Monell was not the local governing body of the city itself, but its department of social services and board of education which were making City personnel decisions in an unconstitutional manner. Id. at 660-61, 98 S.Ct. at 2020-21. Further, in Monroe, the landmark case in § 1983 jurisprudence and the case from which Monell draws its force, it is clear that the Court was concerned with unconstitutional acts taken by officials in spite, and in the face of constitutionally valid laws. See generally, Monroe, 365 U.S. at 171-80, 81 S.Ct. at 475-80.
In a situation where the victim of an unconstitutional employment decision and act is afforded redress by a procedure established by a local governing body, which could correct the injustice, that body can avoid liability for the unconstitutional acts of its officials — and the victims can be made whole. See Owen v. City of Independence, 445 U.S. 622, 652, 100 S.Ct. 1398, 1416, 63 L.Ed.2d 673 (1980). Under this circumstance a city would not be delegating away its ultimate authority for city employment decisions, nor would a city be abdicating responsibility for those decisions. However, where, as here, there is no internal procedure of redress for the victim of an unconstitutional act because an official has been delegated final authority on an employment decision, the responsibility for which primarily lies with the City, a local governing body must be held responsible for the acts of its officials. See generally, R. Freilich & R. Carlisle, Sword & Shield, 435-37, 461-65 (1983) (Municipalities should expect that they will be strictly liable for adverse employment decisions, especially employee terminations).
As a practical matter, local governing bodies must delegate broad authority to their officials in order to keep their corporate bodies running smoothly. However, when, as here, officials are given final authority to make decisions and to act pursuant to a city policy or custom, or in other words to be the officials vested with the ultimate responsibility for acting on behalf of the city, a city cannot be allowed to abdicate its responsibility for those decisions. Under the dissenting opinion’s interpretation of the majority opinion in Bennett, any acts taken by these officials — regardless of their constitutionality, regardless of whether the act was taken or decision made on behalf of the City, and regardless of whether the officials had the final authority on an issue — could not be attributable to the governing body absent facially unconstitutional laws. If this were the case, § 1983 and Monell would be meaningless.
Nor can we agree with the portion of Bennett that holds that governing bodies may be held liable only for the unconstitutional acts of its officials of which it has actual knowledge, or which are so persistent that constructive knowledge can be imputed to the governing bodies. Bennett, vj 728 F.2d at 768. The law cannot tolerate a situation where the constitutional rights of I',! several people must be violated before an i'i individual victim can seek justice. '
Accordingly we hold that: (1) if, according to a policy or custom established by a governing body, an official is delegated the authority, either directly or indirectly, to act on behalf of a governing body; and (2) if a decision made within the scope of the official’s authority ends the matter, then the acts of the official may fairly be said to be those of the local governing body. Our holding is a narrow one. We are dealing here with an intentional, unconstitutional act taken for the City by a City official who was given final authority, pursuant to a custom established by the City through its personnel director, to make the •> decision which led to that act. We do not speculate beyond the precise factual situation in this case. We hold only that when a city official makes an ultimate employment decision on behalf of a city regarding a city employee, the city must be held responsible for the consequences of that decision. We wish to stress that we do not view the City’s policy, of allowing municipal judges to make their own personnel decisions, as unconstitutional. The adoption of that policy clearly is within the province of the City’s authority. What we take objection to is the unconstitutional act of a City employee who was, by City custom, the final arbiter on the matter.
While a city may not be held liable for the discretionary decisions of its officials, it should be held responsible for the consequences of administrative decisions made for the city by those officials. The facts in this case establish unequivocally that, even though the City theoretically retained the primary responsibility for employment decisions, the City in fact had adopted a policy of delegating authority to the municipal judges to make certain final personnel decisions for the City. The City cannot be allowed now to escape responsibility for the consequences of an act taken pursuant to an established City policy. Butler, a municipal judge, fired Williams, a City employee, because she- exercised her First Amendment rights. Under these circumstances, we hold that the City is liable for Butler’s unconstitutional act.
B. The “final authority” issue.
At the close of Williams’ case-in-chief, the City moved for a directed verdict which was denied by the trial court. The City characterizes this denial as error. The trial court went on to find that the City’s personnel director had given Butler the final authority to make the personnel decisions for his court. On appeal, the City argues that whether Butler was the final authority on personnel decisions in his court was a question of fact which should have been submitted to the jury. We disagree, and uphold the trial court’s finding on this issue.
We need not tarry long with the City’s first point. It is clear that a directed verdict is proper only when the evidence is such that reasonable people could not differ as to what the verdict should be. Jackson v. Prudential Ins. Co., 736 F.2d 450 at 453 (8th Cir.1984); Rey v. Fredericktown, 729 F.2d 1171, 1174 (8th Cir.1984); Crues v. RFC Corp., 729 F.2d 1145, 1148 (8th Cir.1984). According to the City’s brief, Williams and a witness for Williams both testified that they had been fired by Butler. Butler testified that, when he first took office in 1969, he had been given authority to hire and fire his staff by the city personnel director. There was no evidence to the contrary. Under these circumstances, the trial court was correct in denying the City’s motion for a directed verdict.
These same circumstances lead us to conclude that the trial court also was correct in finding, as a matter of law, that Butler was the final authority on personnel decisions for his court. When the evidence on an issue leaves no room for any reasonable difference of opinion as to its resolution, the district court should resolve the issue as a matter of law. Roesch, Inc. v. Star Cooler Corp., 712 F.2d 1235, 1237 (8th Cir.), cert. denied, — U.S. -, 104 S.Ct. 1707, 80 L.Ed.2d 180 (1983), quoting, Admiral Theatre Corp. v. Douglas Theatre Corp., 585 F.2d 877, 883 (8th Cir.1978); see McGinn v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 736 F.2d 1254 at 1258 (8th Cir.1984).
C. The tape recordings.
The City’s Police Department was investigating the Traffic Division of the Little Rock Municipal Court in 1981. On two occasions, April 24 and May 11 of 1981, Ms. Judy Wright visited Butler’s chambers and wore a body microphone to record the conversations she had with Butler and court employees on these occasions. These conversations were received and recorded elsewhere by police officers. At trial, Williams introduced these tapes, and their accompanying transcripts, into evidence. Although the tape of the April 24th conversation, exhibit no. 2, and its accompanying transcript, exhibit no. 2a, were introduced into evidence, the tape was not played for the jury nor was the transcript read by the jury. Thus, the City could hardly have suffered prejudice as a result of the trial court’s admission of these exhibits into evidence. Accordingly, we confine our consideration to the objections the City raises regarding the tapes and transcript of the May 11th conversation, exhibits nos. 1, la, and 5.
The May 11th taped conversation, exhibit no. 1, was monitored by Lt. Plummer, a police officer. At trial, Plummer testified that he had listened to this tape, had read its accompanying transcript, and that he believed they fairly and accurately reflected the conversation which took place. Wright testified that the transcript of the May 11th conversation accurately reflected who the speakers had been. Apparently, she was not asked any other questions regarding the accuracy or authenticity of either exhibit. Exhibit no. 5 was a copy of exhibit no. 1, and it had been electronically processed to remove or reduce background noise. This exhibit is the tape which was played for the jury. Prior to trial, the City made a motion in limine to exclude the tapes and transcripts from evidence. As to exhibits nos. 1, la, and 5, this motion was denied in its entirety subject to the condition that Williams provide a proper foundation for admitting the exhibits into evidence. On appeal, the City argues that Williams failed to provide a proper foundation for these exhibits, and thus they were admitted into evidence erroneously. We disagree.
As a threshold matter, we note that the admissibility of evidence is primarily a determination to be made by the trial court. We will not overturn such a determination except for a clear abuse of discretion. United States v. Jones, 687 F.2d 1265, 1267 (8th Cir.1982), quoting, United States v. Brown, 482 F.2d 1226, 1228 (8th Cir.1973). In United States v. McMillan, 508 F.2d 101 (8th Cir.), cert. denied, 421 U.S. 916, 95 S.Ct. 1577, 43 L.Ed.2d 782 (1975), we set forth the requirements for introducing tape recordings into evidence. The proponent of the tapes must establish that: (1) the recording device was capable of taking the conversation offered into evidence; (2) the operator of the device was competent to operate the device; (3) the recording is authentic and correct; (4) changes, additions, or deletions have not been made; (5) the recording has been preserved in a manner that is shown to the court; (6) the speakers are identified, and (7) the conversation elicited was made voluntarily and in good faith, without any kind of inducement. Id. at 104. The City attacks the exhibits on all but the first and sixth of these requirements.
Because the quality of the recording was poor, the City asks us to conclude that the tape recorder operator did not competently record the conversation; thus, the second McMillan requirement is not met. However, the fact that the tape recording successfully was made satisfies the competency requirement of the McMillan test. United States v. McCowan, 706 F.2d 863, 865 (8th Cir.1983).
Second, the City argues that Williams failed to authenticate the exhibits. According to the City, the tapes were not authenticated because Wright testified only that the transcript of the tapes accurately reflected who the speakers were. However, Plummer, the officer who monitored this recording, testified that he had listened to the tape, read the transcript, and that both accurately reflected the conversation which took place. Along with Wright’s identification of the speakers, this testimony was sufficient to establish the authenticity and accuracy of the tape, United States v. Panas, 738 F.2d 278 at 286 (8th Cir. 1984), as well as its accompanying transcript. See United States v. Gordon, 688 F.2d 42, 44 (8th Cir.1982). While perhaps it would be preferable to have the person who prepared a transcript testify to its accuracy, see United States v. Bentley, 706 F.2d 1498, 1507 (8th Cir.1983), cert. denied, — U.S. -, 104 S.Ct. 2397, 81 L.Ed.2d 354 (1984); McMillan, 508 F.2d at 105, it is unnecessary where the accuracy of the transcript is not in dispute. Aside from the general allegations that the tape was inaudible, we note that the City has not pointed out any inaccuracies in the transcript which could have led to prejudice, Bentley, 706 F.2d at 1507-08; Gordon, 688 F.2d at 44, nor did the City offer its own version of the transcript at trial, a practice followed when the content of a conversation is in dispute. United States v. Mendoza, 574 F.2d 1373, 1378 (5th Cir.), cert. denied, 439 U.S. 988, 99 S.Ct. 584, 58 L.Ed.2d 661 (1978), citing United States v. Onori, 535 F.2d 938, 948-49 (5th Cir.1976).
Further, we note that the trial court cautioned the jury to base their verdict upon what was heard, not what was read. In addition, the trial court did not allow the jury to rely on the transcript during its deliberations. Under these circumstances, we cannot say that the admission of the transcripts was error.
Third, the City argues that Williams failed to meet the fourth requirement of the McMillan test — that changes, deletions, or additions had not been made — because the tape had been electronically processed in order to eliminate or reduce background noise. This contention is without merit. The engineer who processed the tape testified that no part of the tape had been deleted, and that only sound interference had been removed from the tape. Having satisfied the trial court, this testimony was sufficient to justify admitting the tape, exhibit no. 5, into evidence and to let it be heard by the jury. Gordon, 688 F.2d at 44.
Fourth, the City argues that Williams failed to establish an acceptable chain of custody for the exhibits. At trial, there was inconsistent testimony between police officers as to who had the original tapes, when, and where the tapes were kept. However, it is undisputed that the originals were in the custody of the police at all relevant times.
Trial courts are entitled to assume that public officials who had custody of evidence properly discharged their duties and did not tamper with the evidence. Panas, 738 F.2d 278 at 287; McCowan, 706 F.2d at 865; United States v. Weeks, 645 F.2d 658, 660 (8th cir.1981), citing, United States v. Malone, 558 F.2d 435, 438 (8th Cir.1977). This assumption is operative until the defendant makes a minimum showing of “ill will, bad faith, other evil motivation, or some evidence of tampering.” Jones, 687 F.2d at 1267, quoting, United States v. Lane, 591 F.2d 961, 962 (D.C.Cir.1979). Factors to be considered in a trial court’s determination of the admissibility of evidence include the nature of the article, the circumstances surrounding its preservation and custody, and the likelihood that others have tampered with it. Weeks, 645 F.2d at 660; Malone, 558 F.2d at 438, quoting, Brown, 482 F.2d at 1228. The City did not make any showing that the evidence had been tampered with, and the police had the evidence in their custody at all relevant times. As to McMillan’s fifth requirement, it was not error to allow the tapes and transcript into evidence.
Fifth, the City tenders a weak argument with respect to McMillan’s voluntariness requirement. The City reasons that Wright may have so manipulated the conversation which was taped as to vitiate the voluntariness of the statements made by Butler and his employees. However, as the City concedes, there is no evidence that the parties to the conversation were under any type of duress, nor is there any evidence that Wright induced those parties to speak with her. Wright merely offered these parties an opportunity to expose their corrupt activities. See McCowan, 706 F.2d at 865. The parties to the conversations obviously spoke of their own free will.
Thus, all requirements of the McMillan test were satisfied by Williams. However, the City argues that the tape was so inaudible that it was error to allow the tape and transcript into evidence.
The task of the trial court, in determining whether to admit tape recordings into evidence which contain inaudible portions, is to assess whether the unintelligible portions are “so substantial in view of the purpose for which the tapes are offered, as to render the recording as a whole untrustworthy.”
United States v. Bell, 651 F.2d 1255, 1259 (8th Cir.1981), quoting, United States v. Young, 488 F.2d 1211, 1214 (8th Cir.1973). We have read the transcript of the tape to which the City objects. Although there are inaudible portions on the tape, they are not so substantial that they render the recording, as a whole, untrustworthy. The trial court did not abuse its discretion in admitting the tape and transcript of the May 11th conversation into evidence.
D. Improper closing remarks.
After trial, the City made a motion to modify the amount of the judgment because during closing argument, Williams’ attorney improperly referred to the future monetary losses Williams would continue to suffer as a result of being fired. Future losses had not been pleaded as an element of damage in Williams’ case. While we cannot condone an attempt to inject into the damages an element which neither has been pleaded nor proven, we note that the City failed to object to the remark.
This court has set forth the standard for reviewing an error which was not objected to at trial.
Rule 46 of the Federal Rules of Civil Procedure retains the requirement that counsel make timely objection to the court. The Supreme Court, in United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 239 [60 S.Ct. 811, 851, 84 L.Ed. 1129] [1940], held that counsel, during closing argument, “cannot as a rule remain silent, interpose no objections, and after a verdict has been returned seize for the first time on the point that the comments to the jury were improper and prejudicial.” This court, in Thompson v. Boles, 123 F.2d 487, 495-96 (8th Cir. 1941), cert. denied, 315 U.S. 804 [62 S.Ct. 632, 86 L.Ed. 1204] [1942], adhered to the Supreme Court’s ruling and held that... “[where an improper remark is made during closing argument], counsel may, and preferably should, make [the] objection, take [an] exception, or ask for remedial action at the close thereof and before the case is submitted to the jury.” Only in extraordinary situations, in order to prevent a “plain miscarriage of justice,” will a reviewing court reverse a judgment based upon errors not objected to at trial.
Lange v. Schulz, 627 F.2d 122, 127 (8th Cir.1980), see also Fed.R.Civ.P. 61. By failing to object to the remark during closing argument, the City waived its right to object to the error on appeal.
E. Attorneys’ fees.
Pursuant to the judgment, Williams’ attorneys filed a motion for attorneys’ fees in the amount of $19,250.00. The trial court reduced the amount requested for the work done by law clerks. The City argued that the award should be reduced because only one of the plaintiffs prevailed. The trial court found merit in this argument and, because it was impossible to distinguish between the time spent on the two claims, reduced the award by 25% for a final award of $13,338.30. After the original request for attorney fees had been filed, Williams’ attorneys submitted a supplemental motion of costs and fees for $1,000.00, which allegedly reflected the time spent on post-trial motions. There is no indication, in the order awarding attorneys’ fees, that the trial court considered this supplemental motion. On appeal, Williams objects to the court’s reduction in fees and failure to consider the supplemental motion for fees. We affirm the trial court’s award of attorneys’ fees, but remand for a consideration of the supplemental motion submitted by Williams’ attorneys.
The award of attorney fees is a matter entrusted to the sound discretion of the trial court, and we will not reverse a ruling on the award of fees unless the record clearly indicates that the court has abused its discretion. Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933, 1941, 76 L.Ed.2d 40 (1983); Bowman v. Pulaski County Special Sch. Disk, 723 F.2d 640, 646 (8th Cir.1983). It must be remembered that one of the plaintiffs in this case failed on her claim entirely, and that both plaintiffs were represented by the same attorneys.
In Hensley the Court noted that the most critical factor in determining a fee award is the level of success obtained by the prevailing party. Hensley, 461 U.S. at 437, 103 S.Ct. at 1941. In reviewing which specific fee requests should be discounted from a total statement when a party has not prevailed on every claim, the “district court may attempt to identify specific hours that should be eliminated, or it may simply reduce the award to account for the limited success. The court necessarily has discretion in making this equitable judgment.” Id. We think this statement also applies to this situation, where only one of two plaintiffs represented by the same attorneys prevails. We think the district court’s award of attorneys’ fees was a fair one. Accordingly, we affirm the district court’s ruling on the original request for attorneys’ fees. However, because there is no indication that the district court considered Williams’ supplemental motion in reaching its determination, we remand to the district court for a sole consideration of that motion.
F. The punitive damage award.
The jury awarded Williams $40,-000.00 in compensatory damages and $60,-000.00 in punitive damages. On the basis of Newport v. Fact Concerts, Inc., 453 U.S. 247, 101 S.Ct. 2748, 69 L.Ed.2d 616 (1981), the district court set aside the punitive damage award. Williams argues that this action was erroneous because the City failed to object to the punitive damage instruction during conference, and thus has waived the right to object to the award on appeal. See Fed.R.Civ.P. 51. We disagree.
The Supreme Court has held clearly that municipalities are immune from punitive damages under § 1983. Newport, 453 U.S. at 271, 101 S.Ct. at 2762. The Court reached this conclusion in Newport even though the city had failed to object to the punitive damages instruction. Id. at 253, 101 S.Ct. at 2752. We recognize that since Newport some courts have held that a city waives the right to object to a punitive damage award on appeal if it failed to do so at trial. See Barnett v. Housing Auth., 707 F.2d 1571, 1581 (11th Cir.1983); Black, 662 F.2d at 184 n. 1. We disagree with the positions taken by these courts. We hold that, under Newport, it would have been an error, as a matter of law, if the district court had failed to set aside the punitive damages award. See Hart, 720 F.2d at 1444.
In conclusion we affirm the judgment on the verdict, but remand for the trial court’s consideration of the supplemental motion for attorneys’ fees submitted by Williams.
. 42 U.S.C. § 1983 (1982) provides in pertinent part:
Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State ____ subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress.
. Suits brought against individual officers in their official capacities are, in effect, suits against the City. Monell v. Department of Soc. Servs., 436 U.S. 658, 690 n. 55, 98 S.Ct. 2018, 2035 n. 55, 56 L.Ed.2d 611 (1978); see also Hutto v. Finney, 437 U.S. 678, 700, 98 S.Ct. 2565, 2578, 57 L.Ed.2d 522 (1978).
. The Fifth Circuit has followed this holding in a variety of circumstances. See, e.g., Hart v. Walker, 720 F.2d 1436, 1445-46 (5th Cir.1983) (county would be liable for a county supervisor's acts if supervisor was the final authority on the issue — remanded for a factual determination of final authority); Bowen v. Watkins, 669 F
Question: Were there cross appeals 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.
The principal issue is the wording of the jury instruction on entrapment. The defendant appeals his jury conviction of conspiracy both to possess cocaine with intent to distribute and to use a communications facility (a telephone) to facilitate that possession and distribution, in violation of 21 U.S.C. §§ 841(a)(1) and 843(b) (Count I). He also appeals his conviction of the substantive offense of using a communications facility to facilitate the possession and distribution of cocaine, proscribed by 21 U.S.C. § 843(b) (Count II).
The district judge gave the following entrapment instruction:
Where a person has no previous intent or purpose to violate the law, but is induced or persuaded by law enforcement officers or their agents to commit a crime, he is a victim of entrapment, and the law as a matter of policy forbids his conviction in such a case.
On the other hand, where a person already has the readiness and willingness to break the law, the mere fact that government agents provide what appears to be a favorable opportunity is not entrapment. For example, when the government reasonably suspects that a person is engaged in the illicit sale of narcotics, it is not entrapment for a government agent to pretend to be someone else and to offer, either directly or through an informer or other decoy, to purchase narcotics from the suspected person.
If, then, the jury should find beyond a reasonable doubt from the evidence in the case that, before anything at all occurred respecting the alleged offense involved in this case, the defendant was ready and willing to commit crimes such as are charged in the Indictment whenever opportunity was afforded, and that government officers or their agents did no more than offer the opportunity, then the jury should find that the defendant is not a victim of entrapment.
On the other hand, if the evidence in the case should leave you with a reasonable doubt whether the defendant had the previous intent or purpose to commit an offense of the character charged, apart from the inducement or persuasion of some officer or agent of the government, then it is your duty to find him not guilty.
The instruction was given over defendant’s objection and in preference to entrapment instructions tendered by him, one of which specifically allocated the burden of proof to the government. The defendant challenges the court’s entrapment instruction asserting that it was prejudicial because it failed to specifically state that the government must bear the burden of proving beyond a reasonable doubt that the defendant was not entrapped.
We consider this issue in the light of our prior decisions, United States v. Landry, 257 F.2d 425 (7th Cir. 1958), and the later case of United States v. Gardner, 516 F.2d 334 (7th Cir.), cert. denied, 423 U.S. 861, 96 S.Ct. 118, 46 L.Ed.2d 89 (1975). In United States v. Landry several instructions were questioned. The principal instruction regarding entrapment bears little resemblance to the instruction we consider, except both failed within the body of the particular instruction to place the entrapment burden expressly upon the government. The Landry instruction contained additional faults. It instructed the jury on matters not in issue and was “confusing,” United States v. Landry, 257 F.2d at 428. The entrapment instruction was also given in conjunction with another instruction on the quantity of heroin involved which was inconsistent with and ignored the entrapment defense. This court stated that the latter instruction required the jury to believe nothing more to convict than what the defendant conceded in his entrapment defense. The government attempted to justify the entrapment instruction by relying on the general stock instruction that the burden of proof was on the government. We declared that in the circumstances of that case where there was a close question on the issue of entrapment that the stock instruction on the government’s burden of proof was not enough cure for all the deficiencies. We noted, however, that in some cases the stock instruction would suffice. 257 F.2d at 430.
It is axiomatic that in determining the propriety of an instruction that all the instructions be considered as a whole. United States v. Patrick, 542 F.2d 381, 389 (7th Cir. 1976), cert. denied, 430 U.S. 931, 97 S.Ct. 1551, 51 L.Ed.2d 775 (1977); United States v. Brown, 518 F.2d 821, 826 (7th Cir.), cert. denied, 423 U.S. 917, 96 S.Ct. 225, 46 L.Ed.2d 146 (1975); United States v. Johnson, 515 F.2d 730, 732-33 n. 7 (7th Cir. 1975). We do not read Landry as carving out an exception to that principle so as to require in all cases that the entrapment instruction be judged alone without regard to the other instructions. The jury is generally charged that all instructions should be considered together as a connected series and that special attention should not be given to any particular instruction. We see no reason in reviewing the question as judges not to do what we tell the jury it must do. We did that in Gardner, 516 F.2d at 349. In reviewing the standard LaBuy entrapment instruction, we considered the instructions as a whole. In considering several objections to the Gardner instruction, we noted that the burden was explicitly placed on the government to prove beyond a reasonable doubt that the defendant had not been entrapped. We also gave some consideration to the other general instructions to the effect that the burden of proof was on the government, that the burden did not shift, and that the defendant did not have to produce any evidence. 516 F.2d at 348. In footnote 11, we added that the recommended instruction should make clear that the entrapment burden was on the government. So it should and we again repeat that it is preferable that the entrapment instruction include that specific provision. Failure to do so, however, will not automatically require reversal. In the present case the specific allocation of the burden of proof to the government was omitted from the entrapment instruction. We must, therefore, consider the instructions as a whole as applied to the particular facts in determining whether reversal is warranted.
Viewing the evidence in the light most favorable to the government, Glasser v. United States, 315 U.S. 60, 81, 62 S.Ct. 457, 86 L.Ed. 680 (1942), we consider the facts briefly. In the summer of 1977 the defendant met Derrick Maxwell, and after sampling Maxwell’s cocaine, the defendant advised Maxwell that he could supply Maxwell with cocaine of high quality at a better price. Later that year, Maxwell became an informant for the Drug Enforcement Administration. In the fall Maxwell and the defendant met again. The defendant advised Maxwell that his Indianapolis contacts made regular trips to California for drug purposes and that he could provide Maxwell with up to a pound of superior cocaine, “the best in the midwest.” The defendant quoted a price around fifteen to eighteen hundred dollars. They exchanged telephone numbers. Defendant stated that if his California connection did not work out, he had other connections. About a week later, the defendant inquired if Maxwell was still interested in purchasing cocaine. Two days later the defendant called Maxwell to advise him that the drugs were available and that his source lived on a farm in Lafayette, Indiana. The next day Maxwell called the defendant and discussed the details of a $2,100 deal for one ounce of cocaine. In a few minutes Maxwell again called defendant about the transaction and possible future transactions. Defendant expressed a desire “to open up this deal one time” with the implication it would clear the way for additional transactions. The proposed trip to Lafayette was discussed as well as compensation to the defendant for setting up the transaction. These conversations were recorded with Maxwell’s consent. Later that month two more similarly recorded conversations reveal the final arrangements for the buying trip. The next day the defendant, his friend Lorenzo Penn, and Maxwell, along with undercover DEA Agent Stephen L. White, drove in two cars to Lafayette. Upon arrival, Penn went alone, but under surveillance, to meet the supplier. During Penn’s absence, the defendant advised Agent White that he had sampled the cocaine and it was of high quality. Penn returned and discussed the reliability of the supplier, and price and quantity. The defendant and Penn then drove to the supplier’s farm to discuss the closing with the two suppliers, Briggs and Long. Part of these negotiations between Penn and Long occurred in defendant’s car and in his presence. Agent White called off this particular transaction after the defendant returned to report on the negotiations. Agent White, who had been introduced by defendant to Penn and Long, however, concluded three other cocaine purchases for a total of $16,000 from Penn and Long within about the next 30 days. The arrests followed.
Penn testified that the defendant had set up the Lafayette trip and knew about and participated in all the original negotiations. Penn further testified that the defendant had contacted him after the Lafayette trip to try to set up another drug transaction. Long also testified about the defendant’s involvement. The defendant generally admitted his participation in some of the negotiations, but claimed ignorance as to the purpose of the trip to Lafayette. He went along to attend a concert, he claimed. Defendant’s defense was entrapment, but in the alternative that if he had been a member of the conspiracy, he had withdrawn before the actual sales took place. However, the evidence showed the defendant’s efforts and interest in the original contact between the buyers and sellers were not restricted to any one sale but were intended as a prelude for future sales for defendant’s profit. Defendant did nothing affirmative to divorce himself from what he helped instigate and arrange. He remained a part of the conspiracy and sought to promote it even after the Lafayette trip.
Against that factual background, it cannot reasonably be found that it was a close case on entrapment. The defendant was not new to drugs and sought to promote the negotiations as a go-between for his own gain. The defendant appears not only to have been ready and willing, but anxious to violate the law. The agents only accommodated the defendant’s obvious desires.
In the entrapment instruction which was given, there was not the slightest suggestion that entrapment was an affirmative defense which the defendant had to prove to obtain acquittal. To the contrary, the jury was continually reminded throughout the instructions that the burden of proof rested upon the government. It was plainly stated in the instructions that:
The entire burden of proof is upon the government from the beginning to the end of trial, and this burden of proof never shifts from the government to the defendant, and the defendant is not bound to prove his innocence, offer any excuse, or explain anything.
That statement was not actually in the entrapment instruction itself, but the jurors were advised that all the instructions were to be considered as a whole and that each instruction was to be regarded in the light of all the other instructions. We do not believe that the instructions considered as a whole were so vague or ambiguous as to reasonably permit misinterpretation of the entrapment instruction by the jury. As the trial judge in addition to reading the instructions to the jury sent the instructions with the jury for use during their deliberations with the further admonition to read them there is even less chance that there was any oversight or misunderstanding about the entrapment burden. See United States v. Donner, 497 F.2d 184, 194 (7th Cir. 1974). Contra, United States v. Wolffs, 594 F.2d 77 (5th Cir. 1979). Although it is preferable to specifically allocate the entrapment burden of proof to the government in the entrapment instruction, we believe that the jury in this case was adequately and properly instructed. We see no need to adopt an inflexible entrapment instruction rule requiring that the entrapment burden always be specifically singled out and allocated to the government within the entrapment instruction. Such a rule would require us to ignore the realities in the differing circumstances of particular cases.
The remaining issues are without merit and require little attention. First, the defendant argues it was error not to give the particular instructions tendered by him on withdrawal from the conspiracy, but in our view the trial court gave an adequate and correct withdrawal instruction.
Next, the defendant alleges that the “indictment was a political instrument in soliciting defendant’s cooperation with the FBI probe of the CETA Program and the DEA drug investigations centered upon the black community.” Had the judge in his discretion permitted excursions into extraneous and collateral matters unrelated to the particular drug transactions, the trial would only have been delayed and the issues confused. Even if we were to consider such evidence to be relevant, there would be no error in its exclusion under Rule 403 of the Federal Rules of Evidence.
The defendant further finds a variety of faults with numerous other instructions, but viewing the instructions as a whole, United States v. Patrick, 542 F.2d 381, 389 (7th Cir. 1976), cert. denied, 430 U.S. 931, 97 S.Ct. 1551 (1977), we find that the jury was correctly and fully instructed.
Finally, the defendant claims the jury was prejudiced by the trial judge’s negative attitude toward defendant’s counsel. In response the government claims defense counsel was guilty of unorthodox and unprofessional tactics. In spite of those opposing claims, we find that the trial judge carefully protected the rights of the defendant.
Finding no error, we affirm the conviction.
. Defendant was sentenced to concurrent terms of two years on each count, with special parole terms of three years on Count I. Defendant was ordered to serve a sentence of fourteen days with the balance suspended and was placed on probation for the remainder of the two years.
. W. LaBuy, Jury Instructions in Federal Criminal Cases, § 2.02 (1963).
. The Federal Criminal Jury Instruction Committee, a circuit-wide panel of judges and lawyers chaired by Judge Bauer, has considered proposing either an entrapment instruction containing an express allocation of the burden to the government or an “issues in the case” instruction which clearly and specifically places on the government the burden of proving beyond a reasonable doubt that the defendant was not entrapped.
. Penn, Briggs and Long, all codefendants, are not involved in this appeal.
. Rule 403 provides:
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.
Question: Were there cross appeals 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
CHOY, Circuit Judge:
Standard Oil Company of California (Standard) and the United States each filed petitions in the district court seeking exoneration from, or limitation of, liability for the results of a disastrous gasoline fire in San Francisco Bay. Jurisdiction in personam for these petitions was based on 46 U.S.C. §§ 181-195 (1970) providing for the limitation of a vessel owner’s liability, and the Admiralty Act, id. §§ 741-752 and Public Vessels Act, id. §§ 781-790 which afford the same remedies against the United States as against private carriers. Following a court trial on the Government’s petition, the district court, sitting in admiralty, issued a final decree determining both parties to be equally and mutually at fault in causing the fire. The United States appeals from this judgment, while Standard cross-appeals from a later decree denying it contribution from the United States for certain claims filed only against Standard. We affirm the district court’s determination of mutual liability, but reverse its decision denying Standard any right of contribution.
Facts
On the evening of September 26, 1966, Standard’s Barge No. 18 was loaded at the company’s refinery in Richmond, California with some 989,730 gallons of various grades of gasoline. Standard’s Tug No. 4 was then brought into position and secured to the stern saddle of the barge for departure from Richmond to Pier 64 in the Central Basin area of San Francisco Bay where the gasoline was to be off-loaded at the Standard storage area. Between 10:45 and 11:00 p. m. as the vessels arrived at Central Basin, Tug No. 4 had mechanical difficulty in reversing its engines which prevented it from navigating and stopping in the usual manner. This forced the master of the tug, Captain Autiere, to ground the barge on an abandoned launching ramp in the southwest corner of the basin. An angle iron and drift pins attached to pilings at the ramp punctured the No. 1 port tank of the barge, and gasoline began to leak into the waters of the bay. The tug failed in its attempts to extricate the barge.
Sometime beween 11:00 and 11:30 p. m. that evening, the radio operator on duty at the United States Coast Guard’s Captain of the Port office heard a message over the “tug circuit” about a gasoline spill in the bay. The “tug circuit” is a private radio communications circuit utilized by various tug and barge operators i*n San Francisco Bay. The Captain of the Port has equipment to monitor this circuit, as well as to communicate over it in case of emergency to control vessels. This circuit is in addition to the Coast Guard’s own radio circuit which the Captain of the Port uses to communicate with other Coast Guard stations in the bay area. The radio operator reported the information concerning the spill to the Coast Guard duty officer, who took no action at that time.
About ten minutes later, the Captain of the Port’s office received a telephone call reporting a gasoline leak from Standard’s Tug No. 4 in the Central Basin. After the San Francisco Fire Department was notified, Chief Petty Officer Day, the duty officer representing the Captain of the Port, ordered Coast Guard patrol boat CG 40427, which was docked at a nearby pier, to go into the area to investigate. CG 40427, a 40-foot steel-hulled utility vessel equipped with two water cooled diesel engines, was under the operational command of the Captain of the Port. Arriving in the Central Basin about 12:05 a. m., Coxswain Bush, who was in command of the vessel, noticed that the Fire Department was already at the scene on Pier 64 with a fire truck and firemen spraying the surface in order to break up the gasoline. The concentration of gasoline was extremely heavy by then, with pronounced fumes and vapor rising like a fog some three feet from the surface. This situation was reported by radio to Officer Day, who then ordered CG 40427 to proceed to the nearby Bethlehem Shipyards and stop the continuing of any burning operations. When this was accomplished, Day ordered the patrol boat to investigate the cause and magnitude of the spill. CG 40427 proceeded over the gasoline-covered surface alongside the tug and barge. Coxswain Bush went aboard the barge, determined the amount of gasoline lost from the No. 1 port tank — eventually some 25,000 gallons — and that all other tanks appeared intact. After reporting these facts to Day, he requested and was given permission to withdraw from the area.
Shortly, the Captain of the Port’s office began to have difficulty maintaining radio contact with CG 40427, although the tug circuit remained clear. At 12:34 a. m. Officer Day departed by automobile from his office to the Central Basin to make a personal inspection. He arrived about twenty minutes later and ordered CG 40427 to take him to the stricken barge. The patrol boat again traversed the gasoline-covered waters to the two stranded vessels. Day boarded the barge and discussed with the tanker-man the feasibility of transferring gasoline from the ruptured tank to the undamaged tanks. When informed that this could be done in about ten minutes, Officer Day boarded the tug and told Captain Autiere not to attempt to move the barge because of the danger of tearing open the other tanks. Returning to CG 40427, Officer Day ordered it to return to Pier 64.
As Officer Day was leaving the pier by automobile, he noticed that the recently-arrived Standard Tug No. 2 had passed a tow line to the immobilized tug to pull the barge off the ramp. Using his car radio, he ordered CG 40427 to stop Tug No. 2 and to proceed back to Tug No. 4 to obtain the tug captain’s name and license number for an oil pollution form. The patrol boat went alongside Tug No. 2 and ordered it not to pull the barge. The tug complied and moved about 75 to 100 yards out of the area. CG 40427 then returned to Tug No. 4 and tied up port side to its starboard quarter with engines left idling. The coxswain boarded the tug to obtain Au-tiere’s license number, but when the captain said he did not have his license there, Bush returned to CG 40427 to radio Day and ask if this information might be telephoned in the morning. Unable to reach Officer Day, Coxswain Bush was just about to step back from his vessel onto the tug when he heard the port engine of CG 40427 accelerate followed by a loud popping noise behind him which sounded like a firecracker. He turned, saw what appeared to be a flame near the port side of his boat where the engine was located, and saw smoke ■ coming from the engine’s compartment, then almost instantaneously a burst of flames. In the words of one of the onlooking crewmen aboard Tug No. 2, “then the whole works blew up.”
All three crew members of the Standard tug and barge, and two of the three Coast Guard sailors were killed as a result of the fire. Only Coxswain Bush, miraculously, escaped with slight injuries. In addition, there was extensive fire damage to the three vessels and assorted property damage to docks, rafts, floats, piers and other shore property.
Claims were filed against both Standard and the United States in their respective limitation proceedings by the estates of the deceased Standard employees. Claims against only Standard were filed by representatives of the two deceased members of the Coast Guard, Coxswain Bush, and others who sustained property damage. Standard and the United States each filed affirmative claims for losses in the other’s limitation proceeding, with Standard in addition seeking contribution or indemnification from the United States. The two limitation proceedings were originally consolidated for trial, but after Standard proposed a settlement with the individual death claimants, the actions were severed and the issue of the Government’s liability was tried to the court.
Government’s Contentions
The United States raises several assignments of error: (1) the district court erred in finding that Officer Day was negligent and that CG 40427 was a proximate cause of the fire; (2) the court erred in not finding that Captain Autiere’s disobedience of the Coast Guard order not to attempt to move the barge was a supervening proximate cause of the fire; (3) the district court’s conclusion that Officer Day was a “managing officer” whose privity or knowledge could impose unlimited liability on the United States is erroneous; (4) the court erred in its computation of damage awards for the estates of the decedents.
Negligence and Causation
The Government challenges as being clearly erroneous the following findings of fact:
“The court finds that the operation of the patrol boat in the area of gasoline vapors pursuant to the orders of the Captain of the Port was a violation of the standing orders of the Captain of the Port and was negligent. This is true whether the Captain of the Port’s standing orders or the normal duty of ordinary care is used as the standard of conduct.
“The court finds by a preponderance of the evidence that the fire was started by some operation of the patrol boat in the area of gasoline vapors, either as a result of the ingestion of gasoline vapors into the air intake system of the pork engine, causing a back fire, or by sparking of an exposed electrical contact in the electrical system of the patrol boat.”
As appellant recognizes, our standard for reviewing findings of fact made by the trial court sitting without a jury in admiralty, is whether these findings can be said to be clearly erroneous. United States v. Soriano, 366 F.2d 699 (9th Cir. 1966). “A finding is clearly erroneous when ‘although there is evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed’. . . .” Mc-Allister v. United States, 348 U.S. 19, 20, 75 S.Ct. 6, 8, 99 L.Ed. 20 (1954). In making this determination, the prevailing party must be given the benefit of all inferences that may reasonably be drawn from the evidence. United States v. Alaska Steamship Co., 491 F.2d 1147 (9th Cir. 1974); Pacific Queen Fisheries v. Symes, 307 F.2d 700, 706 (9th Cir. 1962).
Appellant contends that Officer Day was not negligent in ordering CG 40427 back to the stranded tug and barge because this decision was made under the extenuating circumstances of an extreme emergency. We disagree. There was no imminent danger once Standard Tug No. 2 ceased its attempts to move the barge. By that time, the vessels had been incapacitated for almost two hours without incident. Short of actually rescuing the Standard crewmen, there was no valid purpose for the patrol boat again going into the area, since any further necessary information could have been obtained by other means, e. g. a relay over the tug circuit. Viewing the evidence in the light most favorable to thq prevailing party, Northern Fishing & Trading Co. v. Grabowski, 477 F.2d 1267, 1270 (9th Cir. 1973), we are not definitely and firmly convinced that the district court was mistaken in finding Officer Day to be negligent.
The Government also contends the finding that the patrol boat was a proximate cause of the fire is clearly erroneous because based upon mere conjecture or guess. While it is true that the actual cause of the disaster is unknown, this is often the case when damage results from a fire, simply because of the difficulties inherent in determining the real source. See Minerals & Chemicals Corp. v. S. S. National Trader, 445 F.2d 831 (2d Cir. 1971). However, it is unnecessary, as appellant urges, that the cause be proven by direct evidence. When direct proof of causation is lacking, “the causal connection can be shown by facts and circumstances which, in the light of ordinary experience, reasonably suggests that the [party’s] negligence in the manner charged operated proximately to produce the injury.” Johnson v. Griffiths S. S. Co., 150 F.2d 224, 226 (9th Cir. 1945); see Meadows & Walker Drilling Co. v. Phillips Petroleum Co., 417 F.2d 378, 382 (5th Cir. 1969). See also Michalic v. Cleveland Tankers Inc., 346 U.S. 325, 330, 81 S.Ct. 6, 5 L.Ed.2d 20 (1960). Our view of the record reveals substantial circumstantial evidence, not only in the testimony of Coxswain Bush, but also from other observers, which supports the district court’s finding that the patrol boat was a proximate cause of the fire.
Captain Autiere’s Conduct
The Government maintains that Captain Autiere’s failure immediately to stem the flow of gasoline from the ruptured tank by transferring it to the undamaged tanks, and his subsequent disobedience of the order not to attempt to move the barge, were negligent acts which constitute supervening proximate causes of the fire. This contention is without merit. By definition, in order to constitute a superseding cause, Captain Autiere’s acts must have intervened, or come into active operation, at a time later than some antecedent negligence on the part of the Government, thereby preventing liability for that antecedent negligence. United States v. Marshall, 230 F.2d 183, 190-191 (9th Cir. 1956). See generally W. Prosser, Law of Torts § 44 at 271 (4th ed. 1971); Restatement (Second) of Torts §§ 440-41 (1965). Here the dispatch of CG 40427, a boat ill-suited for operation in gasoline laden waters, into the danger area for the third time followed Au-tiere’s conduct.
Limitation of Liability
The United States seeks to limit its liability for damage claims to the amount of its interest in, or the value of CG 40427, because such damage occurred without its privity or knowledge as owner of the vessel. 46 U.S.C. § 183(a) (1970). Supporting this claim for limitation, the Government contends that any negligence of Chief Petty Officer Day, the non-commissioned officer standing duty watch as Captain of the Port, cannot be imputed to it since Day was “[a]eting merely as a representative of his commanding officer [with] duties no higher than that of an ordinary servant or employee . . . .” The district court determined, however, that “[t]he negligence of the United States . . . was that of the duty officer of the Captain of the Port, who for purposes of limitation of liability was a person whose knowledge of or privity to the negligence precludes the United States from entitlement to limitation.” Although stated as a conclusion of law by the district court, it is clear that this determination must be considered a finding of fact. Port of Pasco v. Pacific Inland Navigation Co., 324 F.2d 593, 599-600 (9th Cir. 1963); see Coryell v. Phipps, 317 U.S. 406, 411, 63 S.Ct. 291, 87 L.Ed. 363 (1943). As such, we find it to be amply supported by the record.
The same standards are applicable to the United States when it seeks limitation of liability because such was occasioned without its privity or knowledge, as would be the case if a private corporation were seeking the same benefit. See The Midland Victory (Petition of United States), 178 F.2d 243 (2d Cir. 1949); USNS POTOMAC (Petition of United States), 303 F.Supp. 1282, 1304 (E.D.N.C.1969). By necessity in both instances, the requisite privity or knowledge can be attributed to the owner only by the acts of its employees. The significant classification, therefore, is between those employees with sufficient managerial authority to bind the corporate, or in this case governmental owner, as distinguished from those employees having no general powers of superintendence over the whole or a particular part of the business. Compare States S. S. Co. v. United States, 259 F.2d 458 (9th Cir. 1958) with Petition of Kinsman Transit Co., 338 F.2d 708 (2d Cir. 1964). See generally Waterman Steamship Corp. v. Gay Cottons, 414 F. 2d 724, 730-731 at n. 14-15 (9th Cir. 1969); 3 Benedict on Admiralty § 490 (6th ed. 1940). In short, the inquiry must focus on whether the negligence is that of “managing officers” or, more properly, “supervisory employees.” The title or rank of these employees is, by itself, of limited value in determining on which side of the line a particular case falls. While this may be one factor, “the real test is not as to their being officers in a strict sense but as to the largeness of their authority.” Waterman Steamship Co., supra at 731, quoting In re P. Sanford Ross, 204 F. 248, 251 (2d Cir. 1913). We conclude that when he was acting as duty officer of the Captain of the Port, Officer Day had sufficient supervisory authority to charge the United States with privity or knowledge of his negligence.
As duty officer standing the watch, Officer Day had been delegated full responsibility and authority to manage the office of the Captain of the Port. In this capacity, the utility patrol boats were directly under his supervision and control. Insofar as the men aboard the CG 40427 were concerned, his orders were to be obeyed just as if they came from the Captain of the Port. Indeed, for all practical purposes, he was the Captain of the Port pro tern despite his rank in the Coast Guard. Under these circumstances we cannot say that the district court erred in its determination that his negligence was within the privity and knowledge of the United States as owner of the vessel. See States S. S. Co. v. United States, supra, 295 F.2d at 474; Great Atlantic & Pacific Tea Co. v. Brasileiro, 159 F.2d 661 (2d Cir. 1947).
The Damage Awards
The district court, after considering the age, life expectancy, number of survivors, earning capacity and personal living expenses of the four Standard employees at the time of their deaths, awarded damages to their representatives. These awards ranged in round figures from $163,000.00 to $211,000.00. The United States now for the first time maintains that the awards are an unwarranted windfall to the families of the deceased because the court failed to make greater allocations for personal living expenses, failed to deduct federal or state taxes, and failed to reduce the awards to their present value. The short answer to these contentions is that we will not reverse the trial court on issues that the record shows were never raised before it. Walker v. Continental Life & Accident Co., 445 F.2d 1072, 1075 (9th Cir. 1971); Union Pacific R. R. v. Johnson, 249 F.2d 674, 677 (9th Cir. 1967).
Standard’s Cross-Appeal
Standard cross-appeals from the district court’s order denying its contribution claim against the United States for any amounts paid or to be paid to the various property damage claimants. No contribution is sought for its payments in settlement with the representatives of the two deceased Coast Guard crewmen, or with Coxswain Bush. The district court’s denial of Standard’s claim, as between joint tortfeasors in this noncollision maritime action, was based upon the Supreme Court’s decision in Halcyon Lines v. Haenn Ship Ceiling and Refitting Co., 342 U.S. 282, 72 S.Ct. 277, 96 L.Ed. 318 (1952), and later interpretations of that decision by this court. This question is an open one in this circuit. Nickert v. Puget Sound Tug & Barge, 480 F.2d 1039, 1041 (9th Cir. 1973) (dictum). We conclude that Halcyon. does not warrant the denial of contribution in this case.
Halcyon involved an action by an injured employee of Haenn, a ship refitting company hired to make repairs on a vessel, against the owners of that vessel for negligence and unseaworthiness. Halcyon Lines, the ship’s owner, im-pleaded Haenn charging that it was con-tributorily negligent in causing the accident. Reversing the lower court’s decision which permitted a claim of contribution by Halcyon against Haenn, the Court expressly created an exception to the established admiralty doctrine of apportioning damages equally among mutual wrongdoers. Although the exception is stated broadly to include all non-collision maritime cases, the Court’s reasons for denying contribution in that case were narrow. That is, where Congress had expressly immunized Haenn, as an employer of harbor workers, from suits by its employees for tort liability, the Court found it inappropriate, in effect, to evade this congressional policy by permitting a right of contribution against Haenn. Since no prior Supreme Court decision required that contribution be granted in noncollision cases, the Court refused to grant such relief in that case. Halcyon, supra at 285-287. But see White Oak Transportation Co. v. Boston, Cape Cod & New York Canal Co., 258 U.S. 341, 42 S.Ct. 338, 66 L.Ed. 649 (1922).
We agree with the Fifth Circuit Court of Appeals that regardless of whether Halcyon is strictly limited to its facts denying contribution from a joint tortfeasor who is statutorily immune from suit, or whether its broad language concerning all noncollision maritime actions is considered dictum, the Halcyon doctrine is inapplicable here. Horton & Horton, Inc. v. T/S J. E. Dyer, 428 F.2d 1131, 1134 (5th Cir. 1970), cert. denied, 400 U.S. 993, 91 S.Ct. 461, 27 L.Ed.2d 441 (1971). In this case, those individuals who suffered property damage filed claims first only against Standard, probably because of the great likelihood that it would be held responsible for such losses. But, had any of these claimants foreseen that the United States similarly would be held liable, undoubtedly they would have made these claims against the Government, just as the representatives of the Standard crewmen did.
This situation is unlike that in Halcyon where the injured employee was precluded by statute from suing his employer. Here, the tort liability of the United States was not limited by statute; on the contrary, the Government’s immunity has been expressly waived for its negligence in this type of case. Under these circumstances, we see no reason for not requiring the United States to contribute toward the damages resulting from its negligent conduct. Therefore, in this noncollision admiralty case where damages are the result of mutual wrongdoing, we hold that contribution will lie where no statute precludes recovery from the joint tortfeasor against whom contribution is sought. In re Seaboard Shipping Corp., 449 F.2d 132, 138-139 (2d Cir. 1971), cert. denied sub nom. Seaboard Shipping Corp. v. Moran Inland Waterways Corp., 406 U.S. 949, 92 S.Ct. 2038, 32 L.Ed.2d 337 (1972); Horton & Horton, Inc., supra, Watz v. Zapata Off-Shore Co., 431 F.2d 100 (5th Cir. 1970).
No. 72-1040 is affirmed.
Nos. 72-1120 and 72-1121 are reversed and remanded.
. The Captain of the Port has promulgated an “Organization Book” containing orders for the operation and handling of boats by the Coast Guard, including the CG 40427. One such general order prescribed procedures for investigating oil and gasoline spills on the water and read:
“If dangerous cargo is involved, inform the OOD [officer on duty] of the danger and request him to warn the patrol craft and fireboat to stay well outside the perimeter of the spill area until it is dissipated and made safe.
“If dangerous cargo is involved, do not institute your investigation while fire preventive measures are underway. As soon as all preventive action is completed, start getting information and samples.”
. The prior decisions of this court did not require our determination of the question presented here, as to whether contribution is available in a situation in which no statute prevents recovery from a joint tortfeasor. In Amerocean Steamship Co. v. Copp, 245 F.2d 291, 294 (9th Cir. 1957) and Union Sulphur & Oil Corp. v. W. J. Jones & Son, 195 F.2d 93, 94-95 (9th Cir. 1952), we faced the same question presented by Halcyon (see text infra) of whether an indirect recovery should be permitted where a statute precluded a direct recovery. We there followed Halcyon and held that it could not. In Simpson Timber Co. v. Parks, 390 F.2d 353, 356 (9th Cir. 1957) and States S.S. Co. v. Rothschild International Stevedoring Co., 205 F.2d 253, 254-255 (9th Cir. 1953), the issues were not ones of contribution but of indemnification. Halcyon therefore was not involved, as was noted both in Rothschild, 205 F.2d at 255 and in Simpson Timber, 390 F.2d at 356, and any reference to this decision merely served the purpose of comparing the related doctrines of contribution and indemnification.
Question: Were there cross appeals 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.
This appeal challenges the District Court judgment, commitment and order of probation entered January 20, 1967, on a jury verdict of guilty on each of four counts of an indictment charging appellant under 18 U.S.C. § 495 with forging and uttering two separate United States Treasury checks (one payable to Catherine C. Slane and the other to J. F. and A. M. Foster) on the ground that the evidence is not sufficient to justify a reasonable mind in concluding, beyond a reasonable doubt, that appellant was guilty as charged.
The evidence, particularly when all logical inferences therefrom are drawn in favor of the jury’s verdict (see United States v. Russo, 123 F.2d 420, 421-22 (3rd Cir. 1941); Thomas v. United States, 93 U.S.App.D.C. 392, 211 F.2d 45, 46 (1954), cert. den. 347 U.S. 969, 74 S.Ct. 780, 98 L.Ed. 1110 (1954)), justified the jury in finding that (1) these checks (dated April 29 and May 1, 1964) had been stolen from the mail before receipt by the payees, (2) the checks were exchanged for cash by appellant on or about May 1, 1964, when they contained forged endorsements, (3) the endorsements of the joint payees (Fosters) were made by the same person, (4) appellant, while engaged in a poker game, accepted approximately 10% less than the face amount of the checks from an individual when he cashed them and he never made restitution to such individual after being informed by the latter that the checks were dishonored, and (5) he never made any attempt to locate the individuals who were in the poker game at the time he alleges the checks were placed in the “pot” which he won. Also, a qualified handwriting expert testified that “it is probable that” appellant forged the endorsements on both checks. Although appellant apparently concedes that such testimony is admissible, he contends that it is not sufficient to permit a jury to find guilt beyond a reasonable doubt on the forgery counts, and that the uttering counts are “so inter-related that reversal on the forgery conviction requires reversal on the uttering conviction.”
In view of appellant’s exclusive possession of the fruits of the crime shortly after its commission and the other evidence referred to above, such as the uncontradicted and positive testimony that the Foster check was forged, that appellant had accepted about 10% less than face value of these Government checks, and that he had never looked for the alleged poker player who had uttered the forged cheek in the card game, there was ample evidence to justify submission of the fourth to sixth counts to the jury. United States v. Chappell, 353 F.2d 83, 84 (4th Cir. 1965); United States v. Allard, 240 F.2d 840, 841 (3rd Cir. 1957); cert. den. sub nom. Fishman v. United States, 353 U.S. 939, 77 S.Ct. 814, 1 L.Ed.2d 761 (1957).
Although the evidence of guilt of forgery as to the Slane check, as charged in the third count, is not as strong as that on the other three, above-mentioned counts, the evidence of the facts summarized under 1, 2, 4 and 5 in the second paragraph of this opinion, when supplemented by the expert’s testimony that it is probable that appellant forged the endorsement on this check, is sufficient to support the verdict of guilty on this count. As stated in United States v. Allard, supra, 240 F.2d at 841, “ * * * all the pieces of evidence against the defendant, taken together, make a strong enough case to let a jury find him guilty beyond a reasonable doubt.”
The District Court judgment, commitment and order of probation dated January 20, 1967, will be affirmed.
. Admissibility under F.R.Crim.P. 26 is governed by “the principles of common law.” The common law makes no distinction as to admissibility of qualified expert opinion on handwriting in criminal, as opposed to civil, cases. 7 Wig-more, Evidence, § 1991, p. 177 (3d Ed. 1940). In addition, the opinion of a handwriting expert, once admitted, can be used for the same purposes and to the same effect as the opinion of other experts, see, e. g., United States v. Acosta, 369 F.2d 41, 42 (4th Cir. 1966), cert. den. 386 U.S. 921, 87 S.Ct. 886, 17 L.Ed.2d 792 (1967), and is not inadmissible under the Opinion Rule or otherwise because it expresses a probability, e. g., 7 Wigmore, Evidence, § 1976 (3d Ed. 1940); Curtis v. A. Garcia y Cia, 272 F.2d 235, 242 (3rd Cir. 1959); Bearman v. Prudential Ins. Co. of America, 186 F.2d 662, 665 (10th Cir. 1951); Francis v. Southern Pac. Co., 162 F.2d 813, 817-18 (10th Cir. 1947), aff’d on other grounds, 333 U.S. 445, 68 S.Ct. 611, 92 L.Ed. 798 (1948). Any reservations in the expressed opinion, as with shortcomings in an expert’s qualifications, go to the weight of the evidence and are a determination for the jury or fact-finder to make, e. g., Schaefer v. United States, 265 F.2d 750, 754 (8th Cir.), cert. den. 361 U.S. 844, 80 S.Ct. 97, 4 L.Ed.2d 82 (1959).
. Tlie rule is stated as follows in 1 Wig-more, Evidence, § 153, p. 600 (3d Ed. 1940):
“Wherever goods have been taken as a part of the criminal act, the fact of the subsequent possession is some indication that the possessor was the taker, and therefore the doer of the whole crime. * * * It is receivable to show the commission of * * * a forgery * * * or any other crime in which cither a chief or a subordinate result might be the possession of a material article.”
The rationale of this inference or presumption was stated as follows by Mr. Justice Story, sitting as Circuit Judge, in United States v. Britton, 24 Fed.Cas. 1239 at 1241, No. 14,650 (C.C.D.Mass. 1822);
“Acts of this sort are not usually done in the presence of witnesses; but in places of concealment, with a view to prevent detection; and it is rare, that the government can offer any evidence of the place of the forgery, except that which arises from the fact of the utterance of the forged instrument.”
In United States v. Russo, 123 F.2d 420, 422 (3rd Cir. 1941), this court quoted the following language from Wilson v. United States, 162 U.S. 613, 619, 16 S.Ct. 895, 40 L.Ed. 1090 (1896), to support an inference of guilty knowledge from “actual and exclusive possession” of the fruits of crime:
“ ‘Possession of the fruits of crime, recently after its commission, justifies the inference that the possession is guilty possession, and, though only prima facie evidence of guilt, may be of controlling weight unless explained by the circumstances or accounted for in some way consistent with innocence.’ ”
. In counterfeiting cases, the federal courts have consistently held that, where exclusive possession of the counterfeit currency is supplemented by circumstantial evidence of guilt at the time of the crime, there is sufficient evidence to justify a finding of the required guilty knowledge. See United States v. Damiano, 290 F.2d 817 (3rd Cir. 1961); United States v. Forzano, 190 F.2d 687, 688-689 (2nd Cir. 1951); United States v. Jonikas, 187 F.2d 240, 242 (7th Cir. 1951).
. Counts I and II were not submitted to the jury and were officially dismissed in the judgment, commitment and order of probation dated January 20, 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: | 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 case is before us on petition for review and cross-petition for enforcement of an order of the National Labor Relations Board. The decision of the Board is reported at 231 NLRB No. 154.
The Schlabach Coal Company is a sole proprietorship which operated several small coal mines in the vicinity of Baltic and Cambridge, Ohio. The Board found that the company tired to avert the unionization of its employees by the United Mine Workers Union by fostering a rival union, the Christian Labor Association, in a Board-supervised election.
Specifically, the Board found that the company violated the act by assisting the Christian Labor Association, by threatening to go out of business if the United Mine Workers rather than the Christian Labor Association won the election, and by threatening to discharge United Mine Workers Union supporters. In addition, the Board found that the company violated the act by firing employee Larry Mills because of his activities on behalf of the United Mine Workers.
The record overwhelmingly supports the Board’s findings. Company supervisors and foremen made no secret of their preference for the Christian Labor Association. They openly stated that Mr. Schlabach would shut down if the United Mine Workers won. Further, there is substantial evidence that the supervisors and foremen threatened to fire anyone who voted for or supported the United Mine Workers and carried out that threat by firing Larry Mills.
The company asserts that the shutdown statements were merely truthful responses to employee questions. This claim is precluded by NLRB v. Gissel Packing Co., 395 U.S. 575, 618-19, 89 S.Ct. 1918, 23 L.Ed.2d 547 (1969). The company also claims that Mr. Mills was fired for a number of valid reasons. Suffice it to say that the record supports the Board’s conclusion that the reasons given were pretextual.
The Board’s order is 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: | 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.
SOBELOFF, Chief Judge.
The two patents here in suit relate to a device used in effecting a tap-off of high frequency signals from a coaxial transmission line. Its primary use is in supplying the necessary impulse to an individual television set by connecting an auxiliary cable to the main line. The device, commercially known as the Fastee, is covered by U.S. Patent Nos. 2,694,-182 and 2,694,183. The application for the first, called “Impedance-Matching Tap-Off Coupler for Wave Transmission Lines,” was filed on February 20, 1953, and for the second, an improvement patent, called “Tap-Off Coupler with Fixed Attenuation for Coaxial Lines,” on September 29, 1953. Both issued on November 9, 1954.
Entrón of Maryland, Inc., assignee of the patents, appeals from the District Court’s determinations of invalidity for lack of invention and non-infringement. D.C.D.Md.1960, 186 F.Supp. 483.
The coaxial cables with which we are here concerned consist of a central conductor surrounded by a tough insulating material called a dielectric, and surrounding this is a cylindrical conductor, usually a copper braid, which in turn is covered by an outer insulation. They are particularly adaptable to modern use in the transmission of high frequency, multiple-band television signals. With the advent of community television antenna systems, around 1950, the need arose for a device to connect a branch cable to a main transmission line. It was necessary to connect the outer conductor of the main cable with the outer conductor of the branch line and to connect the inner conductors of the two cables 'without shorting. Also, as the connection might be made outdoors, any device, to be satisfactory, had to be quickly installable and easily waterproofed.
The plaintiff’s patent claims describe two components. There is a metallic clamping means to hold the transmission line, which has two short pins to pierce the outer insulation of the cable and make contact with the tubular outer braid. There is also a threaded aperture in the clamp into which is screwed the second component, having an insulated pin with an uninsulated point and a threaded metallic outer shell. The pin is forced into the cable to malee contact with the solid inner conductor by engaging and screwing the threaded outer shell of the second component into the threaded aperture of the clamp. This is an application of the so-called “screw-jack” principle. The pin is rigidly constructed and serves as the terminal member of the tap-off’s inner conductor and has attached thereto an impedance element. The outer shell, and the pin and impedance element are separated but rigidly joined by a mechanically strong dielectric. The rearward extension of the outer shell, dielectric, and inner conductor is constructed to form a connector for the branch line.
Prior Art
The defendant argues that the plaintiff’s patent is but an obvious combination of five parts, each of which is old in the art. To this end it introduced at the trial (1) patents showing an insulated pin with an uninsulated point, (2) patents showing either attachment or piercing by the screw-jack principle, (3) patents showing an integrally connected impedance element, (4) patents showing .an internally included dielectric and (5) patents showing a metallic outer shell.
The prior art primarily relied on by the defendant to overcome the presumption of the patents’ validity is comprised of the 1401 and the Holt taps, in prior use, and the following patents: Kamen, 2,615,948, filed November 3, 1949; Brady, 2,677,108, filed March 22, 1950; Bennett, 2,798,204, filed June 30, 1951; Eriksen, 2,552,414, filed June 8, 1948; Weissmann, 1,136,384, filed March 18, 1914; Boothby, 2,598,671, filed October 16, 1945; Hall, 1,067,024, filed October 19, 1912; More, 2,758,280, filed May 29, 1952; and Cork, 2,490,622, filed May 15, 1943.
The 1401, a coupler manufactured by the defendant in 1950, was intended for use on the % inch RG/59 cable, then predominant. To install the 1401 the transmission cable had to be severed and the device affixed to the loose ends. Internally the 1401 had a lead for the inner conductor of the transmission cable, intersected by a branch lead. The device had an attached impedance element and its internal parts were encased in a small “T” shaped metal container.
The Holt tap, marketed in 1951, could be used on the larger % inch RG/11 cable, then coming into commercial use. It did not require severing of the transmission line. With this device the cable was punched by a screw vise through to the solid inner conductor of the cable and an insulated pin with an uninsulated point inserted in the cavity. The pin served as the terminal member of the branch lead and had an attached impedance element. The pin and impedance were held in place by a “T” shaped metal container with the top of the “T” comprising a split flange sliding lock to hold the transmission line.
The Kamen patent, a “Coupler for Wave Transmission Lines,” discloses a clamp, to hold the transmission line, having three threaded apertures. After appropriate coring, an insulated probe, the terminal member of the tap-off’s inner conductor coupler, is screwed into one of the apertures to make electrical contact with the inner conductor of the cable. This probe has an associated impedance element. A second proble contacts the cable’s outer braid; the third makes no conductive contact with the transmission cable, but serves as a connector of the outer braid of the branch line with the clamp.
Brady, also a coaxial coupler, is quite similar to Kamen. Although the defendant contends that Brady teaches partial piercing of the main line, the patent discloses only coring to within a few thousandths of an inch of the inner conductor of the cable and insertion of an insulated probe. Conductive contact between the probe and the inner conductor of the cable is accomplished by pressure of a spring on the probe, which causes the remaining layer of dielectric to “flow” from the point of the probe. Brady uses this method so that only slight electrical discontinuity will occur at the connection point.
Bennett, a “Branch Line Connector,” teaches, as described by the District Court, “a clamping device for reception of the main coaxial cable, which when screwed into place would cause metallic points to be driven into contact with the outer conductor, and would force another pin ‘through the clamped cable outer conductor and inner dielectric between inner and outer conductors’ to ‘the point where the protruding pin point just makes firm contact with the main cable inner conductor.’ A dielectric protrusion surrounding the pin shields it from contact with the main cable outer conductor. * * * Bennett does not have a conductive shell around the parts above the piercing contact pin, and hence the tap-off unit is not concentric. The whole unit is used in a terminal box, intended to eliminate radiation.”
Eriksen teaches a device to attach the end of a coaxial cable to a junction box. The device is in two parts. One slips on to the end of the cable and, by wedging, separates the outer braid from the dielectric and inner conductor. The second part is then screwed into the first. The second has an inner conductor which contacts the inner conductor of the cable. Both parts have a metallic outer shell; the second also has a mechanically strong dielectric which separates and rigidly joins the threaded outer shell and inner conductor. In the engaged position the device maintains substantial coaxial configuration.
Weissmann, a “Tubular Conductor for Incandescent Electric Lamps,” discloses, in the language of the District Court, “an outer tubular conductor insulated from an inner conductor which is ‘preferably * * * a tube concentric with ■the outer tubular conductor.’ Ordinary electric bulbs, with an extension or contact pin, in the base, are screwed into the outer conductor, the metal socket making contact with the outer conductor and the contact pin with the inner conductor. In one example, the contact pin is pointed, and as the light is screwed into the outer conductor, this point is forced through an insulating sheath surrounding the inner conductor to make contact therewith.”
Boothby is a “frequency distinguishing device having low insertion loss.” Again, borrowing the District Court’s language, Boothby “shows a coaxial tap in which the probe engages the inner conductor of the coaxial cable after the dielectric has been removed to expose the central conductor. In Pig. 7 the probe is supported by a dielectric insert. The effect is exactly the same as if the dielectric had been cored, instead of being removed and replaced by a cored insert.” Additionally, we note that attachment of the probe and dielectric insert to the cable is maintained by the screw-jack principle. There is no piercing, however.
Hall shows “socketless contact-making lamps provided with contact-making points of varying lengths, one to contact the upper conductor, and the other the lower conductor, of a pair of metal circuit producing elements, insulated from each other. * * * In one example, * * [t]he short uninsulated pin contacts the upper metal circuit producing element. The longer pin is, except for the piercing point, surrounded by insulating material.”
More uses “the screw-jack principle to force the piercing pins of a branch connector into flat twin lines of a television transmission line.” However, we note that piercing, which is slight, is effected, not in the manner of the plaintiff’s long piercing pin, but rather by mashing, similar to the manner in which the short pins on plaintiff’s clamp are forced into the cable when the clamp is bolted on.
Cork is a slot type connector for specially constructed coaxial cables. The device shows a condensor type impedanee element and an outer shell separated but joined to an inner conductor by a dielectric.
As the above discussion shows, every element of the plaintiff’s patent can be found in the prior art, but no single reference completely anticipates it.
Validity
The asserted invalidity of plaintiff’s combination patent depends upon whether it was obvious to one possessing ordinary skill in the art to piece together the combination in the same way as plaintiff’s assignors. Neither Congress nor the courts have formulated a more precise test. See O.M.I. Corporation of America v. Kelsh Instrument Co., 4 Cir., 1960, 279 F.2d 579, 584.
The defendant argues that he has met his burden, because all the elements of plaintiff’s combination are old, the various elements of the combination work in the same way that they always had before, i. e., that they take on no “new functions” in the combination, and “the testimony of all the experts shows a lack of invention.”
Although it is true that every element of the combination was old, and that Edlen and Diambra, the patentees, were not the first to design a coaxial tap-off device, the combination patent introduced a new way of effecting a high frequency tap and advanced the art by its disclosures. See Loom Co. v. Higgins, 1881, 105 U.S. 580, 591, 26 L.Ed. 1177; Black & Decker Mfg. Co. v. Baltimore Truck Tire Service Corp., 4 Cir., 1930, 40 F.2d 910, 912; Otto v. Koppers Co., 4 Cir., 1957, 246 F.2d 789, 800; Reiner v. I. Leon Co., 2 Cir., 1960, 285 F.2d 501, 503. The plaintiff’s device can be easily and quickly installed without special tools or severing the transmission line. It effects a coupling of cables with a minimum amount of radiation and reflection losses, and it is relatively inexpensive to manufacture. The District Court, in recognition of these qualities, characterized the plaintiff’s device as “compact, efficient and satisfactory,” 186 F.Supp. at page 485, and as “clever and useful.” Id., at page 499.
As to defendant’s argument that the patent is invalid for want of “new functions,” the District Court found as a fact that each element of plaintiff’s combination “performs its ordinary and accustomed function in the way in which it always previously had done; * 186 F.Supp. at page 499. The testimony relied on by the District Court, however, makes clear that this finding means only that plaintiff’s conductors conduct, that plaintiff’s insulators insulate, and that plaintiff’s impedance element impedes the flow of signal. Manifestly, this is not the standard for determining whether an element of a combination exhibits a “new function.” The inquiry should more appropriately be directed to whether the elements of the combination perform or produce a new, different or additional function or operation, electrical or mechanical, in the combination than that theretofore performed or produced by them. See Lincoln Engineering Co. of Illinois v. Stewart-Warner Corp., 1938, 303 U.S. 545, 549, 58 S.Ct. 662, 82 L.Ed. 1008; Great Atlantic & Pacific Tea Co. v. Supermarket Equipment Corp., 1950, 340 U.S. 147, 151, 71 S.Ct. 127, 95 L.Ed. 162. The outer shell of plaintiff’s second component does three things: it effects a conductive connection between the outer conductor of the main and the outer conductor of the branch lines, it prevents external radiation by dissipating the escaping signal along its surface, and it is shaped so that the application of a wrench to it will supply the piercing force to the insulated pin. Although the Holt tap shows the first two functions, Holt’s outer shell is not used to obtain a mechanical advantage. In fact, no prior reference shows an outer shell with such function. Likewise, plaintiff’s dielectric is used to transmit the piercing force, and this function cannot be found in the prior art. Consequently, the combination patent is not invalid for failure of its elements to demonstrate a “new function.”
On the issue of obviousness, Judge Learned Hand has, perhaps, given the most articulate judicial expression:
“The test laid down is indeed misty enough. It directs us to surmise what was the range of ingenuity of a person ‘having ordinary skill’ in an ‘art’ with which we are totally unfamiliar; and we do not see how such a standard can be applied at all except by recourse to the earlier work in the art, and to the general history of the means available at the time. To judge on our own that this or that new assemblage of old factors was, or was not, ‘obvious’ is to substitute our own ignorance for the acquaintance with the subject of those who were familiar with it. There are indeed some sign posts: e. g. how long did the need exist; how many tried to find the way; how long did the surrounding and accessory arts disclose the means; how immediately was the invention recognized as an answer by those who used the new variant?” Reiner v. I. Leon Co., 2 Cir., 1960, 285 F.2d 501, 503, 504.
These general principles have, for many years, guided the decisions of this circuit.
In Otto v. Koppers Co., 4 Cir., 1957, 246 F.2d 789 our court reversed a finding of invalidity where skilled engineers in the art had failed to overcome the problems solved by the patent, and the invention had been adopted by the art. Also, the invention had enjoyed commercial success. Our decisions in Manville Boiler Co. v. Columbia Boiler Co. of Pottstown, 4 Cir., 1959, 269 F.2d 600, 604 and Honolulu Oil Corp. v. Shelby Poultry Co., 4 Cir., 1961, 293 F.2d 127 are to the same effect. Compare O. M. I. Corp. of America v. Kelsh Instrument Co., 4 Cir., 1960, 279 F.2d 579, 584; Brown v. Brock, 4 Cir., 1957, 240 F.2d 723, 727; S. H. Kress & Co. v. Aghnides, 4 Cir., 1957, 246 F.2d 718, 723.
In the instant case the unobviousness of the plaintiff’s combination is strongly evidenced by the failure of the contemporary workers, Kamen, Brady, Bennett, Holt and the defendant, to perceive the advantages of using the screw-jack and insulated piercing pin in direct combination, to pierce a coaxial cable. Although Weissmann saw the utility of a similar combination in 1914 in an accessory art, there is no indication that any one before plaintiff’s assignors had tried to adapt the teachings of the Weissmann patent to effect a high frequency tap. In fact the evidence shows that government scientists during World War II searched but could not find a simple and inexpensive means to tap radar and radio coaxial transmission cables. It is of great significance that the patentees succeeded where learned scientists had failed. Also indicating unobviousness is the evidence that almost every manufacturer, including the defendant, of tap-off devices now markets a tap embodying the screw-jack and piercing pin idea. Lastly, we take note that the plaintiff’s device has enjoyed commercial success, a factor which is entitled to weight in a close case.
With the evidence in this state, we are compelled to conclude that the District Court erred in finding the patents invalid.
However, the broad construction of its patent claims urged by the plaintiff with respect to its piercing unit cannot be allowed. It contends that the claim of an “insulated pin having an uninsulated point” includes a bare pin separated from the outer braid of the cable by air. We do not think the patent claims can be so interpreted. The phrase “insulated pin having an uninsulated point” obviously imports a difference between the surface of the pin at the point and its surface along the sides, a difference not found on a bare pin.
In summary, the plaintiff’s patent is valid, but, as to the piercing unit, the patent monopoly covers only an insulated pin with an uninsulated point distinct from, though attached to, a force-applying threaded outer shell, or something equivalent thereto.
Infringement
The infringement charge is directed against the defendant’s tap-off device, called 1451, first marketed about two years after the Fastee came on the market. It duplicates the Fastee in many respects: it has a clamp to hold the cable, with two short pins to pierce the outer insulation of the cable and make contact with the outer braid and with a threaded aperture into which is screwed a second component. This second component has an impedance element attached to its inner conductor and an outer threaded shell possessing both mechanical and electrical qualities. The inner and outer parts of the second component are rigidly separated (although not completely attached, since the 1451’s impedance element is contained in a cavity provided for it in the dielectric) by a mechanically strong dielectric. The second component has a pin which is the terminal member of the tap-off’s inner conductor and which, after the cable is cored by an appropriate tool through the outer braid of the cable, is forced the rest of the way into the cable by engaging and screwing the threads of the outer shell into the threads of the clamp aperture. Lastly, the outer shell, dielectric and inner conductor extend rearward to form a connector for the branch line.
There are, however, two differences between the plaintiff’s and the defendant’s devices: plaintiff insulates its piercing pin from the outer braid by covering it with insulation at the contact area, while the defendant insulates its pin from the outer braid by cutting the braid away, i. e., uses air. There is evidence that for a time the defendant used a spaghetti tube around its piercing pin which was squashed flat when the pin was screwed in, but this spaghetti cannot be considered insulation since, as pointed out by the District Court, the spaghetti is just as likely to bring the outer braid into contact with the pin as push it away from the pin. 186 F.Supp. at page 506. The second difference is closely related to the first. The plaintiff’s insulated pin permits piercing the cable without pretreatment. With defendant’s device the cable must be partially cored to effect piercing to the inner conductor of the cable.
To establish infringement of its combination patent plaintiff must show that every essential element of the combination, or its equivalent, is embodied in the antagonist device. See Kay Patents Corp. v. Martin Supply Co., 4 Cir., 1953, 202 F.2d 47, 51; Sears, Roebuck & Co. v. Minnesota Mining & Mfg. Co., 4 Cir., 1957, 243 F.2d 136, 140; Johnson & Johnson v. Carolina Lee Knitting Co., 4 Cir., 1958, 258 F.2d 593, 597. This requirement is particularly applicable to the instant case since every element of the plaintiff’s combination is shown in a prior patent, and it follows that if any essential element of the combination or its equivalent is omitted by the defendant, infringement is avoided. Compare Aro Mfg. Co. v. Convertible Top Replacement Co., 1961, 365 U.S. 336, 81 S.Ct. 599, 5 L.Ed.2d 592.
Equivalence is a question of fact. Its resolution requires consideration of “the purpose for which an ingredient is used in a patent, the qualities it has when combined with the other ingredients, and the function which it is intended to perform. An important factor is whether persons reasonably skilled in the art would have known of the interchangeability of an ingredient not contained in the patent with one that was.” Graver Tank & Mfg. Co. v. Linde Air Products Co., 1950, 339 U.S. 605, 609, 70 S.Ct. 854, 857, 94 L.Ed 1097. “The theory on which it is founded is that ‘if two devices do the same work in substantially the same way, and accomplish substantially the same result, they are the same, * * *.’ ” Id., 339 U.S. at page 608, 70 S.Ct. at page 856. Applying this reasoning to the instant facts we agree with the District Court’s finding that there was no equivalence. The obvious purpose for which the plaintiff insulates its pin is to permit piercing of the cable without pretreatment. This is one of the significant improvements of the prior art by the plaintiff’s device. The defendant pierces the cable in a substantially different way, i. e., partially cores the line. It is true that coring instead of insulating a probe to prevent shorting was a well known alternative at the time the defendant manufactured its device, but, since they are not “substantially” the same way, rather different ways, to pierce the cable, they are not equivalent.
The plaintiff further argues that the defendant had pirated the “heart” of its patent, i. e., the screw-jack and piercing pin idea. We can only answer, “that there is no legally recognizable or protected ‘essential’ element, ‘gist’ or ‘heart’ of the invention in a combination patent.” Aro Mfg. Co. v. Convertible Top Replacement Co., 1961, 365 U.S. 336, 345, 81 S.Ct. 599, 604, 5 L.Ed.2d 592.
Because of the difference between the piercing methods of plaintiff’s and defendant’s devices, we think the District Court’s finding of non-infringement is correct.
In conclusion, while we hold the patents valid, the defendant has not infringed, and the judgment in its favor is affirmed.
Affirmed in part and reversed in part.
. The pertinent patent claims are as follows:
2,694,182: “We claim:
“(1) Apparatus for coupling a branch coaxial line to an insulated coaxial transmission cable having a central inner conductor and a coaxial outer conductor spaced and insulated therefrom, comprising conductive clamping means having grooved means for firmly engaging a coaxial cable, and short piercing means for penetrating the outer insulating jacket of a cable held in said groove means, said clamping means having a threaded aperture axially intersecting said groove means, and a piercing terminal member having a threaded force-applying hollow shell member threadedly mounted in said aperture and a central conducting element mounted in said aperture, said element comprising a connector portion for engagement with the central conductor of a branch circuit coaxial cable and a piercing portion of sufficient length to engage the central conductor of a coaxial transmission line held in said groove, when said shell is threaded into said aperture, said two portions being aligned with their adjacent ends separated, and an impedance element in series with said two portions and included between and in firm mechanical force-transmitting engagement with said ends, said piercing portion being insulated from conductive contact with the coaxial outer conductor of an engaged transmission cable by a tough insulating layer surrounding and held by said piercing portion, and having conductively exposed piercing point, a rigid, mechanically strong insulating member between said connector portion and said force applying shell member in engagement with opposed surfaces of said connector portion and said shell member for transmitting a piercing force from said shell member to said piercing portion through said impedance element as said shell is threaded into said aperture.
“(2) The invention according to claim (1), and stop means on said piercing terminal member to limit the forward travel of said piercing member as said shell is threaded into aperture to position the point of said piercing member for conductive engagement with the center conductor of an engaged cable.
“(3) * * * the inner conductor being rigidly held and supported by at least a portion of the outer shell, the rearwardly extending end of said inner conductor constituting .the central conductor and rearwardly extending end of the hollow shell constituting the outer coaxial conductor of a coaxial terminal for attachment of a branch coaxial conductor, and a substantial circuit balancing impedance element included between and in alignment with the ends of said inner conductor and within said outer conductor, the terminals of said impedance element being coextensive with said inner- conductor, said insulation between said inner conductor and outer shell comprising a mechanically rigid insulating member in engagement with opposed surfaces of said conductors for transmitting a piercing force from said outer shell to said inner conductor as said outer shell is brought into full threaded engagement with said clamping means.”
With respect to the claims in No. 2,-694,183 the only one material is No. 5.
“(5) * * * said capacitor comprising two parallel spaced conducting plate members, a block of high-dielectric insulating material molded about said plate members and completely filling the space between them, one of said plate members being integrally connected to said piercing conductor, * * *.”■
. 35 U.S.O.A. § 282 provides in part:
“A patent shall be presumed valid. The burden of establishing invalidity of a patent shall rest on a party asserting it. sH # Hs ”
. As is not uncommon in patent litigation, defendant’s, witnesses testified that the device in question was but an obvious combination of old elements, while the plaintiff’s experts were equally certain of the contrary. Pertinent here is the observation of Justice McKenna in Diamond Rubber Co. v. Consolidated Rubber Tire Co., 1911, 220 Ü.S. 428, 435, 31 S.Ct. 444, 447, 55 L.Ed. 527:
“Knowledge after the event is always easy, and problems once solved present no difficulties, indeed, may be represented as never having had any, and expert witnesses may be brought forward to show that the new thing which seemed to have eluded the search of the world was always ready at hand and easy to be seen by a merely skillful attention. But the law has other tests of the invention than subtle conjectures of what might have been seen and yet was not.”
. We are fully advertent to the plaintiffs objections at the trial to the admission of testimony concerning 1401 and Holt, prior use devices, and the application for the Bennett patent, for lack of proper notice. The records show, however, as to 1401 and Holt that there was actual knowledge and that the District Judge offered the plaintiff adequate time and opportunity, if requested, to check the testimony and present countervailing testimony, if surprise were claimed, but plaintiff did not come forward with any such request. As to Bennett, notice of reliance on the patent was given, which sufficiently referred plaintiff to the applications. Plaintiff availed itself of the opportunity given by the court to submit objections and was heard thereon. We consider that the court thus fully complied with 35 U.S.C.A. § 282 by making appropriate terms governing admission of the challenged testimony. See Thermo King Corp. v. White’s Trucking Service, 5 Cir., 1961, 292 F.2d 668.
These objections to the testimony need not be further considered here in light of our conclusion that the patents in suit, properly limited, are valid.
. The plaintiff’s argument about claims differentiation is adequately dealt with by the District Court. See 186 F.Supp. at pages 503-505.
. Edlen in describing one of the desirable features of his invention said, “Getting down to fine points, I would think that very probably the device which Diambra and I invented had as one of its desirable features, the fact that no initial preparation of any sort had to be made to the cable.”
. The District Judge also found “that defendant’s drilling of the outer conductor, while an essential concomitant of tis uninsulated piercing pin, was bona fide introdueed in an effort to eliminate or materially reduce shunt capacitance believed to be associated with the piercing of the outer conductor by an insulated piercing pin (as distinguished from the coring of the outer conductor). The court further finds that the belief by defendant of the beneficial effects of coring the outer conductor was in good faith and was the reason for the adoption by defendant of a tap-off requiring coring; and that this was not simply a trick or subterfuge to avoid formal infringement.”
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
CLARK, Circuit Judge:
This is an admiralty case. It comes to us after trial to the court without a jury. At the conclusion of the trial the court read into the record its informal findings of fact and conclusions of law, from which the following summary is taken.
I
A. SUMMARY OF FACTS
On September 28, 1971, plaintiff Hydrospace Challenger, Inc., (HCI), brought its research vessel, the DANIEL HARRIS, III, into the shipyard operated by defendant Tracor/MAS, Inc., for repairs and refitting. A few days thereafter, it was hauled on the syncrolift dry dock and its crew sent ashore. On Saturday, October 1, 1971, at the request of Tracor/MAS and with the consent of the HARRIS’ captain, the HARRIS was put back in the water after a cursory joint inspection by a shipyard employee and a crew member. About one and one-half hours later, the captain and three or four crew members, who had returned for the refloating, left the HARRIS again. The vessel was locked and the key turned over to the defendant The William J. Burns Detective Agency. At this point, shore power was being supplied to the HARRIS.
On Monday morning, October 4, 1971, the HARRIS was discovered to be considerably down at the stern and listing to starboard. It was established that the cause of the list was water leakage through valves that had been opened and left unblanked or uncapped by the shipyard in the course of performing work on the HARRIS while the vessel was dry-docked. It was further established that at some time during the weekend, the shore power to the HARRIS had been cut off, preventing the operation of an electric bilge control warning system. Considerable water damage was done to the engine room and fittings of the HARRIS by the flooding.
Subsequently, HCI ordered Tracor/MAS to pump out the HARRIS and to make partial repairs. Tracor/MAS complied, at an expense of 5,734.32 dollars. Additional parts and labor were required to complete the repairs. HCI purchased the parts and performed the labor itself, at an alleged expense of 11,-161.66 dollars.
B. THE PLEADINGS
HCI sued Tracor/MAS and Burns jointly for the 11,161.66 dollars. It alléged that Tracor/MAS breached its contract by failing to perform the repair work for which the HARRIS was originally drydocked in accordance with good marine practice and that the shipyard’s conduct breached implied warranties of workmanlike performance. The complaint charged Burns with negligence in the performance of a duty Burns owed to HCI by virtue of Burns’ contract to provide guard services to Tracor/MAS’ shipyard. Tracor/MAS counterclaimed for the 5,734.32 dollar preliminary repair expense it incurred for HCI’s account. HCI admitted that the work had been performed and that it had received bills and refused payment. It denied legal liability for the counterclaimed sum on the ground that Tracor/MAS’ own breaches of contract had necessitated the repairs. Tracor/MAS filed a cross-claim against its codefendant, Burns, alleging that the detective agency had breached its contract with Tracor/MAS by failing to provide adequate guard services and that any and all damages the court might find were owed to HCI by Tracor/MAS were the natural and direct result of this breach. Burns denied the allegation and answered with a cross-claim of its own against Tracor/MAS. Burns’ cross-claim alleged that watching the water lines of ships in the yard was not covered by any express term in the contract between Tracor/MAS and Burns. Therefore Burns claimed such work was covered by Paragraph 6 of that agreement which provided that whenever additional services not specified in the Agreement or Burns’ Guard Manual were desired, the purchaser would assume responsibility for any consequences resulting from failure to perform them adequately.
C. THE TRIAL AND ITS RESULTS
The case went to trial February 19, 1974. After hearing the evidence, the district court announced its findings of fact and conclusions of law from the bench. After finding the facts we have set out above, the district judge continued as follows. (All emphasis has been added.)
“The Court further finds that the cause for the vessel’s settling was the fact that valves were open in principally the starboard stern tube flushing valve and both port and starboard sea chest valves, so that the water crossed over in the salt water line and came through the piping which the shipyard had left unblanked or uncapped.
“The Court finds that it was the responsibility of the shipyard under the terms of the contract, under Item 13 of the contract, and under the further terms of good marine practices be followed, the shipyard should have plugged the piping and not left it uncapped or unblanked.
“Now, what happens at that point is a little murky and peculiar. The log of the security guards employed by Burns is just mystifying. [The reports of the night guards, one of whom was 75 years old, were unsatisfactory.] I am puzzled that the guards who were there during daylight were not called as witnesses. I will live with my lack of knowledge on that score.
“There was one of those guards who kept [the log] fairly complete, certainly by comparison, [to the guard] who had the 4:00 to midnight watch both Saturday and Sunday. I am unable to draw anything conclusive out of that. Never once does, he mention DANIEL HARRIS. It is almost as if the HARRIS wasn’t there during his watch. And it is rather easy to speculate that there were no lights there that he could check. He mentioned everything else that happened: about the tide going out; barge that was caught under a dock. I won’t speculate on that basis.
“The Court does further find that there was no shore power — for whatever reason there was no shore power— aboard this vessel by Monday morning and that the electric bilge warning horn did not go off because of that. .
“The Court finds that the vessel is entitled to recover from the defendant Tracor/MAS and the defendant Burns the following sum:
“Parts for the clutches in the amount of $6,328.45; cleanup labor of $880.52.
“The Court will award half of the labor expense on repairing the starboard and port clutches which amounts to total damages in favor of the plaintiff in the amount of $9,185.29.
“The Court finds that the percentage of negligence proportioned amongst the parties is three-fourths to the shipyard, one-fourth to the Burns Detective Agency. The Court finds that the guards, although they made some effort to notify personnel, either were not checking in the watches that were not testified about or made inadequate efforts to call when they did recognize the condition.
“The major responsibility belongs on the part of the shipyard. It is their negligence and failure to live up to the contract that created the possibility for a loss, and the major burden of the loss should remain upon them.
“The Court rules in favor of the plaintiff on the counterclaim of Tracor/MAS.
“That leaves what?
[COUNSEL FOR TRACOR/MAS AS TO CROSSCLAIM]: Crossclaim of Burns against Tracor/MAS based on the security service’s agreement.
“THE COURT: I am going to leave Tracor/MAS and Burns where you are and — each claimant — rule against the cross-claim.
[COUNSEL FOR TRACOR/MAS]: I am sorry. Clarify that, Your Honor.
“THE COURT: Pardon?
[COUNSEL FOR TRACOR/MAS]: I don’t understand who you meant to leave—
“THE COURT: I have apportioned it so that the judgment of $9,185.29 shall be against both defendants, and I think they bear responsibility in a ratio of three-fourths to one-fourth; three-fourths against Tracor and one-fourth against Burns.
“I am going to ask Mr. Hayden to prepare a judgment and incorporate those findings and those conclusions of law.
[COUNSEL FOR TRACOR/MAS]: Would you also rule on the contract count by Tracor against Burns on the crossclaim?
“THE COURT: I rule against both crossclaims.
“Is it going to pose any problems, Mr. Hayden?”
[COUNSEL FOR HCI]: No, sir.
“THE COURT: I think those findings of fact and conclusions of law will be an adequate basis for any appeal. I won’t go ahead and enter any formal separate findings or conclusions.
“If anybody feels that they are not adequate you can make a motion to enter them.”
D. THE APPEAL
On this appeal, Tracor/MAS challenges: (i) the apportionment of damages, asserting that the proper result should have been a finding of joint and several liability on the part of both co-defendants; (ii) the denial of its counterclaim against HCI; and (iii) the denial of its cross-claim against Burns. In the alternative, Tracor/MAS alleges that Burns should be held liable for 25% of the total damages done to the HARRIS, including the 5,734.32 dollars repaired by Tracor/MAS before HCI took the ship out of the yard. Burns defends the apportionment and alternatively appeals the denial of its cross-claim against Tracor/MAS.
II
The Federal Rules of Civil Procedure provide that in cases tried to the court without a jury, the court “shall find the facts specially and state separately its conclusions of law thereon . . .” Rule 52(a), Fed.R.Civ.P. Of course, the law and the facts can never be entirely separated, and all the policies underlying Rule 52 may be advanced without time-consuming and frequently unnecessary attempts at perfect dissection and labeling of the elements of a case. See, e. g., Gulf King Shrimp Co. v. Wirtz, 407 F.2d 508, 516 (5th Cir. 1969). But, as the Supreme Court has said,
The well-recognized difficulty of distinguishing between law and fact clearly does not absolve district courts of their duty in hard and complex cases to make a studied effort toward definiteness. Statements conclusory in nature are to be eschewed in favor of statements of the preliminary and basic facts on which the District Court relied. . . . Otherwise, their findings are useless for appellate purposes.
Dalehite v. United States, 346 U.S. 15, 24 n. 8, 73 S.Ct. 956, 962, 97 L.Ed. 1427, 1434 (1953).
We have concluded that the findings of the district court do not provide a sufficiently definite predicate for proper appellate review. Many of the findings are couched in conclusory terms. Some were announced solely as ultimate findings without support which clearly reflected a choice between conflicting accounts of events or between alternate legal interpretations of those events. This court cannot be left to guess. The findings and conclusions we review must be expressed with sufficient particularity to allow us to determine rather than speculate that the law has been correctly applied. See Daniel v. Washington County Board of Education, 488 F.2d 82 (5th Cir. 1973); United States v. Northside Realty Associates, Inc., 474 F.2d 1164 (5th Cir. 1973); Lettsome v. United States, 434 F.2d 907 (5th Cir. 1970) (second remand).
For several reasons, we order remand in this case with more than the usual reluctance. First, the controversy is relatively limited, with the principal protagonists being the codefendants. Second, the parties themselves, despite the explicit invitation of the trial court to request more definite findings, declined to do so. Third, the district court displayed an understandable desire to bypass the welter of claims, counterclaims and cross-claims — couched in tort, contract, or both — and reach a just determination of “the heart of the matter” on the basis of the equities rather than formal distinctions. See generally Staring, Contribution and Division of Damages in Admiralty and Maritime Cases, 45 Calif.L.Rev. 305 (1957).
Unfortunately, the almost mundane damage and accounting issues which are raised by the facts here belie the legal complexity of the issues — some at the very leading edge of the law in this field of admiralty — which must be decided.
The court recognized that although the action by HCI against Tracor/MAS and the cross-claims filed by Tracor/MAS and Burns against each other were brought in contract, the determination of liability depended upon delictual conduct, i. e., substandard performance, whether in refloating the ship without capping or blanking its pipes or in providing guards who were too old or too poorly schooled in emergency procedures to perform their duties. Yet the court’s loose conjunction of the terms “negligence” and “breach of contract” in its final statement does not reveal whether the judgment for HCI was based upon negligence alone, actions which although tortious also constituted the breach of a contractual undertaking, or a rejection of the traditional analysis for a balancing-of-fault approach. At the outset of its discussion of Burns’ liability to HCI the district court clearly indicated an awareness that under HCI’s complaint, the only significance of Burns-Tracor/MAS’ contract was to create a duty of care running from Burns directly to HCI. However, in finally assessing Burns’ liability the court’s general statements about the “one-fourth negligence” of Burns do not disclose whether it accepted the HCI’s tort “duty” theory as the complaint stated, treated HCI as a third-party beneficiary of the Tracor/MAS contract, or rejected a contract-related approach altogether.
The court failed to explain why it ruled against Tracor/MAS on its counterclaim. For aught else that appears, the court assessed three-fourths of the fault of the sinking to Tracor/MAS and one-fourth to Burns. If this be so, it is puzzling why it did not assess Bums for any portion of the water damages represented by the 5,734.32 .dollars, repair item. The court also failed to explain why it allowed all of HCI’s claims for replacement parts and cleanup labor but only half the amount claimed for repair of the HARRIS’ port and starboard clutches.
Most basically, the opinion we are asked to review does not articulate any legal or factual basis for its 75-25 apportionment of fault and damages between these co-defendants. Then too, were Tracor/MAS and Burns adjudged to be joint tortfeasors or indemnitor and indemnitee? We are not told. Yet without an explanation of this predicate, we cannot determine whether the district court intended to apply some existing theory or create a new one.
The court gave no reason for denying the cross-claims. There are numerous possible explanations: (1) the duty created by the Burns-Tracor/MAS contract was insufficiently broad to cover the conduct alleged; (2) the duty created by the guard contract covered the conduct alleged but the contract would not be enforced because it would have the effect of indemnifying a party against its own negligence without a clearly specific provision for this undertaking; (3) the duty, the breach and the intent to indemnify were present, but the proof failed to establish a casual link between the breach and the damage to the HARRIS; (4) the duty, the breach, the intent to indemnify, and the causal link were present, but the conduct of the indemnitor, Tracor/MAS, prevented the performance of Burns’ duty; (5) the doctrine of avoidable consequences precluded recovery, wholly or in part.
Finally, the confusion multiplies when one notes that there was conflicting testimony as to whether the guards were suppose to check the waterlines of the ships in the yard and, if so, who assigned them. The district court did not clearly resolve these issues of fact. In the absence of such a resolution, Paragraph 6 of the guard service agreement cannot be construed. This is critical here because most of the interpretational possibilities listed above apply equally to the obligations Tracor/MAS claimed Burns assumed under the guard service agreement and the obligations Burns claimed Tracor/MAS assumed under the provisions of Paragraph 6.
Concededly, many of the determinations yet to be made are purely or primarily legal in character and could be made by this court in the course of its review if the crucial but unfound facts were implicit in the district court’s resolution of the case, see, e. g., Glassman Construction Co. v. United States ex rel. Clark-Fontana Paint Co., 421 F.2d 212 (4th Cir. 1970), or if the legal conclusions were simply the unstated obverse of a previous legal determination, see, e. g., Lockett v. Henderson, 484 F.2d 62 (5th Cir. 1973), cert. denied, 415 U.S. 933, 94 S.Ct. 1448, 39 L.Ed.2d 492 (1974). Those possibilities are not present in the case before us. Where, as here, multiple legal interpretations of undetermined or incompletely determined facts remain at the appellate stage, our review function cannot be performed. Our only recourse is to remand it for the necessary refinement. We do so without intimating our views on any of the issues adumbrated above.
Remanded with directions.
. The informal fact findings of the district court recite:
“[S]ort of a joint inspection was held by an employee of the ship and one of the crew members.” (Tr. 290; App. 29).
We adopt the formulation set out here as the only reasonable interpretation of the facts that would support the description of the inspection as “joint.”
. In its answers to Burns’ interrogatories, HCI itemized its claims as follows: “Miami Diesel Parts & Equipment, 3339 N.W. South River Drive, Miami, Florida, Fa wick Clutch, $6328.45; HCI, Miami, labor, $880.52; HCI, Miami, labor, repair Starboard Clutch, $1,544.00; HCI, Miami, labor, to repair, disassemble and repair the port clutch, $2408.69.”
. In Cooper Stevedoring Co. v. Fritz Kopke, Inc., 417 U.S. 106, 94 S.Ct. 2174, 40 L.Ed.2d 694 (1974), the Supreme Court declined to apply Halcyon Lines v. Haenn Ship Ceiling & Refitting Corp., 342 U.S. 282, 72 S.Ct. 277, 96 L.Ed. 318 (1952) to bar contribution in a non-collision maritime case where the statutory compensation scheme of the Longshoremen & Harbor Workers’ Act, 33 U.S.C. § 905, would not be impaired. The Court specifically noted that the procedural posture of the case prevented substantive treatment of the question of damage apportionment based on unequal fault or the relation of those issues to indemnity rules. 417 U.S. at 108 n.3, 109 n.4, 94 S.Ct. at 2176, 40 L.Ed.2d at 698-99.
. Bums explicitly makes this claim with regard to the language of Paragraph 6 of the guard services agreement.
. See, e. g., United States v. Seckinger, 397 U.S. 203, 211-12, 90 S.Ct. 880, 885, 25 L.Ed.2d 234, 233 (1970).
. See, e. g., Garner v. Cities Service Tankers Corp., 456 F.2d 476 (5th Cir. 1972).
. See, e. g., Waterman Steamship Corp. v. David, 353 F.2d 660 (5th Cir. 1965).
. See, e. g., Southport Transit Co. v. Avondale Marine Ways, Inc., 234 F.2d 947 (5th Cir. 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: | 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.
BINGHAM, Circuit Judge.
This is a libel of information filed in the District Court of Rhode Island to forfeit the gas screw yacht Eaglet, licensed December 23, 1929, as a pleasure vessel of the United States, to George Davidson, her sole owner. In the libel, among other things, it is alleged that the Eaglet was seized by the Coast Guard on the 1st day of June, 1930, on the navigable waters of the United States, to wit, on the east side of Kickemuit river, at or near its ¡junction with Mount Hope Bay, in said district, and within the admiralty and maritime jurisdiction of the court; that on June 4 the vessel was turned over to the collector of customs of the port of Providence in said district, who, before the filing of the libel, adopted the seizure and now holds said Eaglet in said district and within the admiralty and maritime jurisdiction of the court as forfeited for violation of section 4214 of the Revised Statutes, as amended, and section 4377 of the Revised Statutes.
The allegations of the first count of the libel are that before and at the time of said seizure (June 1, 1930, the Eaglet, being licensed and enrolled as a pleasure vessel as provided in section 4214, as amended (title 46, USCA § 103), was engaged in transporting merchandise for pay contrary to the provisions of said section, and that, by reason of the foregoing and the provisions of said section 4214 as amended, said Eaglet became liable to seizure and forfeiture.
In count 2 it is alleged that before and at the time of the seizure the Eaglet, being then and there licensed and enrolled as a pleasure vessel, was employed in a trade other than that for which she was licensed, in that she was employed in the trade of unlawfully transporting intoxicating liquor containing more than one-half óf 1 per cent, of alcohol fit for beverage purposes, and that, by reason of the foregoing and the provisions of section 4377 of the Revised Statutes (46 USCA § 325), the Eaglet became liable to seizure and forfeiture.
June 17,1930, George Davidson appeared and filed a claim as owner. In it he asked the court to release the vessel on bond, under section 938 of the Revised Statutes (title 28 USCA § 751), and supported his claim by an affidavit that he was the sole owner, and that, at the time of the seizure, no person was arrested in connection with the charge against the vessel. July 2,1930, an order was entered for the release of the vessel on bond, and on July 30, 1930, the appellant excepted to the order.
‘ August 4, 1930, the claimant filed an answer and exceptions, in which he admitted that the Eaglet was licensed and enrolled as a pleasure vessel of the United States: denied that she was seized on the navigable waters of the United States within the District by the Coast Guard; denied that before the filing of the libel the collector of customs had adopted the seizure, and that, at the time of the filing of the libel, held the Eaglet within the district and within the admiralty and maritime jurisdiction of the court.
As to the first ground of forfeiture, the claimant denied that before and at the time of the seizure the Eaglet was engaged in transporting merchandise for pay, and that she became liable to seizure and condemnation by reason of section 4214, and denied that all the allegations were true and within the civil, admiralty, and maritime jurisdiction of the court.
As to the second ground, the claimant denied that before and at the time of seizure the Eaglet was employed in a trade other than that for which she was licensed, that is to say, that, being licensed as a pleasure vessel, she was then and there employed in an illegal trade, to wit, the trade of transport-! ing intoxicating liquor, etc. ; denied that, by; virtue of the foregoing and the provisions of section 4377 of the Revised Statutes, she' became liable to seizure and forfeiture; and denied that all and singly the premises were true and within the civil, admiralty, and maritime jurisdiction of the court; and, as an exception, alleged that the vessel was not seized on the navigable waters of the United States and that the court was without jurisdiction in admiralty.
A hearing was had on the libel and answer. The claimant presented no evidence. The government’s evidence was that, at about five minutes of 4 on the morning of June 1, 1930, the Eaglet was observed running without lights into a slip at Pall river; that immediately thereafter trucks were observed on the dock beside the slip and men were seen unloading sacks from the vessel to one of the trucks; that the Coast Guard vessel C. G. 283, having her searchlights turned on, attempted to enter the slip, and, when twenty-five feet away fired one blank from her gun for the Eaglet to stand to; that the Eaglet got under way and collided with the Coast Guard 283 in leaving the slip; that, as she was leaving the slip, men on board the Eaglet were seen throwing sacks overboard into the slip; that the Eaglet was pursued into the Kiekemuit river in Rhode Island; that in the pursuit the Coast Guard 283 ran aground on a point of land; that the Eaglet rounded this point and after being out of sight of the 283 for fifteen minutes she was found beaehed in Rhode Island; that her crew had departed; and that the Coast Guard seized and took possession of the Eaglet at 5 a. m. Coast Guardsman Pressel testified that, when he first boarded the Eaglet in the morning, she was wholly in the water, and at 5:30 that morning, when the Coast Guard left her, she was afloat in the waters of Kiekemuit river; that, on the morning of the seizure, 243 saeks were taken from the bottom of the river at a point about 200 feet astern of the Eaglet; that, in the afternoon of the same day, Coast Guardsmen Beaudoin and Pressel returned to the Kiekemuit river and found the Eaglet with her bow on shore and the aft part of the vessel in the water. There was no testimony that any member of the Coast Guard had been on board the boat since they left her in the morning, when she was out in the stream, until they returned in the afternoon. No liquor was found on board the vessel. Two days following the seizure, Edgeeomb, one of the Coast Guard on C. G. 283, recovered seven saeks of liquor from the slip at the place where he had seen the crew of the Eaglet drop saeks overboard. He testified that none of the Coast Guard saw any of the saeks thrown from the Eaglet in Kiekemuit river which they found at a point about 200 feet from her stern. The deputy collector of customs, to whom the saeks were turned over, testified that the seven saeks recovered from the slip bore the brand “William Penn Whiskey,” and that the brand on these saeks corresponded with the brand on the 243 saeks recovered from the Kiekemuit river.
At the hearing one of the seven saeks was opened; none of the seven saeks had been previously opened. The bottles in this sack were marked “William Penn Whiskey.” None of the bottles had been opened, and the district attorney asked permission to open one so that the court might smell it, but was not permitted to do so. The deputy collector, called as a witness and having one of the bottles before him, was asked: “What is it? Do you know?” and answered: “That is William Penn Rye Whiskey.” Two bottles , of the. William Penn whisky were offered in evidence, but, on objection, were excluded, to which exception was taken. There was also testimony that all of the seven saeks were marked “William Penn Whiskey,” the same as the one that was opened.
At the close of the testimony the claimant moved to dismiss the libel on the ground that the court was without admiralty jurisdiction, claiming that the vessel was seized by the Coast Guard when she was boarded in the afternoon, at whieh time she was partially out of water. This motion was denied.
A further motion to dismiss was made “on the ground that there was no evidence to sustain the allegations of the libel (1) that the vessel was transporting merchandise for pay, and (2) was unlawfully engaged in transporting intoxicating liquor.” This motion was granted on the ground that “there was no evidence to sustain the allegations' of the libel, in that the liquor recovered from the slip could not be connected with the Eaglet.”
The final decree dismissing the libel was: “It is ordered, adjudged and decreed that the libel herein be and the same hereby is dismissed without costs, and that the bond given in accordance with order of this court in connection with the release of said vessel on bond, be discharged.” It is from this decree that the appeal is taken. The errors assigned and here relied on are that the court erred (1) in ordering the,vessel released on bond; and (2) in dismissing the libel.
The question of admiralty jurisdiction depends upon whether the seizure was made on land or on the navigable waters within the district of Rhode Island. The order of the District Court denying the motion to dismiss for want of admiralty jurisdiction includes a finding that the seizure was made on navigable waters within the District and was justified, if there was any evidence to support such finding. That there was such evidence cannot be questioned, for it appeared that, at the time the vessel was boarded and Seized on the morning of June 1, she was afloat in the navigable waters of Kickemuit river in the district of Rhode Island. How she came to be beached between the time of the seizure in the morning and when the Coast Guard returned in the afternoon, the evidence does not disclose. She may have been washed ashore by the tide. It does not appear that any one took her ashore. We are of the opinion and find that the seizure was made in the navigable waters of the United States within the district of Rhode Island.
The main question, so far as count 1 is concerned, is whether there was any evidence from which it could be found that before and at the time of the seizure the Eaglet was engaged in transporting merchandise for pay and in violation of section 4214, as amended; she having been licensed and enrolled as a pleasure vessel. This section, as amended, reads as follows:
“The Secretary of Commerce may cause yachts used and employed exclusively as pleasure vesssels “ * * to be licensed on terms which will authorize them to proceed from port to port of the United States and to foreign ports without entering or clearing at the customhouse; such license shall be m such form as the Secretary of Commerce may prescribe. Such vessels, so enrolled and licensed, shall not be allowed to transport merchandise or carry passengers for pay. Such vessels shall have their name and port placed on some conspicuous portion of their hulls. Such vessels shall, in all respects, except as above [entering and clearing], be subject to the laws of the United States, and shall be liable to seizure and forfeiture for any violation of the provisions of this chapter.” 46. USCA § 103.
We are of the opinion that there was adequate evidence to warrant the finding, and we find that the Eaglet had engaged in transporting merchandise for pay; that on the morning of the seizure she had had on board and had transported not only the sacks seen on the trucks at the dock and the seven sacks found in the slip, marked “William Penn Whiskey,” but the 243 sacks similarly marked and found within 200 feet of her stem in the Kickemuit river. It is true there was no direct evidence that the Eaglet was engaged in transporting merchandise for pay, but, inasmuch as she had on hoard and transported more than 250 sacks, which, with the bottles they contained, were marked “William Penn Whiskey,” and which, after discovery by the Coast Guard and during her flight, she undertook to free herself of by throwing overboard, there can he no reasonable doubt that she was transporting this large quantity of merchandise for pay. This was the finding and ruling in The Herreshoff (D. C.) 6 F.(2d) 414, and in The Conejo (D. C.) 10 F.(2d) 256. Both of these cases arose under the same provisions of law as are here drawn in question in count 1. The latter case was brought to this court for review. The Conejo, 16 F.(2d) 264. In the opinion of the court, written by Judge Anderson, affirming the decision of the District Court, it was said :
“The evidence shows conclusively that the Conejo was engaged in rum-running off the coast of Maine; that in August, 1925, she landed a cargo of several hundred cases of whisky at Freeport, Me. This was a breach of her license, by transporting merchandise for pay, as the court below held in this ease, and as Judge Morton held in a like ease in The Herreshoff (D. C.) 6 F.(2d) 414.”
A forfeiture should have been ordered under the first count.
We also are of opinion that the court was in error in granting the motion to dismiss as to count 2. Under this count, the claimant having failed to introduce any evidence, all the government was required to show, to entitle it to a judgment of forfeiture, was probable cause for instituting the proceeding. This count was based on a violation of section 4377 of the Revised Statutes (46 USCA § 325) which bears the same title as section 4380 (46 USCA § 328).
Section 4380 of the Revised Statutes provides :
“All penalties and forfeitures which shall be incurred by virtue of this Title may be sued for, prosecuted, and recovered as penalties and forfeitures incurred by virtue of the laws relating to the collection of duties, and shall be appropriated in like manner; except when otherwise expressly prescribed.”
In The Chiquita (D. C.) 41 F.(2d) 842, 843, it was held that libels prosecuted under section 4377, by virtue of the provisions of section 4380, were entitled to “be heard upon and under the same rules of evidence and procedural advantages as are ordained by section 615 of the Tariff Act of 1922 (19 USCA § 525),” and the Court of Appeals for the Ninth Circuit, in 44 F.(2d) 302, apparently approved the holding’ of the District Court as to this matter.
The evidence in this case was sufficient to warrant a finding of probable cause for the institution of the proceeding under the second count, and we so find. See Vincent v. United States (C. C. A.) 19 F.(2d) 344, and United States v. Blackwood, 47 F.(2d) 849, decided by this court March 10, 1931.
The remaining question is whether in this admiralty proceeding' the vessel should have been released on the application of the-owner and his furnishing a bond for the appraised value of the vessel, under the provision of section 938 of the Revised Statutes (28 USCA § 751).
The offenses alleged to have been committed by the vessel are violations of sections 4214, as amended, and 4377, both of which are customs provisions relating to the “enrolling and licensing of vessels.”
Section 938 of the Revised' Statutes (28 USCA § 751), provides:
“See. 938. Upon the prayer of any claimant to the court, that' any vessel, goods, wares, or merchandise, seized and prosecuted under any law respecting the revenue from imports or tonnage, or the registering and recording, or the enrolling and licensing of vessels, or any part thereof, should be delivered to him, the court shall appoint three proper persons to appraise such property, who shall be sworn in open court, or before a commissioner appointed by the district court to administer oaths to appraisers, for the faithful discharge of their duty; and the appraisement shall be made at the expense of the party on whose prayer it is granted. If, on the return of the appraisement, the claimant, with one or more sureties, to be approved by the court, shall execute a bond to the United States for the payment of a sum equal to the sum at which the property prayed to be delivered is appraised, and produce a certificate 'from the collector of the district where the trial is had, and of the naval officer thereof, if any there be, that the duties on the goods, wares, and merchandise, or tonnage duty on the vessel so claimed, have been paid or secured in like manner as if the same had been legally entered, the court shall, by rule, order such vessel, goods, wares, or merchandise to be delivered to such claimant; and the said bond shall be lodged with the proper officer of the court. If judgment passes in favor of the claimant, the court shall cause the said bond to be canceled; but if judgment passes against the claimant, as to the whole or any part of such vessel, goods, wares, or merchandise, and the claimant does not within twenty days thereafter pay into the court, or to the proper officer thereof, the amount of the appraised value of such vessel, goods, wares, or merchandise so condemned, with the costs, judgment shall be granted upon the bond, on motion in open court, without further delay.
“See. 939. All vessels, goods, wares, or merchandise which- shall be condemned by virtue of any law respecting the revenue from imports or tonnage, or the registering and recording, or the enrolling and licensing of vessels, and for which bonds shall not have been given by the claimant, shall be sold by the marshal or other proper officer of the court in which condemnation shall be- had, to the highest bidder, at public auction, by order of such court, and at such place as the court may appoint, giving at least fifteen days’ notice (except in eases of perishable merchandise) in one or more of the public newspapers of the place where such sale shall be; or if no paper is published in such place, in one or more of the papers published in the nearest place thereto; for which advertising, a sum not exceeding $5 shall be paid. And the amount of such sales, deducting all proper charges, shall be paid within ten days after such sale by the person selling the same to the clerk or other pfoper officer of the court directing such sale, to be by him, after deducting the charges allowed by the court, paid to the collector of the district in ,wliieh such seizure or forfeiture has taken place, as hereinbefore directed.” 26 USCA § 752.
In the Admiralty-Rules of Practice, promulgated by the Supreme Court on December 6, 1920, to take effect March 7,1921, Rule 12.(28 USCA § 723) provides:
“Where any ship shall be arrested, the same shall, on the application of the claimant, be delivered to him either on a due ap-praisement, to be had under the direction of the court, or on his filing an agreement in writing to that effect signed by the parties or their proetors of record, and on the claimant’s depositing in court so much money as the court shall order, or on his giving a stipulation for like amount, with sufficient sureties, or an approved corporate surety, conditioned as provided in the foregoing rule; and if the claimant shall unreasonably neglect to make any such application, then the court may, on the application of either party, on due cause shown, order a sale of such ship, and require the proceeds thereof to be brought into court or otherwise disposed of.”
It will be noted that section 938, under which the bond was given, in no way refers to or provides for the giving of a bond where forfeiture is sought for a violation of the internal revenue laws, as was the ease in United States v. One Dodge Coupe (D. C.) 17 F.(2d) 661, or for a violation of the neutrality laws of the United States, as was the case in The Three Friends, 166 U. S. 1, 17 S. Ct. 495, 41 L. Ed. 897, and The Mary N. Hogan (D. C.) 17 F. 813, but that it does, among other causes, refer to forfeitures for violations of law relating to “the enrolling and licensing of vessels,” which is the specific, ground of forfeiture relied upon in both counts of the present libel. It is undoubtedly true that, where forfeiture is sought for a violation of the internal revenue laws or a violation of the neutrality laws, or some other cause not mentioned in section 938, the question of release on bond is discretionary, as was held in United States v. One Dodge Coupe and in The Three Friends, above cited. But where, as in this ease, the violation of law charged concerns the enrolling and licensing of vessels, and the claimant requests a release of the vessel upon giving a proper bond under section 938, it is the duty of the court to release the vessel. The statute, in such case, is mandatory, as is Admiralty Rule 12.
Section 941 of the Revised Statutes (28 USCA § 754), has no relation to the matter here in question. It simply limits the authority of the marshal in taking bonds-to cases other than those of “seizures for forfeiture under any law of the United States.” See The Lynx II (D. C.) 14 F.(2d) 697; In re Jackson (D. C.) 35 F.(2d) 931; United States v. One Dodge Coupe (D. C.) 17 F.(2d) 661; The California (D. C.) 12 F.(2d) 270 — all of which hold that the duty of the eourt to release on bond, in the cases mentioned in section 938, is mandatory.
No act of Congress has been called to our attention, and we have found none, wherein, the mandatory provisions of section 938 have been altered or amended. But section 939, which provides that “all vessels, * * * which shall be condemned by virtue of any law respecting the revenue from imports or tonnage, or the registering and recording, or the enrolling and licensing of vessels, and for which bonds shall not have been given by the claimant, shall be sold by the marshal or other proper officer of the court,” etc., is necessarily amended by chapter 438, section 2, of the Act of March 3, 1925 (27 USCA § 42), which provides:
“See. 2. Upon application therefor by the Secretary of the Treasury, any vessel or vehicle forfeited to the United States by a decree of any eourt for violation of the customs laws or the National Prohibition Act may be ordered by the eourt to be delivered to the Treasury Department for use in the enforcement of the customs laws or the National Prohibition Act, in lieu of the sale thereof under existing law.”
While section 2 of the Act of 1925 necessarily modifies the power of the eourt under section 939 to order the sale of a vessel condemned by decree of eourt, 'for which bond shall not have been previously given by the claimant, and authorizes the transfer of the property, under the conditions named in that section, to the Secretary of the Treasury, it does not direetly or by necessary implication repeal or modify the provisions of section 938, which requires the eourt, upon the request of the claimant for delivery of the property seized and his giving bond in compliance with the terms of said section, to order the property delivered to such claimant. If Congress had intended to amend the mandatory provisions of section 938 relating to release on bond and make the power of the eourt discretionary, it could easily have done so, but it did not. It has simply seen fit to modify the provisions as to' sale after a decree of forfeiture, where the property has. not been previously released on a bond.
The decree and judgment of the District Court dismissing the libel and discharging the bond are vacated, and the case is remand-1 ed to that eourt, with directions to enter a decree of forfeiture and a judgment upon the, bond as provided in section 938.
Question: Were there cross appeals 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.
PELL, Circuit Judge.
These cases are before the court upon applications for enforcement and cross-petitions for review of two orders of the National Labor Relations Board. In case 13-CA — 10161(61)(74-1348, 74-1413) the board found that the company violated § 8(a)(1) and (5) of the National Labor Relations Act (29 U.S.C. § 151 et seq.) by withholding payment of third quarter bonus payments in 1970 without giving the union an opportunity to bargain and by refusing to supply information regarding the method used to compute the amount of bonus payments. The board originally ordered, inter alia, that the third quarter bonus be paid, that relevant information be supplied, and that the company bargain in good faith regarding future bonus payments. Subsequently the board modified its order and ordered payment of all bonuses unilaterally withheld. In. 13 — CA—10823(23)(74r-1349, 74 — 1414) the board found the company violated § 8(a)(1) of the Act by creating the impression of surveillance of the union and threatening plant closure.
I. FACTS
Marland One-Way Clutch Co., Inc. is an Illinois corporation engaged in the manufacture of mechanical clutches. The Tool & Die Makers Lodge No. 113, International Association of Machinists and Aerospace Workers, AFL — CIO, was certified on September 14, 1970. The union’s efforts to organize the company’s employees were opposed by management, but the alleged violations occurred after the election.
From 1947 through 1967 the company paid a bonus to employees at Christmas. In 1968 the company began paying the bonus in quarterly installments. On several occasions, the company wrote letters or memoranda to the employees which upon reasonable interpretation could have caused the employees to think of the bonuses as part of their compensation. Some of these letters related the bonuses to hourly rates and by adding the bonuses to regular hourly rates arrived at a “Marland hourly rate total.” The bonuses were paid quarterly until the third quarter of 1970, shortly after the union election, when no payment was made. The third quarter bonus has since been paid in compliance with the board’s order, but no bonuses have been paid for subsequent quarters.
When the bonus was not paid, the union representative questioned the company representative about the bonus. He was told that the decision at the particular time was to withhold payment and that the bonus was discretionary. The union representative then requested information on the bonus. The company responded:
“Bonus: Christmas bonus is discretionary and based on management evaluation of business.”
Shortly after that colloquy, on October 20, 1970, the union filed charges with the board which resulted in the 61 case.
On December 30, 1970, the union wrote the company with a view to further negotiations on the bonus, making the following request:
“[W]e are hereby requesting that the Company submit in written form, as soon as possible, all information relating in any way to the Method the Company has used in Computing the Christmas bonus in the past for the employees we now represent.”
The company responded that its position on the bonus was detailed in its Answer to Complaint in the 61 case.
The Trial Examiner (now Administrative Law Judge) (ALJ) in the 61 case found that the bonuses were wages within the meaning of the Act and were therefore a subject of mandatory bargaining; that the decision to withhold the bonus was made and executed without giving the union an opportunity to bargain; and that Marland had failed to supply information needed to bargain intelligently. The board subsequently adopted the findings and conclusions of the ALJ.
The 23 action arose from two conversations between Joseph Marland, President of Marland One-Way Clutch Co., and John Russell, an employee of the company.
The first conversation occurred on July 15, 1971. Russell wanted to borrow $500.00 from profit-sharing funds. Mar-land explained that this was not possible but said he would personally lend him the money. Russell testified:
“We discussed a few other little problems for awhile and then right before I was ready to leave he explained to me that if a certain person hadn’t started the union over there, that maybe I wouldn’t be short of funds. . And then he said to me that he thought if I were to start a letter, go around to some of the fellow’s houses and talk to them about the amount of profit sharing that this man had, that it would be a nice idea if we were to ask him to share his profit sharing with the rest of us due to the fact that he was the cause of us loosing [sic] that money.”
Russell also testified that Marland handed him a piece of paper which had the following notations on it:
27,000 Payroll loss
7,400 Stan Profit Share
The ALJ found that the wages lost were probably a reference to a strike that had occurred. The ALJ found that Mar-land’s remarks were no more than a contention that as- a result of unionization, employees went on strike and lost wages as a result and that this could not constitute a violation of § 8(a)(1) of the Act. The board disagreed, finding that the conversation constituted a violation because the reference to Stan created an impression of surveillance — the company knew he was the union organizer — and blamed him for financial loss.
The second conversation occurred August 9, 1971, when Russell, Marland, and their spouses went to the Russell residence after a religious retreat they had attended together. Russell testified that Marland stated during their conversation: “I’ll promise you the men will never get their bonus and I’ll sell the place before I settle.” Marland denied he made that statement though he admitted he said he was disappointed that relations were not as harmonious as before and that he mentioned that he had received offers from several conglomerates to merge. The ALJ carefully analyzed this conflicting testimony, partially crediting Russell to the extent of being persuaded that Marland did speak to Russell about the bonus but not to the extent of being persuaded “that the facts as to exactly what was said has been presented by Russell.”
He concluded:
“Under such circumstances, I do not find the evidence to be reliable to establish that Marland was more than arguing that he would not settle the case and pay the bonus as a result of settlement. In effect it was a statement of the legal position he was taking in litigation. Such conduct is not violative of Section 8(a)(1) of the Act. I so conclude and find.”
The board interpreted the conversation as a threat of plant closure which therefore violated the act.
Additionally, the 23 action complaint initially sought, according to the ALJ, an order directing the company to pay the employees for all bonus payments withheld that have accrued up to the decision. The ALJ dismissed this portion of the complaint on the grounds that as a matter of sound judicial administration of the Act, a complaint proceeding should not be utilized to effect a modification of a prior order of the board (the 61 order) or to determine compliance issues. The general counsel now concedes this was correct.
Later, the general counsel sought and obtained the modification of the 61 order which is now in issue. The modification changed the language in the affirmative action section of the order. The relevant section originally ordered the company to:
“Make whole the employees in the appropriate unit in 1970 for any loss they may have suffered of the third quarterly bonus payment in the manner set forth in the section of this Decision entitled ‘The Remedy.’ ”
After modification the section read as follows:
“Make whole employees in the appropriate unit for any losses they may have suffered by reason of Respondent’s unilateral withholding of any bonus payments, in the manner set forth in the section of the Administrative Law Judge’s Decision entitled ‘The Remedy.’ ”
II. ORIGINAL 61 ORDER
The company argues that the original 61 order should be denied enforcement on three grounds. First, it is contended that the bonus did not equate with “wages” within the meaning of the Act. Second, according to the company, the order is moot — the company has paid the third quarter bonus, it has bargained in good faith within the meaning of the Act, and it has supplied the union with information. Finally, with respect to the section of the order dealing with information, the company argues that enforcement would deprive it of due process because the failure to supply information was not charged in the complaint.
A. Wages or Gratuity
It is clear that bonuses and fringe benefits may constitute wages within the meaning of the Act. Beacon Journal Publishing Co. v. NLRB, 401 F.2d 366, 367 (6th Cir. 1968); NLRB v. Central Illinois Public Service Co., 324 F.2d 916, 918-19 (7th Cir. 1963). Upon the basis of the evidence as set forth hereinbefore, we have no difficulty in saying that there is a substantial basis in the record for the board’s finding that the bonus payments were wages within the meaning of the Act.
B. Mootness
Circumstances may arise where an enforcement proceeding will become moot because a party can establish that there is no reasonable expectation that a wrong will be repeated. NLRB v. Raytheon Co., 398 U.S. 25, 27, 90 S.Ct. 1547, 26 L.Ed.2d 21 (1970), citing United States v. W. T. Grant Co., 345 U.S. 629, 633, 73 S.Ct. 894, 97 L.Ed. 1303 (1953). More commonly, “[a] Board order imposes a continuing obligation; and the Board is entitled to have the resumption of the unfair practice barred by an enforcement decree.” NLRB v. Mexia Textile Mills, 339 U.S. 563, 567, 70 S.Ct. 826, 829, 94 L.Ed. 1067 (1950).
It appears from the record that the payments of the third quarter bonus have been completed and that enforcement is not required of that portion of the order. Nevertheless, this is only a portion of the order. That the company must furnish the union with certain information is not a new concept. Taylor Forge & Pipe Works v. NLRB, 234 F.2d 227, 231 (7th Cir. 1956), cert. denied, 352 U.S. 942, 77 S.Ct. 265, 1 L.Ed.2d 238; NLRB v. Acme Industrial Co., 385 U.S. 432, 435-36, 87 S.Ct. 565, 17 L.Ed.2d 495 (1967); Mallory & Co., Inc. v. NLRB, 411 F.2d 948, 953 (7th Cir. 1969). The company does not argue to the contrary but rather argues that it has already supplied the information sought by the union and no further information is in existence.
Most, if not all, of the company’s reliance upon mootness is founded upon the history of the bargaining and the information furnished during bargaining sessions. This evidence, if the company’s version is correct in fact, would be pertinent and material in a compliance proceeding. The complaint in the 61 case, however, is concerned with the period following the union’s certification and running to a time shortly after the first bargaining meeting in October 1970. Since the board has chosen to pursue enforcement of the 61 order after an earlier withdrawal of an application for enforcement, and being of the opinion that we cannot say that there was not substantial evidence to support the 61 order for the period it involved, we defer to the board’s determination that there should be the imposition of a continuing obligation on the company. We decline to speculate that the likelihood of repeated conduct is so remote as to mandate disposition of the case on the ground of mootness. Clearly the company had more specific information about the payment of the bonus than that it was discretionary and not computed on a mathematical formula. The union was entitled to this information. Whether it received it at sometime subsequent to the order is, as we have observed above, a matter for compliance proceedings.
C. Due Process
The company argues that enforcement of the board’s order with respect to disclosure of information would violate due process because this was not charged in the general counsel’s complaint. The company relies on NLRB v. Bradley Washfountain Co., 192 F.2d 144 (7th Cir. 1951). The general counsel argues that the refusal to bargain language in the complaint is sufficiently broad to include the refusal to supply information and in any event full litigation satisfies the requirements of due process. The board relies on NLRB v. Duncan Machine Works, Inc., 435 F.2d 612, 615 (7th Cir. 1970), and NLRB v. Scenic Sportswear, 475 F.2d 1226 (6th Cir. 1973), among others. The board also argues that this issue is not properly before this court because the company did not file exceptions to the ALJ’s findings on the issue. The company responds that the issue is before the court because the general counsel admitted compliance and that the ALJ limited the scope of the hearing to the extent that it cannot be said that there was a full hearing on the issue.
The position of the board must be upheld. As related in part I of this opinion, the company’s response to the union’s request for information was to refer the union to the company’s Answer to Complaint. That the company included information on this issue in its answer shows it knew the matter was before the board. In addition, substantial evidence on the failure to supply information was adduced during the hearing. The limitations imposed by the ALJ did not prevent testimony on the issue but rather prevented introduction of evidence related to bargaining on other issues. In any event, the company makes no specific showing of how it was mislead by the actions of the board. If the company is relying on the general counsel’s motion for dismissal of the original enforcement proceedings, its reliance is misplaced; any argument to the board would have had to occur before those proceedings were brought. This is not the type of extraordinary circumstance in which failure to raise objections before the board can be overlooked. See § 10(e) of the National Labor Relations Act.
III. MODIFIED 61 ORDER
A. Power of the Board to Modify
The company argues that the board had no power to modify its order because § 10(d) of the Act, which authorizes modification, only authorizes it “until the record in a case shall have been filed in a court.” Under the company’s reasoning the board lost the power to modify when the' record was filed with this court in the original enforcement proceeding. The general counsel argues that the board regained jurisdiction to modify when we granted leave to dismiss the enforcement proceedings without prejudice and that the purpose of exclusive vesting of jurisdiction in the court — preventing conflicts of authority, International Union of Mine, Mill and Smelter Workers, Locals 15, 17, 107, 108, and 111 v. Eagle-Picher Mining & Smelting Co., 325 U.S. 335, 342, 65 S.Ct. 1166, 89 L.Ed. 1649 (1945) — would not be served by this interpretation because once the court dismissed the proceedings, the appellate court was without jurisdiction to enter orders. People ex rel. Wait v. Bristow, 391 Ill. 101, 62 N.E.2d 545 (1945). We agree with the general counsel’s analysis and conclusions. Ford Motor Co. v. NLRB, 305 U.S. 364, 59 S.Ct. 301, 83 L.Ed. 221 (1939), cited by the company, is not in point. In that case a petition for review had been filed so that the board could not terminate the court’s jurisdiction by ending enforcement proceedings. Here the company had filed no petition for review at the time of the withdrawal, and upon the granting of the motion to withdraw without prejudice, this court’s jurisdiction terminated.
B. Enforcement of Modification Denied
The effect of the modification is contested by the parties. The company argues that the board is improperly trying to dictate the substantive terms of a contract by requiring payment of bonuses. NLRB v. Insurance Agents’ International Union, 361 U.S. 477, 490, 80 S.Ct. 419, 4 L.Ed.2d 454 (1960). The general counsel argues that the board is not trying to dictate substantive contract terms, that it is only trying to clarify the original order, and that the modification makes no substantive change in the original order. This issue was explored extensively at oral argument; the parties are much closer to agreeing to the substantive requirements of the law than they are to agreeing on appropriate language to express it.
Substantively, the board’s position, as stated during argument, is that if an employer gives notice of a proposed decrease in compensation, which presumably would include regularly given bonuses, and bargains in good faith on the issue thus created, then the employer’s action in putting the decrease into effect is not unilateral action violating the Act. The general counsel offered a caveat to this as applied to the present case: the company must bargain as though the bonus was in effect, not as if it already had been eliminated; only in this manner, it was asserted, can the status quo ante be established as it existed before the initial unfair labor practice. The company agreed with the basic principle of notice and good faith bargaining as stated above but disagreed to the extent that the general counsel seemed to say that the bargaining must reach an impasse before the decrease could be put into effect.
The board disclaims that in modifying the section of the 61 order it was attempting to require the company to pay all bonus installments to date. However, if this was not the intent, we have difficulty in determining just why the board felt the necessity to make the modification. The original order directed the payment of only the third quarter bonus. It further ordered that the company cease and desist from refusing to bargain and from unilaterally terminating bonus payments. The order also directed that the bargaining include the “Fourth quarter installment of the 1970 Christmas bonus, and any bonus installments,” and to supply any information relevant and reasonably needed by the union in order for it to bargain intelligently on bonuses.
In our opinion, the original order needed no modification or clarification. If the company unilaterally terminated bonus payments under circumstances which would be in violation of the original order, and we will advert further to what those circumstances are, then the board can appropriately determine the matter in compliance proceedings. The determination of whether the company is obligated to make whole any employees for not receiving the bonus subsequent to the 1970 third quarter bonus was prematurely reached by the modification. If, as the board now states, it was not intended that the modification was to serve as an order that any particular quarterly bonus automatically should have been paid, then the modification was unnecessary. As it is stated, the modified section is too vague to inform the company what its obligations might be as to subsequent quarters.
Since we are enforcing the order in the 61 case as originally entered, we find it necessary to clarify the circumstances pertaining to the cease and desist order on unilateral terminations of the bonus payments. In enforcing that part of the order, we do so on the construction that it does not prohibit a termination of bonus payments under circumstances in which the company has given notice of discontinuance to the union and has bargained in good faith on the matter of discontinuance. As the order was originally written, it might appear overly broad because it is likely that under the circumstances outlined a discontinuance would be unilateral in the sense that it would not be bilateral, i. e., agreed upon by the company and the union. We construe the cease and desist order more narrowly, as apparently does the board. The only area of disagreement appears to be whether the bargaining must be to an impasse before the company can unilaterally terminate.
The board cites respectable authority from this circuit and elsewhere to the effect that employers may not without violating § 8(a)(5) and (1) unilaterally take action on a mandatory subject of bargaining, such as wages, unless a genuine impasse, not caused by the failure of one of the parties to bargain in good faith, has been reached. For example, United Fire Proof Warehouse Co. v. NLRB, 356 F.2d 494, 497 (7th Cir. 1966); NLRB v. Palomar Corp., 465 F.2d 731, 735 (5th Cir. 1972); NLRB v. U. S. Sonics Corp., 312 F.2d 610, 615 (1st Cir. 1963); and NLRB v. Fitzgerald Mills Corp., 313 F.2d 260, 268 (2d Cir. 1963), cert. denied, 375 U.S. 834, 84 S.Ct. 47, 11 L.Ed.2d 64.
The company counters with authorities which support the position that, if, during the course of bargaining, notice has been given of proposed unilateral action and the union has been afforded a reasonable opportunity to bargain concerning the proposed change, the company may then lawfully take the proposed action. For example, NLRB v. United Nuclear Corp., 381 F.2d 972, 976 (10th Cir. 1967); NLRB v. Cone Mills Corp., 373 F.2d 595 (4th Cir. 1967); Lane v. NLRB, 135 U.S.App.D.C. 372, 418 F.2d 1208 (1969).
The issue before us, however, does not require the resolution presented in this area of disagreement between the parties. That resolution no doubt will be appropriate in a compliance proceedings if it is determined that such is necessary. In the - 23 case, as w.e have previously noted, the board agreed with the ALJ that a complaint proceeding should not be utilized to determine compliance issues. Yet more than a year later by purporting to modify the original 61 order, the board, it appears to us, has done exactly that, i. e., determined that the company in the intervening years has not complied with the 61 order. Unless the company is locked-in to a perpetual payment of bonuses, irrespective of the extent of or the good faith of bargaining, which we do not understand the board to be contending, the resolution of the question of compliance with the 61 order should be determined on the basis of the history of the bargaining as developed in an appropriate due process hearing and not by the administrative modification here attempted. We therefore in the present proceeding are denying enforcement of the make-whole modification order of January 9, 1974.
IV. THE 23 ORDER
The company does not argue that surveillance, creating the impression of surveillance, or coercion is lawful; but rather it argues that there was not sufficient evidence in the record to find these violations. We agree.
In their briefs the parties dispute the standard of review for the conclusions of the board. We had occasion to consider the proper standard in NLRB v. Wisconsin Aluminum Foundry Co., 440 F.2d 393 (7th Cir. 1971):
“The standard which this court must follow in reviewing the Board’s order is whether on the record as a whole there is substantial evidence to support its findings; the meaning of ‘on the record as a whole’ encompasses not only testimony of witnesses and the Board’s findings and conclusions but also the report of the trial examiner. Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951). This court may not displace the Board’s choice between two fairly conflicting views even though we might justifiably have made a different choice had the matter been before us de novo. Universal Camera Corp., supra at 488, 71 S.Ct. 456, quoted in NLRB v. Walton Manuf. Co., 369 U.S. 404, 405, 82 S.Ct. 853, 7 L.Ed.2d 829 (1962). However, we are not barred from setting aside a Board decision when we cannot ‘conscientiously find that the evidence supporting that decision is substantial, when viewed in the light that the record in its entirety furnishes, including the body of evidence opposed to the Board’s view.’ Universal Camera Corp., supra.” 440 F.2d at 398.
A special problem arises when the ALJ and the board disagree. In Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951), the Supreme Court held that the substantial evidence test is not modified when the court and the ALJ disagree but that the ALJ’s decision should be given the support it intrinsically commands and that this largely depends on the importance of credibility in a particular case. 340 U.S. at 495-96, 71 S.Ct. 456. Of necessity in a ease such as this, the right of the employer to speak must be balanced against the rights of the employees under the National Labor Relations Act to organize. Recognizing the sensitivity of employees to rumors of plant closings, NLRB v. Gissel Packing Co., 395 U.S. 575, 619-20, 89 S.Ct. 1918, 23 L.Ed.2d 547 (1969), the company is nevertheless entitled to express its opinions in friendly conversations so long as its statements do not contain implied threats. See Lake City Foundry Co. v. NLRB, 432 F.2d 1162 (7th Cir. 1970).
To establish surveillance or to create the impression of surveillance as unfair practices requires more than showing that the employer knows who started the union. None of the cases cited by the general counsel establish the contrary; each involved patterns of interrogation or threats to use knowledge. NLRB v. Merchants Police Inc., 313 F.2d 310, 311-12 (7th Cir. 1963) (statement that employer knew who was at union meetings coupled with a statement that “some” might lose jobs constituted coercion); NLRB v. Drives, Inc., 440 F.2d 354 (7th Cir. 1971), cert. denied, 404 U.S. 912, 92 S.Ct. 229, 30 L.Ed.2d 185 (interrogation and statement that employer knew who union members were and they were going to get fired eventually); NLRB v. Brown Specialty Co., 436 F.2d 372, 374 (7th Cir. 1971) (repeated questioning and statement that a supervisor knew who started the union business and that things were going to change); NLRB v. Borden Co., 392 F.2d 412 (5th Cir. 1968) (interrogation, home visits, speeches declaring knowledge of union activities and that employees would suffer); Trumbull Asphalt Co. v. NLRB, 314 F.2d 382 (7th Cir. 1963), cert. denied, 374 U.S. 808, 83 S.Ct. 1697, 10 L.Ed.2d 1032 (interrogation, encouraging spying).
There is no question but that on the date of the July 15, 1971, conversation between Marland and Russell the former was aware of the identity of the employee who had been the principal organizer in the union’s effort to achieve representation status. We find no basis, however, in the findings of the ALJ for the inference that the knowledge of identity was acquired by surveillance nor that it would have created the impression in the mind of Russell that there had been surveillance.
The conversation in question occurred some 10 months after the union had been certified. This was not a case involving claimed surveillance during the course of an organizational drive. Russell’s testimony indicated no surprise that Marland was aware of Stan’s organizational efforts. The testimony indicated nothing more than that Russell matter-of-factly knew that Terrutty was the organizer. Indeed, Terrutty, himself, took the stand in the same hearing at which Russell testified and said he “organized the plant . . . and was elected as a steward of Lodge 113.”
The transcript of the 61 hearing, held on February 18, 1971, (approximately 5 months prior to the Russell-Marland conversation) established through the testimony of the union’s business agent that at the October 2, 1970, negotiation meeting (the first bargaining session) Terrutty was one of the two key men representing the union. There is no reason for believing that Terrutty did not continue to participate in subsequent negotiating sessions.
At the 61 hearing in February 1971, the general counsel introduced as exhibits copies of correspondence about the bonus which had been sent to employees during the latter part of 1970. The exhibits were those which had been sent to and received by Terrutty. It clearly was no secret by mid-1971 that the number one person in the local union was Stanley Terrutty.
Neither this court nor the board should ignore the realities of the world in which we live. It is beyond comprehension that in a plant of some 30 employees everyone connected with the factory would not have been aware of who had engaged in organizing the employees nearly a year earlier without the necessity of any resort to illegal spying. The mere fact that the company president indicated knowledge of the identity of the moving spirit in the organizing effort is too exiguous a membrane to bear the weight of the inference the board has fastened to it. We hold, therefore, that the board’s order without regard to surveillance is not supported by substantial evidence and enforcement must be denied.
The board’s finding of coercion is based on a teatime conversation between Marland and Russell in the latter’s home following their joint attendance at a religious activity. In our opinion, the board’s order based upon its conclusion of law that the company had threatened the employees with plant closure is not in the context in which the board is free to exercise its expertise in drawing inferences diverse from those drawn by the ALJ. The board obviously was taking the position that the statement Russell said Marland made to him was gospel. This ignores completely a part of the credibility determination by the ALJ. After hearing the witnesses— Russell testifying that Marland used specific language regarding selling the place before he would settle and Marland, who did not deny talking about bonuses, not recalling any discussion on that subject but testifying that there had been conversation in which he had referred to offers to purchase the company — the ALJ credited Russell’s testimony, which after all had not been specifically denied, that bonuses had been discussed. The ALJ, however, did not give the credibility gloss to the words as Russell remembered them, and it is obvious from the record that he credited Marland’s testimony of the context in which the matter of bonuses were discussed. The inferences to be drawn by the board must not be unreasonable, Weyerhaeuser Co. v. NLRB, 311 F.2d 19, 22 (7th Cir. 1962), which in our opinion means, inter alia, that the inference should not be based upon evidence of the inconclusive, weak nature of that in the present case, particularly where the inference ignores completely a part of the credibility determination of the ALJ. As with the first prong of the board’s decision in the 23 case, we declined to enforce because of lack of support by substantial evidence.
In accordance with the foregoing opinion, enforcement is ordered in the 61 case as originally entered, enforcement is denied in that case of the order as modified on January 9, 1974, and enforcement is denied in the 23 case.
. The board had petitioned this court for enforcement, No. 72-1468, but the board subsequently moved to withdraw its application without prejudice, which motion was granted. The company takes the position that it had already complied at the time of the withdrawal; the general counsel states the withdrawal was based on the company’s promise to comply. We are not able to find much of significance in this conflict.
. The company’s answer alleged, inter alia, that it “had paid a voluntary Christmas bonus to all employees both in and outside of the bargaining unit for the calendar years 1968 and 1969, such payment was made on a quarterly basis; that the total amount available for distribution of this Christmas bonus and the amount which each employee received varied among them said amounts being wholly within the discretion [of the company]; that there was no specified or specific formula nor any formal policy regarding eligibility.”
It does not appear to be seriously contended that there was in fact any mathematical formula in existence. On the other hand, it appears that the union during negotiations had received from the company substantial information about the bonuses previously paid, including the fact that the payments averaged out among the shop employees at about 30c per hour.
. At the hearing Stanley Terrutty testified that he was the union steward and organizer and that he was the only person in the shop named Stanley.
. We have difficulty in reading the ALJ’s determination as other than giving some credibility to Marland in denying the specific language Russell attributed to him.
. In July 1972, in case 23, the ALJ observed in his decision that the general counsel was seeking an order directing the company to pay the unit employees for all bonus payments withheld that have accrued up to the decision and recommended order in case 23. In his decision, the ALJ stated that he was “persuaded that as a matter of sound judicial administration of the Act, this complaint proceeding should not be utilized as a vehicle to in effect modify the Board’s Order in Case 13-CA-10161 and to determine compliance issues in such proceeding.” As indicated in the present opinion, we agree with the principle and extend the principle to say that the matter of whether there was compliance should be determined in proceedings for that purpose and not by virtue of modification of the original order in which the issue was not considered.
. The board’s caveat set forth above is not quite clear to us. If the company gives notice of termination, it is difficult to see how it could continue to bargain as though the bonus was in effect. What is required is that it bargain in good faith. On the other hand, while the company has contended in the present cases that the bonuses were voluntary and discretionary, we fail to see how it could claim that the bonuses were not in effect prior to the union coming on the scene.
. The ALJ’s findings, supported by substantial evidence, showed that Marland (1) indicated to Russell that the activities of the employee-organizer (Stanley Terrutty; see note 3 supra ) in starting the union may have caused Russell’s need for a loan, and (2) that Mr. Mar-land informed Russell of the substantial sum in the organizer’s profit-sharing account and suggested that Russell “go around to some of the fellow’s houses and talk to them about the amount of profit sharing this man had, that it would be a nice idea if we were to ask him to share his profit sharing with the rest of us due to the fact that he was the cause of us loosing [sic] that money.”
. We, of course, do not intend to indicate that the board may never base its decision on testimony which the ALJ did not credit. In Universal Camera Corp. v. NLRB, supra, the Court stated: “We do not require that the examiner’s findings be given more weight than in reason and in the light of judicial experience they deserve.” 340 U.S. at 496, 71 S.Ct. at 169.
Question: Were there cross appeals 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.
WILKINS, Circuit Judge:
Ian Gordon appeals his conviction of possession of cocaine with the intent to distribute. 21 U.S.C.A. § 841(a)(1) (West 1981). He claims violations of the fourth and fifth amendments and that the district court erroneously denied him offense level reductions for acceptance of responsibility and for being a minimal participant. The United States cross-appeals Gordon’s sentence claiming that the district court erroneously found Gordon to be a minor participant. We affirm the conviction but reverse and remand for resentencing.
I.
On September 14, 1988, Drug Enforcement Administration Special Agent Callahan and Loudoun County Deputy Becerra were engaged in general surveillance of passengers at Washington National Airport in Arlington, Virginia. They observed Gordon deplane from a Pan Am shuttle from New York. While the officers knew that New York was a “source city” for narcotics, they had no prior information about this particular flight or Gordon, nor did Gordon meet a “drug courier profile.”
Callahan and Becerra followed Gordon outside the terminal, where Callahan approached Gordon and explained that he was part of a Drug Enforcement Administration drug interdiction team. Callahan asked for and received permission to search Gordon’s bag. Finding no contraband, Callahan requested permission to “pat him down.” Gordon again gave verbal permission. Upon discovering a bulge in Gordon’s pocket, Callahan requested to see its contents. Although he claimed that the pocket contained only a sandwich, Gordon removed a small clear plastic bag partially wrapped in gray duct tape containing 249.-50 grams of white powder, which Callahan recognized to be cocaine. The officers placed Gordon under arrest and informed him of his Miranda rights.
When the officers asked Gordon if he would answer some questions he responded, “What do you want to know?” When asked the question, “Where were you taking this stuff?” Gordon shook his head in response. He was immediately transported to a nearby police station, a trip which Gordon concedes took no more than five minutes. Becerra testified that at the station he asked Gordon “if he was high, at which he said no. I asked him if he snorted or smoked cocaine. He said no.” When asked how Gordon indicated that he did not snort or smoke cocaine, Becerra stated that Gordon “made a negative gesture with his head.”
At a preliminary hearing, Gordon moved to suppress the cocaine as the product of an illegal search and seizure. He also moved to suppress any inculpatory statements made at the police station on the basis that their admission would violate his fifth amendment rights under Miranda. Both motions were denied and Gordon was subsequently convicted by a jury of possession with the intent to distribute cocaine.
At sentencing, Gordon admitted that he was guilty of simple possession of cocaine and requested a reduction for acceptance of responsibility. U.S.S.G. § 3E1.1. However, on the advice of counsel he would not acknowledge that he possessed the cocaine with the intent to distribute. He refused to elaborate, expressing his desire to preserve any fifth amendment rights in the event of a successful appeal and retrial. He also requested a four-level reduction of his offense level, claiming that as a courier he was entitled to be classified as a minimal participant under section 3B1.2(a) of the guidelines. Over the government’s objection, the court granted Gordon a two-level reduction for being a minor participant. U.S.S.G, § 3B1.2(b). The resulting offense level of 18 with a criminal history category of I produced a guideline range of 27-33 months. The court sentenced Gordon to 27 months.
II.
On appeal, review of a district court determination regarding role in the offense is governed by the clearly erroneous standard. United States v. Daughtrey, 874 F.2d 213 (4th Cir.1989) (determination that defendant was neither minimal nor minor participant is a factual question and due deference requires affirmance unless clearly erroneous); see United States v. Sanchez-Lopez, 879 F.2d 541 (9th Cir.1989); United States v, Wright, 873 F.2d 437 (1st Cir.1989); United States v. Nunley, 873 F.2d 182 (8th Cir.1989); United States v. Rojas, 868 F.2d 1409 (5th Cir.1989).
Gordon bases his claim that he was a minimal participant on the commentary to section 3B1.2 of the guidelines, which states that an offense level reduction for minimal participation would be appropriate “in a case where an individual was recruited as a courier for a single smuggling transaction involving a small amount of drugs.” U.S.S.G. § 3B1.2, comment, (n.2). Gordon also argues that the government’s reference to him during the trial as a courier entitles him to a reduced offense level. However, as this circuit and the Fifth Circuit have held, the fact that a defendant is a drug courier does not automatically entitle him to a reduction. United States v. White, 875 F.2d 427, 434 (4th Cir.1989); see United States v. Buenrostro, 868 F.2d 135, 138 (5th Cir.1989). In Buenrostro the court, referring to the commentary cited by Gordon, stated that “[t]he example suggests that some couriers may appropriately receive the reduction; it does not suggest that all couriers are entitled to a downward adjustment.” Buenrostro, 868 F.2d at 138. In White we adopted the reasoning of Buenrostro and held that section 3B1.2 of the guidelines turns upon culpability, not courier status. White, 875 F.2d at 434. A defendant may be a courier without being less culpable than the other participants. Id. Gordon offered absolutely no evidence to support a finding that he was a minimal participant. Therefore, we affirm the refusal by the district court to grant Gordon a four-level reduction of his offense level on this basis.
In its cross-appeal, the government urges that Gordon was not entitled to the two-level reduction for minor participant status. Its position is simply that Gordon was apprehended while possessing, with the intent to distribute, a quantity of cocaine. The government had no knowledge of the source of the cocaine or that Gordon was involved in a conspiracy with others. At sentencing Gordon offered no evidence regarding the scope of his involvement with another participant or any other evidence on which the district court could base a finding of reduced culpability or involvement justifying his classification as a minor participant. Although Gordon correctly asserts that the number of defendants indicted does not determine whether there was more than one participant involved in the offense, there was no evidence here of participation by anyone else.
The government is correct that mitigating role adjustments apply only when there has been group conduct and a particular defendant is less culpable than other members of the group to such a degree that a distinction should be made at sentencing between him and the other participants. When seeking a mitigating adjustment, a defendant has the burden of proof to convince the district court of its application by a preponderance of the evidence. United States v. Urrego-Linares, 879 F.2d 1234, 1239 (4th Cir.), cert. denied, — U.S. -, 110 S.Ct. 346, 107 L.Ed.2d 334 (1989). Since there are no facts in the record to support Gordon’s position, he is forced to rely on two conclusory statements, one by the prosecuting attorney and the other by the probation officer who prepared the presentence report. During trial, the prosecuting attorney referred to Gordon as a courier, and Gordon argues that this entitles him to be viewed as a minimal participant. Interestingly, Gordon continues to deny that he intended to deliver the cocaine to anyone, yet at the same time he contends that the government’s reference to him as a courier entitles him to a reduced offense level. Also, a worksheet prepared by the probation officer and submitted to the court recommended a two-level reduction as a minor participant. But, as we have previously held, the decision of the district court on whether to apply a particular guideline is not controlled by the probation officer’s recommendation. White, 875 F.2d at 431. Further, in paragraph 5 of the presentence report entitled “Defendant’s Role in the Offense,” it is reported that “[t]he defendant is solely responsible for the charge for which he is before the court.” The district court adopted the report in its statement of findings and reasons for the sentence imposed.
We are faced with a record devoid of any justification for the conclusion of the district court that “[t]he court finds that the base level should be reduced by 2 for the defendant’s role in the offense....” The court offered no explanation nor pointed to any fact to support its conclusion. See United States v. White, 888 F.2d 490, 495 (7th Cir.1989) (“Every sentence under the Guidelines must be supported by reasons.”).
Under the new sentencing system mandated by the Sentencing Reform Act of 1984, 18 U.S.C.A. §§ 3551, et seq. (West 1985 & Supp.1989), a request for the district court to find and apply an aggravating or mitigating factor when determining the appropriate guideline sentence must be based on some evidence. The moving party cannot meet his burden simply by offering conclusory statements. Here, the record is devoid of any evidence, aggravating or mitigating, other than that Gordon was simply a participant not entitled to any adjustment. See U.S.S.G. § 3B1.4. While the finding of the applicability of an aggravating or mitigating factor is protected on appeal by the clearly erroneous standard of review, this protection does not extend to a determination made without any factual foundation. To follow Gordon’s logic, everyone apprehended for possession with the intent to distribute cocaine under these circumstances would be entitled to a reduced offense level because of the general nature of the drug trade where contraband passes from its primary source to the ultimate user through a number of hands.
Consequently, because the district court erroneously applied a two-level reduction for minor role, we remand for resentencing within the sentencing guidelines range resulting from an offense level of 20 and a criminal history category of I.
III.
Gordon also argues that the district court erred by not reducing his offense level for acceptance of responsibility. See U.S.S.G. § 3E1.1. Although at sentencing he did admit that he was guilty of simple possession of cocaine, he did not accept responsibility for his intent to distribute it. He maintains that to have done so would have rendered a successful appeal a hollow victory. He contends that in the event of retrial his admission to the probation officer and district court could be used against him to prove intent to distribute (a fact which Gordon has contested throughout). Gordon characterizes this as a Hobson’s choice between obtaining a reduction and preserving his right to appeal. He likens the choice to the impermissible situation where a defendant must choose to surrender one constitutional right to assert another one. Simmons v. United States, 390 U.S. 377, 88 S.Ct. 967, 19 L.Ed.2d 1247 (1968). Gordon relies on United States v. Perez-Franco, 873 F.2d 455 (1st Cir.1989), and contends that it supports his position. Although we do not accept the holding and reasoning of Perez-Franco as correct, it nevertheless offers Gordon no support. In Perez-Franco, the First Circuit held that a defendant need only accept responsibility for the count to which he has pled guilty as part of a plea agreement. Id. at 463. We believe the approach taken by the Second and Fifth Circuits is correct and hold that in order for section 3E1.1 of the guidelines to apply, a defendant must first accept responsibility for all of his criminal conduct. See United States v. Moskowitz, 888 F.2d 223 (2d Cir.1989); United States v. Tellez, 882 F.2d 141 (5th Cir.1989). However, a defendant is not penalized for failing to accept responsibility. Rather, acceptance of responsibility is a mitigating factor available under appropriate circumstances.
Gordon further argues that the district judge’s comment that “I don’t really view acceptance of responsibility as a post-guilty finding or plea factor” indicated that he believed that acceptance of responsibility would never be available as a mitigating factor after trial. However, in holding that Gordon was not entitled to the reduction, the district judge also stated that “I don’t think he is automatically denied the two points merely because he goes to trial.” The district court found that Gordon had done nothing to indicate his acceptance of responsibility. Indeed, Gordon’s claim that he was entitled to this mitigating factor while at the same time denying the criminal conduct for which he- was convicted by a jury borders on the frivolous.
The determination of whether to give a reduction under section 3E1.1 of the guidelines is a factual one reviewable under the clearly erroneous standard. United States v. White, 875 F.2d 427, 431 (4th Cir.1989). The sentencing judge is in “a unique position to carefully examine the particular circumstances of each case.” Id. As the district court correctly pointed out, the timeliness of the defendant’s conduct in accepting responsibility is a consideration. U.S.S.G. § 3E1.1, comment, (n. 1(g)). There is nothing in the record to indicate that Gordon was entitled to the reduction for acceptance of responsibility except for his counsel’s assertion that he was sincere in accepting his guilt for simple possession of cocaine. The district court did not clearly err in denying Gordon the reduction for acceptance of responsibility.
IV.
Gordon also challenges the denial of his motion to suppress the cocaine by first arguing that he was “seized” in violation of his rights under the fourth amendment. But, before addressing the constitutional issue, we must first resolve the issue of whether a seizure took place. This determination is a question of fact subject to a clearly erroneous standard on appeal. United States v. Gooding, 695 F.2d 78, 82 (4th Cir.1982). In determining whether a person has been “seized,” the issue is whether “in view of all the circumstances surrounding the incident, a reasonable person would have believed that he was not free to leave.” Immigration & Naturalization Service v. Delgado, 466 U.S. 210, 215, 104 S.Ct. 1758, 1762, 80 L.Ed.2d 247 (1984) (quoting United States v. Mendenhall, 446 U.S. 544, 554, 100 S.Ct. 1870, 1877, 64 L.Ed.2d 497 (1980) (plurality opinion)). We have frequently used this standard in reviewing district court decisions. See United States v. Gray, 883 F.2d 320, 322 n. 2 (4th Cir.1989).
Gordon argues that because the officers had no justification for interfering with his travel this encounter was a seizure. However, the fact that Gordon did not meet a “drug courier profile” and the officers had no other reason to suspect Gordon does not mandate that the officers were prohibited from having a brief police-citizen encounter. Florida v. Royer, 460 U.S. 491, 497, 103 S.Ct. 1319, 1324, 75 L.Ed.2d 229 (1983) (fourth amendment not violated when law enforcement officers merely approach an individual in public and ask him to answer some questions). In fact, it is only when an encounter is classified as a seizure that the court must determine whether there was a reasonable suspicion. United States v. Harrison, 667 F.2d 1158, 1160 (4th. Cir.), cert. denied, 457 U.S. 1121, 102 S.Ct. 2937, 73 L.Ed.2d 1335 (1982).
Gordon argues that an Arlington County, Virginia, ordinance making it a misdemeanor for a person in a public place to refuse to identify himself when requested to do so by a law enforcement officer and the fact that his father was a former police officer who taught him to respect and obey law enforcement personnel demonstrate that he believed that he was not free to leave. But Gordon misinterprets the Mendenhall objective test of whether a reasonable person under the circumstances would have believed that he was not free to leave.
As Gordon testified, the officers were polite and quiet, did not instruct him that he could not leave, did nothing to prevent him from leaving, and did not tell him that he must permit the search. Based on all the facts and circumstances, the district court was not clearly erroneous in finding that there was not a seizure of Gordon’s person.
Gordon also challenges the voluntariness of the search. The voluntariness of a defendant’s consent to a search is a factual question determined in light of the totality of the circumstances and should be upheld unless clearly erroneous. United States v. Peterson, 524 F.2d 167, 178 (4th Cir.1975) (citing Schneckloth v. Bustamonte, 412 U.S. 218, 226, 93 S.Ct. 2041, 2047, 36 L.Ed.2d 854 (1973)), cert. denied, 423 U.S. 1088, 96 S.Ct. 881, 47 L.Ed.2d 99 (1976). Moreover, the government need not demonstrate that the defendant knew of the right to refuse to consent for the search to be deemed a voluntary one. Schneckloth, 412 U.S. at 248-49, 93 S.Ct. at 2058-59. When the officer discovered a bulge in Gordon’s pocket, he asked Gordon what the pocket contained. When Gordon replied, “A sandwich,” the officer asked to see it. Gordon then removed the bag of cocaine from his pocket. The district court was correct in finding that this was a voluntary search.
V.
Gordon also argues that shaking his head in a negative manner in response to a question at the police station of whether he used cocaine, thus implying that the cocaine may not be for personal use, was obtained in violation of his fifth amendment right against self-incrimination. Gordon characterizes the shaking of his head after being asked at the airport where he was taking the cocaine as ending the interrogation so that a subsequent question at the police station without renewed warnings did not “scrupulously honor” his “right to cut off questioning” under Miranda as interpreted by Michigan v. Mosley, 423 U.S. 96, 96 S.Ct. 321, 46 L.Ed.2d 313 (1975). Gordon’s reliance on Mosley is misplaced. Mosley held that the principles of Miranda were not violated when, after a defendant had terminated an interrogation and a significant amount of time had elapsed before another officer sought to question the defendant about an unrelated crime, the Miranda warnings were given again. Here, only a few minutes had passed between the Miranda warnings at the airport and the questioning at the police station. Under these circumstances, it was unnecessary for the officers to recite the Miranda warnings again.
Additionally, the finding by the district court that Gordon did not indicate that he was terminating the interrogation is fully supported by the evidence. In response to whether he would answer questions, Gordon asked, “What do you want to know?” When asked where he was taking the cocaine, he replied by shaking his head. Reasonable interpretations of this act are that he did not know or that he did not intend to answer that question — not that he was refusing to answer other questions. We agree with the district court that Gordon did not indicate that he intended to conclude all questioning. The dissent would hold that Gordon did not waive his Miranda rights. However, a waiver “need not be explicit, but may be inferred from all of the circumstances.” United States v. Hicks, 748 F.2d 854, 859 (4th Cir.1984); see also North Carolina v. Butler, 441 U.S. 369, 373, 99 S.Ct. 1755, 1757, 60 L.Ed.2d 286 (1979) (“The question is not one of form, but rather whether the defendant in fact knowingly and voluntarily waived the rights delineated in the Miranda case.”). Here, Gordon indicated that he understood his rights, did not request counsel, and when asked whether he would answer some questions, responded by asking “what do you want to know.” All of the circumstances support the conclusion by the district court that Gordon waived his rights, a finding which we cannot say was clearly erroneous. See United States v. Smith, 608 F.2d 1011, 1013 (4th Cir.1979). Additionally, his statement at the police station was freely and voluntarily made and not in violation of his fifth amendment right against self-incrimination.
AFFIRMED in part; REVERSED in part; and REMANDED.
. The language of Chapter Three, Part B, Role in the Offense, requires that for an aggravating or mitigating adjustment to apply, evidence of group conduct is necessary. In addition, a defendant’s role in the offense should be weighed against the elements of the offense of conviction. Daughtrey, 874 F.2d at 216.
. Gordon offered no evidence to show that he was aware of this ordinance at the time of his arrest.
. The dissent indicates puzzlement by a discussion of Mosley. However, in his brief Gordon relied heavily on Mosley and urged this court to hold that he had terminated the interrogation at the airport and, thus, because the agents did not inform him of his Miranda rights a second time before beginning questioning at the police station, his Miranda rights were not scrupulously honored.
Question: Were there cross appeals 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.
ON REMAND FROM THE SUPREME COURT OF THE UNITED STATES
Before GOLDBERG, POLITZ and SAM D. JOHNSON, Circuit Judges.
SAM D. JOHNSON, Circuit Judge:
On February 23,1981, this Court reversed the district court and denied the Ku Klux Klan, Realm of Louisiana (KKK) an award of attorneys’ fees against the Department of Health, Education and Welfare (HEW). Knights of K. K. K. v. East Baton Rouge Parish School Board, 643 F.2d 1034 (5th Cir. 1981). The basis of the denial was this Court’s determination that the Civil Rights Attorneys’ Fees Awards Act of 1976 did not allow recovery of attorneys’ fees against the federal government. While the KKK’s appeal was pending before the Supreme Court, the Equal Access to Justice Act (EAJA) went into effect. 5 U.S.C. § 504, 28 U.S.C. § 2412 (West.Supp.1981). Because the EAJA allows attorneys’ fees awards to certain parties prevailing in actions against the federal government, the Supreme Court has now remanded this case, 454 U.S. 1075, 102 S.Ct. 626, 70 L.Ed.2d 609 for reconsideration in light of that Act.
I. Attorneys’ Fees Awards Under the EAJA
Prior to implementation of the EAJA, 28 U.S.C. § 2412 barred an award of attorneys’ fees to the prevailing party in any civil action brought by or against the United States government, unless specifically provided for by statute. The district court in the case sub judice nevertheless awarded the KKK $11,920.41 in attorneys’ fees against HEW without referring to any statutory basis for its award. The KKK had asserted a right to attorneys’ fees after it had prevailed in a 42 U.S.C. § 1983 action against the Baton Rouge Parish School Board (Board) and HEW. This Court reversed the district court on grounds that no statutory authority existed for the award. The KKK contended that the Civil Rights Attorneys’ Fees Awards Act of 1976 (Awards Act), 42 U.S.C. § 1988, provided such statutory authority, but this Court determined that the Awards Act does not possess the “clear or express” language necessary to waive federal sovereign immunity for attorneys’ fees under 28 U.S.C. § 2412.
This Court did not consider the applicability of the EAJA to the instant case because that Act did not become effective until October 1, 1981. The EAJA made significant changes in 28 U.S.C. § 2412. As amended, section 2412 still retains a general provision barring attorneys’ fees and expenses against the federal government, except as otherwise specifically provided by statute. Sections 2412(b) and 2412(d), however, provide two broad statutory exceptions. The most significant change is the statutory exception in section 2412(d), which provides in pertinent part:
[A] court shall award to a prevailing party other than the United States fees and other expenses * * * incurred by that party in any civil action (other than cases sounding in tort) brought by or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.
A party is only eligible for this mandatory fee award if it is a “prevailing” party and meets certain financial eligibility requirements set forth in section 2412(d)(2)(B):
(B) “party” means (i) an individual whose net worth did not exceed $1,000,-000 at the time the civil action was filed, (ii) a sole owner of an unincorporated business, or a partnership, corporation, association, or organization whose net worth did not exceed $5,000,000 at the time the civil action was filed, except that an organization described in section 501(c)(3) of the Internal Revenue Code of 1954 (26 U.S.C. 501(c)(3)) exempt from taxation under section 501(a) of the Code and a cooperative association as defined in section 15(a) of the Agricultural Marketing Act (12 U.S.C. 1141j(a)), may be a party regardless of the net worth of such organization or cooperative association, or (iii) a sole owner of an unincorporated business, or a partnership, corporation, association, or organization, having not more than 500 employees at the time the civil action was filed.
Even if a prevailing party is not eligible for a mandatory attorneys’ fee award, section 2412(b) permits a court in its discretion to award attorneys’ fees and other expenses against the federal government to the same extent it may award fees in cases involving other parties. Under this provision, the federal government is now subject to the “bad faith” and “common benefit/common fund” exceptions to the traditional “American Rule” that litigants bear their own costs, including attorneys’ fees. Under the bad faith exception, an award of fees will be allowed against the losing party if it has willfully disobeyed a court order or otherwise acted in bad faith. See F. D. Rich Co. v. United States ex rel. Industrial Lumber Co., 417 U.S. 116, 129-30, 94 S.Ct. 2157, 2165, 40 L.Ed.2d 703 (1974). Under the “common benefit” exception, a court may award fees to a party where the party’s actions have conferred a substantial benefit upon a class of persons. Id. Under the discretionary award provision in section 2412(b), no financial eligibility requirements are imposed upon a prevailing party.
II. Retroactive Application of the EAJA
The KKK was appealing this Court’s denial of attorneys’ fees when the EAJA became effective as law on October 1, 1981. At the outset, the question arises whether such an action on appeal is covered by the EAJA.
The implementation provision provides that the Act shall apply to any civil action that “is pending on, or commenced on or after” October 1, 1981. Section 208, 28 U.S.C. § 2412 (West Supp.1981). Absent any legislative history to the contrary, an action is “pending” so long as a party’s right to appeal has not yet been exhausted or expired. United States. For Heydt v. Citizens State Bank, 668 F.2d 444, 446 (8th Cir. 1982); Photo Data, Inc. v. Sawyer, 533 F.Supp. 348, 350-51 (D.D.C.1982); Berman v. Schweiker, 531 F.Supp. 1149 (N.D.Ill. 1982). See also Perzinski v. Chevron Chemical Co., 503 F.2d 654, 657 (7th Cir. 1974); Williams v. State, 62 Cal.App.3d 960, 133 Cal.Rptr. 539 (1976); In re Estate of Stith, 45 Ill.2d 192, 258 N.E.2d 351, 353 (1970). The fact that a motion for attorneys’ fees is the only matter pending before a court does not mean that court lacks jurisdiction or that the case is not “pending.” Buckton v. NCAA, 436 F.Supp. 1258, 1262-63 (D.Mass. 1977). Because the Klan’s right to appeal had not expired or been exhausted, its action was “pending” on the effective date for the purposes of applying the Act.
III. Eligibility of the KKK
The KKK meets at least two other threshhold requirements of the EAJA. It is a “prevailing party” in civil litigation against an agency of the federal government. Second, the KKK’s demand for injunctive relief under 42 U.S.C. § 1983 is clearly one kind of civil action in which fees may be awarded under section 2412. The mandatory award provision under section 2412(d) excludes tort actions, but the legislative history of the EAJA notes that constitutional torts are not considered a part of this exclusion. H.R.Rep.No. 96-1418, 96th Cong., 2d Sess. 18, reprinted in 1980 U.S. Code Cong. & Ad.News 4953, 4997. See also Matthews v. United States, 526 F.Supp. 993 (M.D.Ga.1981).
To qualify for a mandatory fee award under section 2412(d), the KKK faces two additional hurdles. First, it must demonstrate that it meets the financial eligibility requirement set forth in section 2412(d)(2)(B), which requires that the organization’s net worth did not “exceed $5,000,000 at the time the civil action was filed ... [or that the organization had] not more than 500 employees at the time the civil action was filed.” Assuming the KKK meets the financial eligibility requirement, the burden shifts to the federal government to prove that its “position” was “substantially justified” or “special circumstances” make an award unjust.
Neither the Act nor the legislative history provides a conclusive answer as to whether the “position” for which substantial justification must be shown is the United States’ litigation position or the United States’ posture in its pre-trial actions. See Alspach v. District Director of Internal Revenue, 527 F.Supp. 225, 228 (D.Md.1981). The test of whether or not a government action is substantially justified is essentially one of reasonableness. H.R.Rep.No. 96-1418, 96th Cong., 2d Sess. 10-11, reprinted in 1980 U.S.Code Cong. & Ad.News at 4989. Where the Government can show that its position had a reasonable basis both in law and fact, no award will be made. This standard represents a middle ground between an automatic award of fees and a restrictive position which would have required the prevailing party to show that Government action was “arbitrary, frivolous, and groundless.” 1980 U.S.Code Cong. & Ad.News at 4993. The “special circumstances” exception provides a safety valve for the Government when it is advancing in good faith a credible, though novel, rule of law. Id.
This Court does not have before it adequate facts to determine whether the KKK meets the financial limitation requirement or whether the Government was substantially justified in its position. Furthermore, the basic role of this Court is merely to review a fee award or denial of an award under the EAJA, modifying it only if the failure to make the award, or the calculation of the amount of the award, was an abuse of discretion. 1980 U.S.Code Cong. & Ad.News at 5012-13.
This cause is therefore remanded to the district court to determine if the KKK qualifies under either the mandatory or discretionary provisions of the EAJA. IT IS HEREBY ORDERED that plaintiff submit an application for fees and other expenses to the district court within thirty days of the issuance of this mandate. See 28 U.S.C. § 2412(d)(1)(B).
The reconsideration of this Court’s judgment in light of the EAJA does not affect this Court’s prior determination that this cause should also be remanded to the district court to determine what amount, if any, of attorneys’ fees reasonably may be assessed against the Board. Accordingly, this Court’s remand for that purpose, as set forth in East Baton Rouge Parish, 643 F.2d at 1040-41, is reinstated.
REMANDED.
. The Supreme Court’s order recites as follows:
Nov. 30, 1981. On petition for writ of certiorari to the United States Court of Appeals for the Fifth Circuit. The petition for writ of certiorari is granted. The judgment is vacated and the case is remanded to the United States Court of Appeals for the Fifth Circuit for further consideration in light of Equal Access to Justice Act, Pub.L.No. 96-481, Sec. 201-08.
. 28 U.S.C. § 2412, recited in pertinent part: Except as otherwise specifícaüy provided by statute, a judgment for costs, as enumerated in section 1920 of this title but not including fees and expenses of attorneys may be awarded to the prevailing party in any civil action brought by or against the United States or any agency or official of the United States acting in his official capacity, in any court having jurisdiction of such action.
(emphasis added).
. In 1975 the Board first granted and then rescinded permission for the KKK to use a high school gymnasium for a public meeting during nonschool hours. The Board’s denial came after an HEW official advised the Board that HEW would institute legal action to cut off federal funds to the Board if the Board allowed the KKK to use public school facilities. The KKK filed suit on November 21, 1975, and, as summarized by this Court’s previous opinion, eventually prevailed upon the merits:
Following a hearing on April 20, 1976, the district court denied plaintiffs motion for preliminary and permanent injunctive relief, and dismissed the suit. The district court’s order was reversed by this Court in Knights of the Ku Klux Klan, Realm of Louisiana v. East Baton Rouge Parish School Board, 578 F.2d 1122 (5th Cir. 1978).
Following remand by this Court, the district court entered a judgment and injunction order that set general nondiscriminatory guidelines to which the Board must adhere in making its facilities available to the public. The court also permanently enjoined HEW “from interfering or attempting to interfere with [plaintiffs] use of school facilities.” The order also stated that the costs of the proceeding were to be taxed against HEW.
643 F.2d at 1036.
. This Court nevertheless found that the Civil Rights Attorneys’ Fees Awards Act of 1976 authorized fee awards against the Board, and remanded the case to the district court to determine what amount, if any, of attorneys’ fees reasonably may be assessed against the Board. East Baton Rouge Parish, 634 F.2d at 1041.
. The Awards Act provides in relevant part:
In any action or proceeding to enforce a provision of section [1983, 1985, 1986] the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney’s fee as part of the costs.
. See also United States v. Bodcaw Co., 440 U.S. 202, 99 S.Ct. 1066, 59 L.Ed.2d 257 (1979); Christianburg Garment Co. v. EEOC, 434 U.S. 412, 415, 98 S.Ct. 694, 697, 54 L.Ed.2d 648 (1978); Alyeska Pipe Line Service Co. v. Wilderness Society, 421 U.S. 240, 247, 95 S.Ct. 1612, 1616, 44 L.Ed.2d 141 (1975).
. Section 2412(b) recites, in pertinent part:
(b) Unless expressly prohibited by statute, a court may award reasonable fees and expenses of attorneys, in addition to the costs which may be awarded pursuant to subsection (a), to the prevailing party in any civil action brought by or against the United States or any agency and any official of the United States acting in his or her official capacity in any court having jurisdiction of such action. The United States shall be liable for such fees and expenses to the same extent that any other party would be liable under the common law or under the terms of any statute which specifically provides for such an award.
. The application of these two exceptions can be quite complex. See Comment, The Equal Access to Justice Act: How to Recover Attorney’s Fees and Litigation Expenses from the United States Government, 13 U.Tol.L.Rev. 149 (1981); Dods and Kennedy, The Equal Access to Justice Act, 50 UMKC L.Rev. 48 (1981); Comment, Theories of Recovering Attorneys’ Fees: Exceptions to the American Rule, 47 UMKC L.Rev. 566 (1979).
. Section 208 recites, in pertinent part:
This title and the amendments made by this title shall take effect of [sic] October 1, 1981, and shall apply to ... any civil action or adversary adjudication described in section 2412 of Title 28, United States Code, which is pending on, or commenced on or after, such date.
. The EAJA applies to certain adversary adjudications before government agencies, as well as civil actions. See 5 U.S.C. § 504 (West Supp.1981). In S & H Riggers & Erectors, Inc. v. OSHRC (S & H Riggers II), 672 F.2d 426 (5th Cir. 1982), this Court declined to view an appeal of an agency adjudication as “pending” for purposes of applying the Act. It distinguished between proceedings at the agency level and proceedings on appeal because the Act referred only to “adversary adjudication” as defined in 5 U.S.C. § 504(b)(1)(C) and not to an appeal from such an adjudication. However, S & H Riggers II explicitly distinguished between an agency adjudication and a civil action:
This is not so for proceedings before a district court versus proceedings on appeal. Our conclusion might differ in a nonagency case.
S & H Riggers II at 428 n.3. See also Donovan v. Dillingham, 668 F.2d 1196, 1199 (11th Cir. 1982).
. Under 5 U.S.C. § 504(b)(1)(B), parties in “adversary adjudications” before government agencies are only excluded from eligibility for mandatory attorneys’ fees awards if they have a net worth exceeding $5,000,000 and have more than 500 employees.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
The jury could disbelieve the appellant’s version of what happened. The evidence otherwise is sufficient to show his guilt.
Having testified in his own behalf, there was no error in permitting impeaching evidence of his general bad character, and his bad character for truth and veracity. 70 C.J., Witnesses, § 1040; Baugh v. State, 215 Ala. 619, 112 So. 157; Johnson v. State, 203 Ala. 30, 81 So. 820; Williams v. United States, 5 Cir., 254 F. 52; Williams v. United States, 5 Cir., 46 F.2d 731; Campbell v. United States, 5 Cir., 47 F.2d 70.
Appellant then introduced testimony that his general character was good. In charging, the judge told the jury all this testimony was admissible. As to that showing good character he added: “That testimony was permissible because it is presumed that a man with a good general reputation is not as likely to commit a crime or violate the law as a person who has not a good general reputation; but I charge you, gentlemen, that men who have good reputations, general reputations, do violate the law.” Exception was taken “to that portion of your honor’s charge in which you said it is presumed a man with a good general reputation would not be as apt to commit a crime”. No ground of objection was stated. There is no error prejudicial to appellant in the words excepted to. What followed was a doubtful propriety, but was not excepted to. No error is established.
Judgment affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
McENTEE, Circuit Judge.
The basic question raised by this appeal is whether the defendant was denied his Sixth Amendment right to a speedy trial. On June 1, 1966 he was indicted in the District of Massachusetts for knowingly transporting certain forged checks in interstate commerce and was scheduled to be arraigned on August 1, 1966. At that time he was serving a state court sentence in the Mississippi State Penitentiary where he remained confined until March 21, 1967. He was then taken into federal custody and thereafter released on bail. After his Mississippi attorney had informed the United States Attorney’s office in Boston on April 17, 1967, that his client was available when wanted, defendant was arraigned on the indictment in Boston on May 22, 1967. He was tried and found guilty on November 17, 1967. On two occasions prior to trial defendant moved to dismiss the indictment for failure of the government to arraign and try him speedily despite the fact that he specifically requested this. The district court denied both motions.
It is from the denial of the second motion to dismiss that defendant appeals. He does not complain of any post-arraignment delays. His complaint is that although August 1, 1966, was fixed as the date for his arraignment, he was not arraigned until May 22, 1967, nearly ten months later; that this delay was purposeful and oppressive, violated his Sixth Amendment right to a speedy trial and for that reason the district court erred in not dismissing the indictment.
As we recently held in Fleming v. United States, 378 F.2d 502, 504 (1st Cir. 1967) mere lapse of time is not enough to establish denial of a speedy trial. There we observed that a delay of eleven months was “very short” and hence not unreasonable. It is essential that defendant also show prejudice or that the delay was improperly motivated. See also Schlinsky v. United States, 379 F.2d 735, 737 (1st Cir.), cert. denied, 389 U.S. 920, 88 S.Ct. 236, 19 L.Ed.2d 265 (1967).
Defendant made no showing of prejudice by reason of the delay. He contends, however, that the delay was improperly motivated — that the arraignment was purposely delayed because he would not cooperate with the FBI in the investigation of other matters. In support of this contention defendant’s counsel points to his client’s testimony that in June 1966 when he was interviewed by an FBI agent at the Mississippi State Penitentiary he requested a speedy arraignment and was informed by the agent that he would be arraigned in Boston on August 1, 1966. Defendant also testified that in a later interview’ (after August 1) with the same agent, relating to other matters, he asked the agent why he did not get him to court in Boston and the agent replied, “You don’t help me — why should I help you.”
The FBI agent testified that the only time he interviewed the defendant was on July 20, 1966, at the Mississippi State Penitentiary; that defendant made no request to him for a speedy arraignment and trial; that the date of August 1, 1966, was not mentioned and that at the time of this interview he did not know that the arraignment had been set for August 1. He further testified that he interviewed the defendant solely to ascertain whether he wished to stand trial in Massachusetts or have the case disposed of in Mississippi under Rule 20, Fed.R.Crim.P.; that defendant told him he wanted a trial and that he did not care to discuss the matter further. The agent testified that he did not have any other interview with the defendant.
On the testimony of these two witnesses, their demeanor and the letter of defendant’s Mississippi attorney dated April 17, 1967, which contained no indication that the defendant was interested in a speedy arraignment or trial, the court found that the defendant never made a request to any federal official for a speedy arraignment or trial and denied his motion to dismiss the indictment. Obviously the court was not impressed by the implications from defendant’s testimony that the arraignment was delayed because of defendant’s failure to cooperate with the FBI or the point later raised at the hearing on the second motion that apparently the FBI agent had two interviews with the defendant even though he stated he had but one. We cannot say that the district court’s findings were plainly wrong.
Affirmed.
. Defendant’s first motion, filed shortly after the arraignment, was heard and testimony taken on August 8, 1967. The district court denied this motion in a written memorandum dated September 15, 1967. At or about that time defendant’s attorney learned of some new evidence bearing on the truth and falsity of testimony given at the August 8 hearing and on October 24, 1967, filed a further motion to dismiss. Both motions raised the same basic issue. On November 20, 1967, a hearing was held on the further motion to dismiss and after argument this motion was also denied.
. At the hearing on the second motion to dismiss defendant’s counsel produced copies of Mississippi State Penitentiary records indicating that this FBI agent interviewed the defendant on July 20, 1966 and again on September 21, 1966. This new evidence was the basis for the second motion.
Question: Were there cross appeals 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.
As to the issues of unseaworthiness and contributory negligence, raised by the respondent’s cross-appeal, we affirm on Judge Dawson’s findings and opinion. 134 F.Supp. 514. The findings which the respondent attacks are not clearly erroneous. And under our recent holding in Poignant v. United States, 225 F.2d 595, it is of no moment that the un-seaworthy condition causing the harm may have arisen after the voyage commenced.
Both libelant and respondent, by appeal and cross-appeal, complain of the trial judge’s award of damages. But the findings on the issue of damages are also ones of fact, Lukmanis v. United States, 2 Cir., 208 F.2d 260, which we cannot disregard unless we are satisfied that they are clearly erroneous, Pedersen v. United States, 2 Cir., 224 F.2d 212 (decided June 9, 1955). Quite clearly, the award here may not be so characterized.
Affirmed as to both appeals.
Question: Were there cross appeals 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.
ALDRICH, Chief Judge.
The defendant, upon request, came to the office of the Internal Revenue Service to discuss his income tax returns. At the interview he was warned by the agents of his right to remain silent, and that anything he said might be used against him. Nothing was said on the subject of counsel. Along with other things not subsequently relevant, defendant acknowledged to the agents that a signature on a certain application for a driver’s license was in fact his. Thereafter he was indicted and this signature was introduced against him at the trial as a specimen for handwriting comparison.
The defendant’s sole contention on this appeal is that the agents’ failure to advise him of a right to counsel before eliciting the statement in question requires its exclusion under Miranda v. State of Arizona, 1966, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694, 10 A.L.R.3d 974. In Miranda, the Court stated as the holding of the case,
“[T]he prosecution may not use statements, whether exculpatory or inculpatory, stemming from custodial interrogation of the defendant unless it demonstrates the use of procedural safeguards effective to secure the privilege against self-incrimination. By custodial interrogation, we mean questioning initiated by law enforcement officers after a person has been taken into custody or otherwise deprived of his freedom of action in any significant way.” 384 U.S. at 444, 86 S.Ct. at 1612.
Equally, the background of Miranda demonstrates that it was the product of the Court’s concern with the difficulty of protecting persons in the custody of the police from coercive interrogation tactics carried on in secret. See Developments in the Law — Confessions, 79 Harv. L.Rev. 935, 954-1022 (1966). That, of course, is not this case. Defendant makes no assertion, nor could he, that he was not free to walk out of the Internal Revenue office at any time. Nor is there any suggestion of trickery or fraud.
There must be reasonable limits to the solicitude required of the government. Defendant would have it appear that it would have been a simple matter to have informed him that he was entitled to counsel. This, however, is no easy solution to what, if the defendant is correct, is a very far reaching question. If the government were obliged to inform a defendant that he was entitled to counsel, presumably it would equally be obliged to supply one if he was financially disabled.
In a Miranda situation there may be thought to be a very real need for counsel. But to say that a government agency must be prepared to suggest, and perhaps supply, counsel at every turn that it asks questions of someone, in addition to advising that there is no need to answer and warning of the possibility of self incrimination, we think goes far beyond any principle of fundamental fairness, and would be an uncalled-for departure. To some extent persons must be prepared to look after themselves. Mathis v. United States, 5 Cir., 376 F.2d 595, 4/28/67. Insofar as any force now remains in United States v. Kingry, N.D.Fla., 1967, 19 Am.Fed.Tax R.2d 762, we decline to follow it.
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.
EBEL, Circuit Judge.
Petitioner, Leonardo Q. Hernandez, appeals from an order of the district court denying his petition for a writ of habeas corpus filed pursuant to 28 U.S.C. § 2254. Hernandez has also moved to proceed in forma pauperis on appeal and for a certificate of probable cause.
In 1978, Hernandez was convicted of first degree murder and sentenced to life imprisonment. That judgment was affirmed on direct appeal. See State v. Hernandez, 227 Kan. 322, 607 P.2d 452 (1980). Hernandez first raised the issue addressed here in a post-conviction motion for relief. Relief was denied on the grounds of procedural default and on the merits. Because the state court denied Hernandez’s motion on the alternative ground that Hernandez’s failure to raise his post-conviction relief issue on direct appeal could not be excused as an exceptional circumstance thus permitting him to raise the issue for the first time in a post-conviction relief proceeding, the issue of procedural default may be available to respondents as a defense. Respondents did not raise this defense either below or on appeal. “Therefore, we will deem the defense waived and will proceed to consider the petition on the merits.” Bailey v. Cowley, 914 F.2d 1438, 1439 (10th Cir.1990).
In his petition in federal district court, Hernandez alleged that the trial court gave the jury an unconstitutional instruction which shifted the burden of proving the element of intent to the defense. The district court agreed, but found the error harmless. Upon review, while we agree the instruction, as given, was unconstitutional, we do not find the error harmless and we reverse.
The instruction Hernandez challenged read:
There is a presumption that a person intends all the natural and probable consequences of his voluntary acts. This presumption is overcome if you are persuaded by evidence that the contrary is true.
Rec. I, Doc. 57.
In Myrick v. Maschner, 799 F.2d 642 (10th Cir.1986), we held that this instruction “unconstitutionally shifted the burden of proving intent to the accused, resulting in a denial of due process.” Id. at 645 (citing Sandstrom v. Montana, 442 U.S. 510, 99 S.Ct. 2450, 61 L.Ed.2d 39 (1979)). Therefore, we agree with the district court that the trial court erred in giving this instruction.
Having found error in the tendering of the ... instruction, we must determine whether the error was harmless under the circumstances of this case. The standard by which we undertake this last step in our review is very strict. Because we deal with an error of constitutional dimensions, we may only allow the conviction to stand if we find beyond a reasonable doubt that the error was harmless. “If the ‘record accommodates a construction of events that supports a guilty verdict, but it does not compel such a construction,’ then reversal is necessary.” Thus at this stage of the analysis we must determine de novo whether the evidence before the jury that the defendant [intended to commit murder] was so compelling the jury would necessarily find [defendant] guilty beyond a reasonable doubt, even without the [erroneous] instruction.
United States v. de Francisco-Lopez, 939 F.2d 1405, 1412 (10th Cir.1991) (citations omitted) (emphasis added).
The district court held the error harmless because (1) Hernandez asserted a defense of self-defense “thus minimizing the importance of the intent instruction,” District Court Memorandum and Order at 2-3 (citing to Connecticut v. Johnson, 460 U.S. 73, 87, 103 S.Ct. 969, 977-78, 74 L.Ed.2d 823 (1983)); (2) the evidence against Hernandez was significant; and (3) the jury was properly instructed that the burden was upon the state to prove guilt, not upon Hernandez to prove his innocence and, therefore, “the improper instruction did not have meaningful effect on the deliberations of the jury.” District Court Memorandum and Order at 2-3. We examine these holdings seriatim.
A defendant’s assertion of self-defense does not necessarily admit intent to commit murder. In Johnson, the Court held that in presenting such a defense, “a defendant may in some cases admit that the act” was intentional. 460 U.S. at 87, 103 S.Ct. at 977-78 (emphasis added). We find no such admission here. Indeed, the defense argued Hernandez did not intend to kill the victim.
The district court also held that significant evidence of intent was presented at trial. In examining this holding, we must “make a judgment about the significance of the presumption to reasonable jurors, when measured against the other evidence considered by those jurors independently of the presumption.” Yates v. Evatt, — U.S. -, 111 S.Ct. 1884, 1893, 114 L.Ed.2d 432 (1991). We first look at what evidence presented to the jury tended to prove or disprove the presumption of intent. Id. Next, we weigh the probative force of that evidence against the probative force of the presumption standing alone. Id.
The evidence showed Hernandez shot and killed a fellow patron of a club in Wichita, Kansas. The two had had prior altercations including one two years previously when Hernandez had been beaten severely enough to require medical attention. The two men argued at the club the night of the murder.
Less than an hour after the argument, Hernandez went to the table where the victim was sitting and fired four shots at him. Two shots to the victim’s head and chest were fatal, the other two, one of which struck the victim in the arm and one of which grazed the victim’s arm, were not. Hernandez was restrained by another patron, Perez. The evidence was unclear whether Hernandez was restrained after only two shots had been fired or after all four shots had been fired. The bartender/eo-owner testified he thought only one shot had been fired prior to the one which hit him in the ankle, apparently after grazing the victim’s arm.
Testimony was presented that after the shooting Hernandez stated: “I did it. I shot him.” Tr. at 397. He also stated two or three times “I been waiting for a long time to do this.” Id. at 465. Hernandez responded to questions from another patron as to why he had shot the victim by saying: “Because he broke my teeth.” Id. at 332.
The defense attempted to discredit this testimony by eliciting the information that one witness was currently on probation following her conviction for forgery. The defense also pointed out in closing argument that the victim’s wife and Mr. Perez did not corroborate any of the statements attributed to Hernandez after the shooting.
The defense presented testimony from an investigating detective that the two nonlethal shots appeared to have been aimed shots because they were close together. This testimony supported the defense’s theory that “the two nonlethal shots were the first shots fired; further, that the two lethal shots were fired while Perez was struggling with defendant, and that the fatal shots were fired when defendant did not have complete control of the gun.” Hernandez, 607 P.2d at 457. Therefore, the defense concluded, Hernandez did not intend to kill the victim.
Another defense witness who overheard the altercation between Hernandez and the victim in the bar that night, testified that the victim had been “bothering” Hernandez. The victim hit Hernandez twice in the face with his hand and kicked him once in the stomach. He also testified that the victim told Hernandez to “go out right now. If you no go now, I’ll wait for you outside and I’ll kill you.” Tr. at 655. The defense thus contended that Hernandez acted in self-defense because he was afraid the victim would again beat him or kill him.
After weighing the probative force of this evidence against the probative force of the presumption standing alone, we cannot say the jury “actually rested its verdict on evidence establishing the presumed fact beyond a reasonable doubt, independently of the presumption.” Yates, 111 S.Ct. at 1893. If the defense’s theory of the events is correct, Hernandez may have intended only to wound the victim. Obviously, he may have intended murder. The evidence is not so strong, however, that we can say Hernandez’s intent to kill was established beyond a reasonable doubt independently of the unconstitutional instruction.
Finally, the district court held that the jury instructions, as a whole, cured any error because the jury was instructed that the state bore the burden of proving guilt. In reviewing this factor, we look at the instructions and apply “that customary presumption that jurors follow instructions.” Id. The jury was properly instructed regarding the state’s burden of guilt. The government, however, appears to have attempted to meet its burden, at least in part, by means of the unconstitutional instruction. Further, “[bjecause a mandatory re-buttable presumption no doubt eases the jury’s task, ‘ “there is no reason to believe the jury would have deliberately undertaken the more difficult task” of evaluating the evidence of intent.’ ” Wiley, 767 F.2d at 683 (quoting Johnson, 460 U.S. at 85, 103 S.Ct. at 976 (quoting Sandstrom, 442 U.S. at 526 n. 13, 99 S.Ct. at 2460 n. 13)). Although some evidence was presented rebutting the presumption, we cannot confidently say the jury’s verdict did not rest on the presumption as well as the evidence. Yates 111 S.Ct. at 1195. Therefore, we cannot say the jury instructions as a whole cured the problem.
The record, while it may support the jury’s guilty verdict, does not compel such a result absent consideration of the unconstitutional jury instruction. “The burden-shifting jury instruction[ ] found to have been erroneous in this case may not be excused as harmless error.” Id., at 1197.
Hernandez’s motion to proceed in forma pauperis on appeal and for a certificate of probable cause is GRANTED. The judgment of the United States District Court for the District of Kansas is REVERSED, and the case is REMANDED with directions to grant the writ if the state court does not retry Hernandez within a reasonable period of time.
. After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed.R.App.P. 34(a); 10th Cir.R. 34.1.9. The case is therefore ordered submitted without oral argument.
. Whether Sandstrom applies retroactively is not an issue here because Sandstrom was decided before the Kansas Supreme Court decided Hernandez’s direct appeal. See Wiley v. Rayl, 767 F.2d 679, 681 n. 1 (10th Cir.1985).
Question: Were there cross appeals 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.
Plaintiffs filed this class action under 42 U.S.C. § 1983 seeking declaratory and injunctive relief for the unlawful practice of the Gary, Indiana police in arresting and holding individuals in excess of twenty-four hours without felony charges or producing them before a magistrate for a determination of probable cause to hold the individuals, contrary to Indiana law, I.C. 18-1-11-8. The class was certified to be those persons without counsel who were arrested and incarcerated for an unreasonable time without compliance with the applicable Indiana statute.
The defendants were various officials of the City of Gary and Lake County, Indiana, including appellant Jack H. Crawford, prosecuting attorney for the 31st Judicial Circuit for the State of Indiana. The district court granted the relief sought in the form of a declaratory judgment and mandatory injunction. Only the prosecuting attorney has appealed.
Count C of the complaint is the only Count before us on appeal, and only insofar as it pertains to defendant Crawford. The prosecuting attorney was not originally named as a defendant. Upon motion of certain other defendants, Crawford’s predecessors in office were named as parties, with Crawford substituted for his predecessors less than a week prior to the entry of judgment.
Prior to amendment, Count C contained allegations only of improper police delay. When the prosecuting attorney was named as a defendant, the following paragraph was added to section III of Count C, no other changes being made in the complaint:
la. After the arrest of one suspected of committing a crime, the police officers are responsible for preparing the case for presentation to the Lake County Prosecuting Attorney who makes the final decision on whether or not to file a charge in a court in Lake County with criminal jurisdiction. Thus there are two possible delays in bringing an accused into court: a) a delay caused by the police in processing the case for presentation to the prosecuting attorney, and b) a delay caused by the prosecuting attorney in the preparation, service and filing of the charge in court. Defendant city officials contend they cannot remedy the delay caused by the defendant prosecuting attorney and his staff.
A state officer named in a suit brought under 42 U.S.C. § 1983 must be in some manner responsible for the alleged deprivation of rights. See Duncan v. Duckworth, 644 F.2d 653 at 655 (7th Cir. 1981) (hospital administrator is appropriate party where prison hospital conditions are subject of suit). In this case, the amended portion of Count C informs us about “two possible delays,” one being caused by the prosecuting attorney in filing a charge. But since Crawford in his capacity as a prosecutor has no authority under Indiana law to order city police to detain arrestees past the statutory time limits, the complaint fails to state a cause of action against him. Unlike the hospital administrator in Duncan, Crawford has no responsibilities that make him a suitable defendant in this case.
It is the city police force and not the prosecutor’s office that has the responsibility under Indiana law to bring before a magistrate those they arrest. Thus, as regards the city police, “[w]henever any arrest has been made by any member of the police force, the officer making the arrest shall bring the person before the court having jurisdiction of the offense, to be dealt with according to law .... But no person may be detained longer than twenty-four [24] hours, except where Sunday intervenes, in which case no person may be detained longer than forty-eight [48] hours.” I.C. 18-1-11-8 (emphasis added; brackets in original).
Custody, then, is vested solely in the city police, not the prosecutor. It is the city police who are by law charged with the duty to honor the statutory time limits or else release the arrestees. Because the prosecutor’s responsibility to conduct criminal cases does not encompass the initial appearance procedure as applied to individuals arrested by city police, the complaint fails to state a cause of action against Crawford.
That is so regardless of the plaintiffs’ assertions in their briefs that the prosecutor is involved at the initial appearance stage because as a matter of practice the prosecutor’s office represents the state’s interests during that proceeding. The plaintiffs’ point is irrelevant, since it is not questioned on appeal that the relief sought in the complaint is directed to the persons having custody of the class members, not to the conduct of the hearing.
The complaint vaguely alleges that there are “two possible delays,” only one of which is attributable to the prosecuting attorney as he is the one who prepares, serves and files a charge in court. It is not alleged that the prosecutor is actually responsible for prolonged detention. Nor is it alleged that the prosecuting attorney has some statutory control over detention which he is ignoring. It cannot be said that under Indiana law a prosecutor who may be merely dilatory in fulfilling the responsibilities of his own office thereby provides local police officials with a waiver of their statutory duties placing a limit on detention. The plaintiffs conclude the only paragraph of their complaint relating in part to the prosecutor by alleging that the other defendants, the city officials, claim they cannot remedy any possible delay caused by the prosecutor. In effect the plaintiffs allege that the defendant city officials claim to have some excuse for their actions in an attempt to shift part of the blame to the codefendant prosecutor. However, not even the codefendants, according to the plaintiffs’ complaint, claim that the prosecuting attorney, somehow by orders or otherwise, causes them to violate the Indiana statute which places the detention restrictions squarely on them, not the prosecutor. The issue is solely detention and neither the complaint nor Indiana law puts responsibility for detention on the prosecutor.
The relief accorded must be directed to those who impinge plaintiffs’ liberty by detabling arrestees for too long a period: i. e., the Gary City police. Complete relief was accorded the class when the district court entered its injunction requiring the city police to promptly bring class members before a court for an initial appearance or else release them from custody. If the prosecutor now wishes to have anything to do with the initial appearances of arrestees, he will have to conform his timetable of participation to that established by statute for the city police, and enforceable under the district court’s order.
Insofar as it relates to the actions of defendant Crawford, the district court’s order is reversed. The rest of the order, directed to the Gary police, remains undisturbed by this decision.
. A prior opinion was issued in this case and is reported at 7 Cir., 638 F.2d 1031. A timely Petition for Rehearing with Suggestion for Rehearing En Banc was filed. That Petition is denied. The original opinion is withdrawn and superceded by this opinion.
. The injunction required the defendants as a group to bring arrestees for an initial appearance before a magistrate within twenty-four hours of arrest, except in certain circumstances. The terms of the injunction did not delineate any action to be taken specifically by the prosecutor. The injunction required the defendants to file with the district court a monthly report that detailed their compliance with the injunction’s terms. Eleven months after entry of the injunction, the district court lifted the defendants’ obligation to make any further reports.
. Counts A and B alleged a variety of conditions at the Gary City Jail that were deleterious to the health of the class members. Those Counts were the subject of a declaratory judgment stipulated to by the parties and approved and entered by the district court. They are not involved in this appeal.
. Cf. Grooms v. Férvida, Ind.App., 396 N.E.2d 405, 411 (1979), where the court notes that the strict time limits contained in I.C. 18-1-11-8 apply solely to city police, and not to the state or county police when they act in concert with the prosecuting attorney. See I.C. 17-3-14-5, defining the powers and duties of the county police. The county and state police forces were not parties to 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: | 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.
PHILLIPS, Circuit Judge.
This is an equitable action, brought by Nicosia against Sher and Yearty to cancel an assignment dated August 25, 1954, executed by Nicosia and running to Sher, covering a one-third interest in the seven-eighths working interest in certain oil and gas leases covering lands in No-wata County, Oklahoma, and to establish and quiet Nicosia’s interest in such leases and for other relief. In his complaint Nicosia offered to do equity.
On June 17, 1955, the trial court entered a judgment cancelling and setting aside such assignment and adjudging that Nicosia was the owner of an undivided one-third of a seven-eighths working interest in a certain oil and gas lease covering 150 acres of land in No-wata County, Oklahoma, and an undivided one-twenty-fourth overriding royalty interest in an oil and gas lease covering 40 acres of land situated in Nowata County, Oklahoma. It further adjudged that Yearty was the owner of an undivided two-thirds of the seven-eighths working interest in such leases, subject to the one-twenty-fourth overriding interest in the 40-acre tract in Nicosia, and that Sher was an owner of an undivided one-third of the seven-eighths working interest in the 40-acre tract, subject to the one-twenty-fourth overriding interest of Nicosia.
It further adjudged that the respective titles of the parties to their respective interests should be quieted.
It further adjudged that Nicosia should immediately pay to Sher $750; that Sher and Yearty should render a verified accounting showing all income and expenses incurred in drilling operations and completion of wells on such leases from the commencement of the first well on August 31, 1954, to the date of the judgment, and that upon final approval of such accounting, that each party to the action pay his proper share of the expenses incurred, less his proportionate share of income derived from the sale of oil and gas, or either, within 15 days after such approval. It further ordered that the parties execute and deliver to each other instruments which would give full force and effect to the provisions of the judgment.
By the judgment the court appointed a receiver of the 150 acres of land. The parties rendered an accounting and on September 16, 1955, the master filed his report, in which he found that the contribution to be made by Nicosia as his pro rata share of the cost of drilling, completion, and operation of the wells, after the allowance of proper credits, was $8,744.65. On September 27, 1955, the court entered an order approving the report. Thereafter, on October 28, 1955, Sher and Yearty filed a motion to vacate and set aside the judgment on the ground that Nicosia had not complied with the judgment by paying $750 to Sher and had not paid the $8,744.65 within 15 days from September 27, 1955, nor within a ten-day extension thereof, granted by the court, which expired on October 22, 1955, and that numerous creditors were threatening to file liens against the leasehold, and that the continuance of the receivership would be unnecessarily burdensome and expensive.
On November 23, 1955, the trial court entered a judgment in which it sustained the motion and adjudged that the findings of fact, conclusions of law, and judgment entered in favor of Nicosia and against Sher and Yearty be set aside and held for naught on the ground that Nicosia had not complied with the former judgment and decree of the court, and counsel for Nicosia had notified the court that “they were not complying with the judgment and decree of the court heretofore entered * * By such judgment of November 23, 1955, the court quieted the title in Sher and Yearty against Nicosia in the leases and against all assignees under all assignments made by Nicosia. From the last-mentioned judgment, Nicosia has appealed.
Nicosia did not appeal from the first judgment and it became final.
Under the law of Oklahoma, Nicosia, in order to be entitled to a cancellation of the assignment, was required to do equity.
Where the rules and principles of equity demand it, a court may condition the grant of relief to the complainant, in order to place the defendant in the position which equitably he should occupy in view of the relief granted to the complainant.
The conditions of the relief do not constitute an affirmative decree .against the plaintiff. He may perform them or not at his option. However, if the plaintiff fails and refuses to perform the conditions, the court may deny plaintiff all relief and dismiss his action.
Here, Nicosia failed to comply with the conditions within the time required by the judgment, or at all, to the prejudice of Sher and Yearty and at the hearing on the motion Nicosia announced to the court that he would not comply. It follows that the action of the court in its second judgment was proper.
Affirmed.
. 15 O.S.A. § 235; Duncan v. Keechi Oil & Gas Co., 75 Okl. 98, 181 P. 709.
. Levy v. S. H. Kress & Co., 8 Cir., 285 F. 836, 839; Walden v. Bodley, 14 Pet. 156, 164, 39 U.S. 156, 164, 10 L.Ed. 398; Ingalls v. Ingalls, 257 Ala. 521, 59 So.2d 898, 911; Johnston v. San Francisco Sav. Union, 75 Cal. 184, 16 P. 753, 756; 30 C.J.S., Equity, § 602, p. 994; 19 Am. Jur., Equity, § 412, p. 284.
. Harwell v. Harding, 96 Ill. 32, 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.
MeCREE, Circuit Judge.
This is an appeal from a judgment of the District Court, entered on a jury verdict, dismissing appellant’s suit with prejudice. The questions presented are whether certain damage which occurred on April 22, 1960 to one of appellant’s electrical transformers is within the coverage of an insurance policy written by appellee and, if so, whether the District Court’s judgment must still be affirmed because the judge erred in holding that appellant had produced sufficient evidence to create a fact question for the jury, thus requiring his denial of appellee’s motion for a directed verdict. Jurisdiction is based on diversity and the law of Kentucky controls. Erie R. R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).
Appellant is a public utility serving Louisville and Jefferson Counties in Kentucky. The damage in question was caused by a malfunction within the transformer involving electrical arcing and resultant electromotive forces. Whether an explosion of some of the oil which was circulated through the transformer as an insulator and coolant also occurred is disputed.
Appellant instituted this action in the Jefferson County Circuit Court to recover appellee’s pro rata share of the liability for the loss. The cause was thereafter removed to the District Court and was tried before a jury. The District Judge instructed the jury that appellant could not recover under the policy unless it found that the electrical arcing was followed by an explosion which, apart from other causes, resulted in more than two hundred dollars damage. He then submitted to the jury the following interrogatory :
Did an ensuing explosion, following an electrical arc, occur in either the selector switch compartment or the main tank of the transformer, which was followed by some damage caused by the explosion in the compartment where it took place in excess of $200?
The jury answered this in the negative and pursuant to his further instructions, returned a verdict for appellee. Judgment was entered accordingly, and this appeal followed.
Appellant contends that the District Court’s charge to the jury was erroneous and that it is entitled to recover under the policy if the arcing caused an explosion and if the arcing and explosion together produced total damage in excess of two hundred dollars. We hold that the policy should be construed in this manner and that the judgment of the District Court should therefore be reversed.
The policy’s “explosion clause” provides: “This Company shall not be liable for any loss by explosion unless such loss (including loss, if any, by ensuing fire) exceeds $200 * * Although the total damage to the transformer in this case exceeded one hundred thousand dollars, most, if not all, of the damage was apparently caused by the arcing and electromotive forces. Whether damage of this type can be considered in determining that a “loss by explosion” in excess of two hundred dollars occurred requires consideration of another provision of the explosion clause which states:
The coverage of loss by explosion under this endorsement shall include direct loss by any artificial electrical disturbance immediately preceding and causing such explosion * * *.
We hold that this provision can reasonably be construed to define the term “loss by explosion” and, therefore, permits consideration of the damage from the electrical arcing for the purpose of determining whether the minimum insured loss was incurred by appellant.
The distinction, urged by appellee, between the “coverage of loss by explosion” (our emphasis) and the definition of such loss is neither clear nor obvious. It is just as reasonable to view these provisions as insuring against all covered losses, subject only to the condition that they exceed a minimum amount. So construed they would be analogous to the familiar deductible provisions of many automobile collision insurance policies. Although appellee may not have intended to provide this coverage when it issued the policy, it is clear that the language of the agreement must determine its legal consequences. Under Kentucky law, if two constructions of policy language are reasonable, the one favorable to the insured must be adopted. State Mutual Life Assurance Co. of Worcester, Mass. v. Heine, 141 F.2d 741 (6th Cir. 1944).
With regard to the second question presented, we hold that the District Court did not err in denying appellee’s motion for a directed verdict. Appellee contends that a rupture in the transformer’s pressure relief device might constitute an explosion within the terms of the policy but that it is clear that mere vaporization and decomposition of oil does not. Although in a similar case, Baltimore Gas & Electric Co. v. United States Fidelity and Guaranty Co., 166 F.Supp. 703 (D.Maryland, 1958), rev’d on other grounds, 269 F.2d 138 (4th Cir. 1959), the jury seems to have accepted this proposition, we cannot say that it is true as a matter of law.
There is testimony in the record that the decomposition and vaporization of oil, which necessarily accompanies any arcing which occurs in the parts of the transformer through which this liquid is circulated, constitutes an explosion. It is for the jury to evaluate this testimony and to determine whether the occurrence of these phenomena in the instant ease was within the meaning of the term “explosion” as it is used in the explosion clause of the policy as defined by the court in its instructions.
The judgment of the District Court is reversed and the case is remanded for a new trial.
. Appellee is one of several companies which had insured the transformer.
. The explosion clause is contained within the Extended Coverage Endorsement of the policy and provides :
Provisions Applicable Only to Explosion : The coverage of loss by explosion under this endorsement shall include direct loss by any artificial electrical disturbance immediately preceding and causing such explosion and shall include direct loss resulting from the explosion of unfired pressure vessels or accumulated gases or unconsumed fuel within the firebox (or the combustion chamber) of any fired vessel or within the flues or passages which conduct the gases of combustion therefrom.
This Company shall not be liable for any loss by explosion unless such loss (including loss, if any, by ensuing fire) exceeds $200 and then only for this Company’s pro rata part of the amount of such excess; nor shall this Company be liable for loss by explosion, rupture or bursting of:
(a) steam boilers, steam pipes, steam turbines or steam engines; or
(b) rotating parts of machinery caused by centrifugal force; if owned by, leased by or actually operated under the control of the Insured.
The following are not explosions within the intent of meaning of these provisions :
(a) concussion unless caused by explosion,
(b) electrical arcing,
(c) water hammer,
(d) rupture or bursting of water pipes.
Any other explosion clause made a part of this policy is superseded by this endorsement.
. The parties agree that electrical arcing is an artificial electrical disturbance within the meaning of the terms of the explosion clause.
. Vaporization of oil, according to this testimony, can cause the volume which the oil occupies to increase rapidly by a factor as high as fifteen hundred, depending on conditions.
. We observe that it seems unlikely that this term was intended by the parties to include every instance of vaporization and decomposition caused by electrical arcing. Such a conclusion would render meaningless that part of the explosion clause which provides:
The following are not explosions within the intent or meaning of these provisions :
* * *
(b) electrical arcing * * *.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
CLARK, Circuit Judge.
This appeal raises the question of liability of a forwarding steamship carrier, under a through bill of lading, for damage by reason of rain and spray to a cargo of wool, owned by libelant and stowed on deck of the steamer. The district court exonerated the carrier on the ground that such on-deck stowage had been agreed to by representatives of the shipper and owner of the goods and was proper under the circumstances. Libelant denies that it as owner ever consented, and rests its basic claim of error in the decision on the ground that a “clean” bill of lading negotiated to innocent purchasers does not permit of such a change from the terms of the original contract of carriage.
In December, 1936, and January, 1937, libelant, a New York importing concern, had purchased 321 bales of wool from one Zariffa, in Cairo, Egypt, by cable exchanges. Terms were C. & F., and libel-ant, immediately on contracting for the purchase, opened a letter of credit in favor of Zariffa at London banks through American banking corporations. The banks were instructed to honor Zariffa’s drafts with bills of lading attached.
At Alexandria, Egypt, Zariffa, between January 26 and February 19, 1937, delivered the wool to D. C. Pitellos & Co. in five lots for shipment, notifying libelant by telegraph as each delivery was made. Pitellos & Co. issued five similar negotiable bills of lading stating that varying numbers of bales of wool had been shipped in apparent good order at Alexandria for delivery in New York and Philadelphia to libelant’s bankers or their assigns as consignees. Each bill provided for transshipment of the goods at Port Said by a named vessel “or other suitable steamer.” On the face of the bills, after designation of the number of bales of wool and their weight, and the directions for their transshipment at Port Said, there appeared printed in small capitals the words “Subject to All the Terms and Conditions Contained in the Bills of Lading at Present in Use By: Messrs. -.” The blank following the word “Messrs.” was on four of the bills completed with -the typewritten words “The oncarrying line of steamers”; in the fifth case a specific name had been typed in, only to be crossed out and the same phrase as in the other bills added by pen and ink. The bills also contained some twenty-seven numbered and three unnumbered conditions and reservations printed in small type, among which were separate provisions exonerating Pitellos & Co. and the carrier from all liability for delay in forwarding, and other provisions that goods forwarded were subject tó the conditions and exceptions of the forwarding or carrying conveyance. The bills did not, however, contain permission for on-deck carriage.
The goods were freighted below decks from Alexandria to Port Said. At Port Said, in some manner not disclosed by the record, the wool came under the control of Wm. Stapledon & Son, whose letterhead shows them to be agents for several steamship lines, but not including any concern participating in the transaction now before us. Stapledon & Son experienced considerable difficulty in finding a suitable ship for on-carriage to the United States. At length, toward the end of February, Staple-don & Son arranged with the Port Said & Suez Coal Co., agents for the charterers of the Idefjord, to carry'the wool on the Idef-jord, above deck, at shipper’s risk across the Mediterranean, with restowage in the hold at Casablanca. Libelant asserts a complete lack of proof as to whether or not Stapledon & Son were authorized by the shipper, Zariffa, to contract for on-deck carriage; but in the view we take of the case, Zariffa could not give such authority, had he tried to do so, unless he noted that fact on the original bills of lading before presenting them.
The wool was placed on the Idefjord’s deck, and nonnegotiable bills of lading were prepared on February 27, 1937, by the Port Said & Suez Coal Co., stating the terms of carriage and expressly providing for stowage “on deck at shippers’ risk till Casablanca only where goods must be re-stowed in hold.” It does not appear that these bills were ever issued to the shipper, though the previous correspondence and the' master’s receipts were to a similar effect. Before the Idefjord sailed, its captain was presented with, and he accepted, the “captain’s copy” of each of the five original Alexandria bills of lading. By that time four of these original bills, together with sight drafts and other documents of sale and transfer, had been presented by Zariffa to- the London banks, and Zariffa’s drafts had been honored. And, pursuant to the instructions given earlier, the last bill was so honored on March 2, 1937.
When the wool was damaged en route, libelant filed this libel against the Idefjord. The district court held that' Stapledon & Son had possessed apparent authority to bind all parties interested in the wool to a contract for stowage on deck at shipper’s risk. It also ruled that the damage to the wool had been caused solely as a result of its shipment on deck, and that the Idefjord had not been negligent in its stowage or in departing from Port Said loaded slightly above its summer marks. The Idefjord, D. C. S. D. N. Y., 31 F.Supp. 667.
We see no reason to disturb the finding that the damage was due solely to the on-deck carriage, and accept the lower court’s conclusion that the Idefjord and its crew were otherwise free from negligence. The only substantial issue remaining in the case, as we view it, concerns the privilege of the Idefjord to agree with Stapledon & Son for on-deck carriage, in view of the outstanding Alexandria bills of lading.
1. The Idefjord contends that its liability must be measured by its own contract of carriage, as expressed in the nonnegotiable bills of lading which it prepared at Port Said, with the statement “on deck at shippers’ risk” typed thereon. It is argued that the Idefjord could not have been bound by any of the terms or conditions of the original Alexandria through bills, even though the Idefjord’s captain was presented with his copies thereof. We are not disposed to accept this measure of the on-carrying steamer’s responsibility.
The Alexandria through bills of lading were negotiable, and upon their presentation with drafts to the London banks the seller received his money. This was by no means an' unusual or an unreasonable course of business.' The Idefjord, having notice of the existence and terms of these bills, knew, therefore, that commercial drafts were being or might be honored in reliance on the normal conditions of carriage set forth therein. Under these .circumstances we do not believe it was free to arrange carriage of the cargo in substantial disregard of the original agreement. The T. A. Goddard, D. C. S. D. N. Y., 12 F. 174, 182; The Cayo Mambi, 2 Cir., 62 F.2d 791, 792. The authority of Stapledon & Son to vary that agreement was not known to the Idefjord; even if Stapledon & Son had obtained the requisite permission from the seller, the Idefjord was on notice, from the terms of the bills, that the seller or order was not the consignee of the goods and therefore might not and probably did not possess valid authority to bind whosoever might be the holder of the negotiable through bills of lading. Unless a duty on the part of the on-carrying steamer to comply with the through bill be recognized, no protection can be afforded to the banks and merchants who are accustomed to rely upon such arrangements for financing imports. Nor does the imposition of this obligation confront the Idefjord with Hobson’s choice; it was free to reject the cargo if it was unable to carry it as required by the through bills of lading.
Cases which have been cited to us as containing language supporting the opposite view, such as Reid v. Fargo, 241 U.S. 544, 36 S.Ct. 712, 60 L.Ed. 1156; The Cayo Mambi, supra; Miller v. Harvey, 221 N.Y. 54, 57, 116 N.E. 781, L.R.A.1917F, 559; and Briggs v. Boston & L. R. Co., 6 Allen, Mass., 246, 83 Am.Dec. 626 — to which may be added Aberdeen Grit Co. v. Elierman’s Wilson Line, (Court of Session) [1933] Sess.Cas. 9 — are not opposed in fact. Many of these did not involve variation of the terms of negotiable through bills of lading, and in none of them does it appear that the on-carrying conveyance had notice of the terms of the original through agreement. We read The Cayo Mambi, supra, for example, as sustaining our position. Certain language in The St. Hubert, 3 Cir., 107 F. 727, 732, and in Crossan v. New York & N. E. R. Co., 149 Mass. 196, 198, 21 N.E. 367, 3 L.R.A. 766, 14 Am.St.Rep. 408, taken from its context does lend more support to claimant’s position. Limited to their facts, however, both these holdings are not pertinent to the present aspect of the case. In The St. Hubert, supra, it did not clearly appear whether or not the through bills were negotiable; in any event, certain clauses of the through bills were construed as authorizing the variations later made — a circumstance we refer to at length below. In the Crossan case, again no problem of negotiability was involved, and the on-carrier ran the risk of a lawsuit by the plaintiff if it were to refuse, as a common carrier, to carry the shipment. The Idefjord was in no such danger. It was already loaded above even its summer marks, and no rule of law compelled it to accept further on-deck cargo, even when tendered by the owners thereof. Indeed, the alternative of delay in the forwarding was provided for in the original bills.
2. The Idefjord next contends that the variation it inserted in the contract of carriage was expressly authorized by "the terms of the original Alexandria bills. It was within the contemplation of all parties that the cargo would be transshipped at Port Said, and on-carried to New York by another steamship line. The provision that the forwarding shipment should be subject to the conditions of the bills of lading at present in use by the on-carrying steamers, or some equivalent expression, such as the “regular” bills of lading of the on-carrier, seems not infrequent. It had the effect of incorporating into the original bills of lading whatever terms were to be found in the regular printed form of bill of lading used by the Idefjord, so long as those terms were not inconsistent with the original bills. Bank of California v. International Mercantile Marine Co., 2 Cir., 64 F.2d 97; The Cayo Mambi, supra; The Hibernian, [1907] P. 277 (especially the opinion of Fletcher Moulton, L. J., at 282). Cf. Scrutton on Charterparties and Bills of Lading, 14th Ed. 1939, 84. But this clause would be of no help to the Idefjord, since the provision for on-deck carriage was not part of the Idefjord’s printed form bill of lading, but was typed over the printed form for this particular contract of affreightment. It was in no sense a term of the bill of lading “at present in use by Messrs.-The oncarrying line of steamers.” Even if it were, it could hardly be said to be consistent with the original bills.
Each of the original bills also contained as a part of Clause 7 the provision that “Goods transhipped, overcarried or destined for ports where the ship does call will be forwarded at ship’s expense but subject to the conditions and exceptions of the forwarding conveyance" which was substantially repeated at the end of the bill, as follows: “This Bill of Lading shall be construed and governed by English Law, and shall apply from the time the goods are received for shipment until delivery, but always subject to the conditions and exceptions of the carrying conveyance.’' (Italics added.) This provision must be construed in the light of the earlier provision referring to the regular bills or the bills “at present in use” by the on-carrier. The earlier provision, being filled out for the occasion by typing or handwriting,. would be preferred if there were any inconsistency between them. Pacific Rice Mills v. Westfeldt Bros., 5 Cir., 31 F.2d 979; Deutschle v. Wilson, 8 Cir., 39 F.2d 406; Thomas v. Taggart, 209 U.S. 385, 389, 28 S.Ct. 519, 52 L.Ed. 845, affirming In re Jacob Berry & Co., 2 Cir., 149 F. 176. In any event, this added provision did not mean that the second carrier might propose, and the initial carrier might agree to, any sort of harsh, arbitrary conditions of carriage. We may assume it did mean that on-carriage need not accord strictly with the terms of the original bills. Aberdeen Grit Co. v. Ellerman’s Wilson Line, supra. But the most this clause can mean is that by the express provisions of the Alexandria documents, the initial carrier or its representative and the Idefjord might arrange reasonable terms for carriage of the goods, in line with the latter’s ordinary forms of contract and not fundamentally inconsistent with the original bills.
The case therefore turns on whether or not a contract for on-deck carriage at shippers’ risk was such a reasonable one under the circumstances. We do not think it was. The very essence of the' C. & F. contract was payment on presentation of a clean bill of lading. As stated above, the Idefjord was chargeable not only with notice of the existence of outstanding clean negotiable bills, but also with knowledge that such bills might be transferred to innocent parties in the regular course of trade. It is settled beyond dispute that a clean bill of lading negatives on-deck carriage of goods such as wool. The Delaware, 14 Wall. 579, 604, 20 L.Ed. 779; St. Johns N. F. Shipping Corp. v. S. A. Companhia Geral Commercial, 263 U.S. 119, 124, 44 S.Ct. 30, 68 L.Ed. 201, affirming The St. Johns N. F., 2 Cir., 280 F. 553; The Gran Canaria, D. C. S. D. N. Y., 16 F. 868, 872. It has even been held that a captain cannot issue a clean bill if the goods are stowed above deck. The Kirkhill, 4 Cir., 99 F. 575, 578. Had the on-deck provision been noted on the original bills, they might in all probability never have been honored by the London banks. By carrying the goods above deck, knowing that fact was not marked on the original bills, the Idefjord allowed a fraud to be worked upon any one who might innocently pay value for the bills. The Kirkhill, supra. The contract for on-deck stowage, therefore, cannot be deemed consistent with the original bills, or reasonably within the contemplation of the parties. It may have been true that the alternative of allowing the goods to remain in Port Said until below-deck stowage became available was fraught with danger to the value of the cargo; but such a course was authorized by the provisions in the original bills waiving liability for delay in transshipment. On-deck carriage was not.
The view we have taken does not conflict with The St. Hubert, supra, Reid v. Fargo, supra, or cases like Crossan v. New York & N. E. R. Co., supra, and Aberdeen Grit Co. v. Ellernian’s Wilson Line, supra. The reasonableness oí the variation depends on the circumstances of the particular case, and upon whether or not a clean negotiable document of title is outstanding. The variations in the decisions above cited were either of the sort ordinarily to be expected in different bills of lading or eminently reasonable under the situation confronting the on-carrying conveyance. In none of those cases was the variation one which could work harm upon an innocent third party.
3. We find necessary only brief comment on the other contentions advanced. The supposed proof that the buyer ratified the arrangement for on-deck stowage is not convincing. Knowledge was not brought home to the libelant before the ship sailed; only the shipper knew, and he appears to have done nothing except to write libelant a letter delivered in America long after the damage was done. But after all, he had stepped out of the picture and was perhaps well advised in so doing. That libelant affected insurance when it received the shipper’s letter on March 17, 1937, and did not seek to disaffirm its purchase, can have no bearing here; the bills had already been presented, and libelant’s responsibility to the holders fixed. Cf. Hansson v. Hamel & Horley, [1922] 2 A. C. 36, 46; Harper v. Hochstim, 2 Cir., 278 F. 102, 103, 20 A.L.R. 1232. And though it is claimed that the ship’s liability in a suit in rem is measured by the contract of her master, and not by an antecedent agreement with third persons, not the agents of the ship, yet the Idefjord, by accepting the cargo for carriage with knowledge of the clean through bills, made the issuer of those bills its agent. It could not then accept the goods under its own conditions,' and it was bound in rem for right delivery. The Sprott, D. C. S. D. N. Y., 70 F. 327; The Poznan, D. C. S. D. N. Y., 276 F. 418.
The decree is reversed, with directions to the district court to enter a decree in favor of libelant, and to proceed to assess the damages, by reference or otherwise as it shall determine.
Before he resigned Judge PATTERSON heard the argument of this appeal, and voted at the conference to reverse the judgment. Since his resignation he has read this opinion and authorizes us to say that it accords with his views.
Here the buyer’s bank or order, rather than the seller or order, was the named consignee. The only effect of this variation, so far as concerns ns here, was to take the seller out of the picture at once, as the carriers would then see at a glance.
Moreover, the decision of the second carrier in the Orossan. case was eminently reasonable under the circumstances. 'The only variation was in the amount of the freight to be charged; and had the shipment of horses been refused, the cost of their upkeep would probably have exceeded the amount of the. disputed freight charge. The reasonableness of the variation imposed by the Idefjord — on-deck carriage — is discussed 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: | 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.
EDWARDS, Circuit Judge.
This case presents two important issues. The first is whether a Title VII civil rights employment discrimination ease brought by a federal government employee under 42 U.S.C. § 2000e-16(c) (Supp. II, 1972) entitled her to a trial de novo before the United States District Court. We answer this question “Yes.”
The second is whether the District Judge properly dismissed appellant’s claim of racial discrimination in the Veterans Administration’s choice of a white female applicant named Dolores Wehner for the post of Supervisory Clerk at the Brecksville, Ohio, Veterans Administration Hospital over appellant Mary Ann Abrams, a black woman who scored highest when qualified applicants were certified by a rating panel under the Veterans Administration’s own promotion plan. Our consideration of this entire record convinces us that plaintiff-appellant carried the burden of proving a prima facie case of racial discrimination and we vacate the District Court’s judgment and remand the case for reconsideration under a different allocation of the burden of proof than that which the court employed.
THE TRIAL DE NOVO ISSUE
In 1972 Congress took steps to extend to federal employees the protections against discriminatory employment practices which employees in private industry had enjoyed since 1965. See 42 U.S.C. §§ 2000e-2, 2000e-5 (1970). The antidiscrimination provisions pertaining to federal employees were adopted in 42 U.S.C. § 2000e-16(a) (Supp. II, 1972) and were made enforceable in the first instance by the Civil Service Commission. 42 U.S.C. § 2000e-16(b) (Supp. II, 1972). In 42 U.S.C. § 2000e-16(c) (Supp. II, 1972) Congress also provided that within thirty days of receipt of notice of final adverse action by the Civil Service Commission “an employee . may file a civil action as provided in section 2000e-5 of this title.”
Section 2000e-5 is the section which grants employees in private industry a “civil action” for racial discrimination. It does not in express terms grant private employees a “trial de novo,” but it is now settled law that its provisions have that effect. In the concluding paragraph of Justice Powell’s opinion for a unanimous Supreme Court in Alexander v. Gardner-Denver Co., 415 U.S. 36, 94 S.Ct. 1011, 39 L.Ed.2d 147 (1974), the Court held:
We think, therefore, that the federal policy favoring arbitration of labor disputes and the federal policy against discriminatory employment practices can best be accommodated by permitting an employee to pursue fully both his remedy under the grievance-arbitration clause of a collective-bargaining agreement and his cause of action under Title VII. The federal court should consider the employee’s claim de novo. The arbitral decision may be admitted as evidence and accorded such weight as the court deems appropriate.
Alexander v. Gardner-Denver Co., supra, at 59-60, 94 S.Ct. at 1025, 39 L.Ed.2d at 164.
See also McDonnell Douglas Corp. v. Green, 411 U.S. 792, 799, 93 S.Ct. 1817, 1822, 36 L.Ed.2d 668, 676 (1973).
We recognize, of course, that the Gardner-Denver case dealt with private rather than federal employees. But in 42 U.S.C. § 2000e-16(d) (Supp. II, 1972) Congress said that the provisions construed above should govern civil actions brought by federal employees:
(d) The provisions of section 2000e-5(f) through (k) of this title, as applicable, shall govern civil actions brought hereunder.
Even without the Supreme Court’s explicit establishment of de novo trial for private employees under Title VII, we would have believed that Congressional grant of a right to “file a civil action” should be construed as a right to a “trial” rather than to an appeal upon the record made before the Civil Service Commission. Of course, as indicated in footnote 21 from Gardner-Den ver above, the District Court has discretion to admit the prior record (there arbitral) and to give weight to the prior decision. But as we understand trial de novo, admission of an administrative record by no means precludes the taking of additional evidence or even rehearing the testimony of key witnesses.
We shall not proceed further with this discussion. The ambiguities of the legislative history have been amply discussed in the conflicting decisions listed below. This exact issue is now pending before the Supreme Court in Chandler v. Johnson, 515 F.2d 251 (9th Cir. 1975), cert. granted sub nom. Chandler v. Roudebush, 44 U.S.L.W. 3179 (U.S. Oct. 6, 1975) (No. 74-1599). We state our view so that it can be weighed along with the generally similar views of the Third, Seventh and D.C. Circuits (See Sperling v. United States, 515 F.2d 465 (3d Cir. 1975), petition for cert. filed, 44 U.S.L.W. 3107 (U.S. Aug. 15, 1975) (No. 75-247); Caro v. Schultz, 521 F.2d 1084 (7th Cir. 1975), petition for cert. filed sub nom. Simon v. Caro, 44 U.S.L.W. 3346 (U.S. Dec. 1, 1975) (No. 75-784); Hackley v. Roudebush, 520 F.2d 108 (D.C.Cir. 1975)) and with conflicting views of the Eighth, Ninth and Tenth Circuits (See Haire v. Calloway, 526 F.2d 246 (8th Cir. 1975); Chandler v. Johnson, supra; Salone v. United States, 511 F.2d 902 (10th Cir. 1975), petition for cert. filed, 43 U.S.L.W. 3684 (U.S. June 19, 1975) (No. 74-1600)).
On this issue we reject the contentions of the government. The District Judge essentially granted appellant a trial de novo, although he admitted the full administrative record and did set certain limits on additional evidence. We have written on this matter partly to express our circuit’s point of view on an important issue, and partly to make clear that on the remand which we subsequently order, the District Judge has wide discretion to hear any evidence which would be admissible in a case containing no prior record if it is tendered and such evidence is not objectionable as redundant or cumulative.
THE RACE DISCRIMINATION ISSUE
This controversy begins with the Veterans Administration’s announcement on June 16, 1972, that there was an opening for the position of Supervisory Clerk (Chief, Ward Administration Section) at a GS-7 classification at a salary of $9,053 — $11,771 at the Brecksville, Ohio, Veterans Administration Hospital. Appellant Mary Ann Abrams, who then was employed at the hospital as a secretary-stenographer with a GS-5 classification, applied for the position under the hospital’s Merit Promotion Plan. The announcement of the vacancy for the position of Supervisory Clerk stated that applications would be accepted under the Merit Promotion Plan. It also stated:
It is our policy to fill vacancies by selection from the ‘best qualified’ applicants available. Normally vacancies will be filled through the promotion plan; however, to insure selection from the ‘best qualified’ persons, concurrent consideration may be given persons known to be available for transfer, reinstatement, reassignment, voluntary change to lower grade, or by appointment from the outside. Regardless of the placement action, there will be no discrimination because of sex, race, color, religion, national origin, lawful political affiliation, marital status or physical handicap.
The Merit Promotion Plan called for the rating of applicants for promotion by a rating panel appointed by the hospital superintendent. The panel rated applicants as to basic qualifications, additional experience, education and training, employee awards, outside activities, and supervisory evaluations. According to the plan the panel makes a numerical rating of each applicant without knowing the applicant’s name and within five days forwards an alphabetical list of those eligible to the “selecting official.” The selecting official then interviews the eligible candidates and within five days announces the selection.
In this instance on July 25, 1972, the five applicants with the highest ratings and the individual scores were certified to the selecting official, James E. McGhee. Their scores were as follows:
Mary Ann Abrams 93
Lillian Mark 92
Joan H. Allen 89
Miriam Merleno 89
Bernice Bene 89
A supplement dated the same day was attached to the certificate stating: “The name of Delores M. Wehner, Supervisory Clerk, GS-8 VA Hospital, Cleveland, Ohio, is referred for consideration for reassignment and change to lower grade.”
McGhee testified that the next day, July 26, 1972, he went to the VA Hospital in Cleveland on business and there interviewed Miss Wehner whom he had heard highly recommended by her supervisor. Without interviewing the persons on the certified promotion list before making his decision, as contemplated by the promotion plan, McGhee decided to offer the position to Miss Wehner. The record indicates, however, that Wehner had been rated 83 by the same rating panel — ten points lower than appellant. Subsequently, McGhee was instructed by the Acting Superintendent of the hospital to interview all of those on the certified promotion list. McGhee did so, telling each that he had already made his decision to offer the position to someone else. As will be detailed, McGhee then and later defended his appointment by contending that on the basis of long experience and a good work record in the same duties which were involved in the post to which he appointed her, he considered Wehner the “best qualified” applicant.
Appellant charged (and somewhat equivocally the District Judge appears to agree) that prior to 1972 there had been “a distinct pattern of discriminatory promotion practices . . . established by the hospital officials.” The District Judge recited appellant’s part in this history:
I go further, though. Mrs. Abrams testified about certain previous attempts for promotion, the first one in January of 1966, when she says that she was ranked highly qualified for promotion to secretary of the Assistant Hospital Director, but a person with a lower ranking was accepted.
She testified that in May of 1969 she was ranked highly qualified for promotion to secretary to Chief of Staff, but that a lower ranking applicant was selected.
She testified that in November of 1970, she was one of either — it was not clear to me whether there were 10 or 12 applicants — who were ranked highly qualified for promotion, to Chief, Ward Administration Section, Medical Administration Division- — indeed, the very same position that we are considering as the 1972 complaint — and that a Mrs. Ney was preselected.
The evidence would certainly suggest that Mrs. Ney very may well have been preselected. She was the secretary to the Chief, as I read the record, of that division; and it does not suggest that she had had any particular supervisory experience except for a short period at Metropolitan General Hospital, Cleveland.
Mrs. Ney, “the preselected” preceding Supervisory Clerk, left the Brecksville Hospital in February of 1972. The announcement of the acceptance of applications under the Merit Promotion Plan was not made until June 16, 1972. The District Judge found that Miss Wehner made her application for transfer and demotion to the position to be filled three days later on June 19, 1972. The District Judge also noted concerning Wehner’s promotion:
The record that was added included sheets taken from Miss Wehner’s personnel file. There is no explanation of why it was that there was a temporary promotion to GS-8 and a continuation or extension of that promotion; it isn’t clear from the record exactly why that was done. But it is evident that it was done and that she did achieve a Grade GS-8 as a result of these things that occurred between roughly April of 1972 and the time when she made her application for this position.
As we have noted, however, the record indicates that a list of five qualified applicants was certified on July 25, with appellant at the top of the ratings. Miss Wehner’s name was not on the list, but a supplement was attached to the list referring her name “for reassignment and change to lower grade.”
Theoretically, under the Merit Promotion Plan, the names of the highly qualified applicants were supposed to have been supplied alphabetically to the selecting officer without the numerical scores. McGhee was supposed to interview the applicants before making his selection and without knowing their scores. Actually, this record shows that he did receive the ratings, thus being made fully aware of the appellant’s top standing and her 10 point higher score than Miss Wehner’s. In addition, as we have noted, the very next day, July 26, 1972, he went to the Cleveland Hospital, interviewed Miss Wehner, and made his selection of her without prior thereto having interviewed any of “the highly qualified” applicants under the Merit Promotion Plan. It appears that Miss Wehner was willing to take the appointment — a demotion of one grade for her — because the Brecksville Hospital was closer to her home than the Cleveland Hospital.
After reviewing the administrative and Civil Service Commission record and taking additional testimony, the District Judge discussed Mrs. Abrams’ charges of discrimination and concluded that racial discrimination was “not established by the necessary preponderance of the evidence, which is the burden cast on the plaintiff.”
In McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), the Supreme Court set out a three step procedure for the determination of racial employment discrimination cases under Title VII:
The complainant in a Title VII trial must carry the initial burden under the statute of establishing a prima facie case of racial discrimination. This may be done by showing (i) that he belongs to a racial minority; (ii) that he applied and was qualified for a job for which the employer was seeking applicants; (iii) that, despite his qualifications, he was rejected; and (iv) that, after his rejection, the position remained open and the employer continued to seek applicants from persons of complainant’s qualifications.
The burden then must shift to the employer to articulate some legitimate, nondiscriminatory reason for the employee’s rejection.
On remand, [the employee] must . . . be afforded a fair opportunity to show that [the employer’s] stated reason for [the employee’s] rejection was in fact pretext. McDonnell Douglas Corp. v. Green, supra at 802, 804, 93 S.Ct. at 1824-1825, 36 L.Ed.2d at 677-679.
Accord, Franklin v. Troxel Mfg. Co., 501 F.2d 1013 (6th Cir. 1974).
As indicated earlier, we believe that appellant had made out a prima facie case of discrimination which had the effect of shifting the burden of proof to the government to show that its decision to fill the position with Miss Wehner was a nondiscriminatory decision based on sound business reasons.
The Act proscribes not only overt discrimination but also practices that are fair in form, but discriminatory in operation. The touchstone is business necessity. If an employment practice which operates to exclude Negroes cannot be shown to be related to job performance, the practice is prohibited. Griggs v. Duke Power Co., 401 U.S. 424, 431, 91 S.Ct. 849, 853, 28 L.Ed.2d 158, 164 (1971).
See also Albemarle Paper Co. v. Moody, 422 U.S. 405, 95 S.Ct. 2296, 45 L.Ed.2d 245 (1975).
We are well aware that McGhee’s testimony was that he based his selection solely on his judgment that Miss Wehner’s experience and capability in performing the work of Supervisory Clerk at the Cleveland VA Hospital justified his selecting her without previously considering any of the other candidates. This may, of course, be the case, since neither the District Judge nor we are privileged to know the subjective thoughts and feelings of the selecting official given this absolute authority. It is, however, impossible for a record like this one to be written without convincing those intimately involved that the whole Merit Promotion Plan as operated was a cruel farce. Absolute discretion over employment decisions where subjective race prejudice may control (perhaps even without the executive’s knowledge) is no longer consistent with our law. Senter v. General Motors Corp., 532 F.2d 511 (6th Cir. 1976); Rowe v. General Motors Corp., 457 F.2d 348 (5th Cir. 1972).
If this record did not show that in the 1970 promotion to this same position, Mrs. Ney had been preselected without any prior experience for this very job over appellant, who then also was rated as more highly qualified, if appellant had not been rated 10 points superior to Miss Wehner for the now disputed promotion to the same job (including a four point higher rating on “supervisory evaluation”), we might not be so definite about our holding that at least a prima facie case of discrimination had been made out. As the matter stands, however, we vacate the judgment of the District Court and remand the case for the government to go forward with proofs which seek to meet the legitimate, nondiscriminatory rejection standards set forth in McDonnell Douglas Corp. v Green, supra, and Griggs v. Duke Power Co., supra.
Thereafter the appellant may offer rebuttal (McDonnell Douglas Corp. v. Green, supra at 804, 93 S.Ct. at 1825, 36 L.Ed.2d at 678) and the District Judge should redetermine appellant’s claims of racial discrimination.
. (c) Within thirty days of receipt of notice of final action taken by a department, agency, or unit referred to in subsection (a) of this section, or by the Civil Service Commission upon an appeal from a decision or order of such department, agency, or unit on a complaint of discrimination based on race, color, religion, sex or national origin, brought pursuant to subsection (a) of this section, Executive Order 11478 or any succeeding Executive orders, or after one hundred and eighty days from the filing of the initial charge with the department, agency, or unit or with the Civil Service Commission on appeal from a decision or order of such department, agency, or unit until such time as final action may be taken by a department, agency, or unit, an employee or applicant for employment, if aggrieved by the final disposition of his complaint, or by the failure to take final action on his complaint, may file a civil action as provided in section 2000e-5 of this title, in which civil action the head of the department, agency, or unit, as appropriate, shall be the defendant. 42 U.S.C. § 2000e-16(c) (Supp. II,’ 1972).
We adopt no standards as to the weight to be accorded an arbitral decision, since this must be determined in the court’s discretion with regard to the facts and circumstances of each case. Relevant factors include the existence of provisions in the collective-bargaining agreement that conform substantially with Title VII, the degree of procedural fairness in the arbitral forum, adequacy of the record with respect to the issue of discrimination, and the special competence of particular arbitrators. Where an arbitral determination gives full consideration to an employee’s Title VII rights, a court may properly accord it great weight. This is especially true where the issue is solely one of fact, specifically addressed by the parties and decided by the arbitrator on the basis of an adequate record. But courts should ever be mindful that Congress, in enacting Title VII, thought it necessary to provide a judicial forum for the ultimate resolution of discriminatory employment claims. It is the duty of courts to assure the full availability of this forum.
Question: Were there cross appeals 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:
The College of the Desert and two of its officials, the president and the dean of instruction, appeal the judgment for Coleen Roberts following a jury trial on her sex discrimination and due process claims in her section 1983 action. They also appeal the district court’s order reinstating the original judgment following their refusal to pay Roberts the reduced damages she had agreed to accept by way of remittitur. Roberts cross-appeals the judgment for the defendants following a bench trial of her Title VII claims. We affirm in part and remand for further proceedings.
BACKGROUND
The College of the Desert is a California community college. Dr. Stout was its President and Dr. Patterson was its Dean of Instruction during the time relevant to Roberts’ complaint. The College hired Roberts as an instructor and chairperson of the Home Economics Department on July 1, 1974. The College contends that Roberts created serious problems in her administrative capacity because of her failure to adhere to hiring, purchasing and accounting procedures. Officials discussed these problems with Roberts during the 1974-75 academic year and outlined the complaints in a written memo on March 18, 1975. Because. the problems continued in the 1975-76 academic year, the Board of Trustees placed Roberts on probationary status for the 1976-77 year and froze her compensation for performing as chairperson at the prior year’s level.
During the 1976-77 year, Roberts continued to create administrative difficulties, allegedly by not following hiring and purchasing procedures, by taking unauthorized vacations and by deviating from procedures for obtaining travel reimbursements. In February of 1977, the administration informed Roberts she would not be reappointed as chairperson. Roberts requested a hearing, which was scheduled in June of 1977. During the months prior to the hearing, Roberts further, provoked the ire of the administration, allegedly by falsifying her supervisor’s signature on a work requisition, using campus duplicating facilities for personal projects, and teaching at another community college without proper authorization. Roberts contends all the criticisms and standards used in evaluating her were the product of sex discrimination.
At the Board meeting in June, Roberts was given only eight minutes to make her presentation, which was brought to an end by a heated exchange with John McFadden, President of the Board, over the propriety of Roberts’ teaching at another college while employed by the College of the Desert. After the meeting, the Board decided to let stand the appointment of a new chairperson to the Home Economics Department.
Roberts remained at the College as a tenured instructor but four restrictions were imposed upon her during the 1977-78 academic year. She was restricted from (1) teaching overload classes, (2) participating in committee work, (3) attending conferences, and (4) holding herself out as an agent of the College. The restrictions were lifted by the end of the year except that Roberts was still not permitted to hold herself out as an agent of the College.
Roberts continued to have conflicts with the College over office assignments, use of personal leave time, and teaching schedules. Roberts contends all of her problems were the product of sex discrimination or were in retaliation for her protest of the loss of the position as chairperson.
Roberts filed suit on July 5, 1983, alleging sex discrimination claims under Title VII, 42 U.S.C. § 2000e et seq., and under the Civil Rights Acts of 1866 and 1871, 42 U.S.C. §§ 1981, 1983 and 1985(3). Roberts' section 1983 claim was grounded on two theories: denial of equal protection on the basis of sex discrimination and the denial of due process due to the lack of a meaningful hearing. Before trial, Roberts dropped her section 1981 claim, and the court dismissed the section 1985 claim toward the end of the trial. After the trial, the jury found for Roberts on her section 1983 claim and awarded her compensatory damages of $515,000 and punitive damages from Stout of $125,000 and from Patterson of $15,000. The College and individual defendants moved for judgment NOV or for a new trial. The court agreed there was no basis for punitive damages and that the compensatory damages were excessive. The court ordered Roberts to accept a re-mittitur or to face a new trial. Roberts agreed to accept the remittitur and the court ordered the defendants to pay $315,-000 within 30 days or it would reinstate the judgment of May 29,1985 totaling $655,000 damages. All parties timely appealed and cross-appealed.
ANALYSIS
I. Statute of Limitations
Roberts filed suit on July 5, 1983, alleging discrimination during all the years of her employment by the College from 1974 until the time of filing. Most of the specific acts alleged occurred in 1977 or earlier years. Defendants Patterson and Stout argue on appeal that the three-year statute of limitations, applicable to section 1983 claims filed in California in 1983, bars recovery for damages arising from any conduct prior to July 5, 1980. This argument is without merit because the statute of limitations is an affirmative defense which was not specially pleaded in the district court and cannot be raised for the first time on appeal. See Fed.R.Civ.P. 8(c); Harbeson v. Parke Davis, Inc., 746 F.2d 517, 520 (9th Cir.1984). Dr. Patterson further argues that he raised this issue in post trial motions, but he only raised the argument that Wilson v. Garcia, 471 U.S. 261, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985), should apply retroactively and that under its rule Roberts’ claims should be barred by California’s one-year statute of limitations for personal injury actions. This does not constitute pleading of the affirmative defense of the three-year statute of limitations, which was never raised in the district court.
II. Eleventh Amendment Immunity
If the College is an arm of the state for purposes of the eleventh amendment, the district court lacked jurisdiction to entertain the section 1983 suit against the College. Edelman v. Jordan, 415 U.S. 651, 677-78, 94 S.Ct. 1347, 1362-63, 39 L.Ed.2d 662 (1974). Even if the College is shielded from suit by the state’s sovereign immunity, we have jurisdiction to consider the merits of Roberts’ appeal because she could still recover from the individual defendants in their individual capacity. Stones v. Los Angeles Community College District, 796 F.2d 270, 272 (9th Cir.1986). Because we conclude that the jury’s verdict should be upheld, we must confront the question of the College’s immunity. Cf. id. (the fact that claims lacked merit meant panel did not have to try to answer the “quite difficult-question whether judgment against the [college] would violate the Eleventh Amendment”).
In analyzing the factors that determine whether a governmental entity is an arm of the state, we consider state law treatment of the entity. Jackson v. Hayakawa, 682 F.2d 1344, 1350 (9th Cir.1982). The central factor in this inquiry is “whether the named defendant has such independent status that a judgment against the defendant would not impact the state treasury.” Id. at 1350 (quoting Ronwin v. Shapiro, 657 F.2d 1071, 1073 (9th Cir.1981)). We decline to decide this question, believing that it is one for the district court to determine in the first instance, coincident with the development of an appropriate factual record. See Patsy v. Florida Bd. of Regents, 457 U.S. 496, 515 n. 19, 102 S.Ct. 2557, 256 n. 19, 73 L.Ed.2d 172 (1982) (avoiding, on prudential grounds, the decision whether Board of Regents is arm of state for eleventh amendment purposes); accord Keller v. Prince George’s County, 827 F.2d 952, 963-64 (4th Cir.1987).
III. Legal Questions
We review all legal questions de novo. United States v. McConney, 728 F.2d 1195, 1201 (9th Cir.), cert. denied, 469 U.S. 824, 105 S.Ct. 101, 83 L.Ed.2d 46 (1984).
A. Parallel Title VII and § 1983 Claims
The appellants argue that Title VII is the exclusive remedy for sex discrimination in employment, and therefore, that the district court erred by submitting to the jury Roberts’ section 1983 claim based on a denial of equal protection. The Supreme Court has stated generally that Title VII does not deprive aggrieved parties of other remedies. Johnson v. Railway Express Agency, 421 U.S. 454, 461, 95 S.Ct. 1716, 1720, 44 L.Ed.2d 295 (1975). However, in Great Am. Fed. Sav. & Loan Ass’n v. Novotny, 442 U.S. 366, 378, 99 S.Ct. 2345, 2352, 60 L.Ed.2d 957 (1979), the Court held that section 1985(3) may not be invoked to redress violations of Title VII because section 1985(3) confers no substantive rights. Thus it cannot be invoked when the only right violated is the Title VII right to be free of discrimination in employment. Since Novotny, courts have attempted to determine whether its rule applies to actions under section 1983 as well.
The Ninth Circuit has not expressly decided this question but has implicitly recognized that Title VII and section 1983 are not mutually exclusive. See, e.g., Lowe v. City of Monrovia, 775 F.2d 998, 1010-11 (9th Cir.1985), as amended, 784 F.2d 1407 (9th Cir.1986) (Title VII and section 1983 claims of sex and race discrimination both considered without ruling on exclusivity of Title VII remedies); Padway v. Palches, 665 F.2d 965, 968-69 (9th Cir.1982) (Section 1983 claim of denials of due process, and equal protection cognizable in case alleging Title VII violations as well).
We agree with the reasoning of those courts that have held that Title VII does not preempt an action under section 1983 for a violation of the fourteenth amendment. See Keller, 827 F.2d at 956-63; Ratliff v. City of Milwaukee, 795 F.2d 612, 623-24 (7th Cir.1986) (the Fourteenth Amendment and Title VII both grant public sector employees independent rights to be free of employment discrimination; a plaintiff may use section 1983 to escape the comprehensive scheme of Title VII even if the same facts suggest a violation of Title VII); Trigg v. Fort Wayne Community Schools, 766 F.2d 299, 301 (7th Cir.1985); Grano v. Department of Development, 637 F.2d 1073, 1075 (6th Cir.1980) (employee may sue under both Title VII and section 1983 when the section 1983 violation rests on a claim of infringement of rights guaranteed by the Constitution). Both the Fourth and Seventh Circuits distinguish Novotny on the ground that the employer in that case was a private entity, so there was no state action element giving rise to a separate constitutional claim cognizable under section 1985(3).
B.Due Process
The College and individual appellants argue that Roberts lacked any protectible property interest in continued employment as department chair after only three years in the position on annually renewable contracts. The district court rejected the College’s argument that Roberts had no right to due process and held that because the College agreed to give her a hearing the jury could determine that the unreasonable manner of conducting the hearing constituted a deprivation of due process.
Roberts argues that her protectible property interest in her continued employment as a department chair arises from “mutually explicit understandings.” Perry v. Sindermann, 408 U.S. 593, 601-02, 92 S.Ct. 2694, 2699-2700, 33 L.Ed.2d 570 (1972). The understandings are evidenced by Dr. Stout’s statements at the trial. He testified that he could not recommend non-reassignment without good cause and that the Roberts hearing in June 1977 was “part of her appeal rights.” Roberts says these comments evidence an understanding of her right to continue in the position for which she was originally hired of sufficient magnitude to meet the Perry test. We agree.
The appellants argue that Roberts had no property interest in continued employment because the law of California does not create such an expectation of continuation in an administrative position. See Lagos v. Modesto City Schools Dist., 843 F.2d 347, 349-50 (9th Cir.1988), cert. denied, — U.S. -, 109 S.Ct. 309, 102 L.Ed.2d 328; Loehr v. Ventura County Community College Dist., 743 F.2d 1310, 1314-17 (9th Cir.1984). While the appellants are correct in their analysis of state law, they do not address the argument that Dr. Stout’s statements reflect a mutual understanding of the nature of Roberts' expectations. The appellants cite out of circuit authority for the proposition that a gratuitous hearing granted as a courtesy and not a right does not have to conform to requirements of due process. E.g. Kilcoyne v. Morgan, 664 F.2d 940, 942 (4th Cir.1981), cert. denied, 456 U.S. 928, 102 S.Ct. 1976, 72 L.Ed.2d 444 (1982); Clark v. Whiting, 607 F.2d 634, 642 (4th Cir.1979); Jeffries v. Turkey Run Consolidated School Dist., 492 F.2d 1, 3 (7th Cir.1974). These cases are inappo-site where, as here, the right to due process derives from an explicit understanding, as permitted by Perry, 408 U.S. at 601, 92 S.Ct. at 2699.
Brady v. Gebbie, 859 F.2d 1543 (9th Cir.1988), is not controlling and may be distinguished because under Oregon law, property rights of state employees must arise solely from statutes or regulations made pursuant to statutory authority. Papadopoulos v. Oregon State Bd. of Higher Educ., 14 Or.App. 130, 511 P.2d 854 (1973), cert. denied, 417 U.S. 919, 94 S.Ct. 2626, 41 L.Ed.2d 224 (1974). In the instant case, there is no expression of California law which excludes “tenure by contract” and prohibits a Perry v. Sindermann claim.
C. Retaliation
The appellants argue on the authority of Novotny, 442 U.S. at 375-76, 99 S.Ct. at 2350-51; that the district court erred in submitting a retaliation claim cognizable only under Title VII to the jury, thus tainting the section 1983 verdict. The court did not give an instruction on retaliation as an element of Roberts’ claim, and thus the issue did not go to the jury. To the extent that the appellants are objecting to the admission of evidence or argument on the retaliation question, they have failed to preserve this issue for review because they made no objections during the trial.
D. Qualified Immunity
Immunity exists to shield government officials when their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known. Harlow v. Fitzgerald, 457 U.S. 800, 818-19, 102 S.Ct. 2727, 2738-39, 73 L.Ed.2d 396 (1982). Whether the law is well-established is a question of law reviewed de novo. Ward v. County of San Diego, 791 F.2d 1329, 1332-33 (9th Cir.1986), cert. denied, — U.S. -, 107 S.Ct. 3263, 97 L.Ed.2d 762 (1987). Dr. Stout and Dr. Patterson argue that they are entitled to qualified immunity on. the due process theory because under California law there is no property interest in a college administrative position that requires a hearing before nonreassignment. However, the right to notice and hearing has long been established in cases where the plaintiff has a legitimate expectation of continued employment. Perry, 408 U.S. at 601, 92 S.Ct. at 2699. Because we have found that the understanding between Roberts and Dr. Stout satisfies the Perry standard, the defendants are not entitled to immunity from liability for the College’s failure to provide Roberts the rudiments of due process.
IV. Substantial Evidence
A. Liability Verdict
The standard of review for a jury verdict in a civil case is whether it is supported by substantial evidence, that is, such relevant evidence as reasonable minds might accept as adequate to support a conclusion. Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1013-14 (9th Cir.1985), cert. denied, 474 U.S. 1059, 106 S.Ct. 802, 88 L.Ed.2d 778 (1986).
The district court indicated that it found substantial evidence to support a finding of a section 1983 violation based on either the equal protection or due process claim, and therefore held that it had to sustain the verdict. We are satisfied that substantial evidence supports the jury’s verdict. Even if the evidence of intentional sex discrimination were less than substantial, we have the discretion to attribute the general verdict to the due process violation, of which there was substantial evidence. Traver v. Meshriy, 627 F.2d 934, 938 (9th Cir.1980). Accord McGrath v. Zenith Radio Corp., 651 F.2d 458, 464 (7th Cir.), cert. denied, 454 U.S. 835, 102 S.Ct. 136, 70 L.Ed.2d 114 (1981).
B. Damages Reduction
This court does not disturb a damages award unless it is clearly unsupported by the evidence. Chalmers v. City of Los Angeles, 762 F.2d 753, 760 (9th Cir.1985).
The jury awarded Roberts the following compensatory damages:
$115,000 Lost income, expenses and special damages
200,000 Pain and suffering
200,000 Destruction of career
The jury also awarded punitive damages of $15,000 against Dr. Patterson and $125,-000 against Dr. Stout.
The district court reviewed the evidence and disallowed the $200,000 attributable to destruction of her career because there was no evidence that Roberts tried to obtain other employment or that her personnel record at the College was causally connected to any putative inability to find another job. Roberts asserts that her career is destroyed and she is unemployable, but she cites to no specific evidence presented at trial to prove that fact.
The district court disallowéd the punitive damages against Patterson and Stout because it found no evidence of the requisite intent or reckless and callous disregard. Smith v. Wade, 461 U.S. 30, 51, 103 S.Ct. 1625, 1637-38, 75 L.Ed.2d 632 (1983). Roberts has made no argument on appeal in support of the propriety of the punitive damages jury award.
V. Damages Judgment
The district court was within its discretion in granting the defendants’ motion for a new trial unless Roberts, accepted a remittitur. Fenner v. Dependable Trucking Co., 716 F.2d 598, 603 (9th Cir.1983). But it erred in reinstating the judgment of $655,000 after finding the verdict excessive and insufficiently supported by the record; Id. (“The trial court abused its discretion in entering a judgment reflecting damages it had determined were excessive.”). Upon remand the district court is directed to reinstate the reduced damages judgment.
VI. Appellants’ New Trial Motion
In addition to the other asserted grounds for a new trial the appellants contend they were denied a fair trial because of (1) the trial court’s exclusion of evidence and (2) Roberts’ misconduct. The court’s eviden-tiary rulings are reviewed for abuse of discretion and will not be reversed absent prejudice. Kisor v. Johns-Manville Corp., 783 F.2d 1337, 1340 (9th Cir.1986). There was no abuse of discretion in refusing to allow testimony by one of Roberts’ prior employers because it was of questionable relevance. Denial of a new trial is reviewed for abuse of discretion. Robins v. Harum, 773 F.2d 1004, 1006 (9th Cir.1985). The judge saw Roberts’ demeanor and did not find it so egregious as to justify a new trial. We conclude that he did not err in that determination.
VII. Title VII Cross Appeal
A. Do Jury Findings Bind the Trial Court?
The crucial question raised by Roberts’ cross appeal is whether the district court was bound by the jury verdict on the section 1983 claim to rule in Roberts’ favor on her Title VII claim. We do not decide whether a court must accept jury findings on a legal claim when it rules on an equitable claim because here there were no findings. This was a general verdict and it is impossible to say upon which theory, due process or equal protection, the jury imposed liability. See Hussein v. Oshkosh Motor Truck Co., 816 F.2d 348, 355 (7th Cir.1987) (in deciding whether to grant equitable relief under Title VII, the district court would have been prohibited from reconsidering any issues necessarily and actually decided by the jury); Blake v. Hall, 668 F.2d 52, 54 (1st Cir.1981) (trial judge not bound by the jury verdict in deciding whether to grant equitable relief because there was no way to determine what common issues were decided by the jury), cert. denied, 456 U.S. 983, 102 S.Ct. 2257, 72 L.Ed.2d 862 (1982).
B. Substantial Evidence
In reviewing a court’s ultimate determination on a Title VII claim, this court applies the clearly erroneous standard because the determination is essentially a factual one. Atonio v. Wards Cove Packing Co., 827 F.2d 439, 443 (9th Cir.1987) (panel opinion after remand from en banc decision), cert. granted, — U.S. -, 108 S.Ct. 2896, 101 L.Ed.2d 930 (1988).
The district court determined that Roberts had made out a prima facie case of sex discrimination, but that the College’s reasons for non-reassignment to the chairper-sonship were legitimate business reasons which Roberts did not show to be pretextual. This finding is not clearly erroneous.
VIII.Attorneys’ Fees
Roberts contends that the district court abused its discretion in denying her attorneys’ fees because she prevailed on her section 1983 claim and a prevailing party in a civil rights case is ordinarily entitled to fees under 42 U.S.C. § 1988. The College argues that this court has no jurisdiction to review the attorneys’ fees order because Roberts failed to refer to that order in her notice of cross-appeal. The College is correct. Although we have observed that it “violates the spirit of the Federal Rules of Civil Procedure to avoid a decision on the merits on the basis of mere technicalities,” McCarthy v. Mayo, 827 F.2d 1310, 1314 (9th Cir.1987), Roberts’ oversight was more than a mere technicality. Her notice of cross-appeal was specifically limited to an appeal from the portion of the court’s May 29, 1985 order entering judgment for the defendants in her Title VII claim. That order did not mention attorneys’ fees at all. The College’s notice of appeal referred only to the order filed September 19,1985, denying the motion for new trial, and that order did not mention the attorneys’ fees ruling either. In this case it cannot be fairly inferred that Roberts intended to challenge the attorneys’ fees ruling. Cf. id.; see also, C.A. May Marine Supply Co. v. Brunswick Corp., 649 F.2d 1049, 1055-56 (5th Cir.) (the express mention of one part of an order negates the inference of the intent to appeal from the order as a whole), cert. denied, 454 U.S. 1125, 102 S.Ct. 974, 71 L.Ed.2d 112 (1981); Elfman Motors, Inc. v. Chrysler Corp., 567 F.2d 1252, 1254 (3d Cir.1977) (per curiam) (when an appeal is taken from a part of a specified judgment the court of appeals acquires no jurisdiction to review other judgments or portions thereof not so specified); see also, Torres v. Oakland Scavenger Co., — U.S. -, 108 S.Ct. 2405, 2408-09, 101 L.Ed.2d 285 (1988) (failure to file notice of appeal in accordance with specificity requirement of F.R.A.P. 3(c) is a jurisdictional bar).
Roberts argues that there was no prejudice to the appellants because she indicated in her civil appeals docketing statement that part of the relief she sought was $222,901 in attorneys’ fees. However, she did not brief the issue in any depth and we believe the appellants would be prejudiced by our consideration of the merits of the trial court’s decision that any fees awarda-ble for success on the section 1983 claim were offset by fees awardable to the College for its success on the Title VII claim.
On the other hand, because Roberts “succeeded on a significant issue and achieved some of the benefit [she] sought in bringing the suit,” Toussaint v. McCarthy, 826 F.2d 901, 904 (9th Cir.1987), she is entitled to an award of reasonable attorneys’ fees for the instant appeal. 42 U.S.C. § 1988.
CONCLUSION
The judgment of the district court is AFFIRMED in part, REVERSED in part and the cause is REMANDED for entry of a reduced damages judgment and for further proceedings to determine the College’s status for purposes of eleventh amendment immunity.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
LINDLEY, Circuit Judge.
Plaintiff brought suit in the District Court seeking to set aside the report and order of the Interstate Commerce Commission entered June 28, 1949, in docket 30005, dismissing its complaint before the ■Commission, making the latter and the United States defendants. The Chicago and North Western Railway Company was permitted to intervene. Upon the complaint, the exhibits attached thereto and the answers of the defendants and the intervenor, the District Court entered judgment dismissing the suit. Plaintiff has perfected this appeal, asserting that the court erred in failing to find that the Commission violated its statutory authority in refusing to grant the relief prayed in the proceedings instituted by plaintiff before it. Certain subsidiary issues are presented which we shall discuss in the course of this opinion.
The evidence upon which the Commission acted is not before us. Consequently the only factual question presented before the District Court and upon review here is whether the findings of the Commission are sufficient to support its order. We must presume that the evidence fully sustained the findings; the only inquiry left is as to the legality of the order based on those findings. Rochester Tel. Corp. v. U. S., 307 U.S. 125, 59 S.Ct. 754, 83 L.Ed. 1147; Miss. Valley Barge Co. v. U. S., 292 U.S. 282, 54 S.Ct. 692, 78 L.Ed. 1260.
Part of the prior history of the events helpful to an understanding of the matters in issue appear in our decision in Chicago & North Western Railway Co. v. Froehling Sup. Co., 7 Cir., 179 F.2d 133, wherein, in view of the fact that certain demurrage charges made in pursuance o'f the Commission’s Service Order No. 369, 10 F.R. 1430 were the legal charges, we affirmed the judgment of the District Court awarding the railroad company judgment therefor. What was said in that opinion need not be repeated. Neither in that case nor in the present one did plaintiff question the -validity of the Service Order. It is a part of the established tariffs of all carriers; its legality is unquestioned. Iversen v. United States, D.C., 63 F.Supp. 1001, affirmed 327 U.S. 767, 66 S.Ct. 825, 90 L.Ed. 998. See also Avent v. United States, 266 U.S. 127, 45 S.Ct. 34, 69 L.Ed. 202; United States v. P. Koenig Coal Co., 270 U.S. 512, 46 S.Ct. 392, 70 L.Ed. 709; United States v. Michigan Portland Cement Co., 270 U.S: 521, 46 S.Ct. 395, 70 L.Ed. 713; Turner, Dennis & Lowry Lumber Co. v. C., M. & S. P. Ry. Co., 271 U.S. 259, 262, 46 S.Ct. 530, 70 L.Ed. 934.
While the appeal in the former case was pending, on June 8, 1948, plaintiff filed with the Commission its complaint against the North Western and others asking the Commission to order a waiver of or exemption from demurrage on 143 cars delivered by the railroad to plaintiff in November and December, 1946, and January, 1947, to the extent of the difference between the amount due as computed under the tariffs then in effect by virtue of Service Order No. 369 and the amount which would have accrued under the authorized charges in effect prior to the effective date of that order. In the alternative, plaintiff prayed that, if at the time the Commission had decided the matter plaintiff had paid to the North Western the sum sought to be abated, the Commission order that company to make reparation of the amount thus exacted.
In view of a nation-wide shortage of box cars existing in the fall of 1945, the Commission, as an emergency aid in relieving the shortage, on November 9, 1945, issued Service Order No. 369 requiring increased demurrage charges on box cars, over those previously existing. Plaintiff contended before the Commission and still insists that it should have had relief as to the additional charge prescribed by the order, over and above the charges which would have been due the North Western prior to issuance o'f the order. To permit the railroad company to collect the additional demurrage, in view of the circumstances presented, plaintiff insisted, was unreasonable and tended unduly to enrich the carrier by allowing it to collect charges despite its failure to observe the embargo hereinafter discussed.
Some months later, in order to relieve the congestion of cars then existing at plaintiff’s plant, North Western, through the Association of American Railroads, on October 30, 1946, issued an embargo on all freight consigned to plaintiff. The accumulation of cars at plaintiff’s unloading places had been caused by the arrival of a large number of cars of material which plaintiff had purchased and received but which it had not unloaded. Plaintiff’s contract of purchase of the material supplied, which was located in various states, contained no restriction as to the number of cars or quantities of merchandise which could be shipped by the vendor to plaintiff within any specific period, and no provision for notification of plaintiff as to when cars-would be shipped. In other words, plaintiff knew in advance that these cars might arrive in any quantity at any moment. Indeed, it vainly attempted to ascertain when shipments would be made. During the pertinent period plaintiff detained the 143 cars with which we are concerned beyond the free time allowed by the tariffs. The demurrage charges on them accuring under the tariffs existing before order No. 369 was promulgated were paid by plaintiff without objection and the additional demurrage charges due under the terms of order No. 369 amounting to $20,143.75 were paid by plaintiff a'fter and in compliance with the decision of this court in Chicago & North Western Railway Co. v. Froehling Sup. Co., 7 Cir., 179 F.2d 133.
Before the Commission, plaintiff contended that it had been duly diligent in attempting to unload cars. However, it made no claim for adjustment of the charges for the detention of the cars because of anything that had occurred, as it might have done under the Act. In other words, plaintiff did not contend that the demurrage charges should be adjusted because of the difficulties encountered recognized as ground for adjustments but insisted that the additional demurrage charges, though legal, were unreasonable, because it had no knowledge of the embargo and because cars arrived at its plant despite the embargo. The Commission found that since plaintiff asserted that it was not aware of the embargo, it, of course, had “placed no reliance upon the embargo and could not have been injured by any nonobservance thereof which may have occurred. The failure of defendants to comply with the provisions o¡f the embargo notice, therefore, affords no ground 'for a finding of unreasonableness of the charges assailed.” It found further that “the proximate cause of this detention was the contract made by complainant with the Palmer Company, the shipper of these cars, under which it obligated itself to accept these shipments when and as made, without notification until after they were enroute, or had arrived at destination. In such circumstances, where the proximate cause of the detention was of the complainant’s own making, no relief from applicable demurrage charges otherwise reasonable can be granted.” The Commission added: “Complainant urges that while, because of the terms of the contract, it could not have ordered a cessation of loading, nevertheless, had it known of the existence of the embargo it could and would have arranged for the diversion of future cars or for the storage of their contents at point of origin. It is difficult to understand why knowledge of the embargo was necessary for complainant to resort to diversion of the cars enroute. It was aware of the accumulation of the cars awaiting its unloading, and if it was in a position to divert any of the cars enroute, as apparently was the case, due diligence would seem to demand that such diversions should have been effected. We find that the demurrage charges assailed are not shown to have been unreasonable. The complaint will be dismissed.”
From the foregoing, it is apparent that among the decisive findings of fact of the Commission are these: (1) the demur-rage rates are reasonable; (2) the proximate cause of the detention was of plaintiff’s own making; (3) knowledge of the embargo was not necessary in order to furnish plaintiff an opportunity to resort to diversion of the cars; (4) due diligence upon the part of plaintiff demanded that such diversion be made effective and (5) plaintiff was not duly diligent. As we have pointed out, in the absence of the record disclosing the evidence before the Commission, we are bound to accept its findings. The only question remaining is as to whether, upon the findings, the order of the Commission was in accord with the law. Only questions affecting constitutional power or statutory authority are pertinent when the basic requisites of proof are established. Rochester Tel. Corp. v. U. S., 307 U.S. 125, 59 S.Ct. 754, 83 L.Ed. 1147. The court can not substitute its opinion for that of the Commission simply because the facts are not in dispute. United States v. Chicago Heights Trucking Co., 310 U.S. 344, 352, 60 S.Ct. 931, 84 L.Ed. 1243; United States v. Louisville & Nashville R. R., 235 U.S. 314, 35 S.Ct. 113, 59 L.Ed. 245.
Bearing in mind that plaintiff had inadequate facilities for receiving and unloading the cars upon arrival and that as a result the latter stood idle and unloaded for as long as eight weeks, that plaintiff made no attempt to divert them to other destinations and that the charges accumulated because of plaintiff’s own fault, it would seem clear that the Commission was fully justified in denying relief from imposition of demurrage assessed in accord with its own order. It must be kept in mind that plaintiff does not attack the validity of the charges as fixed by the order. In view of the Commission’s findings, we think it was not authorized by statute to grant the relief prayed.
Plaintiff insists that, inasmuch as an embargo had issued against cars destined to it and inasmuch as the North Western continued to deliver cars consigned to it contrary to the terms of the embargo, the railroad may not collect the additional charge. But, as the Commission said, lack of knowledge of the embargo’s existence in no way prevented plaintiff from exercising due diligence to avoid what it knew was an unduly congested car situation. It knew, irrespective of the embargo^ irrespective of Order No. 369, that, for every car that came to it, not unloaded within 48 hours, legal demurrage charges would continue to accumulate until the car was unloaded. To protect itself against legal demurrage charges, it was plaintiff’s duty to attempt to relieve thé situation by any means reasonably possible, including not only diligent efforts to unload but efforts likewise to divert to places where congestion did not exist. Thus, in Menasha Paper Co. v. Chicago & North Western Ry., 241 U.S. 55, 36 S.Ct. 5Q1, 60 L.Ed. 885, an embargo had been declared. In spite of the embargo merchandise was delivered to Menasha, who contended that the railroad could not collect demurrage charges upon freight arriving during the embargo. The Supreme Court held that, irrespective of the embargo, the railroad had a right to deliver any cars tendered to it and that, inasmuch as the consignee received the cars without protest, the railroad company was lawfully entitled to collect the charges despite the embargo. Consequently, we approve the Commission s conclusion that an embargo is an emergency measure placed in effect because of some disability on the part oif the carrier which makes the latter unable properly to perform its duty as a common carrier. It is not promulgated for protection of the shipper or the consignee but to protect transportation generally. Neither a shipper nor a consignee can insist upon the placement of an embargo as a matter of right. Consequently the acceptance of cars for, or the forwarding of cars to, an embargoed industry does not itself operate to relieve a consignee from demurrage charges. The carrier was under no obligation to place an embargo against plaintiff’s shipments, or to enforce such an embargo once it had been placed, in order to relieve plaintiff of the payment of demurrage charges due to the latter’s delay in unloading. Indeed, it was the duty of the company under the Act, as well as the common law, to accept cars for transportation and delivery. Menasha Paper Co. v. Chicago & N. W. Ry. Co., 241 U.S. 55, 36 S.Ct. 501, 60 L.Ed. 885.
As we have observed, plaintiff had a right to ask for adjustments, but did not do so. The Commission said: “Complainant stresses its efforts to ascertain the amount of material which it was likely to receive, the acquisition of warehouse space, the employment of additional workmen and independent contractors, and the purchase of unloading equipment as evidence of due diligence in unloading the cars as promptly as circumstances permitted. The damage to the contents of cars while enroute, failure of prompt inspection of such cars, failure of switch deliveries, and the warm-up periods necessary for unloading crews are stressed as factors contributing to delays in unloading beyond its control. Demurrage tariffs in effect at the time provided for adjustment of the charges for the detention of cars beyond the free time due to delays of this character, but complainant failed to file claims for such adjustments.” Furthermore, where the detention is the result of an accumulation of cars so great as to exceed unloading capacity, it is not such an unusual condition as will justify relief. Penn. R. R. Co. v. Kittanning Co., 253 U.S. 319, 40 S.Ct. 532, 64 L.Ed. 928. So here the Commission has 'found that the reason for detention was plaintiff’s acquiescence in the accumulation of cars so great as to exceed its unloading capacity.
Believing as we do that the findings justify the order oí the Commission, it follows that the District Court rightfully dismissed the complaint to set it aside.
The judgment is affirmed.
. Of the 143 cars, 9 were billed to Froehling Sup. Co., 4 to Walter E. Heller, and 130 cars to Walter E. Heller Co., factors for Froehling Supply Co., Palmer Bolt and Nut Co., care Froehling Supply Co., or Palmer Bolt and Nut Co., care Walter E. Heller Co., factors for Froehling Supply Co.
Question: Were there cross appeals 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.
POSNER, Circuit Judge.
This diversity breach of contract suit is not the longest contract lawsuit in history, but it is one of the longest relative to the stakes, which are modest (under $60,000). The ease is in its fifteenth year, and this is the third appeal to this court. (May its third coming be the last.) The present lawyers for the opposing parties were debate partners in high school at a time when the lawsuit was already well under way; and 12 years ago the plaintiffs were complaining about delay in the disposition of the case. See “Waiting for Court Date: Justice Eludes Motel Operator,” Metro-East J., Aug. 27, 1973. They have since learned patience.
The plaintiffs, Mr. and Mrs. Cates, owned a motel. The defendant, Morgan, a Texas corporation, manufactures portable building units. In June 1970 the Cateses made a contract with Morgan to buy for about $26,000 portable buildings that would add 10 rooms to the motel’s 12. The buildings were delivered in September, in defective condition. Morgan promised to repair them, and its men did some desultory work at the site on and off for several months. In April 1971, after the men had not been back for more than a month, the Cateses wrote Morgan to say that they considered Morgan to have broken the contract. Morgan did not reply, and the suit was filed in August. Morgan counterclaimed for the unpaid balance of the purchase price, some $3,000.
Trial (a bench trial) began in February 1973 but was adjourned on the basis of a tentative settlement agreement. Negotiations to make the agreement final were protracted but in September 1973 the parties finally stipulated, in an order signed by the district judge, that Morgan would resume the repairs it had discontinued back in March 1971. The Cateses had done no repair work in the meantime either on their own or by hiring a contractor. The work continued on and off for some months, but not to the Cateses’ satisfaction. The parties then agreed to submit all issues of liability and damages arising out of Morgan’s alleged breach of contract, except the issue of consequential damages, to binding arbitration. In October 1974 the arbitrator ruled that there had been a breach and fixed the Cateses’ damages (the cost of making the buildings habitable) at some $3,500, against which Morgan was entitled to set off the amount of the contract price that the Cateses hadn’t paid. As the setoff was almost equal to the damages, the Cateses ended up with a net award of only $218.05.
The issue of consequential damages, however, was unresolved. Trial therefore resumed in the district court in May 1975. The Cateses claimed some $56,000 in lost profits from not being able to rent the 10 rooms because of the defective condition in which the portable buildings housing the rooms had been delivered. In October the judge ruled that the Cateses were entitled to consequential damages but of less than $5,000. The Cateses appealed. For reasons no longer clear it was not till the end of 1978 that the appeal was presented to a panel of this court, which reversed, 591 F.2d 17 (7th Cir.1979), on the ground that the district judge had set too stringent a standard for proving lost profits. A new trial was held and a judgment for the Cateses rendered in 1982 awarding them the full $56,000 that they had sought. Morgan appealed and again we reversed (this time in an unpublished order, 735 F.2d 1366), on the ground that the district judge had failed to consider Morgan’s defense that the Cateses had failed to mitigate their damages.
When the case came back to the district judge the parties agreed to let him decide the issue of mitigation on the basis of the record of the previous trial, but the judge later vacated the stipulation and a new trial was held last year. This time the judge awarded the Cateses $33,532.14 in consequential damages, representing their lost profits for two periods: September 1, 1970, to September 30, 1971, and September 11, 1973, to April 30, 1975. Regarding the intervening period — October 1, 1971, to September 10, 1973 — the judge held that the Cateses had failed to mitigate their damages:
Although the defendant stopped working on March 29, 1971, the Court finds that the plaintiffs had no reason to believe that the defendant was finished with repairing the units. Having no reason to believe that the defendant would not finish, the plaintiffs were under no obligation to mitigate their damages as of March 29, 1971. However, this does not mean that the plaintiffs’ duty to mitigate was forever relieved. After a period of time the plaintiffs should have realized that the defendant would not come back to repair the units. The Court feels that after six months, the plaintiffs should have made this realization. Therefore the Court finds that after the passage of six months the plaintiffs’ duty to mitigate arose.
The judge also awarded the Cateses $2,500 for what it would have cost them to repair the buildings back in 1971 when their duty to mitigate arose.
The parties have cross-appealed. The main issues concern mitigation of damages, on which see Farnsworth, Contracts §§ 12.-12-13 (1982). Morgan argues that the duty to mitigate arose before October 1, 1971, and that the judge’s finding that the Cateses failed to mitigate damages for a period beginning then (but the precise beginning daté doesn’t matter) logically precludes any award of consequential damages for a later period. The Cateses argue that the judge improperly placed the burden of proving mitigation on them, that Morgan had an equal opportunity to mitigate and is therefore barred from raising the defense of failure to mitigate damages, and that in fact there never was a period in which they failed to mitigate their damages.
The contract was broken in September 1970 when the buildings were delivered in defective condition, and ordinarily the duty to mitigate damages would have arisen at that time and the Cateses would have been required to set about with reasonable dispatch to put the units into renta-ble shape. But if a seller of defective goods tells the buyer, don’t bother to get the goods repaired — I’ll do it — the duty to mitigate is suspended; to put this differently, the seller may not insist on mitigation when by its words or deeds it has led the buyer to believe that it has assumed what would otherwise be the buyer’s burden of mitigation. See, e.g., Shearson Hayden Stone, Inc. v. Leach, 583 F.2d 367, 371 (7th Cir.1978). The district judge found, and its finding is not clearly erroneous, that by promising to repair the defects and sending its men to the motel to do the work Morgan lulled the Cateses into thinking that they didn’t have to do anything themselves to repair the defects, because Morgan would take care of it.
But if at some point the seller makes clear to the buyer that it has ceased trying to correct the breach, the suspension of the buyer’s duty to mitigate damages ends, and he must arrange for the repairs himself. See, e.g., Hutson v. Cummins Carolinas, Inc., 280 S.C. 552, 560, 314 S.E.2d 19, 24 (Ct.App.1984). This happened sometime after March 29, when Morgan’s men disappeared from the site. It is a nice question, however, just when the Cateses should have awakened to the fact that Morgan’s men were not coming back. If you invite someone to dinner, and hours after he was due he still hasn’t arrived, you had better infer that he isn’t coming, and start eating. You can’t let yourself and your other guests starve merely because there is a slight chance that he will show up days later.
The Cateses’ lawyer wrote Morgan on April 23 that they would not pay the balance of the contract price, because Morgan had broken the contract; and we do not think that by waiting less than a month after Morgan’s men stopped work to give their side of the dispute the Cateses waited too long. But when Morgan did not promptly reply with further promises of repair, the Cateses had to assume that the breach was irrevocable, that Morgan’s crew was not coming back, and that they had better make their own arrangements for the repairs. How long they could wait after April 23 for some form of reply, how much longer after the expiration of a reasonable waiting period it would have taken them to make the repairs themselves or hire a contractor to make them, and when finally the units could have been made habitable are difficult questions since, in fact, the Cateses did nothing. The judge said six months was all they were entitled to. This was a guess; but in the nature of things no more than a guess was possible; and it was an informed and sensible guess, which we cannot deem clearly erroneous (Morgan conceded at argument that it was not an unreasonably long period) — unless perhaps the Cateses are right that Morgan has the burden of proving failure to mitigate damages, rather than their having to prove mitigation.
Our previous opinion held that the law applicable to the substantive issues in this diversity case is the Uniform Commercial Code as adopted in Illinois (Morgan’s portable building units were “goods” within the meaning of the Code, see § 2-105). 591 F.2d at 20. As an original matter there would be some doubt whether under Illinois conflict of laws rules, which of course govern in a diversity suit tried in Illinois, Illinois contract law was applicable to a dispute arising under a contract made in Texas and partially performed there. But the precedents on this question are too uncertain to warrant our reopening the question. See Boise Cascade Home & Land Corp. v. Utilities, Inc., 127 Ill.App.3d 4, 12-13, 82 Ill.Dec. 180, 186-87, 468 N.E.2d 442, 448-49 (1984); Dr. Franklin Perkins School v. Freeman, 741 F.2d 1503, 1515 n. 19 (7th Cir.1984); American Nat’l Bank & Trust Co. v. Weyerhaeuser Co., 692 F.2d 455, 460 n. 10 (7th Cir.1982); Zlotnick v. MacArthur, 550 F.Supp. 371, 373-74 (N.D.Ill.1982). In any event, the parties to a lawsuit can, within broad limits, stipulate to the law governing their dispute; the parties here have impliedly stipulated to the application of Illinois law; and an implied stipulation is good enough. See, e.g., Muslin v. Frelinghuysen Livestock Managers, Inc., 777 F.2d 1230, 1231 n. 1 (7th Cir.1985); Casio, Inc. v. S.M. & R. Co., 755 F.2d 528, 530-31 (7th Cir.1985).
The Uniform Commercial Code requires mitigation of damages, see UCC § 1-106, comment 1, but it does not say who has the burden of proof on the issue of mitigation. There are no Illinois cases on the point, and cases from other jurisdictions are hopelessly divided — compare for example TCP Industries, Inc. v. Uniroyal, Inc., 661 F.2d 542, 550 (6th Cir.1981), with Wilson v. Hays, 544 S.W.2d 833, 836 (Tex.Civ.App.1976). The debate would not be an easy one to resolve on grounds of policy. On the one hand the plaintiff has easier access to information about his own efforts to mitigate damages. On the other hand he is more likely to mitigate his damages than to trust entirely to his legal remedies for breach of contract, and on this ground similar disputes over burden of proof in tort cases have been resolved in favor of placing the burden of proof on the defendant — for example to show that the plaintiff was contributorily negligent or failed to take steps to avoid some or all of the harmful consequences of the defendant’s tort. See Prosser and Keeton on the Law of Torts 451, 458 (5th ed. 1984). But we can sidestep the debate by observing that the cases make no distinction between the burden of proving mitigation of damages under the Uniform Commercial Code and under the common law of contracts, and by asking where Illinois assigns the burden of proof regarding mitigation of damages in common law contract cases. The answer is clear: on the defendant. See Fisher v. Fidelity & Deposit Co., 125 Ill.App.3d 632, 642, 80 Ill.Dec. 880, 888, 466 N.E.2d 332, 340 (1984); Dillman & Associates, Inc. v. Capitol Leasing Co., 110 Ill.App.3d 335, 343-44, 66 Ill.Dec. 39, 46, 442 N.E.2d 311, 318 (1982). In default of better information we must assume that in a case under the Uniform Commercial Code, too, Illinois courts would place the burden of proof on the defendant. It was therefore Morgan’s burden to prove that the Cateses had failed to mitigate their damages.
Burden of proof is important when the evidence is in equipoise, or when no evidence is put in on an issue, or the case is tried to a jury, which may attach great significance to who has the burden of proof, not fully realizing (or accepting) that burden of proof should determine the outcome only when decision is balanced on the razor’s edge. Although the district judge had ruled that the plaintiffs had the burden of proof, his opinion does not mention burden of proof and nothing in the opinion suggests that it played a role in his determination that after six months the Cateses had a duty to mitigate damages. Both parties put in evidence and the judge picked a period, not unfavorable to the Cateses, by the end of which they should have mitigated their damages. The judge’s error about who had the burden of proof was harmless. See E.S.I. Meats, Inc. v. Gulf Florida Terminal Co., 639 F.2d 1348, 1352-53 (5th Cir.1981).
We turn now to the Cateses’ argument that they had no duty to mitigate damages because Morgan had an equal opportunity to mitigate. At first blush the concept of equal opportunity to mitigate seems to assert the true but irrelevant proposition that a defendant can always avoid liability by not breaking his contract, and in that sense always has an equal opportunity with the plaintiff to mitigate the latter’s damages. See Rossi v. Mobil Oil Corp., 710 F.2d 821, 834 (Temp.Emerg. Ct.App.1983). But there is a little more to the concept than that. In the first case to employ it, S.J. Groves & Sons Co. v. Warner Co., 576 F.2d 524, 530 (3d Cir.1978) (alternative holding), the defendant had broken its contract to supply concrete for the plaintiff’s building project, and it defended on the ground that the plaintiff should have turned to another firm, Trap Rock, as a substitute source or at least a supplemental source of concrete. The defendant itself, however, had used Trap Rock in the past, and could just as easily as the plaintiff have turned to it to make up the deficiency in its own supply. See also Midwest Industrial Painting of Florida, Inc. v. United States, 4 Cl.Ct. 124, 133 (1983).
We need not try to guess whether Illinois would recognize the “equal opportunity” doctrine (if so recent and rarely applied and, as we are about to see, questionable a legal idea can be called a doctrine) in a suitable case. The doctrine is discordant with common law principles, which demand a reason for not letting losses lie where they fall. If a plaintiff can avoid a loss at a cost no greater than the defendant would bear, one might have thought that he would have to incur the cost (for which of course he could seek reimbursement from the defendant) and thereby avoid the loss. Be that as it may, the parties’ positions were not symmetrical here. Morgan’s business is making portable housing units, not running a motel. While it might well have been able to perform the necessary physical repairs of its defective units as well as the Cateses or some contractor hired by them could do — might even have been able to hire a contractor as easily as the Cateses could have done, though being an out-of-state company it might have been at a disadvantage in this respect — no argument is made that it could have done these things at lower cost than the Cateses; and it could not have made other adjustments that might have avoided all or some of the consequences of its breach at a lower cost than making physical repairs would have entailed. The Cateses should have (but Morgan could not have) considered carefully the possibility of reducing their lost profits either by ordering substitute units or by making superficial repairs to the defective units and then renting them at cut rates. Contract law seeks to preserve the buyer’s incentive to consider a wide range of possible methods of mitigation of damages, by imposing a duty to mitigate even if some of the possibilities are equally within the seller’s power. This incentive would be lost if Morgan’s ability to repair its defective units — only one method, and maybe not the cheapest method, of reducing the Cateses’ consequential damages — excused the Cateses from all duty of mitigation.
We thus agree with the district judge that the Cateses had a duty to mitigate damages and that it arose on October 1, 1971. Morgan argues that, if so, consequential damages cannot be awarded for any subsequent period, for if the Cateses had mitigated their damages back in 1971 as they were supposed to do they would have had no subsequent consequential damages. They would have been renting out the units and earning rental income since 1971, rather than only since 1975 when they finally made the repairs that made the units habitable.
This argument is inconsistent with fundamental common law principles. Supposing it to be the fact, as found by the district judge, that between September 1973 and April 1975 “the defendant intermittently worked on the units and made assurance that the units would be repaired,” are the Cateses to be forever at the mercy of Morgan’s misrepresentations and broken promises because they failed to mitigate damages back in 1971? We think not. Suppose that having failed to mitigate their damages by repairing the units in 1971 or 1972 the Cateses finally went and signed a contract with another contractor in 1973 to make the repairs, and the contractor then broke his promise. The Cateses would not be barred from recovering contract damages from him merely because if they had repaired the units back when they were supposed to they would never have had to sign this contract. To rule otherwise would be to say that if a person breaks his leg through his own carelessness, he cannot complain if the doctor sets the leg negligently and as a result makes the break worse. The Cateses in our hypothetical case would not, merely by failing to mitigate damages, have made it more likely that they would be victimized by a subsequent contractor when belatedly they began to mitigate, and therefore they would not be in law the cause of that subsequent harm.
The analogous case in tort law is Berry v. Sugar Notch Borough, 191 Pa. 345, 43 A. 240 (1899). The plaintiff, the motorman of a trolley, sued the town for negligence in letting a rotten tree fall on the trolley, injuring him. The defense was that he was contributorily negligent, because he had been speeding, and if he had been driving more slowly he would not have been under the tree when it fell. The defense failed. The motorman’s negligence did not make the kind of accident that occurred more likely to occur. No more did the Cateses’ initial dawdling about repairing the defective units make it more likely that a contractor would break his promise to repair the units. It makes no difference who the contractor was. Morgan made a fresh promise to repair, which it broke, and by breaking became liable for the consequential damages of the breach.
It might have been more elegant if the Cateses had in 1975 moved to amend their complaint to add as a new and separate cause of action the breach by Morgan of the stipulation that the parties made in September 1973, or for that matter if the Cateses had filed a separate breach of contract suit which would have been consolidated with the original one. There would have been no jurisdictional obstacle to a new suit, since the parties are of diverse citizenship and the amount in controversy exceeds $10,000 even when limited to the second period for which the judge allowed an award of consequential damages. Since a complaint can be amended at any time, even in the court of appeals, to conform to the evidence, see, e.g., Reese v. Elkhart Welding & Boiler Works, Inc., 447 F.2d 517, 528-29 (7th Cir.1971); Fifth Ave. Bank v. Hammond Realty Co., 130 F.2d 993, 995 (7th Cir.1942); Smith v. CMTAIAM Pension Trust, 654 F.2d 650, 654 n. 2 (9th Cir.1981); 6 Wright & Miller, Federal Practice and Procedure § 1494, at pp. 476-77 (1971); cf. Fed.R.Civ.P. 15(b), we could simply deem the complaint so amended. But such formalities are unnecessary. The district judge was entitled to find that Morgan had made and broken a fresh promise to repair the units, leading the Cateses to forbear and thereby imposing on them consequential damages for the period from September 1973 to April 1975, when Morgan’s second breach became irrevocable and the Cateses finally completed the repair of the units.
The Cateses’ other damages, to which we turn now, are repair costs. The Cateses argue that $2,500 is too low because it is the cost of repair in 1975, and it would have been higher in 1971 if they had mitigated damages then, since they would not have had the benefit of the work, such as it was, that Morgan performed pursuant to the stipulation of September 1973. Morgan says it is too high, because the Cateses’ income tax return reported only $1,300 as the cost of those 1975 repairs. We would have thought the issue settled by the arbitrator’s finding that it would have cost the Cateses some $3,500 to repair the units back in 1971. The Cateses shy away from so arguing because they want us to award them $15,000 based on bids they solicited in 1971 (to which Morgan replies with great force that the bids were on work that would have greatly improved and not merely repaired the units), and Morgan because it wants to reduce the amount to $1,300. But since the parties agreed to submit the issue of repair costs to binding arbitration and the judge confirmed the arbitration in a portion of an earlier judgment which has never been challenged, it fixes the repair costs for this lawsuit. The Cateses are entitled to their consequential damages as admeasured by the district judge, plus $218.05 (the net due them under the arbitration award), or a total of $33,750.19.
The last two issues are procedural. Morgan argues that the judge had no power to set aside the stipulation in the final pretrial order that the latest remand be tried on the record of the previous trial. 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, and it was here. It turned out that the record of the previous trial did not fully illuminate the issue of mitigation of damages, which became a focus of concern in the case only after we reversed the second judgment; the judge was therefore acting well within his broad discretion in the management of the litigation process to order a further, and brief, evidentiary hearing “to prevent manifest injustice.” Fed.R. Civ.P. 16(e); see, e.g., Newman v. A.E. Staley Mfg. Co., 648 F.2d 330, 333 (5th Cir.1981); Seneca Nursing Home v. Secretary of Social & Rehabilitation Services, 604 F.2d 1309, 1313-14 (10th Cir.1979).
Finally, Morgan argues that the judge violated Rule 408 of the Federal Rules of Evidence by using the stipulation of September 1973 to fix liability for consequential damages incurred thereafter. The rule provides that statements made in settlement negotiations are not admissible to establish a party’s liability, or damages, in the dispute that was the subject of the negotiation. Nothing Morgan said or agreed to in the negotiations that culminated in the execution of the stipulation in September 1973 could have been used to establish its liability for the breach of contract that occurred in September 1970 or to fix its damages for that breach. But no act or statement of Morgan’s connected with these negotiations was used to establish its liability for breach of contract, which by this time Morgan concedes. It may seem that the negotiations and specifically the stipulation itself are being used to prove an item of the Cateses’ damages, namely the consequential damages from September 1973 to April 1975. But this is true only in the literal sense that, as the case has been presented, those damages are deemed damages of the original breach. As Morgan itself is at pains to argue in connection with the Cateses’ failure to mitigate damages, any damage liability stemming from the original breach ended on October 1, 1971, when their duty to mitigate accrued. Morgan’s liability for additional damages beginning in September 1973 is based on its breaking a later promise, the promise made in the stipulation to resume repairs. Obviously a settlement agreement is admissible to prove the parties’ undertakings in the agreement, should it be argued that a party broke the agreement. See, e.g., Central Soya Co. v. Epstein Fisheries, Inc., 676 F.2d 939, 944 (7th Cir.1982). That is the Cateses’ argument with regard to the later period of consequential damages.
We affirm the district judge’s judgment except to change the amount of damages to $33,750.19. No costs shall be awarded in this court.
Modified and Affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
CUMMINGS, Circuit Judge.
Plaintiff filed this action under 42 U.S.C. § 1981 on October 21, 1986, alleging that his employer, defendant Firestone Tire and Rubber Company (“Firestone”), demoted him on the basis of his race on September 20, 1984. Defendant’s motions for summary judgment on the grounds of expiration of the statute of limitations and the absence of any genuine issues of material fact as to whether defendant’s decision to demote plaintiff was motivated by race were denied on January 8 and 13, 1988, respectively. 675 F.Supp. 1134. The case was tried on March 29, 1988. On March 30, 1988, the jury informed the court that it was unable to reach a decision and was discharged. On March 31, 1988, Judge Mills granted defendant’s motion for directed verdict on which he had earlier reserved ruling until deliberation of the jury and judgment was entered in favor of defendant. Plaintiff appeals the entry of directed verdict and defendant cross-appeals the denial of summary judgment based on the statute of limitations. We affirm.
I.
Statute of Limitations
Defendant contends that plaintiff’s action, filed over twenty-five months from plaintiff’s demotion, is barred by Illinois’ two-year statute of limitations for personal injuries (Ill.Rev.Stat. ch. 110, ¶ 13-202 (1983)), rendered applicable to Section 1981 actions by Goodman v. Lukens Steel Co., 482 U.S. 656, 107 S.Ct. 2617, 96 L.Ed.2d 572 (1987). Because Sections 1981 and 1983 do not contain a statute of limitations, courts applied various types of state statutes of limitations to the federal claims based on analogies to state causes of action, resulting in an undesirable lack of uniformity among jurisdictions. This inconsistency as to Section 1983 actions was resolved by Wilson v. Garcia, 471 U.S. 261, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985), which held that for purposes of choosing the most appropriate state statute of limitations, Section 1983 claims are essentially claims for personal injury. Accordingly, the appropriate state statute of limitations for personal in-juiy should be borrowed from the forum state. Goodman merely applied the holding of Wilson to Section 1981 claims. Goodman, 107 S.Ct. at 2621.
Defendant argues that Goodman should be applied retroactively to bar plaintiff’s claim under the general rule that “cases should be decided in accordance with the law existing at the time of decision.” Goodman, 107 S.Ct. at 2621. An exception to this general maxim exists where: (1) the decision at issue overrules clear precedent on which litigants may have relied or addresses an issue of first impression which was not foreshadowed; (2) retroactive application of the decision would retard the operation of a federal statute; and (3) retroactive application would result in substantial inequity. Chevron Oil Co. v. Huson, 404 U.S. 97, 106-107, 92 S.Ct. 349, 355-356, 30 L.Ed.2d 296 (1971). We agree with the district court that such an exception to retroactive application is warranted here.
Prior to the decision in Goodman on June 19, 1987, precedent in this Circuit beginning with Waters v. Wisconsin Steel Works, 427 F.2d 476, 488 (7th Cir.1970), certiorari denied, 400 U.S. 911, 91 S.Ct. 137, 27 L.Ed.2d 151, 911, established that the Illinois five-year statute of limitations for residual claims (Ill.Rev.Stat. ch. 110, 1113-205 (1983)), applied to actions under Section 1981. This case is therefore distinguishable from Goodman in which the Court determined that there was no clear precedent within the Third Circuit on which plaintiffs could have relied in filing their suit and applied the statute of limitations retroactively to the claims of that class of plaintiffs. Plaintiff here, however, was clearly justified in relying on this Court’s case law applying the five-year statute of limitations prior to Goodman.
Conceding that the five-year statute of limitations had been applied to Section 1981 actions in this Circuit prior to Goodman, defendant argues that plaintiff should have been forewarned as to the holding in Goodman by the Supreme Court’s earlier decision in Wilson. By analogy to Section 1983 actions, defendant contends, plaintiff should have concluded that Section 1981 actions would likewise be subject to the two-year Illinois personal injury statute of limitations.
This Court rejected similar reasoning in Nazaire v. Trans World Airlines, Inc., 807 F.2d 1372, 1380 (7th Cir.1986). There this Court refused to apply the Illinois two-year statute of limitations to a Section 1981 action in spite of Wilson since “ ‘Section 1981 ... is more fundamentally concerned with injury to the contractual or economic rights of minorities [than Section 1983], and as such should appropriately be governed by the longer contract statute of limitations.’ ” Nazaire, 807 F.2d at 1380, quoting Judge Garth’s dissent in the Goodman court oí appeals decision, 777 F.2d 113, 132 (3rd Cir.1985). Accordingly, even after Wilson, this Circuit continued to apply the Illinois five-year statute of limitations to Section 1981 actions.
Even if plaintiff should have been on notice after Wilson but prior to Goodman that the statute of limitations in Section 1981 cases was an open question, his claim would nonetheless be timely filed under Anton v. Lehpamer, 787 F.2d 1141 (7th Cir.1986), which established transitional statutes of limitations for Section 1983 decisions which accrued prior to Wilson. In Anton, this Court decided that Wilson should not be applied retroactively to Section 1983 causes of action that accrued prior to that decision on April 17, 1985. Instead, such plaintiffs should be given the first to expire of either the five-year residual statute of limitations on which they may have relied or the two-year personal injury statute of limitations from the date of the Wilson decision. Therefore even if plaintiff is deemed to have been on notice that the Wilson decision was likely to be extended to Section 1981 claims, he still met the Anton time limitations for actions accruing before Wilson by commencing this action within two years of the Wilson decision.
The second factor of the Chevron test, whether retroactive application of the law will further or retard the operation of a federal statute, militates in favor of prospective application of Goodman as well. Both Goodman and Wilson serve the interests of safeguarding the rights of federal civil rights litigants, achieving uniformity and certainty and minimizing unnecessary collateral litigation. Wilson, 105 S.Ct. at 1947-1949; Goodman, 107 S.Ct. at 2622. Fully retroactive application of Goodman would clearly interfere with the rights of federal litigants who were injured prior to Goodman by shortening the limitations period from five to two years. Further, the interests of uniformity and certainty will be only minimally affected by prospective application of Goodman since only those actions which accrued prior to Goodman would be subject to a different limitations period. Although for a period of time there will be two effective limitations periods, thereby temporarily undermining the goal of uniformity, the delineation is clearly demarcated by the date of the Goodman decision, reducing the likelihood of unnecessary litigation.
The final Chevron factor requires us to examine the inequity that may be caused by retroactively applying a shorter limitations period than previously applied by this Circuit. The inequity in terminating this action by a two-year statute of limitations while this Court’s precedent clearly allowed the plaintiff five years to commence this litigation is self-evident. This is certainly not a situation where plaintiff “slept on his rights” and equity warranted retroactive application to cut off his cause of action. Plaintiff commenced this action well within the five-year statute of limitations applicable when his action accrued. Prospective application only of the Goodman decision is therefore clearly appropriate.
Consistent with Anton we hold that a plaintiff whose Section 1981 cause of action accrued prior to the decision in Goodman should be allowed to file that action within the period first to expire of: (1) five years from the accrual of the cause of action or (2)two years from the decision in Goodman on June 19, 1987. Plaintiffs action is not time-barred under this rule.
II.
Directed Verdict
In reviewing the entry of a directed verdict by the district court, this Court must determine “whether a fairminded jury could return a verdict for the plaintiff on the evidence presented.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986). In order to establish a violation of Section 1981, plaintiff must have presented sufficient evidence to enable a reasonable jury to conclude that defendant’s decision to demote plaintiff was motivated by his race. Goodman, 107 S.Ct. at 2623. Plaintiff may meet this burden by either direct evidence of the employer’s discriminatory motive or circumstantial evidence showing that the employer’s articulated rationale for demotion was merely a pretext for underlying discrimination. United States Postal Service Board of Governors v. Aikens, 460 U.S. 711, 716, 103 S.Ct. 1478, 1482, 75 L.Ed.2d 403 (1983).
We agree with the district court that plaintiff has failed to establish a case of racial discrimination. However, we disagree with the district court’s conclusion that plaintiff has failed to meet his prima facie case. Once a Section 1981 claim has been fully tried on the merits, the issue of whether plaintiff has established a prima facie case is no longer relevant. Aikens, 460 U.S. at 714-715, 103 S.Ct. at 1481-1482. If plaintiff has failed to make out a prima facie case of race discrimination, the district judge should grant the defendant’s motion for directed verdict relieving the defendant of its burden of establishing nondiscriminatory reasons for the employment action. “Where [as in this case] the defendant has done everything that would be required of him if the plaintiff had properly made out a prima facie case, whether the plaintiff really did so is no longer relevant.” Aikens, 460 U.S. at 715, 103 S.Ct. at 1482. Accordingly, we address the ultimate issue of whether plaintiff has been the victim of his employer’s racial discrimination.
The evidence presented at trial, appropriately viewed in the light most favorable to the plaintiff, reveals that plaintiff failed to perform his job satisfactorily on at least four separate occasions. Plaintiff entered employment with the defendant as an hourly employee at one of defendant’s tire manufacturing plants in Akron, Ohio, in April 1968. He was eventually promoted to a supervisory position several years later, but was laid off in 1981 when defendant closed its Akron, Ohio, facilities. Plaintiff was able to find alternative employment as a supervisor in defendant’s Decatur, Illinois, plant and was hired to work in the “banbury” department by its manager, Jerry Mills, beginning work on April 13, 1981.
Plaintiffs employment as a production supervisor in the banbury department was apparently satisfactory from the commencement of his employment until December 1983, after which four incidents occurred which defendant represents formed the basis for plaintiff’s demotion. On January 4, 1984, one of the banbury machines under the supervision of plaintiff began to malfunction. Plaintiff diagnosed the problem as a failure of the automatic oil-injection system. He accordingly instructed two hourly employees to drop the oil manually into the machine. Subsequently, plaintiff received a phone call from his spouse informing him that her car was incapacitated. Plaintiff received permission to leave the factory to assist his wife, but failed to inform his supervisor of the machine malfunction. Plaintiffs supervisor later determined that 18,000 pounds of defective rubber had been processed by the malfunctioning machine. The malfunction was later found to be caused by a closed air valve. Plaintiff was reprimanded by Jerry Mills and a shift foreman, Gary Mol-lohan, for his failure to diagnose the cause of the mechanical malfunction accurately and for risking the safety of his workers by stationing them inside the banbury machine.
In June of 1984, plaintiff was observed by another shift foreman, Dale Hubner, lying with his eyes closed on a conveyor belt behind a banbury machine during work hours. Plaintiff denied actually sleeping on the conveyor belt and offered the alternative characterization that he was merely resting his eyes. He was reprimanded for this incident and was requested to take a few days’ leave from work as discipline.
Plaintiff subsequently twice failed to report for work in August of 1984. The failure apparently resulted from plaintiff’s neglect to check the work shift and overtime schedule. He was informed that a note documenting his failure to report would be placed in his personnel file.
The final incident occurred on September 7, 1984, when one of the machines under the supervision of plaintiff ran thirteen bad batches of rubber before the error in the rubber recipe was detected. Plaintiff offered the explanation that the operator of the machine must have changed the rubber recipe after plaintiff had checked it prior to initiating the machine. Jerry Mills, however, testified that it would have been physically impossible for the operator to have changed the recipe after the run was started and concluded that plaintiff must have failed to check the recipe prior to commencing the process or checked it inaccurately. Plaintiff was asked to take a period of vacation as a result of the incident. Upon returning to work, he was informed that due to the recent occurrences he was requested to resign voluntarily from his supervisory position to become an hourly employee or leave the employ of the defendant. Plaintiff chose the former option and this suit was commenced twenty-five months later.
Although at trial plaintiff disputed whether the four incidents were evidence of inadequate performance on the job, he did not deny that the incidents occurred. As proof that defendant’s proffered reasons for demotion were pretextual, plaintiff produced evidence of statements made by Jerry Mills that plaintiff would not be promoted, that Mills did not like plaintiff’s “type” and that one of plaintiff’s “type” was enough. Plaintiff admits that Mills never specifically referred to plaintiff’s race in making the above comments, although plaintiff assumed and it would be a reasonable inference that Mills was referring to plaintiff’s race. Plaintiff offered no other evidence that any employment procedure had been ignored or that white supervisors were treated differently. In response to the statements offered by Smith as evidence that Mills harbored racial prejudice, the defendant presented evidence that Mills had hired the plaintiff initially, Mills demoted a white supervisor merely for sleeping on the job, and that Mills had promoted another black supervisor.
The standard for review of a directed verdict requires “this Court to view all of the evidence in the light most favorable to [the appellant].” Panter v. Marshall Field & Co., 646 F.2d 271, 281 (7th Cir.), certiorari denied, 454 U.S. 1092, 102 S.Ct. 658, 70 L.Ed.2d 631 (1981), emphasis original (quoting Chillicothe Sand & Gravel Co. v. Martin Marietta Corp., 615 F.2d 427 (7th Cir.1980)). Crediting as we must the statements offered by the plaintiff to be inferential evidence of racial prejudice, such statements are not, however, sufficient to demonstrate that the defendant relied on both legitimate and illegitimate criteria, or mixed motives. In its recent reexamination of mixed motive employment decisions, the Supreme Court determined that where a plaintiff has demonstrated that an illegitimate consideration was a substantial factor in the employment decision, the defendant must demonstrate by a preponderance of the evidence that the same decision would have been made absent the illegitimate motive. Price Waterhouse v. Hopkins, — U.S. -, 109 S.Ct. 1775, 104 L.Ed.2d 268 (1989). As Justice O’Connor explained in her concurring opinion in Price Waterhouse, “stray remarks in the work place, while perhaps probative of sexual harassment, ... cannot justify requiring the employer to prove that its hiring or promotion decisions were based on legitimate criteria.” Price Waterhouse, — U.S. at -, 109 S.Ct. at 1804 (O’Con-nor, J., concurring). Such remarks, as offered by the plaintiff, when unrelated to the decisional process, are insufficient to demonstrate that the employer relied on illegitimate criteria, even when such statements are made by the decision-maker in issue. Plaintiff has failed to provide the requisite nexus between the statements made by the defendant and the demotion of the plaintiff to demonstrate that plaintiff’s race was a “substantial factor” in the defendant’s decision. The burden-shifting framework for mixed motive cases in Price Waterhouse is therefore inapplicable here. Instead, employing the framework established in Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981), we examine whether the legitimate reasons proffered by the defendant were the “ ‘true reasons’ ” for the demotion of Smith. Price Waterhouse, — U.S. at -, 109 S.Ct. at 1787 (Brennan, J., plurality), at -, 109 S.Ct. at 1795 (White, J., concurring), at -, 109 S.Ct. at 1800 (O’Connor, J., concurring).
We agree with the district judge that defendant demoted plaintiff for non-discriminatory reasons. Plaintiff has failed to offer any evidence, other than the statements by Mills, to demonstrate that the justifications offered by the defendant were pretextual. The statements made by Mills were not shown to be related to Smith’s demotion and are simply insufficient to rebut the weight of the detailed and documented testimony by the defendant concerning Smith’s work performance. Plaintiff’s poor performance involved more than a single isolated incident of failing to appear for work on time. Several thousand pounds of defective rubber were produced on two separate occasions. In addition, plaintiff was found lying down on the job which plaintiff himself does not deny, claiming merely to have been resting his eyes. Plaintiff was also late for work on two other occasions. He was questioned and reprimanded regarding each of these occurrences, providing him with some opportunity to confront the criticism of him and improve his performance prior to his demotion. Although his job performance while employed with the defendant prior to 1984 was satisfactory, his quality of work during 1984 was seriously marred by the four incidents cited by defendant. Plaintiff cannot expect to be retained in a supervisory position based on his past performance in light of his sharply deteriorating performance in 1984. It is not our province to second-guess the business judgment of an employer where, as here, it acted on ample legitimate justification for demoting the plaintiff. Mason v. Pierce, 774 F.2d 825, 829 (7th Cir.1985).
The judgment of the district court is affirmed.
. Accord, Usher v. City of Los Angeles, 828 F.2d 556 (9th Cir.1987); Derstein v. Van Buren, 828 F.2d 653 (10th Cir.1987). But see Thomas v. Shipka, 829 F.2d 570 (6th Cir.1987); Smith v. Pittsburgh, 764 F.2d 188 (3rd Cir.), certiorari denied 474 U.S. 950, 106 S.Ct. 349, 88 L.Ed.2d 297 (1985); Wycoff v. Menke, 773 F.2d 983 (8th Cir.1985); Rivera v. Green, 775 F.2d 1381 (9th Cir.1985), in each of which Wilson was applied retroactively either because in the former three cases there was no clear contrary precedent while in Rivera retroactive application would actually lengthen the period of filing for the plaintiff.
. See, however, Baker v. Gulf & Western Industries, Inc., 850 F.2d 1480 (11th Cir.1988), and Larkin v. Pullman-Standard Div., Pullman, Inc., 854 F.2d 1549 (11th Cir.1988), where Goodman was applied retroactively because no one statute of limitations had been applied to Section 1981 cases to establish clear precedent on which plaintiffs could have relied.
. Indeed, plaintiff seems to recognize the futility of his argument in his brief which contains less than five pages of argument replete with grammatical errors and which is devoid of sufficient substance to enable this Court to determine that any error was committed by the district court.
.Defendant moved for a directed verdict at the close of both plaintiffs and defendant’s cases. The district judge denied the first motion, but reserved ruling on the second, which was eventually granted following the jury deadlock.
. The banbury department prepares raw materials according to a rubber recipe to be used in producing tires.
Question: Were there cross appeals 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.
JERRE S. WILLIAMS, Circuit Judge:
Appellant, Wilbert J. Sheets, appeals the district court’s dismissal of his lawsuit which asserted causes of action against appellees under the Louisiana Uniform Trade Secrets Act and the equitable doctrine of unjust enrichment. We affirm the dismissal. All parties appeal the $25,000 in sanctions the court awarded appellant. Appellant asserts he is entitled to heavier sanctions while appellees claim that no sanctions were proper. We remand the issue of sanctions back to the district court for further elaboration of the court's basis for awarding the sanctions.
I.
Wilbert J. Sheets is a 66 year old resident of Gonzales, Louisiana. He retired in 1973 from his job as a machinist at Exxon. His two sons, Wayne and Tommy, opened a motorcycle dealership in 1974 in Gonzales called Cycle Country U.S.A. Cycle Country became a Yamaha dealership in March 1976. Wayne and Tommy were the sole partners in the dealership; Wayne handled sales and Tommy handled maintenance and repairs. Wilbert worked with his sons at Cycle Country, helping with maintenance and acting as a mechanic and troubleshooter. Wilbert, however, was not a salaried employee of Cycle Country and did not receive any compensation for the services he provided the dealership.
In December 1979, Cycle Country received an initial shipment of two model number 125 Yamaha tri-motorcycles. This was the first tri-motorcycle manufactured by Yamaha. Its intended purposes included recreational use in water, mud, dust, snow, and other elements. It was advertised as being an “all-terrain vehicle” suitable for hunting, fishing, farming, professional racing, “swampratting,” and desert and mountain travel. Cycle Country sold one of these tri-motorcycles to a customer and used the other as a demonstrator.
In February 1980, Cycle Country received a shipment of 50 additional model 125’s. Members of the Sheets family bought a number of these tri-motorcycles and raced them. Tommy, Wayne, and Wilbert all personally experienced problems with the engine stalling or drowning on the 125. Cycle Country received similar complaints from other customers to whom the dealership had sold 125’s. Similar complaints were also being received by other Yamaha dealers in the area. Evidently the placement of the air intake system at the back of the machine between the two rear wheels allowed water, dust, and other foreign matter to be drawn into the carburetor, causing the vehicle to stall or drown out. The debris was also causing premature wearing of internal engine parts. Tommy and Wayne asked their father to see if he could fix this problem with the 125’s engine.
In March 1980, Wilbert Sheets modified the engine of Cycle Country’s demonstrator model by running an air hose from the air intake box between the rear wheels to the front of the tri-motorcycle under the seat. The hose acted as a snorkel for the air intake system, bringing in air from the front of the vehicle at a higher level than before. Wilbert plugged up the air intake pipe located within the air intake box. Wilbert also experimented with different sizes of fuel jets to find the size effective with the air box improvements in ensuring the proper air/fuel mixture. Overall, Wilbert Sheets claims these modifications effectively solved the stalling problems and enabled the tri-motorcycle to perform as advertised.
With the exception of the fuel jet modification, the entire device could be seen either by removing the seat of the tri-motor-cycle, which did not require tools, or by turning the machine on its side. Customers of Cycle Country were permitted to drive the modified demonstrator model. Appellant also modified a number of the tri-motorcycles owned by friends and relatives who belonged to the Cycle Country tri-motorcycle racing team. Neither Cycle Country nor appellant, however, sold a trimotorcycle with the air snorkel device, nor did appellant ever sell an air snorkel device. Wilbert Sheets continued to fine tune his modification on the tri-motorcycles owned by family and friends over the next few months.
In mid-March 1980, Wayne Sheets showed and explained the air snorkel device to Bob Aaron, a Yamaha U.S.A. district sales manager, during Aaron’s regular bimonthly visit to Cycle Country. Apparently Wayne Sheets did not show Aaron the entire modification but did tell him that his father had devised a modification to the engine which would solve the problems the machine was experiencing. Appellant claims Aaron returned two weeks later with two Yamaha representatives from Japan who examined and photographed the modified tri-motorcycle. Appellant claims he arrived at Cycle Country just as Aaron and the Yamaha representatives were leaving and remembers one of the representatives holding a camera. Aaron did not make out a dealer report documenting this second visit to Cycle Country, contrary to his usual habit. At trial he denied remembering this second visit and the names of the two Yamaha representatives. Tommy and .Wayne Sheets had been present during this visit and their testimony supported their father’s claims.
Two weeks later, appellant claims Aaron returned to Cycle Country with two more representatives from Yamaha. Only Wayne Sheets was present at the shop during this visit, and he did not recall if anyone had photographed or examined the modified tri-motorcycle during this visit. Again, no dealer report was made of this visit by Aaron.
Aaron visited the shop again in August 1980 and, according to Tommy Sheets, asked Tommy to bring a modified tri-motor-cycle to a Yamaha service seminar in New Orleans later in the month. Tommy complied with this request. This seminar was limited to Yamaha employees and dealers. Wilbert Sheets’ modification evidently was discussed at the seminar as a solution to the shifting and drowning problems the 125 was experiencing.
In April 1981, Tommy and Wayne Sheets sold their interests in Cycle Country, including the modified demonstrator, to a third party, and entered into a release with Yamaha U.S.A. Wilbert Sheets was not a party to this release.
In November 1981, Wilbert Sheets saw a Yamaha advertisement in Outdoor Life magazine, publicizing the company’s new tri-motorcycle model number 175 which contained an air intake device very similar to his modification on the 125. Wilbert Sheets immediately sought legal advice and eventually filed suit in federal district court against Yamaha Motors Corp., U.S.A. on October 5, 1982. His suit claimed damages for the alleged advantages and benefits realized by Yamaha as a result of Yamaha’s alleged misappropriation of his invention and its incorporation by Yamaha into the model 175 tri-motorcycle. His claims were based in part upon the Louisiana Uniform Trade Secrets Act for misappropriation of a trade secret and upon unjust enrichment principles in Louisiana law.
On March 21, 1983, Wilbert Sheets applied for a United States patent on his air intake device. After abandonment of this patent application, Wilbert Sheets filed a ' second patent application on February 19, 1985. His patent counsel was notified on June 11, 1985, by the United States Patent and Trademark Office that most of his claims were unpatentable because of a previous patent issued on January 29, 1985, to Ko Tanaka of Shizuoka, Japan, and assigned to Yamaha Japan.
Trial on the merits of appellant’s suit against Yamaha U.S.A. and Yamaha Japan was held before the district court without a jury on August 25 and 26 and December 29, 1986. Following the presentation of appellant’s case, appellees moved for involuntary dismissal under Fed.R.Civ.P. 41(b). On April 3, 1987, the district court dismissed the entire case under Rule 41(b) after finding that Wilbert Sheets had failed adequately to maintain the secrecy of his invention and thus could not recover under the Trade Secrets Act or for unjust enrichment. The court, however, awarded Wilbert Sheets sanctions under Fed.R.Civ.P. 11 and 37 of $25,000 against Yamaha U.S.A. and Yamaha Japan for failure of the Yamaha firms to carry out pretrial discovery in good faith and for needlessly increasing the costs of the litigation. Sheets v. Yamaha Motors Corp., U.S.A., 657 F.Supp. 319 (E.D.La.1987).
Appellant appeals the district court’s finding that he failed to make reasonable efforts to maintain the secrecy of his invention as required under the Trade Secrets Act and the court’s finding that he had no cause of action for unjust enrichment.
II.
In this diversity jurisdiction lawsuit, we look to the law of the state of Louisiana to determine the substantive rights of the parties under both of appellant’s claims. As to the trade secrets claim, Louisiana has adopted a version of the Uniform Trade Secrets Act, La.Rev.Stat.Ann. § 51:1431 et seq. Under this act, a “trade secret” is defined in § 51:1431(4) as:
information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (a) derives independent economic value, actual or potential, from not being generally known to and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use, and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
Comment (f) under this provision provides:
Reasonable efforts to maintain secrecy have been held to include advising employees of the existence of a trade secret, limiting access to a trade secret on a “need to know basis,” and controlling plant access. On the other hand, public disclosure of information through display, trade journal publications, advertising, or other carelessness can preclude protection.
Comment (f) shows that Louisiana has adopted the concept of “relative secrecy” as opposed to “absolute secrecy” in its trade secrets act. “The efforts required to maintain secrecy are those reasonable under the circumstances, and courts do not require extreme and unduly expensive procedures be taken to protect trade secrets.” Tubular Threading, Inc. v. Scandaliato, 443 So.2d 712, 714 (La.Ct.App.1983). See also E.I. duPont deNemours & Company v. Christopher, 431 F.2d 1012 (5th Cir.1970), cert. denied, 400 U.S. 1024, 91 S.Ct. 581, 27 L.Ed.2d 637 (1971) (explaining relative secrecy under Texas law); Tri-Tron International v. Velto, 525 F.2d 432 (9th Cir.1975) (explaining relative secrecy under California and Montana law); K-2 Ski Company v. Head Ski Co., Inc., 506 F.2d 471 (9th Cir.1974) (Maryland and Washington law).
The district court found that Wilbert Sheets had failed to use reasonable efforts under the circumstances to maintain the secrecy of his modification to the Yamaha tri-motorcycle and thus was not entitled to recover damages for the alleged misappropriation of the modification under the Uniform Trade Secrets Act. The determination of whether relative secrecy exists in a particular case is a question of fact reviewable by this Court under the clearly erroneous standard of review. Tri-Tron International, 525 F.2d at 436; K-2 Ski Company, 506 F.2d at 474.
Upon our review of the record, we must conclude that the district court’s finding that appellant failed to take reasonable efforts under the circumstance to maintain the secrecy of his invention is not clearly erroneous. As the district court noted, appellant allowed one of the modified tri-mo-torcycles to be shown at a Yamaha service seminar in August 1980. He also let Cycle Country, a company in which he had no proprietary interest, use a modified tri-mo-torcycle as a demonstrator, apparently without restriction. Further, he installed his modification on the tri-motorcycles of at least nine other individuals and gave them, at most, only minimal instructions not to reveal the modification to others. These limited attempts at secrecy appear to have had more to do with maintaining the Cycle Country racing team’s competitive edge in racing and less to do with maintaining the secrecy of the modification itself.
Apparently, appellant also allowed several Yamaha representatives to enter Cycle Country and examine and photograph his modification without taking any efforts at maintaining the secrecy of the modification. There had been no need for appellees to resort to subterfuge or other improper means in order to obtain information pertaining to the modification. Hurst v. Hughes Tool Company, 634 F.2d 895, 898 (5th Cir.), cert. denied, 454 U.S. 829, 102 S.Ct. 123, 70 L.Ed.2d 105 (1981). Cf. E.I. duPont deNemours & Company, supra; A.H. Emery Company v. Marcan Products Corporation, 389 F.2d 11 (2nd Cir.), cert. denied, 393 U.S. 835, 89 S.Ct. 109, 21 L.Ed.2d 106 (1968). A disclosure of a trade secret to others who have no obligation of confidentiality extinguishes the property right in the trade secret. Ruckelshaus v. Monsanto Company, 467 U.S. 986, 1002, 104 S.Ct. 2862, 2872, 81 L.Ed.2d 815 (1984). See also Interox v. PPG Industries, Inc., 736 F.2d 194, 202 (5th Cir.1984).
III.
Wilbert Sheets also asserts a cause of action under general equitable principles of unjust enrichment, or an actio de in rem verso, under Louisiana law. Following French jurisprudence, the Louisiana Supreme Court has adopted five prerequisites to this type of action:
(1) [Tjhere must be an enrichment, (2) there must be an impoverishment, (3) there must be a connection between the enrichment and resulting impoverishment, (4) there must be an absence of “justification” or “cause” for the enrichment and impoverishment, and finally (5) the action will only be allowed when there is no other remedy at law, i.e., the action is subsidiary or corrective in nature.
Minyard v. Curtis Products, Inc., 251 La. 624, 205 So.2d 422, 432 (1967). See also Diggs v. Hood, 772 F.2d 190, 193 (5th Cir.1985); Austin v. North American Forest Products, 656 F.2d 1076, 1088 (5th Cir.1981).
The district court gave several reasons for holding that Wilbert Sheets did not have a cause of action under the doctrine of unjust enrichment. We address only one of these rationales, as we find it dispos-itive. The district court was concerned that the application of the unjust enrichment doctrine in this case would contravene the more particularized requirements of the Louisiana Uniform Trade Secrets Act. We share the district court’s concern and hold that the fourth and fifth prerequisites to the application of this equitable doctrine were not met in this case.
Louisiana enacted an express statutory scheme to protect individuals and entities in the position of Wilbert Sheets when it adopted the Uniform Trade Secrets Act. Under Louisiana law, Wilbert Sheets is not entitled to fall back on the equitable doctrine of unjust enrichment after failing to establish a trade secret due to his failure to make reasonable efforts to maintain secrecy. Thus, in a very real sense the enrichment by Yamaha was brought about by Wilbert Sheets’ own failure to maintain the secrecy of his invention.
Louisiana law makes clear that when an adequate remedy at law is available, the court may not resort to principles of equity. Austin v. North American Forest, 656 F.2d at 1089. See La.Civ.Code Ann. art. 21; Minyard, 205 So.2d at 433. An action for unjust enrichment must not be allowed to defeat the purpose of a rule of law directed to the matter at issue. Edmonston v. A-Second Mortgage Co. of Slidell, Inc., 289 So.2d 116, 122 (La.1974). In Austin v. North American Forest, we held that a court applying Louisiana law could not resort to equity even though the remedy at law was barred by prescription. Wilbert Sheets had a remedy under the Trade Secrets Act by which he could have recovered for the alleged misappropriation of his modification to the Yamaha tri-mo-torcycle. He failed to gain the protection of this act by his carelessness. Under Louisiana law he cannot now invoke principles of equity to recover for the benefits he alleges appellees enjoyed at his expense.
IV.
After ordering additional briefing on the issue of sanctions and reconvening trial to hear evidence on this subject, the district court awarded Wilbert Sheets $25,000 in sanctions from appellees. The court found that appellees had “acted both negligently and in bad faith in needlessly increasing the costs of this litigation and in failing to cooperate in the pretrial discovery permissible under the Federal Rules of Civil Procedure.” 657 F.Supp. at 323. Behavior cited by the court as supporting these sanctions included: Yamaha U.S.A.’s failure to waive service of process on behalf of Yamaha Japan and forcing Wilbert Sheets to serve Yamaha Japan under the Hague Convention; appellees’ lack of cooperation in providing documentation of Yamaha representatives’ travel in the United States and in responding to discovery requests relevant to this issue; and appellees’ failure to respond fully and candidly to three sets of interrogatories and requests for production of records from appellant.
We have some doubt as to the propriety of the breadth of the court’s award of sanctions in this case. Our doubts arise primarily from the court’s rather vague references both to the rules under which it was basing its sanctions and the behavior the court was actually sanctioning.
The court made general references to Rule 37 in its opinion regarding the award of sanctions. The court, however, did not specify which section of Rule 37, if any, it was actually invoking to award the sanctions. Specificity is important because sanctions under Rule 37(b)(2) require that the party against whom the sanctions are levied failed to “obey an order to provide or permit discovery.” The court made no reference to any particular order that appel-lees failed to obey. We do not search the record for an order that might possibly support the district court’s $25,000 award under Rule 37(b)(2) because this may not be the portion of the record upon which the court relied. See Fjelstad v. American Honda Motor Co., Inc., 762 F.2d 1334, 1338-9 (9th Cir.1985). Sections (c) and (d) of Rule 37, the only other sections seemingly of some relevance, do not require that the sanctioned party fail to obey a discovery order.
The district court’s primary objection to appellees’ behavior, besides the court’s belief that appellees generally were not cooperating in discovery and were needlessly increasing the cost of the lawsuit, was that Yamaha U.S.A. had answered falsely (in the court’s opinion) as to its knowledge of patent rights its parent company had obtained in an air snorkel device. Because of Yamaha U.S.A.’s misleading responses as to Yamaha Japan’s patent rights, Wilbert Sheets’ attorneys claim that they ran up well over $25,000 in attorney’s fees and expenses in discovering the patent themselves and in attempting to secure a patent on behalf of Wilbert Sheets. Sheets’ attorneys claim these fees and expenses would not have been expended had appellees informed them that Yamaha Japan did have a patent application pending before the U.S. Patent and Trademark Office as early as 1981. There was extensive briefing and testimony on these expenses and the district court’s award of $25,000 in sanctions appears to be based largely on this claim.
Rule 26(g) would appear to be the rule most applicable to the overall award of sanctions in this case. The district court, however, mentioned Rule 26(g) only in passing in its opinion and relied instead on Rule 37 and Rule 11. We acknowledge that Rule 26(g) closely parallels Rule 11 and note that the two rules appear to overlap. Rule 26(g), however, applies exclusively to discovery requests, responses, and objections while Rule 11 has been interpreted by some commentators to apply only to those papers, pleadings, and motions for which other sanction provisions are not applicable. Thomas v. Capital Security Services, Inc., 836 F.2d 866, 870-71 (5th Cir.1988) (en banc); Zaldivar v. City of Los Angeles, 780 F.2d 823, 829-30 (9th Cir.1986); National Association of Radiation Survivors v. Turnage, 115 F.R.D. 543, 555 (N.D.Cal.1987). See also Notes of Advisory Committee on Rules accompanying Rule 11 (“Although the encompassing reference to ‘other papers’ in the new Rule 11 literally includes discovery papers, the certification requirement in that context is governed by proposed new Rule 26(g). Discovery motions, however, fall within the ambit of Rule 11.”)
In summary, we conclude that a remand to the district court is needed in order for that court to make additional findings so as to state more specifically the bases upon which it awarded Wilbert Sheets $25,000 in sanctions against appellees. As the district court’s holding now stands, it is unclear what specific behavior the court was sanctioning and what rules, or provisions within these rules, the court relied upon to award sanctions. Until the district court makes such specific findings and conclusions, we are unable to exercise effectively our appellate review of the court’s action.
AFFIRMED IN PART, REMANDED IN PART.
. Appellant claims to have told these individuals not to make his invention known to others. He claims he felt these people would not divulge his invention because by doing so they would lose their competitive edge in racing. Neither Tommy nor Wayne nor Wilbert, however, placed any restrictions upon the resale of these modified tri-motorcycles. Some of the modified trimotorcycles were in fact resold the following year.
. On April 6, 1984, appellant amended his complaint to add as a defendant Yamaha Motor Company Ltd. (“Yamaha Japan"), a Japanese corporation and the actual manufacturer of the tri-motorcycles. Proper service was not made on Yamaha Japan until July 1985. Yamaha Motors Corp., U.S.A. (“Yamaha U.S.A.”), a California corporation, is a wholly owned subsidiary of Yamaha Japan and is the distributor of Yamaha motorized products for Yamaha Japan in the United States.
. Passing reference should also be made to La. Rev.Stat.Ann. § 51:1437 which sets out the preemptive effect of the Louisiana Uniform Trade Secrets Act on other law. It should be emphasized, however, that we are not deciding this case on this express preemptive effect of the Uniform Trade Secrets Act but instead upon the prerequisites to the application of the doctrine of unjust enrichment under Louisiana law. As a result, we perceive no need to certify the question of preemption by § 51:1437 to the Louisiana Supreme Court as requested by appellant.
. Appellees defend their actions by noting that the discovery requests regarding the existence of the patent were directed to Yamaha U.S.A. prior to Yamaha Japan’s being made a party to the lawsuit and filing its answer. Appellees assert that Yamaha U.S.A.’s denial of the existence of any patent rights was a proper response since the patent was held by Yamaha Japan, the separate parent company of Yamaha U.S.A., and Yamaha U.S.A. had no knowledge of the patent rights held by its parent company.
. We have serious doubts as to whether some of the district court’s other reasons for awarding the sanctions are proper. There appears to be no basis for sanctioning appellees for forcing appellant to execute service of process on Yamaha Japan under the Hague Convention. Yamaha Japan clearly had the right to be served under the proper service procedure. The two corporations appear to have had legitimate business reasons for insisting on this right, including avoidance of judicial piercing of the corporate veil and imposition of liability on one corporation for the acts of the other. There was also no discussion of the expenses incurred by appellant’s counsel due to appellees’ lack of cooperation in providing documentation of appel-lees’ representatives' travel in the United States and in responding to discovery requests relevant to this issue.
Question: Were there cross appeals 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.
MINER, Circuit Judge:
Defendant-appellants/cross-appellees, Town of Blooming Grove and its Town Supervisor, Board, Building Inspector, Planning Board and Board of Zoning Appeals (collectively, “the Town”) appeal from the amended portion of a judgment entered in the United States District Court for the Southern District of New York (Kram, J.). The action was brought under the provisions of 42 U.S.C. § 1983 (1988) (“section 1983”) to redress the unconstitutional deprivation of a property right, a claim rejected in the jury verdict and the original judgment entered thereon. An amendment to the judgment declared a property right under state law. The amendment was based on a jury finding, in answer to one of the questions posed by the court in a special verdict form, that under New York law plaintiff-appellee/cross-appellant Marvin H. Greene held a vested property right to develop a 136-acre parcel of land he owned in Blooming Grove in a manner that did not conform with current town zoning regulations. Greene and Lake Anne Realty Corporation (collectively, “Greene”), a company of which Greene is the sole shareholder and officer, cross-appeal from the portion of the judgment, entered upon the jury verdict, determining that the Town had not unconstitutionally deprived them of any property right.
Each of the eight claims (designated as “causes of action” in Greene’s complaint) originally pleaded by Greene was premised on the contention that the Town’s use of its zoning powers to deny his applications for building permits constituted a deprivation of property without due process under section 1983. The third cause of action was based on the Town’s amendment to its zoning ordinance in 1974. That amendment foreclosed Greene from using the undeveloped portion of his land for the extension of his existing bungalow colony. Although it was not contested that Greene had a right of nonconforming use as to the 123 bungalow units already built, the issue dividing the parties was whether his right had vested with respect to the planned expansion of the resort over the entire 136-acre parcel. Thus, in the third cause of action, Greene sought a declaration that he had “a valid vested right to improve [the] bungalow colony by the addition of an additional 419 units in accordance with the provisions of the [Town] zoning ordinance in force prior to the adoption of the Zoning Ordinance of 1974” and a direction that the Town issue him a permit to build the 419 units. The Town moved for summary judgment dismissing the complaint, which the district court granted. On appeal, we reversed and remanded as to that portion of the summary judgment dismissing Greene’s third cause of action, finding a triable issue of fact as to “whether Greene’s nonconforming bungalow colony use includes, as a matter of property right under New York law, the construction of the additional bungalow units.” Greene v. Blooming Grove, 879 F.2d 1061, 1066 (2d Cir.1989) (“Greene I”).
On this appeal, we hold that the district court erred in exercising jurisdiction over an unpleaded pendent claim to grant declaratory relief to Greene on an issue of state law after the jury had found for the Town on the federal claim and after the district court had entered a judgment, pursuant to the jury’s special verdict, dismissing the entire complaint. Accordingly, we reverse the portion of the judgment granting declaratory relief. We affirm the portion of the judgment entered upon the jury verdict in favor of the Town upon the section 1983 claim.
BACKGROUND
Familiarity with Greene I, in which we described in detail the dispute underlying this action, is presumed. Here, we recite only those facts relevant to this appeal.
In accordance with Greene I, a jury trial on the third cause of action was held in February, 1990. In this claim, Greene alleged that the Town’s amendment to its zoning ordinance in 1974, under which his planned expansion of a bungalow colony resort over the entire 136-acre parcel became reclassified as an impermissible use of the land, amounted to an unconstitutional deprivation of a property right. Greene argued that his right to expand the bungalow colony by the construction of an additional 419 units had vested prior to the adoption of the 1974 amended ordinance.
With the consent of the parties, the district court submitted to the jury a special verdict form. The jury responded in the affirmative to the first question contained in the special verdict: “Does the vested nonconforming use of [Greene’s] bungalow colony extend to the entire 136 acres previously approved for bungalow colony use?”. However, the jury answered in the negative to the next question: “With respect to [Greene's] claim that the refusal of the Town ... to permit the building of additional bungalow colony units on the undeveloped portion of [the] bungalow colony deprived [him] of a property right protected by the United States [Constitution in violation of [section 1983], [has] [Greene] proven this claim by a preponderance of the evidence?”. Because of its answer to the second question, the jury did not respond to the third question, which concerned the amount of damages to be awarded plaintiffs upon a finding of liability.
Immediately after the jury announced its verdict, the Town orally moved in open court for “dismissal of the finding of the state law property right since the jury verdict finding no violation of [section 1983] ... divested the [court of] subject matter jurisdiction over the state law claim.” Although Greene had not pleaded separately a cause of action under New York state law, the district court and the parties apparently assumed at that point, without previous discussion of the subject, that there was in the case a pendent state law claim to declare that Greene’s vested right to a nonconforming use extended to the entire parcel of land. Judge Kram stated that she would withhold decision on the Town’s motion while she considered it further.
On February 28, 1990, judgment in accordance with the jury verdict was entered in the district court dismissing the complaint; the judgment made no reference to any disposition of the Town’s oral motion to dismiss the finding of a state law property right. On March 8, Greene moved under Fed.R.Civ.P. 59(e) and 60 to amend the judgment dismissing the complaint to include a declaration that Lake Anne held a vested right of non-conforming use for the entire 136 acres and to order that the Town issue a building permit to him. In response, the Town submitted a brief, in which it argued that no claim that the right existed had been asserted as a cause of action under state law. In an opinion dated October 22, 1990, the district court denied the Town’s oral motion to dismiss Greene’s “pendent claim” and granted declaratory relief to Greene, amending the judgment of dismissal to provide that “Marvin H. Greene has a valid vested right to improve the bungalow colony ... by the construction of an additional 419 units” in conformance with the pre-1974 zoning ordinance. However, Judge Kram denied Greene’s request for an order that the Town issue a building permit.
DISCUSSION
When a claim under section 1983 is based on an alleged deprivation of property in violation of the fourteenth amendment, a court must make
the following inquiry: (a) whether a property right has been identified; (b) whether governmental action with respect to that property right amounts to a deprivation; and (c) whether the deprivation, if one be found, was visited upon the plaintiff without due process of law.
Fusco v. Connecticut, 815 F.2d 201, 205 (2d Cir.), cert. denied, 484 U.S. 849, 108 S.Ct. 149, 98 L.Ed.2d 105 (1987); see also Parratt v. Taylor, 451 U.S. 527, 536-37, 101 S.Ct. 1908, 1913-14, 68 L.Ed.2d 420 (1981), overruled in part on other grounds, Daniels v. Williams, 474 U.S. 327, 328, 106 S.Ct. 662, 663, 88 L.Ed.2d 662 (1986). The extent and nature of a property right protected by the fourteenth amendment, as well as whether the right exists at all, are determined by reference to state law. Cf Mennonite Board of Missions v. Adams, 462 U.S. 791, 798, 103 S.Ct. 2706, 2711, 77 L.Ed.2d 180 (1983); Fusco, 815 F.2d at 205-06. In this case, the determination of Greene’s property right was a necessary prerequisite to a determination of the claim asserted under section 1983. It was not made in response to a separate and distinct pendent claim for which relief had been sought. See Ruiz v. Estelle, 679 F.2d 1115, 1157-59 (5th Cir.), aff'd in part, vacated in part, 688 F.2d 266 (5th Cir.1982) (per curiam), cert. denied, 460 U.S. 1042, 103 S.Ct. 1438, 75 L.Ed.2d 795 (1983).
The exercise of pendent jurisdiction where a pendent claim is pleaded is within the discretion of the district court, and is “not [the] plaintiffs right.” United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 1139, 16 L.Ed.2d 218 (1966); see also Mayor of Philadelphia v. Educational Equality League, 415 U.S. 605, 627, 94 S.Ct. 1323, 1336, 39 L.Ed.2d 630 (1974). If a pendent claim to declare a state property right had been pleaded, we would review under an abuse of discretion standard the district court’s decision to exercise pendent jurisdiction by declaring Greene’s vested right pursuant to New York law, considering factors of judicial economy, convenience and fairness to the parties, and whether the claims were so interrelated that Greene normally would be expected to try them together. See Gibbs, 383 U.S. at 725-26, 86 S.Ct. at 1138-39.
Here, however, no pendent state claim ever was before the district court. Greene never pleaded a state claim separately, never raised one as a discrete claim during the lengthy course of this litigation and only sought relief premised solely on state law after the district court already had entered judgment dismissing the action pursuant to the jury’s verdict. In its Memorandum Opinion and Order granting the motion to amend the judgment, the district court correctly stated that Greene’s “state claim,” “if pleaded in the amended complaint and retained after remand in the pre-trial order, would be pendent to the § 1983 claim.” However, the district court erred when it assumed that a state claim was pleaded in the amended complaint and proceeded to exercisé jurisdiction over a pendent state claim that had been neither pleaded nor raised during the long course of the action.
A plaintiff may invoke federal jurisdiction over a state law claim appended to a federal claim where the pendent claim and federal claim share a common nucleus of operative fact. Gibbs, 383 U.S. at 725, 86 S.Ct. at 1138; see, e.g., Federman v. Empire Fire & Marine Ins. Co., 597 F.2d 798, 810 (2d Cir.1979); Harris v. Steinem, 571 F.2d 119, 122 n. 7 (2d Cir.1978). However, Greene never asserted a state claim in his amended complaint, and we find in the record before us no mention by Greene of any pendent state law claims during the proposal of jury charges, the formulation of the special verdict form to be submitted to the jury, or at the time the jury rendered its verdict. In opening remarks, counsel for Greene described the action to the jury as one arising under section 1983 and involving an unconstitutional deprivation by the Town. The fact that the Town indicated after the verdict that it believed a pendent claim had been raised against it does not aid Greene, who simply failed to assert the claim. Thus, it seems clear that the finding on the state law issue merely established one of the elements of the section 1983 claim, and we hold that the district court’s exercise of pendent jurisdiction was improper under the circumstances. Cf. Haywood v. Ball, 586 F.2d 996, 1000 (4th Cir.1978) (plaintiff who pleaded claims under section 1988 and under common law of negligence entitled to relief based on jury’s verdict for him on pendent claim, notwithstanding jury’s verdict for defendants on federal claim).
Greene argued in his post-trial motion (but failed to argue on appeal) that he had met the requirements for asserting a pendent state claim, even though unpleaded, citing Leather’s Best, Inc. v. S.S. Mormaclynx, 451 F.2d 800, 809 (2d Cir.1971). In Leather’s Best, a shipper was awarded damages in an action asserted under the Carriage of Goods by Sea Act (“COGSA”) against the owner of the pier from which the shipper’s goods were stolen and against the carrier which had delivered the goods to the pier. Id. at 807-08. Addressing the issue of jurisdiction sua sponte, this Court held that, even though the shipper pleaded the action in admiralty and the pier owner was not susceptible to a suit in admiralty, the district court had power to hear the unpleaded claim as an exercise of its pendent jurisdiction because “[t]he heart of the shipper’s complaint [under COGSA] is that the loss of the [goods] was the result of the negligence of [the pier owner].” Id. at 808.
Although the court in Leather’s Best eschewed “an ‘unnecessarily grudging’ approach to the question of power to hear the pendent claim” and stated that, under Gibbs, the analysis should “focus[] upon the relationship between the facts underlying the state and federal claims,” id. at 809, Leather’s Best is distinguishable from this case. There, the action was grounded in admiralty, in which “[p]leadings ... have traditionally been read with liberality.” Id. at 808. Moreover, the federal claim pleaded in the shipper’s complaint and the unpleaded pendent claim were based on the same theory (i.e., negligence); therefore, the shipper’s presentation at trial of his case fairly apprised the pier owner of the unpleaded claim against him, and the pier owner was not prejudiced by this Court’s decision to allow the shipper to proceed with the pendent claim on remand.
By contrast, the Town here was not fairly apprised of an unpleaded pendent claim by Greene’s introduction of evidence supporting his contention that he held a nonconforming use to build an additional 419 bungalow units, because Greene was required to present such evidence in order to maintain his only pleaded claim. Cf. Grand Light & Supply Co. v. Honeywell, Inc., 771 F.2d 672, 680-81 (2d Cir.1985) (post-trial amendment of pleadings to add claim to conform with evidence not permitted unless unpleaded claim actually has been tried and opposing party has opportunity to defend against it). Had the Town known that Greene sought a declaration that his right of nonconforming use extended across the entire parcel of land as a claim independent of the section 1983 claim, it might have undertaken its defense in a different manner. However, the combination of the pleadings, arguments and the evidence offered at trial gave notice to the Town that it was required to defend only a section 1983 claim for unconstitutional deprivation of a property right. It was this deprivation that was at the “heart” of Greene’s complaint.
Our decision here can hardly be said to represent an overly formalistic approach to the assertion of claims. Not only did Greene fail to assert a pendent claim in his pleadings but, as discussed above, he attempted to do so only after judgment had been entered in the litigation. However, the jury's finding that the vested right extended to the entire parcel of land may yet prove to be of some benefit to Greene. The finding may have collateral estoppel effect if Greene seeks in state court to compel the issuance of a building permit. Compare Neulist v. Nassau County, 108 Misc.2d 160, 166-69, 437 N.Y.S.2d 239, 245-46 (Sup.Ct.1981) (element of action for malicious prosecution collaterally barred from being relitigated after identical issue determined as part of section 1983 action in federal court), aff'd, 88 A.D.2d 587, 450 N.Y.S.2d 762 (2d Dep’t 1982), appeal denied, 57 N.Y.2d 606, 441 N.E.2d 568, 455 N.Y.S.2d 1025 (1982) with Brizse v. Lisman, 231 N.Y. 205, 207-08, 131 N.E. 891, 891 (1921) (special verdict findings by jury for plaintiff in case where ultimate verdict rendered in favor of defendants held to have no collateral estoppel effect against defendants in any future action brought by plaintiff against defendants).
Since we have concluded that the district court abused its discretion in exercising pendent jurisdiction over the state law component of the section 1983 claim, we hold that it was error to amend the judgment under Fed.R.Civ.P. 59(e) and 60. The “narrow aim” of Rule 59(e) is “ ‘to mak[e] clear that the district court possesses the power’ to rectify its own mistakes in the period immediately following the entry of judgment.” White v. New Hampshire Dep’t of Employment Security, 455 U.S. 445, 450, 102 S.Ct. 1162, 1165, 71 L.Ed.2d 325 (1982) (footnote omitted). Similarly, Rule 60 permits amendment where the original judgment contains clerical error, and was premised on “mistake, inadvertence, surprise or excusable neglect.” See Morgan Guaranty Trust Co. v. Third Nat’l Bank of Hampden Cty., 545 F.2d 758, 760 (1st Cir.1976). However, neither rule is applicable here. Once the jury had found the Town not liable under section 1983, which was the only claim tried, the district court’s only remaining task was the entry of judgment dismissing the claim. Cf. Continental Cas. Co. v. Howard, 775 F.2d 876, 883 (7th Cir.1985) (“[a] motion to amend the judgment ... is appropriate if the court in the original judgment has failed to give relief on a claim on which it has found that the party is entitled to relief.”), cert. denied, 475 U.S. 1122, 106 S.Ct. 1641, 90 L.Ed.2d 186 (1986).
We have examined Greene's remaining contentions and find them to be without merit.
CONCLUSION
We affirm the portion of the amended judgment that dismisses the claim under 42 U.S.C. § 1983 and reverse the portion of the amended judgment that declares a vested right in the extension of the nonconforming use of the undeveloped portion of the bungalow colony property.
Question: Were there cross appeals 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, Chief Judge:
Appellant Grover Moran challenges the district court’s dismissal of his petition for habeas corpus relief. Because the record supports the district judge’s finding that Moran’s confession was voluntary, we affirm.
Moran was arrested on March 31, 1977, and charged with multiple counts of crime against nature. His attorney retained a psychiatrist, Dr. Malcolm Latour, to examine him. The attorney instructed Moran to cooperate with Dr. Latour, but not to speak to anyone else.
After Dr. Latour’s examination on April 8, two agents of the Federal Bureau of Investigation (F.B.I.) questioned Moran about a murder unrelated to the charges on which he was arrested. The agents first advised Moran of his Miranda rights, both orally and on a written form which he read and signed. Moran “broke” and confessed to the murder an hour into the interview after the agents told him that the victim’s son blamed his father for his mother’s death.
Local police officers advised Moran of his Miranda rights and interviewed him the next day. Moran agreed to show the officers where he disposed of the murder weapon and the victim’s clothes. Extensive searches for these items proved fruitless. At the end of the day, Moran signed a written statement detailing the facts he had revealed to the F.B.I. agents the day before.
Moran repudiated this confession at his subsequent suppression hearing and trial. He testified that he talked to the F.B.I. agents despite his attorney’s warning because he was afraid, confused, and didn’t know what to do. He also stated that he confessed in order to get out of the interview and away from the agents. Dr. Lat-our testified at both proceedings that Moran did not have the mental capacity to understand the Miranda rights nor to voluntarily waive them. A jury convicted Moran of first degree murder and he was sentenced to life imprisonment.
After exhausting state avenues for relief, Moran filed a petition for writ of habe-as corpus in the United States District Court for the Eastern District of Louisiana. The district judge summarily denied his petition. This court reversed and remanded for an evidentiary hearing on the issue of whether Moran’s confession was voluntary. This hearing was held on July 6, 1984.
Dr. Latour’s deposition was admitted into evidence at the hearing. Dr. Latour testified that his examination revealed that Moran’s intelligence was below normal, although Moran was not mentally retarded. Dr. Latour stated that Moran was gaunt, tremulous, submissive, and suffering from great anguish or pain on the day of the examination and F.B.I. interrogation. Dr. Latour diagnosed Moran’s condition as severe prepsychotic depression. He concluded that at the time of Moran’s interrogation and confession, Moran knew the difference between right and wrong, but did not have mental capacity to understand and intelligently waive constitutional rights or the normal mental defensive mechanisms necessary for a voluntary confession in an interrogative setting.
Dr. David Shraberg, whom the magistrate recognized as qualified to testify in the field of forensic psychiatry, testified on the basis of his review of Moran’s medical records, Moran’s statement, and transcripts of prior proceedings in the case. Dr. Shra-berg never personally examined Moran. Dr. Shraberg testified that Moran was legally sane and competent at the time of his confession, that Moran was probably suffering from a great deal of guilt and a need to confess rather than an incapacitating mental defect or illness at that time, and that this emotional distress would not have impaired Moran’s capacity to rationally waive his rights or freely confess.
The magistrate found the testimony of Dr. Shraberg to be the more credible, and recommended dismissal of Moran’s petition with prejudice. The district court adopted the magistrate’s findings of fact and conclusions of law, and dismissed the petition.
On review of a federal criminal conviction, we apply the clearly erroneous standard to a federal district court’s determination that a petitioner’s confession was voluntary. United States v. Gorel, 622 F.2d 100, 104-05 (5th Cir.1979), cert. denied, 445 U.S. 943, 100 S.Ct. 1340, 63 L.Ed.2d 777 (1980); United States v. Watson, 591 F.2d 1058, 1961 (5th Cir.), cert. denied, 441 U.S. 965, 99 S.Ct. 2414, 60 L.Ed.2d 1070 (1979); United States v. Kelly, 556 F.2d 257, 260 (5th Cir.1977), cert. denied, 434 U.S. 1017, 98 S.Ct. 737, 54 L.Ed.2d 763 (1978); United States v. Vasquez, 534 F.2d 1142, 1146 (5th Cir.), cert. denied, 429 U.S. 979, 97 S.Ct. 489, 50 L.Ed.2d 587 (1976). A state court finding of voluntariness, however, requires an independent federal determination of that issue. In Miller v. Fenton, - U.S. -, - ---, 106 S.Ct. 445, 449-53, 88 L.Ed.2d 405 (1985), reversing and remanding 741 F.2d 1456 (3d Cir.1984), the Supreme Court refused to apply the presumption of correctness provided for in 28 U.S.C. § 2254(d) to state court determinations of voluntariness. Rather, the Court held “that the ultimate question of the admissibility of a confession merits treatment as a legal inquiry requiring plenary federal review.” Id. at -, 106 S.Ct. at 452. The petitioner in this case was convicted in state court. In the present federal habeas corpus proceeding, a magistrate first made the determination that his confession was voluntary after an evidentiary hearing ordered by this court, and the district judge then adopted that determination. Since here a federal court, after an evidentiary hearing, has determined to uphold a state court’s finding of voluntariness, our appellate task is to review a federal determination of voluntariness, not such a court’s decision to apply the § 2254(d) presumption of correctness.
In addition, the magistrate and the district judge determined that Moran’s confession was voluntary because the magistrate found Dr. Shraberg’s testimony more credible than Dr. Latour’s. A factual issue which is dispositive of a constitutional question upon resolution is subject to review under the normal standard of review for other factual determinations. Miller, - U.S. at -, 106 S.Ct. at 452 (citing Dayton Bd. of Educ. v. Brinkman, 443 U.S. 526, 534, 99 S.Ct. 2971, 2977, 61 L.Ed.2d 720 (1979)). A magistrate’s or district judge’s decision to credit the testimony of one witness over the contrary testimony of another is thus subject to review under the clearly erroneous standard. United States v. Pozos, 697 F.2d 1238, 1243 (5th Cir.1983) (“The credibility choices of the district court, based on live testimony at a suppression hearing, are subject to the normal ‘clearly erroneous’ standard of review.” (citations omitted)); see also Miller, - U.S. at -, 106 S.Ct. at 451 (deference to the trial court’s determination is appropriate when the issue concerns the credibility of witnesses).
The record here provides ample support for the magistrate’s decision to rely on Dr. Shraberg’s testimony rather than Dr. Latour’s. Both the F.B.I. agents and the local police advised Moran of his rights before questioning him. Moran indicated to Dr. Latour on the same day as his confession that he understood he was to cooperate with the doctor, but not to speak to anyone else. Dr. Latour stated in his deposition that Moran knew the difference between right and wrong and was in touch with reality on that day, yet concluded that Moran could not confess voluntarily because of emotional vulnerability due to severe depression.
Dr. Shraberg attributed that willingness to confess to natural feelings of guilt rather than mental illness or emotional vulnerability. He explained that Moran’s confession and subsequent repudiation fit the psychopathic personality which often confesses when caught and then feels discharged. He noted that Dr. Latour’s report contained personal, subjective opinions and terms which did not support a professional diagnosis of clinical depression so severe as to render Moran incapable of defending himself or being aware of his rights.
The record does not suggest that Moran was mistreated, held incommunicado, jailed for a substantial period of time, subjected to prolonged questioning, or denied access to his retained attorney before questioning. The appeal of the F.B.I. agents to Moran’s empathy and emotions was not an unacceptable interrogation tactic.
Moran has shown only that at the time he confessed he was of low intelligence, was feeling depressed, and was disturbed by some of the questions and statements of his interrogators. He has not shown that his will was usurped by them. The magistrate was entitled to conclude that Moran was not so lacking in his capacity to resist self-incrimination that his confession should be deemed involuntary. His finding that Dr. Shraberg’s testimony was more credible than Dr. Latour’s is not clearly erroneous. Moran has thus failed to establish that his confession was involuntary.
The judgment appealed from is
AFFIRMED.
We do not decide today whether we would apply the same standard in reviewing a federal habeas court’s decision to overturn a state court's determination of voluntariness. We leave to another day the decision whether, in such a case, Miller v. Fenton’s balancing of federalism, comity, and due process concerns might lead this court to make its own independent determination of vol-untariness without extending any presumption of correctness to the conclusions of the state court.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
WISDOM, Circuit Judge:
Donnie E. Spinks, plaintiff-appellant, employed by Labor Services, Inc., was injured while performing work for Chevron Oil Company on one of Chevron’s drilling barges in the Gulf of Mexico. The accident generated three suits by Spinks and multitudinous pleadings, including third party demands, counterclaims and cross-claims for indemnity and attorney’s fees. The suits were consolidated for trial and on appeal. The principal issue is whether the district court erred in denying relief to Spinks; the court found that Spinks’ “negligence was the sole proximate cause of the accident.” Another issue is whether, although Spinks was a borrowed servant of Chevron, he remained, for purposes of the Jones Act, an employee of Labor Services, his original employer. We reverse in part and remand.
In Civil Action No. 70-251 Spinks sued Chevron for damages under the general maritime law alleging that he was injured as a result of the Chevron’s negligence and the unseaworthiness of its jack-up drilling barge, the S-66. Chevron filed a third party complaint against Labor Services claiming indemnity and attorney’s fees, under the terms of a contract obligating Labor Services to defend Chevron in any suit brought against it by any of Labor Services’ employees. Labor Services counterclaimed against Chevron for indemnity or contribution, should Labor Services be cast in judgment. It also demanded that Chevron indemnify it for medical expenses and maintenance paid by Labor Services as a result of plaintiff’s injury. The counter-claim rests on the theory that Spinks was the borrowed employee of Chevron. The district court granted judgment for Chevron on the merits.
In No. 70-252 Spinks sued only Labor Services (his immediate employer), Travelers Insurance Company, and the excess insurers of Labor Services, basing his suit on the Jones Act, 46 U.S.C. § 688, and the general maritime law. Labor Services filed a third party complaint against Chevron and Chevron filed a cross complaint against Labor Services. The district court dismissed this action.
In No. 71 — 150 (389) Spinks sued Labor Services for maintenance during a limited period of time, about four weeks, during which Labor Services discontinued the payment of maintenance while he was convalescing from his first disc surgery. According to Labor Services, the payments were discontinued to enable the employer to recover overpayment of maintenance. Before trial the parties stipulated that the plaintiff was not seeking future maintenance and cure.
Labor Services, which had, through its insurers, paid maintenance and cure to the plaintiff sought to recover these payments from Chevron. The district court enforced the agreement between Labor Services and Chevron subjecting Labor Services for liability for maintenance and cure payments.
The court did not enforce the agreement as to attorney’s fees. The court concluded that “the ends of justice would best be met by Chevron and Labor Services each being responsible for its own cost of defense.”
I
Chevron’s jack-up drilling barge, the S-66, has a crew of thirty-five or thirty-six men who work, eat, and sleep aboard the barge. Of these, about eighteen are employees of Labor Services who the year around do maintenance work on the barge and perform the labor in jacking the barge up and down at each marine destination. Part of Labor Services’ business is the supplying of laborers to work on oil rigs and drilling barges.
In March 1970 oil sprayed from a Chevron platform blew on the barge S— 66. Chevron rented a small, portable steam-cleaning machine. The rental invoice reflects that the machine was used from March 3, 1970 to April 20, 1970 and that it was returned with the notation “unit inoperative”. The regular Labor Services crew used the steam-cleaning machine every day after its arrival. Labor Services made the operation of the steam-cleaning machine a two-man job, one man to handle the nozzle and the other man to keep the machine running. The machine was equipped with a forty foot long hose. Keeping the machine running required supplying the machine with diesel fuel and with liquid detergent. Five-gallon cans were provided for carrying the fuel and the detergent. Each can when filled weighed forty pounds. The man who had the job of “keeping the steam-cleaning machine going” had the duty of “watching the machine” and spraying the belt with a nonslip compound to attempt to keep the machine from over-heating and stopping. The machine leaked liquid soap almost constantly.
Donnie Spinks was injured on the morning of April 8, 1970 when he stepped on a ramp aboard the S-66. He was nineteen years old at the time, a seaman, and a member of the crew of the barge. He had been employed by Labor Services for about eight months, all of which time had been spent aboard the S-66. On the day of the accident he was working with William Walker in steam-cleaning the heliport. Walker, an older and more experienced man, had been on the barge for about two and a half years. Walker’s job was to handle the nozzle and Spinks’ job was to supply the soap and diesel and keep the machine running. Their “pusher” (supervisor or foreman) was George Hanks. Walker and Hanks were also employees of Labor Services. Labor Services provided Spinks’ pay slips, withheld social security payments and taxes from his salary, and listed him as its employee. As noted, its contract with Chevron made it responsible for maintenance and cure payments for the employees furnished Chevron. Chevron controlled the operations of the S-66, supplied the tools and equipment, and assigned general tasks. The details of work were left to the pushers.
The heliport was connected to the barge proper by a ramp. This ramp was about three to four feet wide and ten to fifteen feet long, on about a three-step incline, and was equipped with handrails. Spinks had to make periodic trips to the barge for soap and fuel used in the spraying machine. Hanks knew that Spinks had made several trips carrying two buckets, one in each hand. Neither Hanks nor anyone else told Spinks to carry or not to carry two buckets. The district court found that the soapy condition on the walkway, which Hanks knew about, had existed for at least four hours. The court found that “it had not been washed down as it should have been and plaintiff and his co-worker must bear the responsibility for that failure.” There was available on the barge an absorbent substance known as Dresser-Dri, the use of which might have made the footing less slippery. Spinks could have used it without permission, but did not. Nor did Hanks direct him to use it. The Chevron barge maintenance foreman testified that Labor Services pusher was the one to initiate the placing of the Dresser-Dri in the area where men would work.
On the first step of the ramp, Spinks fell, while carrying the heavy buckets. He suffered spinal disc damage which required two surgical operations to repair.
The trial court found that both Labor Services and Chevron were negligent in permitting the soap machine to run on diesel fuel instead of kerosene, in not correcting the leak around the piston pump of the machine, and that this use of a faulty soap machine, “that is one with a leak in the pump area and one on which the belt frequently slipped, might be deemed to constitute an unseaworthy condition.” But the court held that their negligence and the “deemed” unseaworthiness were not proximate causes of Spinks’ injury. Indeed, the court found that Spinks’ negligence was the sole proximate cause of his injury, because of (1) his “and his co-worker’s” failure to wash down the deck and ramp, (2) his decision to carry two heavy buckets, (3) his failure to use handrails, and (4) his failure to use Dresser-Dri. The court held that, as far as Spinks was concerned, the vessel was not unseaworthy, for Spinks’ job was to repair the very conditions that were the subject of the unseaworthiness.
II
Spinks sued only Labor Services under the Jones Act. The district court granted an involuntary dismissal on the Jones Act claim, because (1) Labor Services was neither the owner nor the operator of the vessel, and (2) Spinks was the borrowed employee of Chevron. Spinks appeals this ruling, as well as the finding that his injury was caused by his sole negligence. He argues that (1) a seaman may have more than one Jones Act employer, and (2) under the admiralty doctrine of comparative negligence, at least some of the blame must be imputed to Labor Services through Hanks’ failure to supervise Spinks properly and Walker’s failure (with Spinks) to wash down the deck.
A. We conclude that the district court erred in denying recovery on the ground that Spinks’ negligence was the sole proximate cause of his injuries. An employer’s negligence need not be the sole proximate cause of an injury to result in his liability, but may merely be a contributing cause of the accident. Hern v. Moran Towing & Transp. Co., 2 Cir. 1943, 138 F.2d 900; Johnson v. Griffiths S.S. Co., 9 Cir. 1945, 150 F.2d 224; Norris, The Law of Seamen § 693 (3d ed. 1970); cf. Andrews v. Chemical Carriers, Inc., 3 Cir. 1972, 457 F.2d 636, cert. denied, 409 U.S. 874, 93 S.Ct. 120, 34 L.Ed.2d 126; Restatement 2d, Torts § 430, Com. b. In Sanford Bros. Boats, Inc. v. Vidrine, 5 Cir. 1969, 412 F.2d 958 this Court declared: “The question of proximate cause in an action under the Jones Act turns on whether the actions of the defendant contributed to the injury even in the slightest degree. Proximate cause is not destroyed merely because the plaintiff may also have contributed to his own injury.”
The trial judge regarded the issue of liability as close: The day before he held for the defendants, he announced that he would find the defendants liable. In addition, the district court found both Walker and Spinks negligent for failing to wash down the soapy deck. Since the fellow-servant rule is inapplicable in admiralty, Walker’s negligence must be imputed to his employer under familiar respondeat superior principles. Gilmore & Black, The Law of Admiralty § 6-20 (1957). At least some negligence must be assigned to Labor Services’ pusher, Hanks, who was aware of the dangerous condition and Spinks’ working methods. See Ballwanz v. Isthmian Lines, Inc., 4 Cir. 1963, 319 F.2d 457. If a pusher’s job does not include a duty to prevent accidents, it is difficult to understand what a pusher does. We note that the trial court found both defendants negligent — though not proximately negligent — for this was the first reason the court gave for refusing to allow Chevron attorney’s fees under its indemnity contract with Labor Services. In its final judgment the district court declared: “As indicated in this Court’s opinion, neither Labor Services nor Chevron were free from fault in this case. The Court simply found that neither the negligence of Chevron nor the negligence of Labor Services was a proximate cause of the accident involved in spite of the fact that there was evidence of negligence on the part of both of these defendants.”
B. The concept of proximate cause often obscures the true analysis of a tort. A court makes a policy judgment on the limits of liability when causation in fact has been established. Prosser, Torts § 42 (4th ed. 1971). This Court has applied in maritime law the legal cause analysis, as it is used in common law torts in admiralty. For example, in Watz v. Zapata Off-Shore Co., 5 Cir. 1970, 431 F.2d 100, we held that an independent intervening cause did not relieve a manufacturer of a defective hoist of liability, when its negligence was a substantial factor in bringing about the harm. We looked to the Second Restatement of Torts for guidance, citing section 435(1).
The American Law Institute’s Restatement 2d of Torts adopts the mod-era concept of legal cause. The elements of legal cause are negligence, a causal connection between the negligence and the injury, the invasion of a legally protected interest, and lack of a countervailing legally protected interest as a defense to liability. Restatement 2d Torts § 9. The defendant’s negligence must be a substantial factor in bringing about the harm, with no rule of law relieving the actor of fault. Id. § 431. “Substantial” means more than “but for” the negligence, the harm would not have resulted, (id. Com. a) and more than merely negligible negligence. Id. Com. b. The gist of it is that some responsibility for the effect must accompany the cause.
Because of strong policy considerations in admiralty, legal cause analysis is particularly suited to maritime tort law. Seamen as a class have often been styled “wards of the court”, and employers have been assigned a high standard of duty towards them. This policy of protecting seamen from the hazards of their profession is evidenced by the employer’s strict liability for providing a seaworthy vessel, and supplying maintenance and cure for ill seamen. In negligence cases, admiralty prohibits defenses of assumption of risk, see Neal v. Saga Shipping Co., 5 Cir. 1969, 407 F.2d 481, and contributory negligence, see Pope & Talbot, Inc. v. Hawn, 1953, 346 U.S. 406, 74 S.Ct. 202, 98 L.Ed. 143. Under the Jones Act, even the slightest negligence suffices for a finding of liability. Ferguson v. Moore-McCormack Lines, Inc., 1957, 352 U.S. 521, 77 S.Ct. 457, 1 L.Ed.2d 511. It would be anomalous to allow an overly strict interpretation of proximate cause to defeat the remedial purposes of admiralty tort law.
C. The duty owed by an employer to a seaman is so broad that it encompasses the duty to provide a safe place to work. Vickers v. Tumey, 5 Cir. 1961, 290 F.2d 426, 429-432. See Gilmore & Black, The Law of Admiralty § 6-37 (1957); Norris, The Law of Seaman § 692 (3d ed. 1970). By comparison, the seaman’s duty to protect himself (the ground for any countervailing legal interest serving to exculpate the employer) is slight. His duty is to do the work assigned, not to find the safest method of work. This is especially true when his supervisor, Hanks in this case, knows the working method used by the seaman, and does nothing about it. See Ballwanz, 319 F.2d at 462; Adams v. United States, 9 Cir. 1968, 393 F.2d 903.
As between Spinks, a nineteen year old seaman, and his supervisor, it cannot be said that Spinks alone had the duty to realize that carrying two buckets was dangerous, or to apply the anti-skid material, or to see that the deck was washed down. As between Spinks and his co-worker, Walker was older, had worked on the barge two and a half years, and handled the nozzle applying the soap and steam in washing down the soapy deck. We state no opinion on the relative responsibility of these individuals. We do hold, however, that in the circumstances this case presents, the entire burden cannot be placed on the lowest member of the hierarchy.
III
We reverse the ruling that Labor Services was not Spinks’ Jones Act employer. The Jones Act, 46 U.S.C. § 688 (1970), is remedial legislation, extending to seamen the rights accorded railway workers under the Federal Employers’ Liability Act [FELA], 45 U.S.C. §§ 51-60 (1970). As such, it should be liberally construed in favor of injured seamen. Cortes v. Baltimore Insular Line, 1932, 287 U.S. 367, 375, 53 S.Ct. 173, 175, 77 L.Ed. 368, 373; See Norris, The Law of Seamen § 662 (1970).
A. By the express terms of the Jones Act an employer-employee relationship is essential to recovery. Cosmopolitan Shipping Co. v. McAllister, 1949, 337 U.S. 783, 69 S.Ct. 1317, 93 L.Ed. 1692; Norris, The Law of Seamen § 670 (1970); Gilmore & Black, The Law of Admiralty § 6-21 (1957). The employer need not be the owner or operator of the vessel. Barrios v. Louisiana Construction Materials Co., 5 Cir. 1972, 465 F.2d 1157, 1164 — 1165. Independent contractors have been held liable under the Act. Barrios; Constance v. Johnston Drilling Co., 5 Cir. 1970, 422 F.2d 369; Mahramas v. American Export Isbrandtsen Lines, 2 Cir. 1973, 475 F.2d 165; Savard v. Marine Contractors Inc., 2 Cir. 1972, 471 F.2d 536, cert. denied, 412 U.S. 943, 93 S.Ct. 2778, 37 L.Ed.2d 404; cf. Hanks v. California Co., W.D.La. 1967, 280 F.Supp. 730, 738 n. 14; Hebert v. California Co., W.D.La.1967, 280 F.Supp. 754, 761 n.3.
The posture of this case is unusual in that most injured seamen seek to reach a more solvent prime contractor or shipowner by alleging an employment relationship under the borrowed servant doctrine. See Restatement 2d Agency §§ 220-227. The courts have been receptive to this theory. If a prime contractor has assumed enough of the incidents of an employer, such as the right to control an employee’s work, he will be deemed a seaman’s employer. United States v. W. M. Webb, Inc., 1970, 397 U.S. 179, 90 S.Ct. 850, 25 L.Ed.2d 207. See Gilmore & Black, The Law of Admiralty § 4-23 (1957).
B. That a seaman is a borrowed servant of one employer does not mean that he thereby ceases to be his immediate employer’s servant. Restatement 2d Agency § 227, Comment b. In any common sense meaning of the term, Labor Services was Spinks’ employer. He was hired and paid by Labor Services. That company, not Chevron, withheld taxes and social security payments from his salary, and forwarded them to the government as required of an employer by law. Labor Services employed Spinks’ co-worker Walker and his supervisor Hanks. Hanks could fire Spinks; the record strongly suggests that Chevron could not — it could merely have Labor Services recall and replace him. Labor Services made a profit for every day Spinks was aboard the S-66. Now that he is injured, Labor Services cannot forget him. We do not quarrel with the trial court’s finding that Chevron had sufficient control over him to be a borrowing employer. We merely hold that under the Jones Act, Labor Services remained his employer.
C. Much of the difficulty in this area stems from the Supreme Court’s dictum in Cosmopolitan Shipping Co. v. McAllis-ter, 1949, 337 U.S. 783, 791, 69 S.Ct. 1317, 1322, 93 L.Ed. 1692, 1698, that “... under the Jones Act only one person, firm, or corporation may be sued as employer”. In that case the court held only that a seaman could have no Jones Act recovery from a general shipping agent when his wartime employer was the United States. Moreover, it has been held that a seaman may have but one Jones Act employer. See Mahramas v. American Export Isbrandtsen Lines, 2 Cir. 1972, 471 F.2d 165; Savard v. Marine Contracting Inc., 2 Cir. 1972, 471 F.2d 536.
If this means that an injured seaman must speculate at his peril on whether the trial court ultimately will find him a borrowed employee of the shipowner, or an employee of his immediate employer, we reject the theory. Such a rule can result in defeating Jones Act rights through contractual manipulations. See Mahramas, 471 F.2d at 173 (Oakes, J. dissenting), Hanks, 280 F.Supp. at 738. We see nothing offensive in suing an immediate employer under the Act, or even both employers in the alternative. The defendants can sort out which between them will bear the final cost of recovery, either through common law indemnity or contribution principles, or contractual provisions, as in the instant case. This is especially important in the area of offshore drilling operations, where oil exploration companies customarily contract for all labor.
The Jones Act incorporates standards established by the FELA. Under the FELA an employee may have more than one employer. It would seem reasonable therefore that a seaman may have more than one Jones Act employer. In Shenker v. B. & O. R. R., 1963, 374 U.S. 1, 83 S.Ct. 1667, 10 L.Ed.2d 709, an employee of the B & O was injured while working on another railroad company’s car. The Supreme Court held that his immediate employer owed him the duty of a safe place to work, which it breached. This Circuit has held that a railroad employee may have two employers. Porter v. St. Louis-San Francisco R.R., 5 Cir. 1966, 354 F.2d 840. But we need not, pass on the question whether Spinks could sue Chevron and Labor Services under the Jones Act; Spinks sued only one employer — Labor Services.
IV
Resolution of the proximate cause issue obviates the need to review the issue of contractual indemnity, because the trial court expressly based its holding on the defendants’ lack of fault for Spinks’ injuries. We observe, however, as did the trial court, that no public policy prohibits parties from using a contract to shift liability for payment of tort claims, as long as the injured seaman’s rights are not prejudiced thereby. Tidewater Oil Co. v. Travelers Ins. Co., 5 Cir. 1972, 468 F.2d 985.
There is no good reason not to enforce all of the contract, including Labor Services’ liability for attorney fees. Since the right is contractual, the court does not possess the same equitable discretion to deny attorney’s fees that it has when fashioning equitable remedies, or applying a statute which allows the discretionary award of such fees. No less than carrying adequate insurance, this liability is figured into the rates ycharged by independent contractors.
V
Traditionally, maintenance and cure is “a duty... annexed by law to a relation” owed by an employer to an injured seaman to the point of maximum cure. Cortes v. Baltimore Insular Line Inc., 1932, 287 U.S. 367, 53 S.Ct. 173, 77 L.Ed. 368. A line of cases has held that the Jones Act employer is also the maintenance and cure employer. See Braen v. Pfeifer Oil Transp. Co., 1959, 361 U.S. 129, 132, 80 S.Ct. 247, 4 L.Ed.2d 191; Vincent v. Harvey Well Service, Inc., 5 Cir., 1971, 441 F.2d 146. When the employer is an independent contractor, nonetheless he owes maintenance and cure. See, e. g., Mahramas, 475 F.2d at 171; Sims v. Marine Catering Service, Inc., D-La.1963, 217 F.Supp. 511. When, however, a prime contractor or shipowner has assumed control over an employee so that the independent contractor ceases to be his employer entirely, the borrowing employer becomes liable for maintenance and cure. Smith v. Dale Hart, Inc., W.D.La.1970, 313 F.Supp. 1164. Here, too, we pretermit deciding which employer owes maintenance and cure, for that would depend in large part on the resolution of the indemnity question. But it is clear that the fact that Labor Services has paid maintenance and cure to date should not be construed as an admission that it is Spinks’ maintenance and cure employer, as Chevron contends. Such a rule would discourage payments to injured seamen when they are most in need.
Spinks’ allegations concerning discontinuance of maintenance and cure payments for one month are better dealt with on remand.
VI
The trial court concluded that the soapy condition of the deck was created to correct a previous unseaworthy condition (the oil on the deck), and could not itself constitute an unseaworthy condition. Applying soapy solution to the deck was Spinks’ ordinary work aboard the S-66. We find no error in this holding. See Keel v. Greenville Midstream Service, Inc., 5 Cir. 1963, 321 F.2d 903; Lind v. American Trading and Production Corp., 9 Cir. 1961, 294 F.2d 342.
* * a.
We conclude that the cause must be reversed and remanded for (1) reconsideration of liability, both under the Jones Act and maritime law, consistent with the principles stated in this opinion; (2) reconsideration of the indemnity provisions of the contract between Labor Services and Chevron; and (3) the determination of damages, should the district court find for the plaintiff.
Reversed in part and remanded.
. In the interest of brevity, we have simplified our discussion of the pleadings.
. The contract, in part, provided that: “Contractor [Labor Services] agrees to defend and hold Company [Chevron] indemnified and harmless from and against any loss, expense, claim or demand for:
‘(a) Injury to or death of Contractor’s employees or for damages to or loss of Contractor’s property in any way arising out of or connected with the performance by Contractor of services hereunder; * * ”
See footnote 4.
. “Any seaman who shall suffer personal injury in the course of his employment may, at his election, maintain an action for damages at law, with the right of trial by jury, and in such action all statutes of the United States modifying or extending the common-law right or remedy in cases of personal injury to railway employees shall apply.. 46 U.S.C. § 688 (1970).
. Before trial the district court rendered judgment in C.A. 70-251 and C.A. 70-252 granting Chevron’s motion for a partial summary judgment against Labor Services. The court explained that this judgment recognized that Spinks was contending that he was an employee of Labor Services; that in these suits Labor Services could have no right of indemnity from Chevron, if he were Chevron’s employee, “since, in that event, Labor Services would not be liable to the plaintiff anyway.” This ruling did not involve C.A.-150, the suit for maintenance and cure. In C.A.-150 Labor Services sued to recover the payments it had made to Spinks through its insurers. The court found that even if Chevron were found to be liable for maintenance and cure, “such liability has ultimately been shifted to Labor Services through their agreement.” Since the Court has “determined that there was no negligence on the part of Chevron proximately causing the accident... the indemnity agreement is unenforceable.” See Tidewater Oil Co. v. Travelers Ins. Co., 5 Cir. 1972, 468 F.2d 985. The counterclaim of Labor Services and Travelers was therefore dismissed.
. The Court gave as its first reason for this holding, that “neither Labor Services nor Chevron were free from fault”. Furthermore for purposes of a Jones Act or maritime claim the injury was not to an employee of Labor Services. “Insofar as the plaintiffs claim for [for four weeks] maintenance and cure is concerned, that portion of the case was insignificant insofar as legal fees are concerned.”
. At the conclusion of the trial on liability and after hearing argument of counsel the district judge declared from the bench: “[Tjhere will undoubtedly be liability found against Chevron and in all probability liability will be found against Labor Services and there will also undoubtedly for sure be contributory negligence found against the plaintiff. So that will necessitate the taking of testimony in connection with quantum.
MR..MELANCON: I didn’t hear, your Hon- or, I missed a part of it. You said there will be liability found on the part of Chevron?
THE COURT: Yes, indeed.
MR. MELANCON: And liability on the part of Labor Services?
THE COURT: Yes, indeed.
MR. MELANCON: And liability, or rather contributory negligence on the part of the plaintiff?
THE COURT: Yes, indeed.
MR. MELANCON: Now, your Honor, in view of the expression of the Court, would it state at this time whether or not the liability you are contemplating against Chevron is predicated upon an interpretation of an employer-employee relationship?
THE COURT: No. It will be broad enough to hold Chevron responsible and Labor Services. I simply make this decision now in order to get on with the medical tomorrow, but there is no question — let me say this, gentlemen, there is no question but what the holding will say that the plaintiff was an employee of Chevron for the purpose of the Jones Act claim. There is no question about that. It may not make a great deal of difference, because in all probability, liability will also be predicated on negligence and upon unseaworthiness, as well as a possible finding of liability for Jones Act also.
There will be a finding of liability also on grounds of negligence, as far as Labor Services are concerned. There will be found contributory negligence on the part of the plaintiff. In what degree, I can’t state at this time, but at least that will give sufficient notice to all of you where the liability will lie for the purpose of going forward now with the question of quantum.
. See footnote 2.
. Admiralty customarily follows common law tort developments, when they do not interfere with its basic policies. The doctrine of Palsgraf v. Long Island RR, 1928, 248 N.Y. 339, 162 N.E. 99, that an actor is not answerable in tort to a person to whom he owed no duty, was adopted in admiralty in Sinram v. Pennsylvania R.R., 2 Cir. 1932, 61 F.2d 767, 770. Similarly the holding of MacPherson v. Buick Motor Co., 1916, 217 N.Y. 382, 111 N.E. 1050 dispensing with privity (embodied in the First Restatement § 395 (1934)) came into admiralty in Sieracki v. Seas Shipping Co., 3 Cir. 1945, 149 F.2d 98, aff'd, 1946, 328 U.S. 85, 66 S.Ct. 872, 90 L.Ed. 1099. When a trend in the law advances the remedial purposes of maritime tort law, admiralty will adopt it in place of the prevailing state law. Pope & Talbot, Inc. v. Hawn, 1953, 346 U.S. 406, 74 S.Ct. 202, 98 L.Ed. 143 (comparative negligence). The theory of legal cause, because it is suitable for admiralty, should be preferred to proximate cause in maritime tort law.
. See Sanford Bros. Boats, Inc. v. Vidrine, 5 Cir. 1969, 412 F.2d 958.
. Justice Frankfurter, in his dissent in Rogers v. Missouri Pacific R.R., 1957, 352 U.S. 500, 77 S.Ct. 443, 1 L.Ed.2d 493, a companion case to Ferguson v. Moore-McCormack Lines, Inc., 1957, 352 U.S. 521, 77 S.Ct. 457, 1 L.Ed.2d 511, stated the Court’s view that “...on the question of causality, the [FELA] has tried to avoid issues about ‘sole proximate cause,’ meeting the requirement of a causal relation with the language that the injury must result ‘in whole or in part’ from the employer’s negligence.” 352 U.S. at 538 n. 7, 77 S.Ct. at 467 n. 7, 1 L.Ed.2d at 528 n. 7.
. In Ballwanz v. Isthmian Lines, Inc., 4 Cir. 1963, 319 F.2d 457, the court characterized the duty of employees in the status of Spinks as follows:
His duty was to do his work as he was instructed. He was in no sense obligated to protest against the method of operation which he had been instructed to follow or to devise a safer method, nor was he obligated to call for additional or different equipment. If the doctrine of unseaworthiness means anything, it is totally repugnant to the doctrine of assumption of risk on the part of seamen. The plaintiff in this case was at the very bottom of the hierarchy of command, and the effect of the charge was to place too much responsibility upon him for the over-all operations of the stevedore.
. Barrios v. Louisiana Construction Materials Co., 5 Cir. 1972, 465 F.2d 1157, specifically held that the seaman who was there employed by a contractor, Williams-McWilliams Company, on a barge owned and operated by one A. O. Rappellet had a Jones Act claim against Williams-McWilliams, even though the barge was owned and operated by Rap-pellet. The court there specifically treated and discussed cases cited for and against the proposition that a seaman employee can have a Jones Act claim against his employer who is not the shipowner or operator.
. Q. (By Chevron’s attorney) Did Mr. Hanks have the power to hire or fire or run you off the job?
A. (By Walker) Yes, sir, he did.
Q. And was Mr. Spinks’ salary also paid by Labor Services?
A. Yes, sir.
******
Q. And you received your pay, your wages from Labor Services, did you not?
A. (By Spinks) Yes, sir.
. Q. (By Chevron’s attorney) Now, let us be quite specific, sir, and let us be specific about Mr. Spinks on April 5, 1970. Did you, sir, if you were on the S-66 on that day, have the power and authority to fire Mr. Spinks and run him off the job?
A. (By Mr. Boren, Chevron’s barge foreman) No, sir.
Q. Now assuming a situation presenting itself which to you was intolerable or not acceptable that Mr. Spinks was doing— whatever it may have been — what would have been the customary and routine procedure of your handling such a situation?
A. I would have recommended to the pusher that he be let go or talked to, whichever the case might be... But I could not personally fire the man. I had no authority of that kind.
. In United States v. W. M. Webb, Inc., 1970, 397 U.S. 179, 90 S.Ct. 850, 25 L.Ed.2d 207, the Supreme Court held that a shipowner must completely divest himself of control, as in a bareboat charter, to avoid being a seaman’s employer. The same reasoning applies more forcefully to Labor Services, Spinks’ immediate employer.
Furthermore, under the FELA an employer may be liable for the acts of its agents. “Agents” is liberally construed under that Act. Hopson v. Texaco, Inc., 1966, 383 U.S. 262, 86 S.Ct. 765, 15 L.Ed.2d 740 (carrying the FELA rule into admiralty). Whether phrased as dual employers or employer-agent, the result is the same: an injured seaman may reach either party through the Jones Act, unless of course, either has ceased completely to be his employer. Their status and liability inter se is not the injured seaman’s concern.
. The Court may have meant that a seaman may not recover from more than one employer under the Jones Act. Norris, The Law of Seamen § 670 at 312 n. 11 (3d ed. 1970).
. But in Mahramas the court specifically stated that the plaintiff, there a hairdresser employed by “The House of Albert” beauty shop on a luxury liner, was entitled to a Jones Act claim against The House of Albert despite the fact that The House of Albert was not the owner or operator of the vessel.
. For example, the actively negligent party must indemnify the passively negligent party. Barrios, 465 F.2d at 1167; Constance v
Question: Were there cross appeals 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.
MESKILL, Circuit Judge:
This action is before us on appeal from a judgment entered in the United States District Court for the District of Connecticut, Blumenfeld, J, granting plaintiffs’ motion for attorneys’ fees pursuant to the Equal Access to Justice Act, 28 U.S.C. § 2412 (1982) (EAJA). The court held that the government’s position in litigation was not substantially justified so that a fee award to plaintiffs was proper. Because we disagree with the court’s conclusion, we reverse. We also dismiss plaintiffs’ cross-appeal concerning the amount and calculation of the award.
I
This case represents the final chapter in a lengthy series of actions concerning federal housing subsidies. Because the issue ■before us is a limited one — whether the district court’s award of fees was proper — a brief review of the facts will suffice. The complete factual and procedural history of the underlying actions has been exhaustively covered in a number of prior opinions. See Dubose v. Pierce, 579 F.Supp. 937, 941-46 (D.Conn.1984) (Dubose V); Dubose v. Harris, 82 F.R.D. 582, 583-85 (D.Conn.1979) (Dubose IV); Dubose v. Harris, 434 F.Supp. 227, 228-30 (D.Conn. 1977) (Dubose III)) Dubose v. Hills, 22 Fed.R.Serv.2d 476, 477 (D.Conn.1976) (Dubose II)) Dubose v. Hills, 405 F.Supp. 1277, 1280-82 (D.Conn.1975) (Dubose I), modified on other grounds, 420 F.Supp. 399 (D.Conn.1976).
Section 236 of the National Housing Act, 12 U.S.C. § 1715z-1 (1982), provides for financial assistance to owners of low income housing projects. In 1974 Congress modified this program through passage of the Housing and Community Development Act of 1974 (HCDA), Pub.L. No. 93-383, 88 Stat. 633. Among the changes instituted by HCDA was the addition of § 1715z-1(f)(3)(A) (1976), repealed by Omnibus Budget Reconciliation Act of 1981, Pub.L. No. 97-35, § 322(f)(7), 95 Stat. 403. Section 1715z-l(f)(3)(A) amended HCDA’s operating subsidy program to allow the Secretary of Housing and Urban Development (HUD) to make “additional assistance payments to the project owner in an amount up to the amount by which the sum of the cost of utilities and local property taxes exceeds the initial operating expense level.” 12 U.S.C. § 1715z-1(f)(3)(A) (1976). These payments were intended to protect tenants in low income housing from rent boosts that would otherwise result from increases in property taxes and utility costs.
This subsidy program was not implemented. Instead, HUD allowed owners to pass cost increases along to tenants as higher rents. The Secretary believed that implementation of the program was discretionary and that the agency could choose to use its funds in other ways.
The underlying action followed. In 1975 Judge Blumenfeld granted the tenants’ motion for a preliminary injunction ordering the Secretary to implement the program. Dubose I, 405 F.Supp. at 1292-93. Rather than appealing that decision, HUD concentrated its opposition on projects other than those covered by the injunction. In May 1976, after additional suits were filed, the court certified a statewide class of project-plaintiffs and ordered HUD to pay subsidies to all projects in Connecticut. Dubose II, 22 Fed.R.Serv.2d at 477-79.
In June 1976, the United States District Court for the District of Columbia issued a permanent injunction ordering HUD to pay the subsidies for nationwide housing projects. Underwood v. Hills, 414 F.Supp. 526, 532 (D.D.C.1976). That injunction was stayed by the Supreme Court pending appeal. 429 U.S. 892, 97 S.Ct. 250, 50 L.Ed.2d 175 (1976) (action of whole Court). In 1977 the Supreme Court granted certiorari in two related cases, Harris v. Abrams and Harris v. Ross, 431 U.S. 928, 97 S.Ct. 2630, 53 L.Ed.2d 243 (1977). See Abrams v. Hills, 547 F.2d 1062 (9th Cir.1976), vacated sub nom. Pierce v. Abrams, 455 U.S. 1010, 102 S.Ct. 1700, 72 L.Ed.2d 127 (1982), and Ross v. Community Services, Inc., 405 F.Supp. 831 (D.Md.1975), aff'd, 544 F.2d 514 (4th Cir.1976), vacated sub nom. Pierce v. Ross, 455 U.S. 1010, 102 S.Ct. 1700, 72 L.Ed.2d 127 (1982).
Before those cases could be heard, the parties in the related actions agreed to a settlement. Under this agreement, HUD was to pay into the Underwood Court a settlement fund from which eligible tenants were to receive retroactive tax and utility cost subsidy payments. See Stipulation for Settlement, reprinted as Appendix to Dubose IV, 82 F.R.D. at 592-605 (Stipulation). The Stipulation also required that the underlying cases were to remain active until settlement administration was completed. Stipulation, 82 F.R.D. at 598 ¶ 17. This settlement was approved by the Connecticut district court. Dubose IV, 82 F.R.D. at 588-92.
During the settlement administration process, the Equal Access to Justice Act, 28 U.S.C. § 2412 (1982) (EAJA), was passed. The relevant provision of EAJA states:
[ejxcept as otherwise specifically provided by statute, a court shall award to a prevailing party ... fees and other expenses ... incurred by that party in any civil action ... brought by or against the United States ..., unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.
28 U.S.C. § 2412(d)(1)(A) (emphasis added).
The plaintiffs in both the Connecticut action and in certain California actions moved for fees pursuant to section 2412(d)(1)(A). Both courts ruled in favor of the plaintiffs, holding that the government had failed to establish either of the statutory defenses to the awarding of fees. Du-bose V, 579 F.Supp. at 948-52; Underwood v. Pierce, 547 F.Supp. 256, 261-64 (C.D.Cal. 1982), appeal pending No. 83-5773 (9th Cir.).
In the instant case, Judge Blumenfeld held that HUD’s position was not “substantially justified” under EAJA. The court noted that the fact that the government was not ultimately successful would not lead ineluctably to the conclusion that HUD’s position was unjustified. Instead, the court evaluated the “reasonableness” of the agency’s litigation position. The court held that “HUD’s position was not merely unreasonable but had no justifiable basis,” Dubose V, 579 F.Supp. at 950, and that the government’s assertion that “special circumstances” made an award unjust, 28 U.S.C. § 2412(d)(1)(A), was similarly unavailing. HUD insisted that because the settlement agreement barred payment of attorneys’ fees from the fund, which was the only possible source of fees at the time, any award of fees was thereby barred. The court rejected this argument, holding that an award of fees was proper under EAJA despite the terms of the settlement agreement.
II
Because we believe that the government’s position was substantially justified, we reverse the judgment of the district court. We therefore need not consider the effect of the settlement agreement provision that barred the use of the fund for attorneys’ fees.
The district court’s determination that HUD’s position was not plausible should be viewed as a conclusion of law, Spencer v. NLRB, 712 F.2d 539, 563 (D.C. Cir.1983), cert. denied, — U.S. -, 104 S.Ct. 1908, 80 L.Ed.2d 457 (1984), and subject to de novo review. Boudin v. Thomas, 732 F.2d 1107, 1117 (2d Cir.1984).
The definition of “position” under EAJA is settled in this Circuit. In Boudin we determined that the term refers to the government’s position in litigation rather than its actions during the underlying administrative proceedings. Boudin, 732 F.2d at 1115-16. Therefore, we may consider only HUD’s litigating posture in our examination of justification.
The government bears the burden of proving that its action as a litigant was substantially justified. Environmental Defense Fund, Inc. v. Watt, 722 F.2d 1081, 1087 (2d Cir.1983); Spencer, 712 F.2d at 557; Ellis v. United States, 711 F.2d 1571, 1575 (Fed.Cir.1983); Dougherty v. Lehman, 711 F.2d 555, 561-62 (3d Cir.1983); H.R.Rep. No. 1418, 96th Cong., 2nd Sess. 10, reprinted in 1980 U.S.Code Cong. & Ad.News 4953, 4984, 4989. “The test of whether or not a Government action is substantially justified is essentially one of reasonableness. Where the Government can show that its case had a reasonable basis both in law and fact, no award will be made.” H.R.Rep. No. 1418 at 10, 1980 U.S.Code Cong. & Ad.News at 4989. See also Environmental Defense Fund, 722 F.2d at 1085; Tyler Business Services, Inc. v. NLRB, 695 F.2d 73, 76 (4th Cir.1982) (absence of rational explanation for gap in proof results in finding of absence of justification).
Plaintiffs prevailed in the underlying action in the district court because the court rejected Secretary Hills’ claim that her refusal to implement the operating subsidy program was a valid exercise of discretion. Dubose I, 405 F.Supp. at 1288-92. HUD’s litigation position was premised on its belief that, under the National Housing Act, the agency had discretion to choose the ways in which it would implement national housing policy. In support of its position, HUD relied on Pennsylvania v. Lynn, 501 F.2d 848 (D.C.Cir.1974). In Lynn the D.C.Circuit held that Secretary Romney had discretion to terminate a number of housing programs and that he had not abused his discretion in so doing, because he believed that the legislative purposes were not served by these programs.
Secretary Hills, defendant’s predecessor, argued before the district court that she had discretion as to the implementation of the operating subsidy program based on the language and legislative history of the Act and on Congress’ subsequent funding decisions. She also argued that her lawful discretion over the allocation of her contract authority permitted her to refuse to fund the operating subsidies. We are concerned not only with the substantive accuracy of this position as viewed by hindsight, but also with the agency’s legal justification for its actions throughout the litigation.
We are convinced that HUD has borne its burden of proving that its litigation position, albeit ultimately unsuccessful, was not unreasonable. Our analysis of this “borderline” case is aided by our examination of the factors developed by the Spencer Court. United States v. 2,116 Boxes of Boned Beef, 726 F.2d 1481, 1486 n. 11 (10th Cir.1984), cert. denied, — U.S. -, 105 S.Ct. 105, 83 L.Ed.2d 49 (1984); Foley Construction Co. v. United States Army Corps of Engineers, 716 F.2d 1202, 1204 (8th Cir.1983), cert. denied, — U.S. -, 104 S.Ct. 1908, 80 L.Ed.2d 457 (1984). These factors are: the clarity of the governing law, the foreseeable length and complexity of the litigation and the consistency of the government’s position. Spencer, 712 F.2d at 559-61.
1. Clarity of the Governing Law
The government’s position must be evaluated according to the legal justification for its posture throughout the litigation rather than by hindsight after later judicial interpretations of the issues involved. See Devine v. Sutermeister, 733 F.2d 892, 895 (Fed.Cir.1984). At the time the underlying action was filed, the D.C. Circuit’s conclusion in Lynn, the only judicial guidance available, offered no hint of the ultimate outcome of the subsequent cases. In preparing its litigation stance the government relied on arguments similar to those which had succeeded in Lynn. The district court admitted that it initially found Lynn to be relevant. Dubose V, 579 F.Supp. at 950-51.
The district court’s reevaluation of its earlier view of the justification for the government’s position ignores the requirement that we consider HUD’s perspective as the agency developed its trial and appeal strategy. The factors that the court later found persuasive in distinguishing Lynn were not so obvious at that stage. The governing law, to the extent that it existed, did not mandate HUD’s surrender early in the litigation. Although HUD’s position became more questionable as adverse trial and appeal decisions accumulated, we cannot say that the tally ever became so one-sided as to render HUD’s position clearly unjustifiable.
Thus, the first of the Spencer factors, the clarity of the governing law, tilts in favor of HUD. See Cornelia v. Schweiker, 741 F.2d 170, 172 (8th Cir.1984) (where all legal issues were questions of first impression in circuit, agency’s action in seeking clarification from courts was reasonable); Boudin, 732 F.2d at 1116 (law on issue in question was not clear at time of suit; government’s position was reasonable). Cf. Hoang Ha v. Schweiker, 707 F.2d 1104, 1106 (9th Cir.1983) (case previously decided, adverse to government’s position, is factor in assessing reasonableness, but cases from other circuits are not conclusive); Wyandotte Savings Bank v. NLRB, 682 F.2d 119, 120 (6th Cir.1982) (fact that government’s position was contrary to prior Sixth Circuit precedent did not mean that it was not substantially justified; fees denied).
2. Foreseeable Length and Complexity of Litigation
The Spencer Court stated:
Sensitivity to the central objective of the Act — reduction of the deterrents to challenges of unreasonable government conduct — thus suggests that, in categories of cases in which substantial investments of effort and money commonly are required to prosecute suits to their ultimate conclusions, the government should be obliged to make an especially strong showing that its persistence in litigation was justified.
712 F.2d at 560.
This factor adds little to our analysis. While this litigation has certainly been long and complex, spanning some ten years and several circuits, we find no indication that the government’s behavior deterred aggrieved tenants from filing suits. Indeed, the government paid the subsidies that were ordered in the December 1975 and May 1976 injunctions until operation of the May 1976 injunction was stayed by this Court. See Dubose III, 434 F.Supp. at 230; see also 429 U.S. 1085, 97 S.Ct. 1092, 51 L.Ed.2d 531 (1977) (action by whole court refusing to vacate stay issued by Second Circuit).
Moreover, simple reliance on the length of the litigation in this case is deceptive. The settlement negotiations and fee motions have been proceeding since 1977. Neither of these developments was foreseeable at the outset of the litigation. We find no reason to include this case in the category described by the Spencer Court. Hence we decline to impose on HUD the burden of making an “especially strong showing” of justification merely because the litigation has been long-lived. We conclude that, at most, this factor provides little benefit to either party.
We note also that the foreseeable complexity of the litigation is closely tied to the first factor, the clarity of the governing law. Where, as here, the government’s position appeared at first to be supported by persuasive case law, the government should not be penalized for defending a suit which becomes long, complex and eventually unsuccessful.
3. Consistency of the Government’s Position
The Spencer Court suggested that where the government acts to single out one private party as the victim of an inconsistent interpretation, the government’s unpredictability should be penalized. Spencer, 712 F.2d at 560-61. Here, by contrast, the plaintiffs cannot argue that they were “subjected to atypically harsh treatment.” Id. at 561. It has been clear throughout the history of this litigation that the Secretary had no intention of paying any operating subsidies unless those payments were made in response to court orders. This factor, then, clearly supports a denial of legal fees.
In sum, the Spencer factors alone demonstrate that HUD’s litigation position was substantially justified. But we need not rely exclusively on those factors. Additional considerations lead to the same result.
The district court also refused to credit either the stays issued by this Court and the Supreme Court, or the Supreme Court’s grant of certiorari in two related cases, suggesting that those events were “too opaque” to lend credence to a conclusion that HUD’s position was justified. As to the former, the court found no indication that the Supreme Court’s grant of a stay indicated any view as to the merits; our subsequent issuance of .a stay was dismissed with the suggestion that we “had little choice but to grant one.” Dubose V, 579 F.Supp. at 950. And as to the latter, the court suggested that the Supreme Court might have granted certiorari in those two cases, both of which had ruled against the government, in order to affirm the lower court’s rejection of HUD’s position. Id. We reject this reasoning.
“A court in staying the action of a lower court ... must take into account factors such as irreparable harm and probability of success on the merits.” Coleman v. Paccar, Inc., 424 U.S. 1301, 1305, 96 S.Ct. 845, 847, 47 L.Ed.2d 67 (Rehnquist, Circuit Justice, 1976) (granting motion to vacate stay; citing O’Brien v. Brown, 409 U.S. 1, 3, 92 S.Ct. 2718, 2719, 34 L.Ed.2d 1 (1972) (per curiam)). In this Circuit, in addition to considering the harm to the parties and the public interest, a court must find that the movant has demonstrated “a substantial possibility, although less than a likelihood, of success.” Hayes v. City University of New York, 503 F.Supp. 946, 963 (S.D.N.Y.), aff'd on other grounds sub nom. Hayes v. Human Resources Administration, 648 F.2d 110 (2d Cir.1981). See also In re Turner, 309 F.2d 69, 72 (2d Cir.1962). We find it unlikely that these criteria were overlooked by this Court simply because the Supreme Court had already acted. We see both stays as indicative of the courts’ view that the government’s position was not unreasonable.
The same is true of the Supreme Court’s grant of certiorari. Although the outcome of the Court’s examination of this situation was left forever in limbo by the settlement, we do not believe that the district court’s interpretation is the only plausible one. We believe that it is equally probable that the Court granted certiorari not to affirm but to reverse the lower court decisions. The district court cited its previous opinion as support for its conclusion that HUD’s conduct was “unreasonable [and] had no justifiable basis.” Dubose V, 579 F.Supp. at 950. However, the court’s prior opinion has little bearing on the instant determination because the first conclusion was not “made with an intent to resolve EAJA questions.” Cinciarelli v. Reagan, 729 F.2d 801, 806 (D.C.Cir.1984).
Similarly, the district court's suggestion that the numerous adverse rulings in the lower courts should lead to a different result does not convince us to overlook the many factors supporting our conclusion, particularly in light of the stays and grant of certiorari discussed above. Nor does the court’s suggestion that the government’s participation in the settlement represented an admission that the litigation was unjustified merit much analysis. Speculation as to the agency’s intent in settling adds little to our analysis. A holding that an agency’s decision to settle an appeal on terms favorable to the claimant undercuts the agency’s justification of its litigation position would discourage future settlements, a factor we should not lightly disregard. A litigation position that was justified, for EAJA purposes, before a settlement should not later lose its justification as a result of the settlement. After all, policy reasons quite apart from the merits of the dispute may, in the last analysis, dictate a premature termination of the litigation.
Ill
For the reasons stated above, we vacate the judgment of the district court and hold that the government has carried its burden of proving that its litigation position was substantially justified. In view of this determination, we need not reach the issue of whether the settlement agreement provision barring an award of fees from the fund affects a fee award under EAJA. We also need not reach the plaintiffs’ cross-appeal concerning the amount and calculation of fees. The cross-appeal is dismissed. We remand to the district court for entry of an order dismissing the complaint. No costs on appeal.
. In addition to the actions in the District of Connecticut, related suits were filed in other parts of the country, including the District of Columbia, Maryland and California. See Abrams v. Hills, 547 F.2d 1062 (9th Cir.1976), vacated sub nom. Pierce v. Abrams, 455 U.S. 1010, 102 S.Ct. 1700, 72 L.Ed.2d 127 (1982); Underwood v. Hills, 414 F.Supp. 526 (D.D.C. 1976); Ross v. Community Services, Inc., 405 F.Supp. 831 (D.Md.1975), aff'd, 544 F.2d 514 (4th Cir.1976), vacated sub nom. Pierce v. Ross, 455 U.S. 1010, 102 S.Ct. 1700, 72 L.Ed.2d 127 (1982). For other related cases, see Dubose v. Harris, 82 F.R.D. 582, 585 n. 12 (D.Conn. 1979).
. Our stay was issued after that ordered by the Supreme Court, 429 U.S. 892, 97 S.Ct. 250, 50 L.Ed.2d 175 (1976) (action by whole Court), in Underwood v. Hills, 414 F.Supp. 526 (D.D.C. 1976).
. The government argued before the district court that the actions were not "pending” on the effective date of the EAJA and that EAJA did not permit an award of fees for work performed prior to that date. These arguments have been abandoned on appeal.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | 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.
BOWMAN, Circuit Judge.
Appellants Dr. Lee Roy Black and Dick D. Moore of the Missouri Department of Probation and Parole appeal from the District Court’s order granting Nicholas J. Romano’s petition for a writ of habeas corpus. The District Court held that the sentencing judge denied Romano due process in failing to consider alternatives to incarceration before revoking Romano’s probation. Romano v. Black, 567 F.Supp. 882 (E.D.Mo.1983). We affirm the District Court’s order. Romano cross-appeals, challenging the District Court’s finding that one of the witnesses at the probation revocation hearing validly waived her privilege against self-incrimination. We need not discuss this contention, however, since our affirmance of the District Court’s order grants-Romano all the relief he seeks.
I. Facts and Procedural History
On December 10, 1974, Romano was arrested for transferring and selling marijuana. A two-count indictment charging him with transferring and selling marijuana was issued. On November 15, 1976, Romano pled guilty to both counts before the Honorable Dean Whipple, Circuit Judge of the Twenty-Sixth Judicial Circuit of Missouri, sitting in Laclede County. On April 13, 1977, Romano was given a suspended sentence of two concurrent twenty-year prison terms and was placed on probation for five years.
On June 15, 1977, Romano was involved in an automobile accident. He was arrested and charged with leaving the scene of an accident — a felony in the State of Missouri. At a probation revocation hearing held on July 18, 1977, Judge Whipple revoked Romano’s probation and imposed the two concurrent twenty-year suspended sentences. Romano began serving those sentences immediately. The charge of leaving the scene of an accident was reduced later to .careless and reckless driving, a misdemeanor, and Romano pled not guilty to that charge. On October 12, 1977, Romano was found guilty of careless and reckless driving and was fined one hundred dollars and assessed costs.
On March 28, 1980, Romano filed with Judge Whipple a pro se motion for post-conviction relief under Mo.R.Crim.P. 27.26 (Rule 27.26). In this motion Romano challenged the probation revocation proceeding. Judge Whipple denied this motion on July 11, 1980, holding that although a Rule 27.-26 motion is the proper avenue for post-conviction relief in Missouri, an exception to that rule is made when the challenged proceeding is one for probation revocation, in which case relief must be sought by way of a habeas corpus petition.
On the basis of Judge Whipple’s ruling, Romano filed a petition for a writ of habe-as corpus challenging his probation revocation. The petition was filed in the Circuit Court of Cole County, the county in which Romano was incarcerated. That court denied this petition and instructed Romano to file a Rule 27.26 motion in the county where he was convicted and sentenced. Acting on that instruction, Romano then petitioned the Laclede County Circuit Court for reconsideration of his motion for post-conviction relief. On August 27, 1980, Judge Whipple denied Romano any relief, restating the reasons given when he originally denied Romano’s 27.26 motion. Romano then filed a notice of appeal with the Missouri Court of Appeals. The appeal was dismissed without opinion on February 3, 1981.
On April 14, 1980, Romano filed a petition for writ of error coram nobis challenging the constitutionality of his reckless driving conviction. The petition was denied, and Romano filed a notice of appeal with the Missouri Court of Appeals. This appeal was dismissed on November 18, 1980 for failure to prosecute.
On June 13,1981, Romano filed a petition for a writ of habeas corpus with the United States District Court for the Eastern District of Missouri under 28 U.S.C. § 2254. In this petition he once again challenged the constitutionality of his reckless driving conviction. The petition was denied on October 2, 1981. The District Court reasoned that it was powerless to affect Romano’s incarceration since his petition challenged only the constitutionality of his reckless driving conviction and not the constitutionality of his probation revocation proceeding. A subsequent appeal by Romano to this Court was dismissed without prejudice because Romano had failed to exhaust state remedies. Romano v. Wyrick, 681 F.2d 555, 556-57 (8th Cir.1982). On October 4, 1982, Romano filed a petition for a writ of habeas corpus with the Missouri Supreme Court challenging his probation revocation proceeding. The petition was denied without opinion on October 18, 1982.
Having exhausted his state remedies, on November 4, 1982 Romano again filed a petition for a writ of habeas corpus with the District Court under 28 U.S.C. § 2254, this time challenging the probation revocation proceeding. While the petition was pending, Romano was released on parole on December 17, 1982. The District Court granted Romano a writ of habeas corpus on June 20, 1983, and ordered him released unconditionally from the custody of the Missouri Department of Probation and Parole. 567 F.Supp. at 887. The present appeals are from the judgment of the District Court.
II. Discussion
A. Adequacy of the Probation Revocation Hearing
The District Court held that Romano was denied due process when, during the probation revocation hearing, Judge Whipple failed to consider alternatives to imposition of the prison terms to which he previously had sentenced Romano. We affirm.
The revocation of probation for violation of a condition of probation is within the discretion of the sentencing judge. United States v. Rifen, 634 F.2d 1142, 1144 (8th Cir.1980). If the sentencing judge determines that the probationer has “abused the opportunity granted him not to be incarcerated,” the judge may revoke the probation. Schneider v. Housewright, 668 F.2d 366, 368 (8th Cir.1981) (quoting United States v. Nagelberg, 413 F.2d 708, 709 (2d Cir.1969), cert. denied, 396 U.S. 1010, 90 S.Ct. 569, 24 L.Ed.2d 502 (1970)). In making this determination the government must present enough evidence “ ‘to satisfy the [sentencing] judge that the conduct of the probationer has not met the conditions of the probation’ ” United States v. Strada, 503 F.2d 1081, 1085 (8th Cir.1974) (quoting United States v. Garza, 484 F.2d 88, 89 (5th Cir.1973)); Ewing v. Wyrick, 535 S.W.2d 442, 444 (Mo.1976). This is a far less stringent test than the reasonable doubt standard used in criminal trials.
In the instant case, it has been established by sufficient evidence that Romano violated the terms and conditions of his probation. The sentencing judge’s analysis, however, should not end with the mere finding of a probation violation. The Supreme Court requires that a sentencing judge state the reasons for revoking probation in order to satisfy the due process requirements of the Fifth and Fourteenth Amendments. Gagnon v. Scarpelli, 411 U.S. 778, 784, 93 S.Ct. 1756, 1760, 36 L.Ed.2d 656 (1973) (citing Morrissey v. Brewer, 408 U.S. 471, 479-80, 92 S.Ct. 2593, 2599, 33 L.Ed.2d 484 (1972)). The revocation decision must include both a finding that the probationer violated a con- ' dition of his parole and that the probationer should be committed to prison. The Court considered such an analysis vital to preserving the function of the probation and parole systems. As the Court noted:
Both the probationer or parolee and the State have interests in the accurate finding of fact and the informed use of discretion — the probationer or parolee to insure that his liberty is not unjustifiably taken away and the State to make certain that it is neither unnecessarily interrupting a successful effort at rehabilitation nor imprudently prejudicing the safety of the community.
Id. 411 U.S. at 785, 93 S.Ct. at 1761. Gag-non and Morrissey thus establish that “informed use of discretion” in a revocation proceeding must include consideration of alternatives to incarceration.
An example of the efforts of state courts to implement the Gagnon and Morrissey standards may be found in Abel v. Wyrick, 574 S.W.2d 411 (Mo.1978). At the probation revocation hearing in Abel the probationer admitted that he had violated his probation. The sentencing judge did not allow him to explain the reasons for his violation, and stated: “ ‘The only thing I’m interested in is what you have told me; you violated your probation. There’s no use wasting any more time, I’m going to revoke your probation. What they do with you up at the institution, I don’t know. But a rule is a rule.’ ” Id. at 419. In holding that the sentencing judge failed to consider alternatives to incarceration, as required by Gagnon and Morrissey, the court stated: “Of course, the judge, in his discretion, may have concluded, after weighing the alternatives, that none would be appropriate and that incarceration was the only realistic alternative. But at least more than a cursory consideration of alternatives is required.” Id.
Appellants Black and Moore note correctly that the sentencing judge in the present case made no statements as blatant as those made by the sentencing judge in Abel. We believe, however, that the Abel court did not intend any rigid formula for determining what constitutes adequate consideration of alternatives to incarceration, but instead anticipated ease-by-case analy-ses. Similarly, we must consider carefully the record here in order to determine if it shows compliance with the Constitutional standards established by Gagnon and Mor-rissey.
Our analysis of Judge Whipple’s treatment of Romano, first at the sentencing hearing and later at the probation revocation hearing, leads us to conclude that Judge Whipple failed to consider any sanction other than incarceration for the probation violation committed by Romano. At the sentencing hearing Judge Whipple made the following statements to Romano in pronouncing sentence:
[I]t is my intentions [sic] to assess punishment against you of 20 years in the penitentiary and place you on parole [sic] for a period of five years and probably extend that for another five years for a total of ten years on probation with very strict rules. And a violation of any one of those rules will cause that parole [sic] to be revoked and you sent to the penitentiary ....
[Following enumeration of the special conditions of Romano’s probation] Now, Mr. Romano, if I get any report back that you have refused any of these items I will consider it a violation of this parole [sic]____ At that time, I will issue a warrant for your arrest and order you held without bond until we can have a parole [sic] revocation hearing and if at that hearing it is proven that you did refuse to do any of these prescribed items or any of the general rules and conditions of a parole [sic] that are prescribed by Missouri Department of Probation and Parole, then you can anticipate that I will terminate this parole [sic] and order you transported to the reception center of the Missouri Penitentiary in Jefferson City to serve 20 years, do you understand me?
Trial Transcript at 46, 49-50. These statements alone give some indication that the sentencing judge was convinced from the start of the process that Romano was a high-risk candidate for probation.
Romano’s marijuana conviction was his first felony offense. His only prior conviction came in 1967 for misdemeanor possession of an unspecified controlled substance, for which he was fined $50. During the 28 months between his arrest and sentencing in the present case his only violation was one traffic ticket for running a stop sign.
Although the pre-sentence investigation report noted that Romano had problems in dealing with authority figures, it also noted that his employers rated his work and work habits as good. One of these employers, Mike Atkinson, the owner of the Stein Club bar, testified on Romano’s behalf at the sentencing hearing.
The pre-sentence investigation recommended concurrent five-year sentences on each count. The prosecutor asked for concurrent ten-year sentences on each count. Instead, Judge Whipple gave Romano probation and concurrent twenty-year suspended sentences on each count. Twenty years is the maximum sentence provided by Missouri law for this first offense.
The eonclusory way in which the sentencing judge announced his decision to revoke Romano’s probation provides evidence of his failure to consider alternatives to incarceration. Although significant evidence mitigating the seriousness of Romano’s probation violation was presented at the hearing, the sentencing judge’s decision does not even acknowledge that evidence. The incident later determined to be a probation violation occurred outside of the Stein Club, Romano’s former place of employment. Romano’s car struck Timothy Bradley, a pedestrian with whom Romano was acquainted. Immediately after the incident, Romano stopped the car, let out two passengers, and drove away. The two passengers attended to Bradley. Ten hours after the accident, Romano visited Bradley in his hospital room to check on his condition. While it is true that Romano did not immediately report the accident and that he did leave the scene, given his other post-accident behavior it hardly can be said that he sought to escape responsibility for his actions. The facts do not compel a conclusion that Romano’s effort at rehabilitation had failed or that he represented a danger either to himself or to society. A sentencing judge might reasonably have concluded that continued probation, perhaps with additional conditions, was the proper alternative. The point, however, is not that Judge Whipple imposed incarceration, but that he did so without giving any indication that he considered any of the- possible alternatives.
The District Court concluded as follows: Judge Whipple indicated to Romano that once it was determined he had violated a condition of his probation, he would terminate Romano’s probation and send him to jail. The Court recognizes that such admonitions are commonly used by sentencing judges to inject fear of resulting consequences and discourage probation violations. But, when such statements are coupled with a record totally devoid of evidence showing that the judge considered alternatives to incarceration, there prevails a strong inference that the judge harbored a disposition to send Romano to jail for any probation violation, regardless of the nature of the violation and without regard to any other possible options.
567 F.Supp. at 886. The District Court’s analysis is consistent with the Missouri Supreme Court’s decision in Abel, supra, and also is in keeping with the teaching of Gagnon and Morrissey that once an individual has been given the opportunity to prove himself through probation or parole, due process protects the liberty interest inherent in that opportunity to the extent that it may not be ended without careful consideration of options other than active prison time.
B. The Remedy Granted by the District Court
The District Court noted that Romano’s initial probation term was for five years. He had served only three months of that probationary period at the time his probation was terminated. After serving five and one half years in prison, Romano was released on parole. Appellants Black and Moore argue that, since the conditions of probation are significantly different from the conditions of incarceration, Romano should be returned to his status as a probationer.
The position advanced by appellants Black and Moore if adopted would result in the imposition of a cumulative penalty upon Romano requiring him to serve out the remainder of a five-year probation term, with the possibility of imposition of a further active prison term for a violation, all in addition to the five-and-one-half years he has served in the Missouri State Penitentiary plus one-and-one-half years of conditional freedom while on parole. The District Court, in the sound exercise of its discretion, did not choose to blind itself to the time Romano had served in the custody of the State of Missouri. The District Court noted:
The Court agrees that conditions of incarceration are different from conditions of probation. The rigors and stress associated with imprisonment are far greater than those of probation. The Court finds that Romano has now met the requirement of the law, and hereby orders that he be released from the custody of the Missouri Department of Probation and Parole.
567 F.Supp. at 887. We hold that the District Court did not abuse its discretion in granting this remedy. See Iasigi v. Van de Carr, 166 U.S. 391, 17 S.Ct. 595, 41 L.Ed. 1045 (1897).
The order of the District Court is affirmed.
. The following requirements for a parole revocation hearing were established in Morrissey:
(a) written notice of the claimed violations of parole; (b) disclosure to the parolee of evidence against him; (c) opportunity to be heard in person and to present witnesses and documentary evidence; (d) the right to confront and cross-examine adverse witnesses (unless the hearing officer specifically finds good cause for not allowing confrontation); (e) a 'neutral and detached' hearing body such as a traditional parole board, members of which need not be judicial officers or lawyers; and (f) a written statement by the fact-finders as to the evidence relied on and reasons for revoking parole.
Morrissey, 408 U.S. at 489, 92 S.Ct. at 2604. Gagnon applied these requirements to probation revocation hearings. Gagnon, 411 U.S. at 782, 93 S.Ct. at 1759.
Question: Were there cross appeals 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.
CUDAHY, Circuit Judge.
On June 15, 1989, the National Labor Relations Board (the “Board,” the “NLRB”) ordered Jones Dairy Farm (“Jones”) to cease and desist from implementing a mandatory “work hardening” program. Jones asks us to review and set aside the Board’s order; the Board cross-petitions for enforcement of its order.
Jones raises two points in its petition. First, Jones argues that the Wisconsin Worker’s Compensation Act, Wis.Stat. § 102.01 et seq., grants it a right to implement the program in order to reduce its disability payments to injured and ill employees. Second, Jones contends that the administrative law judge (the “AU”) and the NLRB violated its right to due process by deciding the case on the basis of a no-strike clause in the collective bargaining agreement (the “CBA”), despite the fact that Local 538 (the “Union”) did not prosecute its case on that theory. For the reasons discussed below, we deny Jones’s petition for review and grant the NLRB’s petition for enforcement of its order.
I. BACKGROUND
At the time the dispute arose over the work hardening program, Jones and the Union were parties to a CBA effective from November 9, 1985, to October 1, 1988. The CBA contained seniority and sick pay provisions. Article XI, the seniority clause, provided in material part:
11. In cases of proven disability, where an employee is not able to perform a job according to his seniority, the Company and the Union may deviate from the seniority provisions in order to place him on a job he can perform.
General Counsel’s Exh. 2, at 34.
Article XVI set out the sick pay provisions. It read:
1. Regular full-time employees with twelve (12) months or more of continuous service with the Company, who are absent because of physical disability due to sickness or accident (except where such disability is covered by the Workmen’s Compensation Law of Wisconsin), where such disability is supported by acceptable medical evidence, shall receive Sick Pay.
2. Subject to the other provision [sic] of this Article, Sick Pay shall be payable for each period the employee is prevented by such disability from performing any and every duty pertaining to the employee’s occupation.
5. In cases of disability which would have been covered by this article but for the fact that they are covered by the Workmen’s Compensation Law of the State of Wisconsin, the employee, if eligible under this article, will receive the difference between what he received as compensation under said law and the amount he would have received under this article but for the exclusion of the disability because of his being covered by the Workmen’s Compensation Law.
Id. at 43, 45-46.
Further, the CBA contained a no-strike/no-lockout clause that read in part:
1. Since arbitration is provided for grievances, since the procedures of the National Labor Relations Board are available for claims of unfair labor practices, and since negotiation on matters not covered by this Agreement is to be deferred until the expiration of this Agreement, the Union will not call or sanction any strike, stoppage, slowdown or other interference with work during the term of this Agreement and the Company will not lock out any or all of its employees.
Id. at 42 (emphasis added).
Because of a high work-related accident rate, Jones and its worker’s compensation insurer, EBI, began studying methods to reduce the number and severity of acci-' dents and the cost of the company’s disability payments. Among the options explored by the company was a so-called “work hardening” program offered by Opportunities, Inc. (“OI”), an organization specializing in boosting the confidence and strength of temporarily partially disabled workers and preparing them to return to their regular jobs. OI provides light duty jobs in a factory setting to temporarily partially disabled employees of participating companies. The companies pay a service fee to OI and also pay wages to their own employees. Under the program, a participating company’s physician would examine a disabled employee and determine what, if any, work he could perform. An appropriate assignment would be made at OI, and the employee would work at the assigned position under the supervision and direction of OI. The employee would earn wages, which would be offset by a reduction in disability benefits. Jones proposed to pay its employees assigned to 01 an hourly wage of $4.00 — about one-third of the normal wages prescribed by the CBA. Jones Dairy Farm and Local No. P-1236, United Food and Commercial Workers Union, AFL-CIO-CLC, Case No. 30-CA-9395, at 3 (June 23, 1987) (hereafter the “ALJ’s findings”). Jones asserts that even after state and federal taxes, the partially disabled employee would be no worse off than if he had remained on temporary total disability status. If the employee declines the limited duty work, however, his benefits are still reduced according to the formula, and he obviously does not receive any wages.
On June 23, 1986, Jones first notified the Union that it was considering the work hardening program as well as several plans directed at accident prevention and injury and health counseling. Representatives of Jones, EBI and the Union toured OI’s facilities two days later, but when Jones again raised the proposal at a regular grievance meeting on July 14, the Union refused to give its consent. On September 29, 1986, Jones informed the Union that it intended to implement the 01 program unilaterally on October 15; at the Union’s request, Jones delayed action on the plan until it met with Union officials at a special meeting on October 17. At the meeting, the Union refused to consent to the work hardening program and specifically stated as its major concern the issue of bargaining unit employees working outside of Jones’s premises. On October 24, Jones advised the Union that it would unilaterally implement the program on November 3; the company sent letters to the same effect to all of its employees on October 31. On November 11, the Union filed a grievance protesting Jones’s unilateral implementation of the work hardening program, General Counsel’s Exh. 7, and on November 17, the Union filed its charge with the NLRB.
The complaint issued by the General Counsel of the NLRB pursuant to the Union’s charge accuses Jones of engaging in unfair labor practices in violation of sections 8(a)(1) and (5) and 8(d) of the National Labor Relations Act (the “Act,” the “NLRA”), 29 U.S.C. §§ 158(a)(1) and (5), 158(d). Jones’s App. at 32-37. The complaint explicitly alleges that the work hardening program modified the seniority and sick pay provisions without the Union’s consent. The complaint mentions neither the no-strike clause nor the “management rights” clause contained in Article V of the CBA. General Counsel’s Exh. 2, at 9. Between November 1986 and April 1987 (when the parties presented their cases to the AU), Jones assigned seven of its employees to the 01 work hardening program. Four agreed to participate; three refused and suffered reduced disability compensation. AU’s findings at 5.
The AU concluded that the work hardening program was encompassed within “wages, hours, and other terms and conditions of employment” and was therefore a mandatory subject of bargaining under section 8(d) of the NLRA. The AU further determined that the Wisconsin Worker’s Compensation Act was not preempted by the NLRA since the employer was not required to implement a light duty/rehabilitation program. Rather, according to the AU, the implementation of such a program was negotiable. The AU next addressed the Union’s contention that the program impermissibly expanded the bargaining unit. He concluded that “farming out” bargaining unit employees, AU’s findings at 12, was a permissible subject of bargaining that required the consent of both the Union and the employer. The AU then rejected Jones’s contention that the no-strike clause permitted it to take unilateral action on any subject (like the work hardening program) not covered by the CBA. The ALJ read the no-strike clause in a manner wholly contrary to Jones’s interpretation, concluding that, in fact, the clause mandated that the status quo be preserved during the term of the CBA with regard to any subjects not specifically addressed in the CBA. Consequently, the AU ordered Jones to cease and desist from implementing the work hardening program without the Union’s consent.
Jones fared no better with the NLRB, although the NLRB did modify the AU’s findings in some respects. The NLRB agreed with the AU that the work hardening program was a mandatory bargaining subject under section 8(d) because worker’s compensation benefits, although provided by state law, are nevertheless “emoluments of value which accrue to employees out of their employment relationship.” Jones Dairy Farm and Local No. P-1236, United Food and Commercial Workers Union, AFL-CIO-CLC, 295 N.L.R.B. No. 20, at 7 (June 15, 1989) (citations omitted) (hereafter the “NLRB decision”). The Board rejected the AU's finding that the program was a permissive bargaining subject because it expanded the scope of the bargaining unit. However, the Board concluded that this aspect of the AU’s determination was not necessary to the resolution of the case, since the Board also agreed with the AU that the no-strike clause prohibited Jones from unilaterally implementing the OI program.
II. JONES’S CLAIMED RIGHT TO IMPLEMENT THE OI PROGRAM UNILATERALLY
Jones asserts, essentially, that its implementation of the work hardening program was authorized by state law and was none of the NLRB’s concern. In support of its position, Jones cites the Supreme Court’s decisions in Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987), and Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 105 S.Ct. 2380, 85 L.Ed.2d 728 (1985). Neither of these cases, however, removed the OI program from the purview of the NLRA and the regulatory jurisdiction of the Board.
Although neither the AU nor the NLRB devoted much attention to the matter, we consider it important to inquire initially whether the Wisconsin Worker’s Compensation Act did in fact grant Jones a right to-impose a light duty rehabilitation program as a means of reducing its disability indemnity. None of the parties has directed us to a provision of the Worker’s Compensation Act that expressly vests an employer with such a right. The record, too, is ambiguous on this point.
Jones relies in large measure on a decision in its favor rendered by an AU in the Worker’s Compensation Division of Wisconsin’s Department of Industry, Labor and Human Relations (the “DILHR”). Castenon v. Jones Dairy Farm, Nos. 87 64614 & 88 11916 (Mar. 20, 1989), reprinted in Jones’s App. at 38-46. The Casten-on decision, which explicitly declined to consider the applicability of federal labor law to the matter, referred to Wis.Stat. section 102.35(3), but then stated that the present matter was not a section 102.35(3) dispute. That section provides:
(3) Any employer who without reasonable cause refuses to rehire an employe who is injured in the course of employment, where suitable employment is available within .the employe’s physical and mental limitations, upon order of the department and in addition to other benefits, has exclusive liability to pay to the employe the wages lost during the period of such refusal, not exceeding one year’s wages. In determining the availability of suitable employment the continuance in business of the employer shall be considered and any written rules promulgated by the employer with respect to seniority or the provisions of any collective bargaining agreement with respect to seniority shall govern.
(Emphasis added.) Section 102.35(3) is clearly concerned with the rights of recuperating employees. It may be that the Wisconsin AU in Castenon extrapolated from this provision to a corresponding right in employers to insist that temporarily partially disabled employees work up to their physical and mental capacities.
Another section of the Worker’s Compensation Act that may apply is section 102.-43(2). That section provides that the weekly compensation schedule for partial disability is “such proportion of the weekly indemnity rate for total disability as the actual loss of the injured employe bears to his average weekly wage at the time of his injury.” Chris M. Faulhaber, Jr., Administrator of the Worker’s Compensation Division of the DILHR, referred to section 102.43(2) in a letter to the Union’s president and explained how benefits for partial disability are affected by earnings from part-time work. It could be inferred from Faul-haber’s letter — although the letter did not say so expressly — that the DILHR would require a healing worker to accept a position within his capabilities if such a position were offered by his employer. But the letter emphasized that any “part-time or limited employment must be employment with the employer for whom the employe was working when injured” and “should be within the parameters of the union contract in effect.” General Counsel’s Exh. 8.
Jones cites another source in support of its claimed right — the Worker’s Compensation Handbook (1983 & Supp.1985) prepared by the Wisconsin Bar and reprinted in Jones’s Exhibit 8. The Handbook does say that an employee is required to take light duty work (to the extent of his capacities) if it is offered by his own employer; however, the Handbook does not address whether an employee must take light duty work, assuming he is able, with a different employer or on different terms of employment. Further, the Handbook makes no mention of the potential effect of a CBA on the recuperating employee’s obligation to return to light duty work. Finally, the Handbook asserts that its summary of employees’ obligation to take light duty work is based on the “long-standing construction of the [Worker’s Compensation] Statutes” by the DILHR and one unpublished opinion of the Wisconsin Circuit Court. Jones’s App. at 36-37. The Handbook cites as its sole authority an unpublished Wisconsin Circuit Court case — Gillette Well Drilling v. DILHR, Case No. 143-142 (Dane Co. Cir.Ct. April 7, 1975). Under Wisconsin Civil Procedure Rule 809.23(3), unpublished cases have no precedential value.
It may be under Wisconsin law that employers do have a right to insist that their partially disabled employees accept positions they are capable of performing, if the employer has such a position and makes it available. The parties have cited no published case, nor has our own research uncovered any, that establishes such a right. The evidence of DILHR policy contained in the record is inconclusive. Nevertheless, for the purposes of resolving this matter, we will assume that an employer is entitled under Wisconsin law to recall a recovering employee to an appropriate job at the employer’s place of business.
Jones attempts to equate its asserted right with rights guaranteed to workers under state laws prescribing, for example, minimum wages and maximum hours. Such laws predated the federal labor laws, and they form a floor for the negotiation of the substantive terms of a collective bargaining agreement. See Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 21, 107 S.Ct. 2211, 2222, 96 L.Ed.2d 1 (1987) (“[P]re-emption should not be lightly inferred in [the area of state regulation establishing minimum terms of employment], since the establishment of labor standards falls within the traditional police power of the State.”); Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 757, 105 S.Ct. 2380, 2398, 85 L.Ed.2d 728 (1985) (“When a state law establishes a minimal employment standard not inconsistent with the general legislative goals of the NLRA, it conflicts with none of the purposes of the Act.”). By comparing its asserted right, which it also labels an unqualified right, to minimum labor standards laws, Jones would require us to choose between recognizing its asserted right or declaring the Wisconsin Worker’s Compensation Act preempted. Such a choice is unnecessary. The Wisconsin statute has been drafted and interpreted to account for CBA provisions. Section 102.35(3) expressly defers to any applicable seniority provisions in a labor contract, and Faulhaber’s letter to the Union’s president emphasized that the employer’s recall of an employee is subject to the terms of a binding CBA. In our view, therefore, the NLRB persuasively argues that even if Jones had a right under Wisconsin law to insist that its injured workers accept employment up to their capacities, Jones was not required by state law to exercise that right. The right — if it indeed existed — was negotiable.
The Board accepted the ALJ’s conclusion that the OI program was a mandatory subject of bargaining, since it clearly fell within the scope of “wages, hours, and other terms and conditions of employment.” 29 U.S.C. § 158(d). The Board’s findings of fact must be upheld if they are supported by substantial evidence on the record as a whole, 29 U.S.C. § 160(e); David R. Webb Co. v. NLRB, 888 F.2d 501, 503 (7th Cir.1989), cert. denied, — U.S. -, 110 S.Ct. 2560, 109 L.Ed.2d 743 (1990). Further, the Board’s legal conclusions should be accepted and enforced unless they are irrational or inconsistent with the act. NLRB v. Financial Institution Employees, 475 U.S. 192, 202, 106 S.Ct. 1007, 1012-13, 89 L.Ed.2d 151 (1986); Ford Motor Co. v. NLRB, 441 U.S. 488, 497, 99 S.Ct. 1842, 1849, 60 L.Ed.2d 420 (1979); David R. Webb Co., 888 F.2d at 503, 505; Maas & Feduska v. NLRB, 632 F.2d 714 (9th Cir.1979). In particular, we give substantial deference to the Board’s determinations about mandatory and permissive subjects of bargaining. Ford Motor Co., 441 U.S. at 497, 99 S.Ct. at 1849; Jack Thompson Oldsmobile, Inc. v. NLRB, 684 F.2d 458, 461-62 (7th Cir.1982); Maas & Feduska, 632 F.2d at 718-19.
The NLRB noted that the OI program affected temporarily disabled employees’ wages, hours, types of work and workloads. Further, the program would have reduced employees’ sick pay and disability benefits, and these welfare benefits are a mandatory subject of collective bargaining. See Metropolitan Life, 471 U.S. at 751-52, 105 S.Ct. at 2395-96 (citing Chemical & Alkali Workers v. Pittsburgh Plate Glass Co., 404 U.S. 157, 159 & n. 1, 92 S.Ct. 383, 387 & n. 1, 30 L.Ed.2d 341 (1971)). Even if sick pay and disability benefits were not per se mandatory bargaining items, they became so by their inclusion in the CBA. Article XVI(2) clearly stated that sick pay “shall be payable for each period that the employee is prevented by such disability from performing any and every duty pertaining to the employee’s occupation.” (Emphasis added.) Subsection 5 of the same article required Jones to make up the difference, if any, between an employee’s state-mandated worker’s compensation benefits and “the amount [the employee] would have received under this article but for the exclusion of the disability because of his being covered by the Workmen’s Compensation Law.” Jones’s obligations under the CBA with regard to sick pay and disability benefits were explicit. Jones could not attempt to modify unilaterally those provisions during the term of the CBA without obtaining the Union’s consent or bargaining to impasse. 29 U.S.C. § 158(d). The NLRB’s conclusion that the OI program was a mandatory bargaining topic is, therefore, objectively reasonable and wholly supported. We accept that determination as conclusive in these circumstances.
The Board did not reach the question, however, whether Jones had bargained with the Union over the OI program in good faith to impasse. Jones does not argue in its petition to us that impasse was reached, or even sought. In the alternative to its claim of an unqualified right to implement the OI program unilaterally, Jones maintained before the ALJ and the Board that the no-strike clause permitted it to take action unilaterally with respect to any item not covered by the CBA. Both the ALJ and the Board took the opposite view of the no-strike clause’s import, and the Board resolved the matter on the basis of its reading of that clause.
We owe the Board no special deference in matters of contractual interpretation. Irvin H. Whitehouse & Sons Co. v. NLRB, 659 F.2d 830, 833 (7th Cir.1981); Local Union 1395, Int’l Bhd. of Electric Workers, AFL-CIO v. NLRB, 797 F.2d 1027, 1030-31 (D.C.Cir.1986). But we are, of course, mindful of the Board’s considerable experience in interpreting collective bargaining agreements. According to the Board, the no-strike clause was intended by the parties to preserve the status quo during the agreement’s term on mandatory bargaining matters not addressed by the CBA, “just as Section 8(d) [of the NLRA] preserves the status quo as to subjects covered by the agreement.” NLRB decision at 8. Thus, any alteration of the terms of employment during the life of the CBA required mutual assent, and it is undisputed that the Union withheld its consent here. The no-strike clause clearly evinced a desire by the parties to defer negotiation on mandatory items, not, as Jones argues, to waive it. Therefore, we agree with the NLRB and the ALJ that Jones was not free to implement the OI program during the term of the CBA without the Union’s consent; nor could Jones insist that the Union bargain to impasse on that subject. Jones’s unilateral implementation of the OI program therefore violated sections 8(a)(1) and (5) of the NLRA. The Board properly ordered Jones to cease and desist from unilaterally implementing the program and to make restitution to the affected employees.
III. JONES’S DUE PROCESS CLAIM
Having failed to convince the AU or the NLRB of its “right” to implement the OI program, Jones now claims that its due process rights were violated because the AU and the NLRB resolved the matter on the basis of the no-strike clause. Since the Union’s charge did not specifically allude to the no-strike clause, Jones complains that it did not receive fair notice of that theory and that it was consequently deprived of an opportunity to prepare an adequate defense.
It is somewhat incongruous that Jones should charge the NLRB with a due process violation, since it was Jones that drew the AU’s and the Board’s attention to the no-strike clause in the first place. This clause was, indeed, a principal component of Jones’s defense in the administrative proceedings to the Union’s unfair labor practice charge. Jones is now dissatisfied with the intepretation of the clause rendered by the AU and accepted by the NLRB (and by this court). That the AU and Board disagreed with Jones over the meaning of the no-strike clause, however, is no basis for a claim that Jones was denied due process.
Evidently, Jones hopes for a remand so that it can introduce some unspecified evidence from the bargaining history in support of its reading of the no-strike clause. But Jones has already been afforded two opportunities to marshall its evidence. We will not remand the case merely because Jones “assures” this court that such evidence exists, Jones’s Brief at 13, without making any effort to particularize the substance of its would-be proffer.
Finally, Jones argues that, had it been apprised that the AU and NLRB would base their decisions on the no-strike clause, it would have defended its position by referring to a “management rights” clause in the CBA. Since Jones itself brought up the no-strike clause, it could have (and should have) drawn the NLRB’s attention to the management rights clause as support for its reading of the no-strike clause. Jones’s inexcusable failure to avail itself before the Board of all of its possible defenses, particularly after the adverse decision of the AU, deprives it of the right to have those arguments decided here. Jones’s claim that it was denied due process of law rings hollow.
IV. CONCLUSION
The NLRB concluded that “[n]othing in the management-rights, sick leave, no-strike/no-lockout provisions or any other section of the collective bargaining agreement permitted the Respondent to alter the status quo in the manner that it has in this case.” NLRB decision at 9-10. Because we agree with the Board’s reading of the CBA, Jones’s petition for review is Denied, and the NLRB’s order is Enforced.
. In 1966, Jones recognized Local P-1236 of the United Food and Commercial Workers Union as the bargaining agent of its production and maintenance, employees. Local P-1236 merged with Local 538 during the pendency of this case. The parties do not dispute that Local 538 is the successor to Local P-1236. See NLRB’s Brief at 4 n. 3.
. Jones gives the following example of the program's operation:
Assume the employee’s regular wage is $8.00 per hour and he regularly works 40 hours per week. His average weekly earnings are $320 ($8.00 X 40 hours). His worker’s compensation indemnity for temporary total disability is $213.00 (Vi X $320.00) [sic] If he works 20 hours per week on a limited duty job he is paid $80.00 ($4.00 x 20 hours) for that work. His wage loss is thus reduced from $320.00 to $240.00, i.e., from 100% to 75% ($240.00 divided by $320.00). This, results in a worker’s compensation indemnity for partial disability of $159.75 (.75 X $213.00). He receives that indemnity, $159.75, plus the pay for the limited duty work, $80.00, for a total of $239.75, which is $26.75 more than the indemnity for temporary total disability.
Jones’s Brief at 8-9.
. Jones does not explain precisely how much of the employee’s wages from the limited duty work would be subject to federal and state taxes. Jones directs us to its Exhibit 13 in the administrative record, but that document expressly involves calculations based only on gross earnings. In light of our disposition of this case, however, the effect of taxes on the disability package is irrelevant.
. The Union concedes that a temporarily partially disabled employee may be required to accept light duty work at Jones's plant. Subsection 11 of Article XI (the seniority provision of the CBA) nevertheless appears to require the consent of both the Union and Jones to place a recovering employee in a suitable position.
. Shortly after implementing the program, Jones declared that it would not apply to employees whose sickness or disability was not work-related; Jones feared that subjecting such employees to the 01 program would violate the sick pay provisions of the CBA. Jones’s Brief at 5 n. 3. Jones does not explain, however, why application of the program to employees suffering from a work-related disability would not ¡also violate the CBA’s sick pay regimen.
. We discuss the management rights clause below.
. Hereafter, we follow the pagination of Jones’s Appendix when referring to the Castenon decision.
. Indeed, the Labor and Industry Review Commission, to which Castenon and his fellow claimants appealed the state ALJ’s decision, reversed the state ALJ’s decision and declared the matter preempted in light of the NLRB’s decision and order in the present case. Intervenor's Motion to Supplement the Record filed Oct. 10, 1989, at 1-7. Whether a matter that may be governed by state law is preempted by an applicable federal law is, of course, a question of Congress’s intent. Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 208, 105 S.Ct. 1904, 1909-10, 85 L.Ed.2d 206 (1985); Malone v. White Motor Corp., 435 U.S. 497, 504, 98 S.Ct. 1185, 1190, 55 L.Ed.2d 443 (1978). For the reasons we give in this section, we agree with the NLRB that the NLRA and the Wisconsin Worker’s Compensation Act can "peacefully coexist.” NLRB decision at 6.
. The Wisconsin AU who rendered the Casten-on decision testified before the NLRB that Cas-tenon reflects the DILHR’s interpretation of the Worker’s Compensation Act. Tr. at 94-112.
. Unpublished opinions may be cited only "to support a claim of res judicata, collateral estop-pel or law of the case." Wis.Civ.P.R. 809.23(3).
. Jones declares in its brief: “Even if the collective bargaining agreement in haec verba were to preclude Jones from providing limited duty work, a unilateral modification of the agreement to elimination [sic] that prohibition would not constitute a violation of section 8(d).” Jones's Brief at 19. Since we have some difficulty accepting Jones's argument that such a right exists at all, we have considerably more reservations about deeming the “right” absolute and independent of Jones's collective bargaining obligations.
. As we noted above, the ALJ rested his decision on the determination that Jones’s "farming out” of bargaining unit employees to OI was a permissive subject of bargaining that could not be implemented without the Union’s consent. Although the Board disagreed with this aspect of the ALJ’s findings, the issue did not affect the outcome óf the case. Since we resolve the matter on other grounds, we do not reach the Union’s contention that the OI program illegally enlarged the scope of the bargaining unit.
. In any event, it appears that the NLRB, which had the entire CBA before it as an exhibit, in fact considered whether the CBA gave Jones residual authority to take unilateral action in the furtherance of its business with respect to matters not covered by the CBA. NLRB decision at 9 n. 13. The Board found no such broad grant of authority in the CBA 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.
McENTEE, Circuit Judge.
On March 17, 1955, petitioner was convicted by a jury in Superior Court in Massachusetts of the first degree murder of Geraldine Annese. He is currently serving a life sentence at Massachusetts Correctional Institution, Walpole. The murder occurred in Norwood, Massachusetts, on Thursday evening, November 4, 1954. Petitioner was fifteen years old; the victim was a neighbor and former girl friend. According to his confession to the police, which was admitted into evidence at trial over his objection, petitioner left his home shortly after 9:30 p. m. on the evening of the crime through a cellar door. He waited in a garage located next to the victim’s house for about fifteen minutes. When the Annese girl passed by on her way home from a date, petitioner called to her to enter the garage, which she did. He strangled her by the throat with his hands until her hands “stopped moving,” removed her clothes and raped her. Petitioner told the police that he noticed that the victim was menstruating that day. He then returned to his home through the cellar door.
Before admitting petitioner’s confession into evidence at the trial, the judge conducted an extensive voir dire, during which both sides called witnesses. In addition, the jury was instructed to consider whether or not the confession was voluntary. On appeal, the Massachusetts Supreme Judicial Court affirmed the conviction, ruling inter alia that the confession was admissible. Commonwealth v. Makarewicz, 333 Mass. 575, 132 N.E.2d 294 (1956). On August 28, 1968, petitioner filed a petition for a writ of error in the Supreme Judicial Court, again challenging the admissibility of his confession. In accordance with Mass.Gen.Laws eh. 250, §§ 9 and 11 the writ was considered by a single justice of the court, who denied it. Although entitled to do so under Massachusetts law, see discussion infra, petitioner did not appeal that decision to the full bench of the court. ******In May 1969 he filed a petition for habeas corpus in the United States District Court pursuant to 28 U. S.C. § 2254 on the same grounds, viz., that his conviction had been based on an involuntary confession. No evidentiary hearing was held; the district court denied the petition on the basis of the trial transcript. This is an appeal from the decision of the district court.
Respondent contends that petitioner has failed to exhaust his state remedies because he did not appeal from the denial of his 1968 writ of error. Under Massachusetts law the denial of a writ of error can be appealed to the full bench of the Supreme Judicial Court on the grounds that “the single justice abused his powers or that his action was arbitrary and unjustifiable.” Commonwealth v. Sacco, 261 Mass. 12, 17, 158 N.E. 167, 169, cert. denied. 275 U.S. 574, 48 S.Ct. 17, 72 L.Ed. 434 (1927); accord, McGarty v. Commonwealth, 326 Mass. 413, 414-415, 95 N.E.2d 158, 159, cert. denied, 340 U.S. 886, 71 S.Ct. 199, 95 L.Ed. 643 (1950). See generally K. Smith, Massachusetts Practice: Criminal Practice and Procedure § 1244 (1970). In response, petitioner appears to take the position that under the “futility doctrine” he had no obligation to seek a writ of error in the first place. He contends that the writ cannot be used to correct the trial court’s failure to suppress illegal evidence, since that is an issue which there was a “legally sufficient opportunity to litigate” at trial. See Aronson v. Commonwealth, 331 Mass. 599, 602, 121 N.E.2d 669, 671 (1954). Yet the Supreme Judicial Court has considered suppression of evidence questions on writ of error in at least two recent decisions. See Gilday v. Commonwealth, 355 Mass. 799, 247 N.E.2d 396 (1969); Richardson v. Commonwealth, 355 Mass. 112, 243 N.E.2d 801, 803 (1969). Where the state court has indicated a willingness to broaden its traditional remedies in order to reach federal constitutional claims, petitioner must initially seek relief in that court. Grayson v. Montgomery, 421 F.2d 1306, 1309-1310 (1st Cir. 1970).
In the instant case, however, petitioner was not obligated to seek a writ of error since the admissibility of his confession has already been reviewed by the full bench of the Supreme Judicial Court on direct appeal. Brown v. Allen, 344 U.S. 443, 447-450, 73 S.Ct. 397, 97 L.Ed. 469 (1953); Connor v. Picard, 434 F.2d 673 (1st Cir. 1970); R. Sokol, Federal Habeas Corpus § 22.2 (2d ed.1969); Note, Developments in the Law — Federal Habeas Corpus, note 2 supra, at 1096. This is not a case in which, during the period since petitioner’s contention was considered by the state court, the United States Supreme Court has announced a new legal principle whose applicability must first be considered by the Massachusetts court. See Sullivan v. Scafati, 428 F.2d 1023, 1024 n. 1 (1st Cir. 1970) ; cf. Subilosky v. Massachusetts, 412 F.2d 691 (1st Cir. 1969). For these same reasons petitioner was not obligated to move for a new trial pursuant to Mass.Gen.Laws ch. 278, § 29. And his failure to apply to the United States Supreme Court for certiorari following the Massachusetts court’s affirmance of his conviction does not bar federal habeas relief now. Fay v. Noia, 372 U.S. 391, 435-438, 83 S.Ct. 822, 9 L.Ed.2d 837 (1963); Hedberg v. Pitchess, 362 F.2d 511 (9th Cir. 1966).
Because this case was tried prior to the Supreme Court’s decisions in Escobedo v. Illinois, 378 U.S. 478, 84 S.Ct. 1758, 12 L.Ed.2d 977 (1964), and Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966), we must “examine the entire record and make an independent determination of the ultimate issue of voluntariness.” Davis v. North Carolina, 384 U.S. 737, 741-742, 86 S.Ct. 1761, 1764, 16 L.Ed.2d 895 (1966). Because much of the relevant trial testimony by petitioner and the police was directly contradictory and because neither the trial court nor the jury made any express findings of fact, we limit our consideration here to the undisputed facts. Reck v. Pate, 367 U.S. 433, 435, 81 S.Ct. 1541, 6 L.Ed.2d 948 (1961); Thomas v. Arizona, 356 U.S. 390, 402-403, 78 S.Ct. 885, 2 L.Ed.2d 863 (1958).
Petitioner argues that a consideration of the “totality of the circumstances” that preceded the confession, Fikes v. Alabama, 352 U.S. 191, 197, 77 S.Ct. 281, 1 L.Ed.2d 246 (1957), shows that his confession was not voluntary. He stresses his age (15), lack of education (he had not completed the ninth grade), low mentality (I.Q. of 74 or 84 according to two different tests administered shortly after the crime), lack of prior experience with police interrogation, and the time and duration of the questioning. However, we do not find the circumstances in this case inherently coercive. Petitioner was brought to the Norwood Police Station from his home at approximately 12:15 a. m., Saturday morning, November 6, 1954. According to a stipulation made before the district court, he was interrogated for approximately two hours, in three relatively brief sessions, before confessing. The longest interrogation was the first, which lasted from 12:15 to 1:45 a. m. Petitioner was then fingerprinted and given a benzidin test, which revealed the presence of a significant amount of blood on his body, particularly around his groin. The second interrogation was conducted between 3:18 and 3:45 a. m. Petitioner was then allowed to rest for about five hours during which time he was given a phenobarbital pill supplied to the police by his father. He confessed shortly after the beginning of the third interrogation, which began at 9:12 a. m.
A stenographic transcript was recorded during the interrogation. Although petitioner contradicted much of the factual content of that transcript at trial, in this proceeding he relies heavily on it to document his complaints about the treatment he received from the police. The transcript reveals, however, that the police were generally very polite and restrained. Petitioner’s father, who waited in the police station most of the night, was not denied access to his son; indeed, he never requested to see him. Nor did petitioner ask to see his parents or counsel. While we adhere to the opinion that early morning confessions by youngsters after a full night of police custody are inherently suspect, Michaud v. Robbins, 424 F.2d 971, 976 (1st Cir. 1970), the circumstances here fall far short of those described in Haley v. Ohio, 332 U.S. 596, 68 S.Ct. 302, 92 L.Ed. 224 (1948) (fifteen-year-old boy grilled in relays for five straight hours before his 5 a. m. confession, then held incommunicado for 2% days), Gallegos v. Colorado, 370 U.S. 49, 82 S.Ct. 1209, 8 L.Ed.2d 325 (1962) (fourteen-year-old boy held incommunicado for 5 days), and Reck v. Pate, supra, (nineteen-year-old youth of subnormal intelligence subjected to 6-7 hour interrogation sessions and intermittent public exhibition in “show-ups”). See Boulden v. Holman, 394 U.S. 478, 89 S.Ct. 1138, 22 L.Ed.2d 433 (1969); Michaud v. Robbins, supra.
In evaluating any threatening or intimidating remarks made by the police we must weigh “the circumstances of pressure against the power of resistance of the person confessing.” Stein v. New York, 346 U.S. 156, 185, 73 S.Ct. 1077, 1093, 97 L.Ed. 1522 (1953). The “question in each case is whether the defendant’s will was overborne at the time he confessed.” Lynumn v. Illinois, 372 U.S. 528, 534, 83 S.Ct. 917, 920, 9 L.Ed.2d 922 (1963) (emphasis ours). During the first interrogation the police made statements like, “Of course, you are telling an awful {sic] peculiar story, you know that * * *. You don’t expect anybody to believe that story, do you?” The transcript of the interrogation reveals, however, that petitioner was undaunted by such remarks:
“Sgt. Bogdanchik. * * * Isn’t that a fact you rehearsed that story quite a bit ?
“A. Do you want to see my script?
“Sgt. Bogdanchik. Don’t clown. This is pretty serious, you know that don’t you?
“A. Yes.”
During the second interrogation, after the police had learned that the benzidin test showed blood on petitioner’s body, they made statements like, “Something took place in that house that you got {sic] that blood all over you. * * * We are going to stay here a week, or ten weeks, or ten years until we find out.” But again petitioner refused to be intimidated. He insisted a blackbird he had killed with his B-B gun the previous day accounted for the blood.
Petitioner confessed, not under the pressure of threatening remarks, but after he was confronted with the evidence against him. At the beginning of the third interrogation he was informed that his fingerprints had been found at the scene of the crime and that the benzidin test had revealed the presence of blood on his clothes. He had apparently hidden the dungarees he had worn that evening in the hamper at his home, but the police found them and brought them to the station. Immediately after he was shown the blood stains around the fly section of the dungarees, petitioner confessed. That confession resulted not from pressure but from the “inward consciousness * * * of being confronted with evidence of guilt which [he] could neither deny nor explain.” Stein v. New York, supra, 346 U.S. at 185, 73 S.Ct. at 1093. See Thomas v. Arizona, supra, 356 U.S. at 400-402, 81 S.Ct. 1541; cf. Haynes v. Washington, 373 U.S. 503, 83 S.Ct. 1336, 10 L.Ed.2d 513 (1963) (petitioner’s repeated requests to call his wife were not granted until he confessed); Lynumn v. Illinois, supra, 372 U.S. at 534, 83 S.Ct. 917 (confession made as a direct result of police threats to cut off state financial aid to petitioner’s children and to take her children from her).
Two factors cited by petitioner must be given some weight in his favor. Once the police discovered the presence of blood on petitioner’s body for which he had no satisfactory explanation, they did not warn him of his right to remain silent and his right to counsel. While not determinative in this pre-Escobedo, pre-Miranda setting, their failure to do so is a significant factor that must be taken into account. Davis v. North Carolina, supra, 384 U.S. at 740-741, 86 S.Ct. 1761. Similarly, although the delay in bringing petitioner before a magistrate was relatively short, the police had a substantial amount of circumstantial evidence against him by 8:30 a. m. when the state district court opened. Questioning petitioner for a third time at 9:12 a. m. prior to bringing him before the court suggests the possibility of a “callous attitude” on their part, Haley v. Ohio, supra, 332 U.S. at 600, 68 S.Ct. 302, and some degree of over-zealousness in attempting to obtain a confession. Yet these two factors, without more, are not sufficient to render petitioner’s confession involuntary in view of our overall analysis of the events that transpired. Finally, petitioner suggests that the phenobarbital pill5 that he took sometime within the five hours prior to his confession may have reduced his powers of resistance. Cf. Townsend v. Sain, 372 U.S. 293, 307-309, 83 S.Ct. 745, 9 L.Ed.2d 770 (1963). But the evidence showed only that petitioner became drowsy for about ten minutes after taking the pill, and there was no evidence that he took it within the ten minutes immediately preceding the third interrogation.
Affirmed.
. On September 5, 1962, petitioner had filed another writ of error challenging his conviction on grounds other than those raised on direct appeal. That writ was allowed by the single justice, who then ruled against him on the merits. Petitioner appealed that ruling to the full bench of the Supreme Judicial Court, which affirmed the decision of the single justice. Makarewicz v. Commonwealth, 346 Mass. 478, 194 N.E.2d 388 (1963).
. See Whippler v. Balkcom, 342 F.2d 388 (5th Cir. 1965) ; cf. Needel v. Scafati, 412 F.2d 761, 765 (1st Cir.), cert. denied, 396 U.S. 861, 90 S.Ct. 133, 24 L.Ed.2d 113 (1969). See generally Note, Developments in the Law—Federal Habeas Corpus, 83 Harv.L.Rev. 1038, 1097-99 (1970).
. Petitioner was interrogated by Sgt. Walter Bogdanchik and Lt. William H. Delay of the Massachusetts State Police, Chief Mark Folan and Lt. James Murphy of the Norwood Police and District Attorney Myron Lane. Mr. George Kenney, a clerk in the District Attorney’s office, recorded a stenographic transcript in shorthand.
. “Sgt. Bogdanchik. You have taken us on fairy tales, haven’t you?
“A. No.
“Sgt. Bogdanchik. What is the story on the blood if that isn’t a fairy tale?
“A. I have got five boxes of B-Bs at my house. Do you want to go up and see?”
. Respondent takes the position that, because petitioner did not stress this factor in his appeal before the Supreme Judicial Court, we cannot consider it here. However, lack of warnings regarding the right to remain silent and the right to counsel were recognized as relevant to the overall issue of voluntariness long before Esco-bedo v. Illinois, supra, and Miranda v. Arizona, supra. See Davis v. North Carolina, supra, 384 U.S. at 740-741, 86 S.Ct. 1761; Turner v. Pennsylvania, 338 U.S. 62, 64, 69 S.Ct. 1352, 93 L.Ed. 1810 (1949). The Supreme Judicial Court lias already had its “opportunity to apply controlling legal principles to the facts bearing upon [this] constitutional claim.” United States ex rel. Kemp v. Pate, 359 F.2d 749, 751 (7th Cir. 1966).
. Petitioner had been taking these pills for some time in order to control the symptoms of epilepsy with which he was afflicted.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
This cause came on to be heard on the record and on the briefs and oral arguments of attorneys for the contending parties; and it appearing that the findings of fact of the district court are based upon substantial evidence from which are drawn correct conclusions of law and that neither the findings nor conclusions are clearly erroneous and that the reasoning of the district court in its opinion is logical and sound, the decree 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.
SIBLEY, Circuit Judge.
James Bacalis, as beneficiary of an insurance policy on the life of his brother Jerry, got a verdict by direction of the court, and the Insurance Company appealing contends that the evidence required submission to the jury of the issues made by special pleas in substance that the, insured, who was murdered September 3, 1934, was on August 10, 1934, when he applied for the insurance, and on August 24th, when the policy was delivered, in personal difficulty with one Peter Frank, and believed he was in danger of being murdered by Frank, and was carrying a pistol to protect himself, which were circumstances material to the risk unknown to the company and which Bacalis was bound to disclose.
The evidence showed that Jerry Bacalis had previously carried several policies of insurance with the company which had lapsed for nonpayment of premiums. In 1934, he appears to have had a home, and a good business in which Frank and Frank’s brother-in-law Charlie Peters were partners. In May, 1934, Bacalis intercepted a letter from his wife to Frank which led to a discovery of adultery between them. On July 17th, Bacalis filed a suit for divorce against his wife on that ground, and a suit against Frank for $50,000 for alienation of his wife’s affections., Friends arranged a settlement of the latter suit on July 19th by which Frank was to sell on agreed terms his interest in the business to Bacalis. The preliminary payments were made by Bacalis July 31st, and the suit was dismissed. A Greek society to which all parties belonged expelled Frank, but Bacalis is not shown to have had anything to do with that. Frank was not entirely satisfied with the settlement, but the witnesses would not say that he continued “mad.” No proof was made that either Frank or Bacalis had attempted to attack the other, or threatened to do so. Frank had, in speaking of Bacalis, called him a vile name and made an incomplete threat of some sort in case Bacalis should attempt to oust Charlie Peters from the business, but Peters testified that Bacalis had never attempted to do that and he did not expect it; and this was all after the policy had been delivered. There was evidence that the night of the day after the policy was delivered Bacalis asked his young nephew, who slept in an adjoining room, to sleep with him. The following day Bacalis went on a trip and brought back one Lemons, who slept with him five nights after-wards and was sleeping with him on the morning of September 3rd when Bacalis was found in bed shot through the head. Neither Lemons nor Frank testified. Bacalis had a large pistol which he carried on his trips, but was not carrying it more than usual just before his death. He also had gotten a small pistol during the last days belonging apparently to one Doukos. Doukos was produced as a witness by the Insurance Company, but was withdrawn, and the time and circumstances of Bacalis getting that pistol do not well appear. The nephew of Bacalis and two other witnesses mainly relied on by the Insurance Company to prove the pleas did not testify to anything of importance occurring prior to the delivery of the policy. They had, however, previously been questioned and their answers taken by a stenographer. These answers the Insurance Company was allowed to use at first to refresh their recollections, but on failure in that effort they were proven by the stenographer and introduced as an impeachment. The impeaching statements were themselves vague, but could be construed to show fear and caution on the part of Bacalis before the policy was applied for or issued. It was undisputed that Bacalis applied for two policies totalling $10,000, which were issued and tendered to him, but he accepted only, one of them. There was no attempt to show who killed Bacalis. Both Lemons and Frank, it is admitted in. argument, have been acquitted. Frank v. State, 121 Fla. 53, 163 So. 223.
The pleas do not allege any fraudulent intent or purpose on the part of Bacalis in applying for and accepting the insurance. His refusal to accept all that was offered would go far to disprove such an intent. No questions were asked him in connection with his application touching this matter. The position taken is that the case is like that where one gets fire insurance 'on his property when to his knowledge, but not that of fhe insurer, a conflagration which threatens it is already raging; or where one about to fight a duel should in like manner obtain life insurance, as instanced by Judge Taft in Penn Mutual Life Ins. Co. v. Mechanics’ Co., 6 Cir., 72 F. 413, 38 L.R.A. 33; and that the risk is simply not that intended to be insured. In reply it is urged that after all relief in such a case depends on the fraud of the insured as causing a mistake on the part of the insurer, and that a fraudulent purpose must be shown as held in the case cited; and that the fraudulent intent is necessary to be averred has been decided in Florida. American Ins. Co. v. Robinson, 120 Fla. 674, 163 So. 17. Many cases are cited by each side on this point, but we will not decide it because the pleas were demurred to on this ground and were upheld as written, and that judgment is not up for review by cross-appeal. We find it necessary to review only the ruling of the judge that the evidence did not sufficiently sustain the pleas, for we agree in that opinion.
Where against its written policy a life insurance company, particularly after the death of the insured, attempts to show fraud of the insured in procuring it, the rule is well settled that some evidence of fraud is not enough, nor should' the jury be instructed to act on the bare preponderance of the evidence, but that the evidence must be clear and satisfactory in character. Suravitz v. Prudential Ins. Co., 261 Pa. 390, 104 A. 754; Northwestern Mutual Life Ins. Co. v. Wiggins, 9 Cir., 15 F.2d 646; Equitable Life Assurance Society v. Dunn, 3 Cir., 61 F.2d 450; New York Life Insurance Co. v. Kwetkauskas, 3 Cir., 63 F.2d 890; Northwestern Mutual Life Ins. Co. v. West, 62 App.D.C. 381, 68 F.2d 428. In the language of this court in Williams v. Penn Mutual Life Ins. Co., 5 Cir., 27 F.2d 1, 3, “Fraud is never presumed, and' the burden was on appellant to prove it with reasonable certainty by a preponderance of convincing evidence.” Concealment is only a' form of fraud, and the same rule applies when concealment is claimed. College Silk Throwing Co. v. American Credit Ind. Co., 3 Cir., 43 F.2d 668. Bacalis had some cause, in popular estimation, to kill Frank, but Frank had none to kill Bacalis. It is not contended that Bacalis meditated' any attack on Frank. The initial difficulty and its first heat had been assuaged both by time and by a settlement. No new cause for violence appears to have arisen. No strong reason for Bacalis to expect to be killed is proven, nor is it clearly proved that he had such a fear before the policy became of force. One might suppose that his later unwillingness to sleep alone was due to such a fear, and that the fear dated back to the negotiation for the policy; but there is no clear and convincing proof of it. It is not even shown that Frank did kill him.
Appellant is driven to rely, as it does, on the position that the jury might believe the prior statements of the impeached witnesses as the real truth. We think these statements not made in the presence of the insured or anyone representing the policy are only hearsay which could not have been introduced at all except for the purpose of impeaching the witnesses whom the Insurance Company had introduced, and then only on a showing to the court that it ought not to be bound by what they had testified because it had been entrapped by them. The former statements were admitted only to destroy the credit of the witnesses, to annul and not to substitute their, testimony. An ex parte statement does not become evidence of its contents because it misled a litigant into swearing its maker as a witness. If it can be shown that an important witness has by the opposing litigant been induced to change his testimony a situation may arise capable of proof as a circumstance, but it is the conduct of the opposite party that is really proved; just as it is when a statement is made in his presence which if untrue he ought to deny but does not. It is not the statement but the opposing party’s conduct with reference to it that becomes evidence. No conduct of either the dead or the suing Bacalis was shown to have caused a change in the testimony of these witnesses. They stand repudiated and impeached by the Insurance Company. Not only are the impeaching statements not evidence, but the credit of their makers as to what they now swear is weakened. This is but another reason for saying that the evidence wholly fails to be clear and convincing that the pleas are true, but only raises a suspicion that they may be.
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.
LEVENTHAL, Circuit-Judge:
This case is still another chapter in the volume of disputes- — labor disputes and legal disputes — between carriers and unions. The carriers, plaintiffs and appellees, account for most of the nation’s Class I railroads. They brought this action against four unions representing their shoperaft employees, and on March 2, 1970, the District Court granted the carriers a preliminary injunction restraining these unions from engaging in any whipsaw strike against an individual carrier over any dispute arising from notices served by the unions in November 1968 under § 6 of the Railway Labor Act. The Sheet Metal Workers Union appealed. Appellee carriers contend on the merits that the District Court’s order should be affirmed. The primary position of the carriers, however, is that the appeal should be dismissed as moot. We dismiss the appeal.
A. The District Court’s Order of March 2, 1970 and Findings
The underlying facts, available at greater length in the District Court’s opinion (supra note 1), may be stated briefly.
In November 1968 the four shoperaft unions — representing approximately 45,000 workers out of the 500,000 employees in the carriers’ unionized work force — served notices under § 6 of the Railway Labor Act (“Act”), 45 U.S.C. § 156, proposing changes in wages. The carriers served notices proposing changes in work rules. In accordance with the unions’ request, national bargaining began in March 1969. In April the parties jointly applied for the services of the National Mediation Board (“Board”), see 45 U.S.C. § 155 First. Mediation likewise failed to produce agreement, and on September 3, 1969, after the unions declined arbitration, the Board relinquished jurisdiction of the dispute.
The unions served notice of intention to strike seven of the roads. The carriers announced that if any individual road were struck, they would shut down operations and lock out all employees. The Board notified the President, pursuant to § 10 of the Act, 45 U.S.C. § 160. On October 3, 1969, the President created Emergency Board No. 176 to investigate the dispute. This board made recommendations which the unions declined, and on November 2, 1969, it issued its report of failure to resolve the dispute. After maintaining the status quo for another thirty days, as required by 45 U.S.C. § 160, and still another day, the representatives of the unions and carriers initialed a Memorandum of Understanding, dated December 4, 1969.
This settlement was conditioned on ratification by the membership of the shopcraft unions. The membership of three of the unions ratified, but the approximately 6,000 members of the Sheet Metal Workers balked at accepting a work rule that would permit members of one shopcraft union to perform “incidental” work in another craft. Since the unions had agreed that none would accept unless all accepted, the agreement failed.
On Saturday, January 31, 1970, these events happened: At 12:01 a. m. the unions struck the Union Pacific Railroad. The carriers responded by announcing a nationwide cessation of operations to commence at 10 p. m. At 6:30 p. m. District Judge Sirica issued temporary restraining orders, enjoining both the strike (as requested by the carriers) and a nationwide lockout (as requested by the unions).
The opinion accompanying the preliminary injunction of March 2, 1970, stated that the carriers had established sufficient probability of success on the merits, for an injunction to further the purposes of the Act. Judge Corcoran reasoned that selective strikes were illegal with respect to matters, like this one, which had been the subject of “national handling,” and as to which national handling was obligatory under the Railway Labor Act, since a selective strike would have the likely effect of destroying such handling.
B. The Mootness of the Appeal
Events Subsequent to the Preliminary Injunction
The events subsequent to the District Court’s order, brought before us by the carriers’ motion to dismiss the appeal as moot, include these uneontroverted facts: The unions, enjoined from a selective strike, threatened a nation-wide strike, encompassing all carriers. On March 4, 1970, Congress enacted Public Law 91-203, which extended the status quo period mandated by § 10 of the Act, and required the parties to maintain the status quo until midnight April 11, unless they bilaterally agreed to a change.
On April 9, 1970, the President signed into law Public Law 91-226, which provided: “That the memorandum of understanding, dated December 4, 1969, shall have the same effect (including the preclusion of resort to either strike or lockout) as though arrived at by agreement of the parties under the Railway Labor Act (45 U.S.C. 151 et seq.) and that February 19, 1970, shall be deemed the ‘date of notification of ratification’ as used in this memorandum of understanding.”
The terms of the' Memorandum of Understanding were implemented, including the payment of substantial wage increases, some retroactive to January 1, 1969, to the employees represented by the shopcraft unions.
Expiration of the Injunction By Its Terms
It seems to be agreed that this appeal would have been rendered moot if, subsequent to the issuance of the order enjoining the strike, the employer and union had executed an agreement terminating the strike. In Local No. 8-6, Oil, Chemical & Atomic Workers Intern. Union v. Missouri, 361 U.S. 363, 80 S.Ct. 391, 4 L.Ed.2d 373 (1960) the union protested the validity of a state law under the authority of which the governor took possession of a public utility beset by a strike, and the state court enjoined continuation of the strike. On appeal, the state supreme court noted that the injunction had expired by its own terms, but proceeded to sustain the constitutionality of the pertinent sections of the statute authorizing the seizure and prohibiting the strike. The Supreme Court held that to express an opinion on the merits of appellants’ contentions “would disregard settled principles of judicial administration,” and ignore a “basic limitation upon the duty and function of this court.”
In the case at bar, the preliminary injunction restrained any selective strike “over any dispute arising from the Section 6 notices served on or about November 8 and November 29, 1968.” Plainly, that judgment has expired by its terms. There is no possibility of a strike pursuant to the 1968 notices. Public Law 91-226 had the effect of requiring the unions to file a new notice under § 6 of the Act, if they wanted to remove the “incidental work rule” provision set forth in the Memorandum, and mandated by the statute, for that became part of a new plateau of work rules binding on carriers and employees unless changed in accordance with the provisions of the Act. Brotherhood of R. Trainmen v. Akron & Barberton Belt R. Co., 128 U.S.App.D.C. 59, 71, 385 F.2d 581, 593 (1967), cert. denied, Brotherhood of Locomotive Firemen etc. v. Bangar and Aroostock R. Co., 390 U.S. 923, 88 S.Ct. 851, 856, 19 L.Ed.2d 983 (1968). As to this requirement of the Act, it makes no difference whether the work rules are adopted by voluntary agreement of the parties, or by mandate of an arbitration procedure consented by the parties, or by valid legislation specified to have the same effect as an agreement or arbitration.
However, the Union draws a sharp distinction between a settlement to which it has consented, which may be taken as canceling the dispute, and a settlement that has been imposed upon it, which only operates to defer the eruption of the dispute until the mandate is removed. This point requires further consideration.
General Doctrines of Mootness, At Common Law and Under the Constitution
The Union vigorously asserts that the carriers’ contention that the labor dispute is moot is a “sterile, ultra-technical construction [that] runs counter realities of the instant labor relations situation, the need to insure that parties adversely affected by short term orders are accorded the opportunity to obtain judicial review thereof, the public interest in promptly resolving recurring issue of major legal import.” The Union asserts that its hostility to the incidental work rule is implacable and enduring, and that under any “pragmatic standard of labor-management relations, the underlying economic dispute continues to fester.”
We may usefully preface our consideration of the Union’s contention by identifying two separate domains of doctrine that are frequently jumbled in discussions of mootness.
Mootness begins as a doctrine that describes the practice of the courts of England and the colonies — long prior to the adoption of the Constitution. ' It identifies a common law rule, used also and indeed typically in the courts of chancery and the exchequer. It may be usefully referred to as a common law limitation on the duty of a court to decide cases presented. See Mills v. Green, 159 U.S. 651, 653-654, 16 S.Ct. 132, 40 L.Ed. 293 (1895). In this aspect, it is primarily a doctrine of “judicial administration,” as Justice Stewart put it in the Oil, Chemical & Atomic Workers opinion, supra, see 361 U.S. at 368, 80 S.Ct. 391, 4 L.Ed.2d 373.
Certain problems of mootness, however, have a constitutional dimension, under Article III of the Constitution. A Federal court is without power to decide a case that is moot to the extent of constitutional disability. Sibron v. New York, 392 U.S. 40, 57, 88 S.Ct. 1889, 20 L.Ed.2d 917 (1968); Liner v. Jafco, Inc., 375 U.S. 301, 306, 84 S.Ct. 391, 11 L.Ed.2d 347 (1964). As Sibron indicates, an appeal is moot in the constitutional sense when it is “abstract, feigned or hypothetical,” when it seeks an “advisory” opinion because it lacks the “impact of actuality,” or when it lacks the concreteness and the kind of adversariness that is assured when a party has a “substantial stake” in the controversy which assures a presentation with requisite diligence, and, indeed, “fervor.” Id. See also, Flast v. Cohen, 392 U.S. 83, 106, 88 S.Ct. 1942, 20 L.Ed.2d 947 (1968) ; Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 7 L.Ed.2d 663 (1962).
We may assume, for present purposes, that the underlying adversariness of the parties before us, the existence of a controversy in the trial court that was concrete, real and immediate, and the persistence of elements of that controversy in the continuing relations of the parties, remove the case before us from a claim of constitutional disability in the appeal.
However, the constitutional power of a court to decide a contention presented on appeal does not define a constitutional duty. There is latitude in appellate courts to develop doctrines of judicial administration that permit a court to decline decision though not precluded by a jurisdictional bar from consideration of the matter, as appears from recent decisions on concurrent sentences, Benton v. Maryland, 395 U.S. 784, 89 S.Ct. 2056, 23 L.Ed.2d 707 (1969) ; United States v. Hooper, 139 U.S.App.D.C. 171, 432 F.2d 604 (1970).
Expiration of Decree By Its Terms
When events during the pendency of the appeal have eliminated any possibility that the court’s order may grant meaningful relief affecting the controversy that precipitated the litigation, applicable doctrine permits, and judicial administration generally calls for, dismissal of the appeal. The expiration of the decree by its terms is a familiar instance of this rule, as appears from the Oil Workers Union case, and others, e. g., Johnson-Kennedy Radio Corp. v. Chicago Bears Football Club, Inc., 97 F.2d 223 (7th Cir. 1938). It was on this principle that a union sought dismissal of the appeal from, and vacation of, a District Court decree entered in an injunction suit, concerning the meaning of a collective bargaining agreement, because the agreement expired, by its own terms, after the appeal was docketed. General Electric Co. v. Local 761, Int’l U. of Electrical, Radio & Mach. Wkrs., 395 F.2d 891 (6th Cir. 1968). See, also, Shank v. NLRB and General Electric Co., 260 F.2d 444, 446 (7th Cir. 1958).
Certainly the appeal need not be decided because of the bare possibility of such future legal repercussion as estoppel of judgment, for the appellate court may readily prevent a judgment not subject to review “from spawning any legal consequences” by vacating the jugment of the trial court when ordering that the appeal be dismissed. United States v. Munsingwear, Inc., 340 U.S. 36, 41, 71 S.Ct. 104, 95 L.Ed. 36 (1950).
Recurrent Controversies In Cases of Public Interest
However, there is a strong counter-current of doctrine under which the court continues an appeal in existence, notwithstanding the lapse in time of the particular decree or controversy, when the court discerns a likelihood of recurrence of the same issue, generally in the framework of a “continuing” or “recurring” controversy, and “public interest” in maintaining the appeal. When state courts are involved, this doctrine is sometimes referred to as an “exception” to the rule for dismissal of appeals in cases that have become moot. Federal courts, mindful of Article III implications, are inclined to analyze the issue in terms that avoid the use of the word “moot,” by taking a broader view of the scope of the underlying controversy.
The seminal opinion, in modern jurisprudence, is Southern Pacific Terminal Co. v. ICC, 219 U.S. 498, 31 S.Ct. 279, 55 L.Ed. 310 (1911), involving a suit to enjoin enforcement of an ICC order requiring the terminal company to cease and desist from granting an, alleged undue preference for a two-year period. That period expired while the case was on appeal. The Court noted the general rule calling for dismissal of appeal if during its pendency something occurs which precludes the court from granting “effectual relief” to appellant. But it held the rule inapplicable, saying (p. 515, 31 S.Ct. p. 283):
In the case at bar the order of the Commission may to some extent (the exact extent it is unnecessary to define) be the basis of further proceedings. But there is a broader consideration. The question involved in the orders of the Interstate Commerce Commission are usually continuing (as are manifestly those in the case at bar), and these considerations ought not to be, as they might be, defeated, by short term orders, capable of repetition, yet evading review, and at one time the government, and at another time the carriers have their rights determined by the Commission without a chance of redress.
The likelihood of repetition of the controversy and the public interest in assuring appellate review are the key elements of the Southern Pacific Terminal doctrine. The vitality of the South ern Pacific Terminal doctrine is undeniable. Precedents abound, and we have identified some in the margin. Indeed, if this doctrine identifies an “exception,” the exception may have swallowed up the rule — at least where litigation involves actions by or against public officials, and the public interest in assuring enforcement of the legislative will and, of course, constitutional mandates. A cognate “public interest” has also led in recent years to the overhaul of doctrines on matters like standing and ripeness, and to the hearing of controversies from which the courts formerly refrained.
We do not undertake to catalog or analyze in detail the cases on appellate consideration of recurrent controversies. The situations are necessarily variant, and the variables complex. It can be said, however, that when the particular controversy has expired, as when the decree has lapsed by its terms, and as a result the parties have no absolute right, and the court has no corresponding duty, to maintain the appeal, then the court’s decision to maintain the appeal, in the interest of sound judicial administration, is dependent on a prediction of a recurrence or continuation of what is perceived to be essentially the same legal dispute. Without that ingredient, the Federal court will not entertain the appeal so as to advise the parties of what their rights would be in what is essentially a new legal controversy.
While an “effective remedy” for the immediate dispute is not obligatory, there must be at least a capacity for a declaration of legal., right concerning a future projection of the actual dispute that precipitated the litigation. The court will not decide a moot case on the sole ground of public importance, Amalgamated Association of Street etc. Employees Div. 998 v. Wisconsin Emp. Rel. Bd., 340 U.S. 416, 418, 71 S.Ct. 373, 95 L.Ed. 389 (1951). When the court views the public interest as greater a lesser possibility of repetition may suffice, Moore v. Ogilvie, supra. A decision that the case is so dead that the court totally lacks jurisdiction apparently requires a demonstration that there can be “no reasonable expectation” of reiteration of wrong. United States v. W. T. Grant Co., 345 U.S. 629, 633, 73 S.Ct. 894, 97 L.Ed. 1303 (1953).
Latitude of Court in Cases Where Particular Controversy Has Terminated
It is not in derogation of the doctrine permitting disposition of a recurrent or continuing controversy but in an effort to define and secure its perceptive application that we conclude that sound principles of judicial administration point toward dismissal of the pending appeal.
Even where there is undoubted jurisdiction to entertain litigation, as in cases where the defendant relies on his discontinuance of the acts complained of, there is doctrine to decline equitable relief in an appropriate case, and to require a “cognizable danger of recurrent violation, something more than the mere possibility which serves to keep the ease alive.” The declaratory judgment action has enlarged the cases that may meaningfully be entertained by courts, assuming requisite personal stake and adversariness, Powell v. McCormack, 395 U.S. 486, 89 S.Ct. 1944, 23 L.Ed.2d 491 (1969); Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 57 S.Ct. 461, 81 L.Ed. 617 (1937). Yet there is also latitude, under sound doctrine of judicial administration, to decline to entertain actions for declaratory judgments. Golden v. Zwickler, 394 U.S. 103, 89 S.Ct. 956, 22 L.Ed.2d 113 (1969); Public Affairs Associates v. Riekover, 369 U.S. 111, 82 S. Ct. 580, 7 L.Ed.2d 604 (1962); Davis v. Ichord, 143 U.S.App.D.C. 183, 442 F.2d 1207, 1216 (1970) (concurring opinion). And it is settled doctrine that courts go further both to give and withhold relief in the light of consideration of public interest. Virginian Ry. Co. v. System Federation No. 40, 300 U.S. 515, 552, 57 S.Ct. 592, 81 L.Ed. 789 (1937).
The doctrines relating to dismissal of appeal for reasons of sound judicial administration have not hitherto been cast in terms of judicial “discretion.” But when the particular controversy has expired, so that there is no duty or obligation of the court to maintain the appeal, an application of the doctrine permitting maintenance of appeals of recurring controversies in cases of public interest necessarily identifies judicial latitude.
The scope of a court’s latitude, and the significance of its assessment of the degrees of public interest and likelihood of recurrence of the underlying dispute, and the interplay of these factors, are illustrated by the Consumers Union and Green cases, both cited in note 11. Both cases involved an agency’s change of position. In the Consumers Union case, the Veterans Administration changed its contract forms, so as to remove the contractual inhibition on availability of test data sought by plaintiff under the Freedom of Information Act, and entered into a stipulation in open court. The court deemed it “quite clear” that the Government’s restrictions would not be reasserted, and the appeal was dismissed. In Green, the right of the Negro parents- and children to avoid Federal tax exemption and deductions for segregated white schools was deemed to warrant retention of jurisdiction, even though the interpretation of the Internal Revenue Code considered likely enough to warrant a temporary preliminary injunction was subsequently accepted by the Treasury. The court held plaintiffs were entitled to relief “on an enduring, permanent basis, not on a basis that could be withdrawn with a shift in the tides of administration, or changing perceptions of sound discretion.”
Reasons for Dismissing Appeal In the Case At Bar
Our judgment that the interest of sound judicial administration requires dismissal of the appeal at bar embraces the following considerations.
First, and perhaps foremost, the Federal courts must take account of the dangers posed by “freewheeling judicial interference in labor relations.” Chicago & N. W. Ry. Co. v. United Transportation Union, 402 U.S. 570, 583, 91 S.Ct. 1731, 1738, 29 L.Ed.2d 187 (1971). This does not remove our duty, in appropriate eases, to enter decrees that mandate the duties of both carriers and their employees under the Railway Labor Act. But it bids us make certain that the case is truly ripe for ascertainment of the legal rights of these groups, refrain so far as possible from absolute principles bottomed on abstract and hypothetical predicates, and be mindful of the particular difficulties that confront a court’s traverse of these fields of disputation, lacking as it does the aid of a tribunal with familiarity and expertise that may help detect the mines. See Delaware & Hudson Ry. Co. v. United Transportation Union, 146 U.S.App.D.C. 142, 450 F.2d 603, 617, 622, 629 (1971).
Second, we cannot assume that any future dispute over the “incidental work rule” will be merely a recurrence of the past dispute. It may, indeed, be that the same dispute will recur in the court as surely as a disc played another time on the phonograph, and perhaps with amplification of the volume of discord. But the passage of the law also opened up the possibility that actual experience under the incidental work rule would modify attitudes on both sides and mute both fears and hopes. Time has upset many fighting faiths, Justice Holmes once noted. It is one possible benefit of the Congressional interjections with statutes of limited duration, that both union and management will learn lessons from experience with interim rules enforced during the temporary period. Brotherhood of R. Trainmen v. Akron & Barberton Belt R. Co., 128 U.S.App.D.C. at 72-73, 385 F.2d at 594-595 (1968). This possibility is enhanced by the ability of Congress, duly noted in our Delaware & Hudson opinion (450 F.2d at 621), to do more than the courts can do, to go beyond the maintenance of the status quo ante and to provide a new framework.
The appellant’s future course may also be influenced by (a) the possibility that a margin in favor of the rule may be provided by the 45% of its membership not previously interested enough to vote on the matter (see note 3, above), and (b) the circumstance that whereas in 1968-69 all four shopcraft unions which formed an Employees’ Conference Committee undertook to withhold agreement if any union were dissatisfied, appellant’s single-handed resistance to the incidental work rule led the other three shopcraft unions to offer to accept the Memorandum of Understanding despite appellant’s refusal to ratify.
Finally, even assuming there is a persistence of the factual dispute over the incidental work rule, that does not necessarily define a recurrence of the same legal controversy that precipitated the litigation in District Court. That controversy related to the validity of whipsaw strikes (supra, note 1). The parties had diametrically opposed legal positions on that issue. Whatever the differences of the past, it seems plausible to expect that each of the parties has modified its thinking and approach so as to take account of our 1971 opinion in the Delaware and Hudson case, supra.
This is not a case where the appellate court should maintain an appeal in the public interest because a decision of the trial court, though it will not be res judicata if vacated under the Munsingwear doctrine, nevertheless has consequences in terms of deprivation of a party’s continuing rights because of the expectation and probability that officials will conform to the ruling. Carroll v. President and Com’rs of Princess Anne County, 393 U.S. 175, 178-179, 89 S.Ct. 347, 21 L.Ed.2d 325 (1968).
The parties and governmental officials have available not only Judge Corcoran’s analysis but also our subsequent Delaware and Hudson opinion.
Moreover, the steps taken by the appellant union in the future may well take into account not only the Union’s conclusion as to its rights under existing law, but also the possibility that its actions may affect the likelihood of generating pressure for changes in the law, whether along the lines proposed in the President’s message of February 3, 1971, or some other approach. We are not to be taken as speculating on what will happen, but rather as saying that there are so many variables in the situation that one cannot fairly identify a predictably recurring legal controversy, as predictable, say, as the return of the migratory geese and hunters discussed in Lansden, supra note 11.
The expiration of the decree appealed from means that the Union has no absolute right to maintenance of the appeal, and the court has no corresponding obligation to decide the appeal. Certainly any collateral dispute concerning costs does not establish such a right.
The Union essentially appeals to our discretion, to our judgment as to what is appropriate in terms of sound judicial administration of appellate courts. There is more that could be said, but we have identified the principal considerations. The behavior of the parties might indeed be affected by our views on the merits, if we should issue such an opinion, but that is not necessarily a virtue. If anything, courts refrain from advisory opinions. We do not deem it appropriate to ascertain and announce applicable legal principles, dependent as they are on the shape of specific factual contexts, before the facts have taken shape. Perhaps when and as the facts evolve, there will be no legal controversy of consequence. If there is such a controversy, it will likely be different from the one presented in 1970 to the District Court. There should be opportunity for the District Court to make findings and exercise its discretion in the circumstances. If necessary, the appellate court can provide expedited consideration.
The appeal will be dismissed for mootness, and the case remanded to the District Court with directions to vacate the decree brought before us on appeal.
So ordered.
. The District Court’s opinion and its preliminary injunction are reported, Int’l Ass’n of Machinists & AW v. Nat’l Ry. Labor Conf., 310 F.Supp. 905. The term “whipsaw strike” is used in the order. The opinion states (at fn. 5) : “A ‘whipsaw strike’, by common understanding, is a strike against only one member of a multi-employer bargaining unit in an attempt by the use of economic pressure to force that member and each subsequent member to come to an agreement separately.”
. No appeal was taken by the other three shoperaft unions : International Association of Machinists and Aerospace Workers, International Brotherhood of Electrical Workers; International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers.
. Int’l Ass’n of Machinists & A.W. v. Nat’l Ry. Labor Conf., D.C., 301 F.Supp. 904 (1970).
. There was no appeal from that part of the order which denied, on ground of mootness, the unions’ request for a preliminary injunction against the lockout.
. Appellant’s opposition to the motion to dismiss refers to the unswerving opposition to the incidental work rule on the part of the membership of appellant Union, and the representations of the union officials that they would insist on removal of that rule in future notices under the Act. The Union cites the April 1970 testimony to the Senate Committee of its general vice president, John TV. O’Brien: . . . We have [received] literally hundreds and hundreds of letters . . . which indicates the intense interest of our membership . . . They say, “Hang on there and fight to the end. "We don’t want that [incidental work] rule at $10 an hour or any other price.” Hearings before the Senate Committee on Labor and Public Welfare on S.J.Res. 178, 91st Cong., 2nd Sess. (April 2, 1970) p. 101. Mr. O’Brien asserted that if the work rule were mandated this dispute “will be a red hot issue in our next contract.” (p. 62) And Secretary of Labor George P. Shultz, testifying on April 2, for legislation to enact the memorandum of agreement for a temporary period, testified that “I see no greater prospect for a voluntary settlement of this dispute than I saw on March 4 when I recommended that the dispute be settled by legislation.” (p. 2).
. As Chief Justice Taney remarked in Lord v. Veazie, 8 How. [49 U.S.] 250, 254, 12 L.Ed. 1067 (1850) the office of a court of justice is to resolve disputes that cannot be reconciled by the parties to the dispute, and not to provide an opinion that a i>arty desires to know for his own purposes. And its strict limitation is necessary to avoid the abuse that it may be led into an opinion adverse to a person not even before the court.
. Annot. “Public interest ns ground for refusal to dismiss an appeal, where question has become moot, or dismissal is sought by one or both parties.” 132 A.L.R. 1185, 1189 (1940). For the “exception” terminology, see e. g., Nat’l Elec. Contractors Ass’n v. Seattle School Dist., 66 Wash.2d 14, 19-20, 400 P.2d 778, 781-782 (1965), quoting Justice Schaefer in People ex rel. Wallace v. Labrenz, 411 Ill.2d 618, 104 N.E.2d 769, 772, 30 A.L.R.2d 1132 (1952) (“well-recognized exception” applied in blood transfusion case).
. The public interest in preventing an agency from avoiding review by making its orders of limited duration, was in effect analogized to the public interest in a judicial decree to preclude recurrence of violations of law by private persons. The Court cited United States v. Trans-Missouri Freight Ass’n, 166 U.S. 290, 308, 17 S.Ct. 540, 41 L.Ed. 1007 (1897), where the Government appealed from a dimissal of its suit against carriers which had entered into an agreement and pending appeal the carriers entered into a voluntary dissolution of their association. The Court had there noted that the Government’s action was not merely to dissolve the association but to obtain a judgment declaring the agreement invalid, and was an assertion of a right “as a substantial trustee for the public.” The Court concluded that rights were of a “public character” whether the Government was party plaintiff or defendant. See 219 U.S. at 516, 31 S.Ct. 279, 55 L.Ed. 310.
. The doctrine and various cases are discussed in Mootness on Appeal in the Supreme Court, 83 Harv.L.Itev. 1672 (1970) ; Mootness and Ripeness: The Postman Always Rings Twice, 65 Colum. L.Rev. 867 (1965) ; Disposition of Moot Cases by the United States Supreme Court, 23 U.Chi.L.Rev. 77 (1955) ; Diamond, Federal Jurisdiction to Decide Moot Cases, 94 U.Pa.L.Rev. 125 (1946).
. Moore v. Ogilvie, 394 U.S. 814, 89 S.Ct. 1493, 23 L.Ed.2d 1 (1969) ; Green v. Connally, 330 F.Supp. 1150, 1170 (D.C., 3-judge court, 1971), aff’d sub nom. Coit v. Green, 404 U.S. 997, 92 S.Ct. 564, 30 L.Ed.2d 550 (1971) ; Friend v. United States, 128 U.S.App.D.C. 323, 388 F.2d 579 (1967) ; Women Strike for Peace v. Iiickel, 137 U.S.App.D.C. 29, 36, 420 F.2d 597, 604 (1969) ; Matthews v. Hardy, 137 U.S.App.D.C. 39, 45, 420 F.2d 607, 613 (1969) ; Jeannette Rankin Brigade v. Chief of Capitol Police, 137 U.S.App.D.C. 155, 157, 421 F.2d 1090, 1092 (1969) ; Consumers Union v. Veterans Admin., 436 F.2d 1363 (2d Cir. 1971) ; Lansden v. Hart, 180 F.2d 679 (7th Cir.), cert. denied, 340 U.S. 824, 71 S.Ct. 58, 95 L.Ed. 606 (1950).
. National Automatic Laundry and Cleaning Council v. Shultz, 143 U.S.App.D.C. 274, 443 F.2d 689 (1971).
. Care must be taken in regard to the comment quoted in Southern Pacific Terminal (see 219 U.S. at 516, 31 S.Ct. 279, 55 L.Ed. 310) from Boise City Irr. & Land Co. v. Clark, 131 F. 415 (9th Cir. 1904), where the court in maintaining an appeal concerning a water-rate ordinance that had expired stated that one reason for decision of such cases lay in “the necessity of propriety of deciding some question of law presented which might serve to guide the municipal body when again called upon to act in the matter.”
The courts do not give advisory opinions to government agencies any more than to private parties. A distinction is meaningful only in terms of the circumstance that a deliberate and persistent official interpretation is more likely to identify a “recurring controversy” situation.
. E. g., United States v. Trans-Missouri Freight Ass’n, supra note 9; United States v. W. T. Grant Co., 345 U.S. 629, 73 S.Ct. 894, 97 L.Ed. 1303 (1953) ; FTC v. Goodyear Tire & Rubber Co., 304 U.S. 257, 260, 58 S.Ct. 863, 82 L.Ed. 1326 (1938).
. Hecht Co. v. Bowles, 321 U.S. 321, 64 S.Ct. 587, 88 L.Ed. 754 (1944).
However even when the court denies injunctive relief, in the light of a good faith effort at compliance, it may retain jurisdiction to assure continued implementation of legal requirements. Parham v. Southwestern Bell Tel. Co., 433 F.2d 421, 429 (8th Cir. 1970).
. United States v. W. T. Grant, Co., supra note 14, 345 U.S. at 633, 73 S.Ct. at 898.
. See 310 F.Supp. at 909, fn. 2.
. See 117 Cong.Rec. S. 744 (daily ed. Feb. 3, 1971) : “Emergency Public Interest Protection Act.” This report was called for by Public Law 91-541.
. Heitmuller v. Stokes, 256 U.S. 359, 362, 41 S.Ct. 522, 65 L.Ed. 990 (1921) ; Wingert v. First National Bank, 223 U.S. 670, 672, 32 S.Ct. 391, 56 L.Ed. 605 (1912).
. Chicago & N. W. Ry. v. UTU, 402 U.S. at 583, 91 S.Ct. 1731, 29 L.Ed.2d 187.
. It is convenient to use the generic term of dismissal “for mootness,” without regard to whether what is involved is common law mootness, accompanied by an absence of reason for retention, or constitutional mootness that imposes a complete jurisdictional bar.
Question: Were there cross appeals 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, Michael E. Crowe, was indicted for breaking and entering of Carrier Facilities and for aiding and abetting, in violation of 18 U.S.C. §§ 2117 and 2. He initially entered a plea of not guilty, but changed his plea to guilty at his re-arraignment on February 22, 1974. The Court found him suitable for sentencing pursuant to the Federal Youth Corrections Act, and committed him to the custody of the Attorney General pursuant to 18 U.S.C. § 5010(b), until discharged as provided in 18 U.S.C. § 5017(c). Appellant subsequently filed a timely notice of appeal, and this appeal follows.
Court-appointed counsel for appellant has submitted a motion for withdrawal of appearance, being of the opinión that the appeal is wholly frivolous and without merit. In accordance with Anders v. California (1967), 386 U.S. 738, 87 S.Ct. 1396, 18 L.Ed.2d 493, he has submitted a brief setting forth all issues which arguably support the appeal. Copies of the brief were also furnished to appellant, who has failed to raise any additional issues on appeal, and to the United States Attorney, who has filed a motion for summary affirmance.
The questions presented for review on this appeal are (1) whether appellant’s guilty plea was knowingly and voluntarily entered, and (2) whether the sentence imposed was proper under the circumstances of the case. We agree with counsel that this appeal is wholly frivolous and without merit.
Before accepting appellant’s guilty plea, the District Judge conducted a full-scale inquiry pursuant to Rule 11 of the Federal Rules of Criminal Procedure. Judge Blair’s inquiry was a model of thoroughness. After ascertaining that appellant was fully in possession of his faculties and capable of understanding the proceedings and that he was completely satisfied with his representation by counsel, the Court fully informed him as to the nature of the charges against him, his constitutional rights and the consequences of a guilty plea, taking great care at every juncture to ensure that appellant understood what he was being told. The Court then inquired as to the terms of the plea bargain, and ascertained that no threats or other promises had been made to appellant and that he realized the Court was not bound by any plea agreements. The Court then requested a proffer of evidence by the government, and questioned appellant as to his participation in the offense charged. In the course of this questioning, the Court ascertained that all elements of the offense charged were satisfied, that appellant’s constitutional rights had not been violated in the course of his arrest and interrogation, and that he was pleading guilty because he was in fact guilty. Before accepting the plea, the Court again ascertained that appellant had understood every- . thing that took place in the course of the rearraignment, and that he still wished to plead guilty.
There can be no question but that appellant’s guilty plea was knowingly and voluntarily entered, with a full understanding of the nature of the charge and the consequences of the plea. It is quite clear that the plea was accepted only after the Court had fully satisfied itself that it was voluntary and based in fact. In so doing, it provided this Court with a record on which we can say with assurance that appellant’s plea was voluntary.
As for the validity of the sentence imposed, sentencing is within the sole province and discretion of the trial judge. This Court has no power, absent exceptional circumstances, to review a sentence which is within the limits allowed by statute. United States v. Pruitt (4th Cir. 1965), 341 F.2d 700.
The criminal statute under which appellant was charged, 18 U.S.C. § 2117, provides for punishment by a fine of not more than $5,000 or imprisonment for not more than ten years, or both. The Federal Youth Corrections Act, 18 U.S.C. § 5017(c), provides for commitment for an indefinite period, with conditional release not more than four years after conviction and unconditional release not-more than six years after conviction. Before imposing sentence, the Court carefully considered appellant’s pre-sentence and probation reports, and gave both appellant and his attorney an opportunity to be heard. Although appellant did not speak on his own behalf, his attorney delved into his family background, his educational abilities, and his emotional condition, and recommended that treatment and training would be of benefit to appellant. The Court then imposed sentence under the Youth Corrections Act.
This sentence was within the limits allowed- by statute, and was well within the sound discretion of the trial judge. Nor do we find any exceptional circumstances warranting a review of the sentence. Appellant cannot object to the government’s disclosure that he had telephoned his co-defendant’s attorney and offered not to testify against the co-defendant in return for $700 cash. That disclosure was pursuant to a plea bargain in which it was agreed that the government would make no recommendation as to sentence, but would inform the Court of the extent of appellant’s cooperation in the prosecution of his co-defendant, and thus was properly before the Court.
On March 3, 1975, on our own motion, we entered an order, that the Court desired the appellant to state in person and file with the Court, on or before March 21, 1975, all of the grounds for appeal from his conviction which he wished the Court to consider. This order was transmitted to the appellant. The appellant has not responded.
We find no merit in either of appellant’s contentions. Accordingly, the motion for withdrawal of appearance is granted, the motion for summary affirmance is granted, and 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
JAMES HUNTER, III, Circuit Judge:
We review on this appeal the district court’s denial of a preliminary injunction sought by certain officials of the Commonwealth of Pennsylvania to enjoin and restrain the United States from withholding federal funds allegedly due the Commonwealth. Our review of a grant or denial of a preliminary injunction is limited to determining whether there has been an abuse of discretion, an error of law or a clear mistake in the consideration of the proof. National Land & Investment Co. v. Specter, 428 F.2d 91, 95 (3d Cir. 1970). We find no abuse, error or mistake, and, accordingly, affirm.
This action was originally commenced on October 11, 1974 by the United States against the Commonwealth of Pennsylvania and various of its officials, including the Governor, (the “Officials”). In its complaint, the United States alleged that the Commonwealth and the Officials had failed to carry out their supervisory obligations under federal Medicaid and Medicare programs with respect to surveying and certifying private skilled nursing facilities for compliance with federal fire-safety guidelines. The complaint sought an order in the nature of a mandamus to compel the Commonwealth and the Officials to perform their obligations under the federal programs.
On November 1,1974, the Commonwealth and the Officials filed an answer to the complaint, and the Officials, but not the Commonwealth, asserted a counterclaim seeking to compel the United States, the Secretary of the Department of Health, Education and Welfare (“HEW”) and various other federal officials to cease withholding federal funds that the Officials alleged were due the Commonwealth under the Medicaid program. HEW had first deferred and later “disallowed” approximately $12 million in claims for federal financial participation in payments made by the Commonwealth to certain private skilled nursing facilities because, according to HEW, at the time payments were made the facilities lacked valid current provider agreements due to their noncompliance with the Life Safety Code. The Officials asserted that the withholding of these funds was improper because HEW had approved or acquiesced in “interim provider agreements” in which the Commonwealth sought to bring these facilities into compliance with the fire-safety requirements and, alternatively, because the funds had been withheld without prior notice and a “conformity hearing” as required by 42 U.S.C. § 1396c.
On June 5, 1975, the Officials filed a motion for a preliminary injunction seeking to enjoin the counterclaim defendants from withholding the Medicaid funds. On August 12, 1975, the district court denied the motion for preliminary injunctive relief. After reviewing the elements necessary for the issuance of a preliminary injunction, the court concluded that even accepting arguendo the testimony and evidence presented by the Officials, it was insufficient to establish a likelihood of success on the merits. In the court’s opinion, the Officials failed “to submit any evidence or convincing legal argument that there exists a clear duty on the part of the counterclaim defendants to release the funds (or to have conducted a hearing prior to the withholding).” App. at 280a.
While we agree that the motion for a preliminary injunction was properly denied, and hence affirm, we do so for a reason other than that relied on by the district court. In our opinion, the Officials failed to demonstrate irreparable injury pendente lite absent the injunction. We neither reach, nor express an opinion on, the question whether the Officials demonstrate a reasonable probability of succeeding on the merits of their claim that the counterclaim defendants wrongfully withheld Medicaid funds from the Commonwealth.
We have often emphasized that an essential prerequisite to the grant of a preliminary injunction is a showing by the movant of irreparable injury pendente lite if the relief is not granted. E. g, Ammond v. McGahn, 532 F.2d 325 (3d Cir. filed Mar. 11, 1976); A. O. Smith Corp. v. FTC, 530 F.2d 515 (3d Cir. filed Feb. 11, 1976); Oburn v. Shapp, 521 F.2d 142, 147, 150-51 (3d Cir. 1975); Delaware River Port Authority v. Transamerican Trailer Transport, Inc., 501 F.2d 917, 919-20 (3d Cir. 1974); Croskey Street Concerned Citizens v. Romney, 459 F.2d 109, 112 (3d Cir. 1972) (Aldisert, J., concurring). The key aspect of this prerequisite is proof that the feared injury is irreparable; mere injury, even if serious or substantial, is not sufficient. A. O. Smith Corp. v. FTC, supra
Although the Officials have alleged injury resulting from the withholding, we are not satisfied- that the alleged injury is irreparable. Testimony at the hearing on the motion for the preliminary injunction established that the nursing facilities in question were fully reimbursed by the Commonwealth for the claims involved and that the Commonwealth continues to receive federal financial participation in payments made to eligible skilled nursing facilities. App. at 192a-93a. The Commonwealth was deprived of a certain amount of funds ($12,-687,974 or $15,027,000) which it would have had but for the withholding. However, that loss of a discrete amount of funds in an earlier fiscal year does not rise to the level of irreparable injury. If the Officials eventually succeed on their counterclaim, an order mandating the release of the withheld funds would result in the Commonwealth obtaining monies in an ascertainable amount.
The Officials contend that the withholding has made it impossible for the Commonwealth to consider an increase in the rate of payment to providers of nursing home care. There was testimony that the current rate of payment by the Commonwealth ($20 per diem) is inadequate to meet the actual costs of nursing home care and that the effect of this inadequate rate of payment is to limit the opportunity of persons eligible for medical assistance to receive such care in private facilities. App. at 190a, 191a. In addition, there was testimony that the release of the funds in question “could conceivably” result in an increase in the rate to as much as $26 per diem. Id. at 192a.
While we are not insensitive to the plight of private nursing facilities in Pennsylvania and of the Medicaid patients who seek nursing home care in these facilities, it is our view that any effect which the withholding in question has on the Commonwealth’s ability to raise its reimbursement rates does not constitute irreparable injury. Under the Medicaid program a state is free to raise its rate of reimbursement to any level it desires; the federal government must then contribute matching funds on all valid expenditures. Id. at 218a. There was no evidence that the federal government would refuse to match an increase in reimbursement by the Commonwealth. Further, even if the counterclaim defendants did immediately release the monies in question it would only temporarily increase Pennsylvania’s revenue while any meaningful and continuing increase in the reimbursement rate to nursing homes would require a longer term commitment of funds by the Commonwealth.
Thus, for the reasons set forth above, the order of the district court denying the motion of the counterclaim plaintiffs for a preliminary injunction will be affirmed.
. 42 U.S.C. § 1396 et seq.
. 42 U.S.C. § 1395 et seq.
. Both the Medicare and Medicaid programs require participating states to insure that nursing facilities receiving federal funds under these programs comply with the standards of the Life Safety Code of the National Fire Protection Association (21st ed. 1967). 42 U.S.C. §§ 1395x(j)(13), 1396a(a)(28)(F)(i). The Life Safety Code, inter alia, prescribes requirements relating to sprinkler systems, fire alarms, hallway and door widths and accessibility of emergency exits.
. The counterclaim only requested release of Medicaid funds withheld during the period of September 1973 through March 1974 — a sum of $12,687,974. App. at 37a-38a, 234a. How- ■ ever at the hearing on the motion for a preliminary injunction, the Officials sought also to include in their prayer for relief approximately $3 million of Medicaid funds withheld in fiscal year 1975. The district court, over the objection of counterclaim defendants, permitted evidence concerning the fiscal year 1975 withholding, id. at 189a, and in its opinion denying the injunction, the court stated that the “requested injunction would compel the payment of approximately $15 million . . . .” Id. at 279a. Because of our disposition of this appeal, we need not decide whether the counterclaim involves $12,687,974, as the United States contends, or $15,027,000, as the Officials assert.
. Payment of federal funds under the Medicaid program is made for each quarter of the fiscal year prior to the time expenses are incurred. The payments are based on an estimate by the state of its medical assistance expenses for the coming quarter, which is submitted to HEW some 45 days in advance of the beginning of the quarter. 42 U.S.C. § 1396b(d)(l). Based on this estimate, the Secretary of HEW estimates the amount of federal financial participation for the quarter and advances to the state the amount so estimated, reduced or increased to the extent of any overpayment or underpayment which was made in a prior quarter. Id. § 1396b(d)(2). After the end of each quarter, the state is required to submit to HEW a statement of expenditures for the quarter. Thus, because of the way in which funds under the Medicaid program are distributed, HEW had already reimbursed the Commonwealth for its expenses incurred during the period between September 1973 and March 1974 and the $12,-687,974 was withheld from payments due the Commonwealth in quarters subsequent to March 1974.
. Section 1396c provides:
If the Secretary, after reasonable notice and opportunity for hearing to the State agency administering or supervising the administration of the State plan approved under this subchapter, finds—
(1) that the plan has been so changed that it no longer complies with the provisions of section 1396a of this title; or
(2) that in the administration of the plan there is a failure to comply substantially with any such provision;
the Secretary shall notify such State agency that further payments will not be made to the State (or, in his discretion, that payments will be limited to categories under or parts of the State plan not affected by such failure), until the Secretary is satisfied that there will no longer be any such failure to comply. Until he is so satisfied he shall make no further payments to such State (or shall limit payments to categories under or parts of the State plan not affected by such failure), (emphasis added).
The counterclaim defendants contend that the funds were not withheld under section 1396c but rather were “disallowed” pursuant to section 1396b(d)(2), which does not require notice and an opportunity for a hearing. Section 1396b(d)(2) provides that after the state has submitted an estimate of expenses for the coming quarter, the
Secretary shall then pay to the State, in such installments as he may determine, the amount so estimated, reduced or increased to the extent of any overpayment or underpayment which the Secretary determines was made under this section to such State for any prior quarter and with respect to which adjustment has not already been made under this subsection, (emphasis added).
The counterclaim defendants assert that the administrative remedy provided for a disallowance under section 1396b(d)(2) is a reconsideration. 42 U.S.C. § 1316(d); 45 C.F.R. § 201.14.
The Commonwealth is currently pursuing reconsideration although it argues that the Secretary’s action was not a disallowance and that the remedy of reconsideration is inadequate.
. It is well settled that an appellate court may uphold a judgment of a lower court on any theory which finds support in the record and may affirm the decision of a lower court if the result is correct even though the lower court relied on a different, and even a wrong, reason. Helvering v. Gowran, 302 U.S. 238, 245-46, 58 S.Ct. 154, 82 L.Ed. 224 (1937); Tunnell v. Wiley, 514 F.2d 971, 975 & n.4 (3d Cir. 1975); Jurinko v. Edwin L. Wiegand Co., 477 F.2d 1038, 1045 (3d Cir.), judgment vacated on other grounds, 414 U.S. 970, 94 S.Ct. 293, 38 L.Ed.2d 214 (1973); Picture Music, Inc. v. Bourne, Inc., 457 F.2d 1213, 1215 & n.5 (2d Cir. 1972).
. Thus, we need not decide the question presented by the Officials on appeal that the district court, in evaluating the likelihood of success on the merits, committed an error of law by requiring them to meet the strict standards requisite to mandamus relief. Brief for Plaintiffs to the Counterclaim at 5-7.
. In a classic discussion of the requirement of irreparable injury, the District of Columbia Circuit has stated:
The key word in this consideration is irreparable. Mere injuries, however substantial, in terms of money, time and energy necessarily expended in the absence of a stay, are not enough. The possibility that adequate compensatory or other corrective relief will be available at a later date, in the ordinary course of litigation, weighs heavily against a claim of irreparable harm.
Virginia Petroleum Jobbers Ass’n v. FPC, 104 U.S.App.D.C. 106, 259 F.2d 921, 925 (1958) (emphasis in original), quoted with approval in Sampson v. Murray, 415 U.S. 61, 90, 94 S.Ct. 937, 952, 39 L.Ed.2d 166, 186 (1974).
. While the Officials, and not the Commonwealth, instituted the counterclaim, we, of course, recognize that any injury that resulted from the withholding was suffered by the Commonwealth, and perhaps the nursing home facilities and their patients, and not by the Officials themselves.
Although the United States contends that the counterclaimant officials lack standing, that issue was not decided by the district court. In light of our decision, we find no occasion to address that issue, particularly since the district court has not as yet ruled upon it.
. See Sampson v. Murray, 415 U.S. 61, 90, 94 S.Ct. 937, 952, 39 L.Ed.2d 166, 186 (1974); Oburn v. Shapp, 521 F.2d 142, 151 (3d Cir. 1975); Mason v. DeGeorge, 483 F.2d 521, 524 (4th Cir. 1973); Graham v. Triangle Publications, Inc., 344 F.2d 775, 776 (3d Cir. 1965).
. At oral argument, counsel for the counterclaim plaintiffs asserted for the first time that the operation of the disallowance procedure itself, see notes 5 & 6 supra, creates irreparable injury to the Commonwealth. They argued that the Commonwealth cannot adequately plan its welfare budget since at any time and without prior notice HEW can decide to disallow certain of the Commonwealth’s claims. However, the Officials’ counterclaim and motion for a preliminary injunction did not challenge the entire disallowance mechanism but rather sought only to recoup a discrete amount of Medicaid funds withheld in prior years. As we have stated, that withholding does not constitute irreparable injury, and we express no view as to the propriety of the disallowance procedure in general.
Question: Were there cross appeals 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.
For the reasons stated in the opinion of Judge Meancy, 65 F.Supp. 652, the judgment of the District Court 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: | 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.
These are cross appeals from a final judgment entered by the United States. District Court for the District of New Hampshire in a suit for trade-mark infringement and unfair competition. Federal jurisdiction over both causes of action under 28 U.S.C.A. § 1338(a) and (b) and under its predecessor statute and the rule of Hurn v. Oursler, 289 U.S. 238, 53 S.Ct. 586, 77 L.Ed. 1148, is clear. Moreover the facts necessary to establish federal jurisdiction on the ground of diversity of citizenship and amount in controversy are conceded. Our jurisdiction over these appeals under 28 U.S.C.A. § 1291 is obvious.
The Hygienic Products Company, an Ohio corporation, is the manufacturer of a powder, the last patent for which expired in 1932, for cleaning watercloset bowls and automobile radiators by chemical action. It began to use the name “SaniFlush” for its product in 1911, and it has used that name ever since. And, at the same time, it began to use as a trade mark a representation against a plain background of a young woman with an expression of pleasure on her face bending gracefully from the waist in the act of pouring the contents of an approximately pint sized can held in her outstretched hand into an open watercloset bowl. During the years from 1916 to 1940 it obtained several registrations of its mark under the Trade Mark Act of 1905, as amended, some with and some without its trade name printed in extrabold italics, each successive registration showing the woman dressed in the style current at the date thereof and a watercloset bowl of contemporaneous design, but otherwise substantially similar to the original registration, with the exception that the women in the earlier registrations were shown dressed as housemaids, whereas in the last two the woman is depicted as a rather dignified and matronly housewife. Over the past thirty-eight years it has made extensive use of its name “Sani-Flush” and of its representation in the form current at the time of use, in connection with the sale of its product in local, interstate and foreign commerce. Its business prospered from the beginning and is now substantial.
It has always marketed its product in a 22 ounce cylindrical can of conventional proportions bearing a predominantly yellow label upon which its trade name and its trade mark in the current form are prominently displayed, and upon which, in addition to directions for the use of the product, appear the laudatory slogans “Quick”, “Easy”, “Sanitary”, “Cleans without fuss or muss.” In its advertising, which has been nationwide, it has made extensive use of its trade name and its trade mark, and it has also made extensive use of the representation of attractive young women in fashionable dress in a bathroom setting pouring the contents of one of its cans into an open watercloset bowl.
The defendant, Judson Dunaway Corporation, a New Hampshire corporation, is a comparative newcomer in the field. In 1937 it began to manufacture a powder substantially similar to the plaintiff’s, which it called “Vanish”, as it concededly had the right to do since the plaintiff’s patents had expired. At first, it marketed its product in a 21 ounce oval can bearing a black and. white label on which its name was prominently displayed in block capital letters above a representation of an open toilet bowl, a stream of material being shown flowing from the bottom of the letter “I” in the word “Vanish” into the bowl. Subsequently it changed the style of its can to a tall cylindrical one of the same capacity, and it changed its label to one predominantly blue, still, however, prominently displaying its name (which it had registered under the federal act) and the stream of material flowing from it into a toilet bowl as before. It began to advertise its product extensively in various ways in 1937, but its activities met with no objection from the plaintiff until almost ten years later when it began to use, sometimes against a plain background and sometimes in a bathroom setting, first, a pictorial representation of a woman pouring from one of its cans into a watercloset bowl, and later a pictorial representation of a hand, obviously a woman’s, similarly pouring from one of its cans into a watercloset bowl.
The plaintiff formally notified the defendant early in 1947 that it objected to these forms of advertising, and the defendant, asserting its right to continue to so advertise, the plaintiff on May 31 of that year, brought the instant suit for trade mark infringement and unfair competition. The defendant in its answer asserted, first, that all of the plaintiff’s marks were invalid and had been illegally registered for the reason that they were merely descriptive of the goods with which they were used, and second, that the mark in its earlier forms had been abandoned, and then, admitting its use of the advertising matter complained of, it denied that such advertising infringed any of the plaintiff’s marks or constituted unfair competition. Then, by counterclaim, it asked for a judgment ordering the cancellation of all the plaintiff’s marks pursuant to § 37 of the Trade Mark Act of 1946, the so called Lanham Act, 60 Stat. 427, 440, 15 U.S.C.A., § 1119, which by its terms, § 46, became effective on July 5, 1947, while the instant suit was pending. The court below after hearing held that the plaintiff’s marks were valid, that none of them had been abandoned, and that the defendant had infringed and was unfairly competing with the plaintiff by the use of advertising matter showing a woman pouring from a can into a toilet bowl, but not by the use of advertising matter showing merely a woman’s hand pouring from a can into a toilet bowl. From the final judgment enjoining the defendant in keeping with these conclusions both parties have appealed; the defendant from so much of the judgment as adjudicates the validity and infringement of the plaintiff’s marks, the plaintiff from so much thereof as adjudicates that its marks are not infringed by the defendant’s advertising matter showing merely the woman’s hand. In the view we take of the case it will be necessary to give detailed consideration only to the defendant’s appeal.
Its first contention is that the plaintiff’s pictorial representation of a woman pouring the contents of a can into a watercloset bowl does not constitute a valid trade mark under either the common law or the Trade Mark Act of 1905, as amended, for the reason that it is merely descriptive of the plaintiff’s product. We do not agree.
Cases involving the validity of symbols or devices as identifying marks for goods, i. e. trade marks strictly speaking, as distinguished from names used as trade marks, are comparatively rare. But there can be no doubt that “Whether a picture can be a trade-mark for goods depends upon the same test that is applied in determining whether words can be trade-marks,” the question in each case being “whether the picture is merely descriptive of the goods on which it is used or has an arbitrary or fanciful significance in relation to them”, Am.Law Inst., Restatement of Torts, § 721 comment d. And the test of validity at common law is also the test for registerability under the third proviso of § 5 of the Trade Mark Act of 1905, as amended15 U.S.C.A.1946 Ed. § 85 [15 U.S.C.A. § 1052], for that proviso is “simply an expression in statutory form of the prior general rule of law that words [and clearly also devices] merely descriptive are not a proper subject for exclusive trademark appropriation.” P. D. Beckwith’s Estate v. Commissioner of Patents, 252 U.S. 538, 544, 40 S.Ct. 414, 416, 64 L.Ed. 705. And the test of validity was concisely stated by the Supreme Court long ago in the leading case of Elgin National Watch Co. v. Illinois Watch Case Co., 179 U.S. 665, 673, 21 S.Ct. 270, 273, 45 L.Ed. 365, in the following language: “It [a trade mark] may consist in any symbol or in any form of words, but as its office is to point out distinctively the origin or ownership of the articles to which it is affixed, it follows that no sign or form of words can be appropriated as a valid trademark which, from the nature of the fact conveyed by its primary meaning, others may employ with equal truth and with equal right for the same purpose.” See also Canal Co. v. Clark, 13 Wall. 311, 20 L.Ed. 581, in which it was held that the name “Lackawanna” could not be exclusively appropriated for coal emanating from that region of Pennsylvania, and in addition see Bristol Co. v. Graham, 8 Cir., 199 F. 412, in which it was held that a mere representation of a steel belt lacing of a type in the public domain, the patent thereon having expired, could not be appropriated, even by the original patentee, as a valid trade mark for that product.
Application of the foregoing test would seem clearly to indicate that a mere representation of a can with a powdered material flowing from it into a watercloset bowl could not constitute a valid trade mark for the product here involved for one “has no right to appropriate a sign or a symbol, which, from the nature of the fact that it is used to signify, others may employ with equal truth, and therefore have an equal right to employ for the same purpose.” Canal Co. v. Clark, supra, 13 Wall, at page 324, 20 L.Ed. 581, quoting with approval from Amoskeag Manufacturing Co. v. Spear & Ripley, 2 Sandf., N.Y., 599. But this does not establish that the plaintiff’s marks are invalid, for even though they include a common merely descriptive element, i. e., a representation of material flowing from a can into a toilet bowl, they also include representations of women in a particular dress, standing in a particular pose, pouring from the can into a watercloset bowl of a particular design. The marks therefore consist not only of a merely descriptive element, but also of arbitrary and fanciful elements, and it is clearly established that such a composite mark is not rendered invalid by reason of the inclusion therein of some element, or elements, which may with equal truth and equal right be used by others. The reason for this is that “The commercial impression of a trade-mark is derived from it as a whole, not from its elements separated and considered in detail”, P. D. Beckwith’s Estate v. Commissioner of Patents, supra, 252 U.S. at pages 545, 546, 40 S.Ct. at page 417, 64 L.Ed. 705, so that a composite mark is valid if, in addition to its merely descriptive element, it also contains fanciful or arbitrary elements sufficient to give it enough individuality so that viewed as an entirety it can perform its function of pointing distinctively to the origin of the goods to which it is applied. P. D. Beckwith’s Estate v. Commissioner of Patents, supra; Am.Law Inst., Restatment of Torts, § 724. We therefore conclude that the plaintiff’s marks are valid, and hence were properly entitled to registration, for viewing them as a whole they are not merely descriptive, but are original, arbitrary and fanciful.
It does not follow from this conclusion of validity, however, that the plaintiff is entitled to appropriate exclusively unto itself the merely descriptive element of its composite marks. It cannot prevent the defendant from using on its labels or in its advertising (we are assuming that one may infringe under the federal act of 1905 by advertising matter as well as by label, Mishawaka Rubber & Woolen Mfg. Co. v. Panther-Panco Rubber Co., 1 Cir., 153 F.2d 662, 666) a representation of material flowing from a can into a watercloset bowl. Indeed the plaintiff does not contend that it has the right to do so.
Nor do we think that the plaintiff can prevent the defendant from going one step further and advertising its products by showing it in use by a person, and, moreover, in use by the sort of person who would normally be expected to use it, that is, by a woman. We base this conclusion upon common knowledge (although cf. Jantzen Knitting Mills v. Herlich et al. (U.S.D.C.E.D.Pa.1934), 24 Trade Mark Rep. 48) for certainly the representation of products in use by the sort of persons who use them is one of the commonest devices in all advertising. A mere glance at the advertising section of almost any newspaper or periodical renders it unthinkable that any single manufacturer of such products as, for instance, women’s underclothing, bathing suits or stockings, to mention only a few outstanding examples, can possibly be entitled to appropriate unto itself alone the exclusive right to advertise its products by representing them in use. Of course, the defendant cannot represent its product in use in such a setting, or in such a way, as to render it likely that the purchasing public will confuse its product with that of the plaintiff. But this does not mean that the defendant is relegated to advertising its product by showing it in use by an old crone in a mother hubbard with a scowl on her face. Clearly in advertising, to quote from the current musical play “South Pacific”, “There is nothing like the frame of a dame”, and we cannot see why the defendant is not as much entitled to take commercial advantage of pulchritude as the plaintiff.
We mention these matters at some length for it seems to us that the District Court’s conclusion of infringement, with which we feel constrained to disagree, could only have rested upon the defendant’s use in its advertising of the foregoing elements which we think it was free to use, because, aside from those elements, the defendant’s advertising bears little or no resemblance to the plaintiff’s marks.
In the first place the plaintiff’s marks are all on a plain background whereas the defendant’s advertising usually showed a bathroom setting, including a bath tub, shower curtain, tiled walls, etc. In the second place the defendant in all its advertising prominently displayed its trade mark “Vanish” which is not at all similar to the plaintiff’s name “Sani-Flush”. And in the third place the human female figures in the defendant’s advertising are by no means strikingly similar to the ones used by the plaintiff in any of its marks. The plaintiff’s earlier marks showed women dressed as housemaids, and its later ones showed a woman dressed conservatively as a matronly middle-aged housewife. The defendant, on the other hand, never used a housemaid in its advertising, but showed therein a very slim young housewife, perhaps a bride, ultra-fashionably dressed, i. e. in a very short skirt, wearing an elaborate apron, and standing in an exaggeratedly graceful bending posture pouring into a watercloset bowl with an expression of almost ecstatic delight upon her face. This contrasts sharply with the more conservative dress, staid posture, and expression of restrained joy on the faces of the women in all the plaintiff’s trade marks, to say nothing of the rather buxom figure of the woman appearing in its later ones.
Furthermore, the defendants’ distinctive name and its laudatory slogans of “It’s NEW!”. “It’s a pleasure to use”, “A NEW way to keep Your Bathroom fresh and sweet”, “Leaves fresh minty Fragrance” and “Cleans toilet bowls without scrubbing”, which are quite different from the plaintiff’s slogans, serve to sharply differentiate the defendant’s advertising from the plaintiff’s marks.
Viewed as an entirety, for the commercial impression of an advertisement no less than a trade mark is derived from it as a whole, not from its separate elements considered apart and> in detail, it seems to us clear that these distinctive features of the defendant’s advertising, in spite of its use therein of the feature it is entitled to employ, that is to say, an alluring young woman using its product, prevent the possibility of there being any genuine likelihood that purchasers of “Vanish” would be so confused by the advertising of that product that they would think they were purchasing “Sani-Flush.”
What we have said with respect to trade mark infringement in large measure disposes of the plaintiff’s claim for unfair competition. It may be that a merchant or manufacturer can, over a long period of time, make such a distinctive and original arrangement of advertising features common to all, that a competitor who colorably imitates his distinctive style, format and juxtaposition of elements, will be guilty of unfair competition. But it does not appear that the plaintiff has developed any unique style or pattern of advertising peculiarly its own, except for showing its product in use as others are free t.o do. On the contrary in its advertising over the years it has shown its product in use by a great many different models, in a variety of poses and dresses against different backgrounds, even including a representation of a little girl with an expression of disgust on her face over the caption “We don’t talk about toilets!”
To be sure, it once over the caption “I know its SAFE in Septic tanks”, displayed its product in use by a young woman in pose and dress quite closely resembling the young women commonly used by the defendant, but this, as we have shown, does not give it the right to exclude others, even direct competitors, from the use of representations of fashionably dressed and attractive young women in advertising.
The foregoing conclusion renders it unnecessary for us to consider the plaintiff’s cross appeal, for if the defendant can use a representation of an entire woman in its advertising, a fortiori it can use a representation of only a woman’s hand therein.
In conclusion it will suffice to say that the defendant’s advertising viewed as a whole by no means so closely resembles either the plaintiff’s mark or its advertising, viewed also as a whole, as to warrant the conclusion that anyone seeing it would be likely to confuse the defendant’s product with that of the plaintiff.
The judgment of the District Court is vacated and the case is remanded to that court for the entry of a judgment for the defendant; the defendant recovers costs on appeal.
. Provided, That no mark which consists * * * merely in words or devices which are descriptive of the goods with which they are used, or of the character or quality of such goods * * * shall be registered under the terms of this subdivision of this chapter.
. This conclusion obviously renders it unnecessary for us to consider whether the defendant is entitled to an order cancelling the plaintiff’s marks under the provisions of § 37 of the Lanham Act, supra.
Moreover, since the plaintiff’s later marks are valid, if the defendant has infringed them the plaintiff is entitled to injunctive relief, the only relief afforded or contended for, and therefore there is no occasion for us to consider whether or not the plaintiff’s earlier marks have been abandoned.
Question: Were there cross appeals 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.
THOMAS, Circuit Judge.
This case is presented here on a petition of the taxpayer to review a decision of the United States Board of Tax Appeals redetermining, and modifying and' confirming a deficiency in petitioner’s income taxes for the taxable years ended January 31, 1936, 1937, and 1938. The modifications made by the Board were favorable to the petitioner, and the Commissioner has not excepted. The opinion of the Board is reported in 45 B.T.A. 333.
The deficiency found by the Commissioner and in controversy here involves two items of the petitioner’s income tax returns for the taxable years. First, petitioner claimed deductions for salary paid its president for the years 1936, 1937, and 1938 of $10,075, $9,750, and $11,700 respectively, and for salary paid to its secretary-treasurer for the same years of $1,550, $1,650, and $1,800. The Commissioner allowed deductions for the president’s salary in the amount only of $1,200 for each year and for that of the secretary-treasurer in the amount of $600 a year. Second, the Commissioner added to the petitioner’s reported income for the year 1938 the sum of $8,700 as rentals constructively received in that year.
In disallowing the deductions claimed for officers’ salaries the Commissioner stated in his notice of deficiency that the amounts claimed are held to the extent of the amounts disallowed “to be in excess of reasonable allowances for salaries or other compensation for personal services actually rendered.”
In affirming the Commissioner the Board held that the payments to officers and disallowed “were not made as compensation of these two officers, as such. They were made for unusual, nonrecurrent services, the cost of which is represented now in the value of the capital assets thus acquired and now owned by petitioner.”
The petitioner complains in substance that the Board erred in deciding the controversy as.to deductions for salaries on a factual basis not framed by the pleadings or referred to in the evidence; and that the sole issue of fact raised by the pleadings was whether the services rendered by the officers to the corporation were worth the total amount paid for them. Consequently, it is urged, the Board had no jurisdiction to go outside of that issue and determine the case upon the question of the essential character of the services rendered.
On this question there is no merit in petitioner’s contention. The Board went no further than to find the facts and to apply the law to those facts. The Commissioner introduced no evidence at the hearing before the Board, and the testimony introduced by the petitioner abundantly supports its findings.
In brief the facts are that the petitioner is a corporation, the capital stock of which is owned almost wholly by the parties who were its president and secretary-treasurer respectively during the taxable years. The business of the corporation is chiefly the holding of title to approximately 50 acres of land in St. Louis County, Missouri, and leasing it to the Glenwood Sanatorium Company, a corporation owned also by the same parties who were the officers of the petitioner. A large building program consisting of the construction of buildings for the use of the tenant Sanatorium Company was carried through during the years 1933 to 1938 inclusive. Instead of having the work done by contractors the officers whose salaries are involved performed all the services necessary to the management of the construction of the buildings. The savings to the petitioner on the building program thus effected were in excess of $100,000. The petitioner’s evidence shows that the president’s services alone for this character of work were worth $12,000 a year for the four-year period, and that the secretary-treasurer’s services for the same class of work were worth approximately one-sixth as much. No evidence was produced to show the value of the officers’ salaries as such.
Except for the period from July, 1930, to July, 1932, the officers never at any time drew salaries until June 1, 1934, on which date the president was voted a salary of $325 a month and the secretary-treasurer a salary of $50 a month. On February 1, 1935, these salaries were increased to $650 and $100 a month respectively. On August 1, 1935, they were again increased to $975 and $150 a month respectively, and they remained at these amounts until February 1, 1938, when the building program was completed.
The substantive rights of the government and of the petitioner are controlled by §§ 22(a) and 23(a) of the Revenue Act of 1936, c. 690, 49 Stat. 1648, 26 U.S.C.A. Int.Rev. Code §§ 22(a) and 23(a). Under the statute deductions for corporate salaries can be allowed only when such payments constitute “ordinary and necessary expenses paid or incurred * * * in carrying on any trade or business.” A capital expenditure is not deductible as an “ordinary” business expense. It is well-settled that money paid out for the acquirement of something of permanent use or value in one’s business is a capital investment and not deductible from income as an “ordinary” business expense. Duffy v. Central Railroad Company, 268 U.S. 55, 45 S.Ct. 429, 69 L.Ed. 846; Willcuts v. Minnesota Tribune Co., 8 Cir., 103 F.2d 947, 950, certiorari denied 308 U.S. 577, 60 S.Ct. 93, 84 L.Ed. 483; Houston Natural Gas Corp. v. Commissioner of Internal Revenue, 4 Cir., 90 F.2d 814, 816; Great Northern Ry. Co. v. Commissioner of Internal Revenue, 8 Cir., 40 F.2d 372. This rule of law is not .controverted by the petitioner. It argues that the character of the services rendered by its officers was not in issue, only their value.
On this issue we agree with the Board that petitioner is mistaken. Under the statute, supra, there could be but one question, namely, whether the payments represented reasonable allowances for services performed in carrying on the business of the corporation. If the salaries were in part paid for other services they were not ordinary expenses. When petitioner appealed to the Board and challenged the decision of the Commissioner, it took upon itself the burden of establishing its contention that the payments were not only reasonable in amount but also that they were ordinary and necessary in carrying on its business. Instead of sustaining that burden its proof affirmatively showed that the expenditures were not ordinary and necessary expenses paid or incurred in carrying on its business but, on the other hand, that they were in large part, if not entirely, capital investments.
In an appeal to the Board the burden is upon the taxpayer “to show that it was entitled to the deduction which the Commissioner had disallowed, and that the additional tax was to that extent illegally assessed.” Reinecke v. Spalding, 280 U.S. 227, 233, 50 S.Ct. 96, 98, 74 L.Ed. 385. The taxpayer must show that the assessment is wrong upon any proper theory. Helvering v. Gowran, 302 U.S. 238, 245, 58 S.Ct. 154, 82 L.Ed. 224. Upon appeal the Board “may investigate anew the issues between the government and the taxpayer, and upon the determination of the appeal it may affirm, set aside, or modify the findings and decision of the Commissioner.” Blair v. Oesterlein Co., 275 U.S. 220, 227, 48 S.Ct. 87, 89, 72 L.Ed. 249. Neither the Board nor this court is bound by the reason assigned by the Commissioner for his decision. If the disallowance is right it must be affirmed by the application of the correct rule of law. Helvering v. Gowran, supra; Hormel v. Helvering, 312 U.S. 552, 61 S.Ct. 719, 85 L.Ed. 1037; J. & O. Altschul Tobacco Co. v. Commissioner of Internal Revenue, 5 Cir., 42 F.2d 609, 610.
The petitioner asserts that the Board erred in finding that the services of the president and secretary-treasurer were of the reasonable value of $1,200 and $600 per year respectively because there was no evidence to support such finding. The answer to this claim is that the Board made no such finding either expressly or impliedly. It found only that the Commissioner did not err in holding that the salaries paid in excess of these amounts were not ordinary expenses paid in carrying on petitioner’s regular business. The allowances made by the Commissioner were not in issue in the absence of a cross-appeal, and they were neither considered nor passed upon by the Board.
The petitioner asked the Board to amend its findings and to grant a further hearing or a rehearing to afford it an opportunity to present further evidence upon the type and character of services rendered by its officers. The application was denied, and the petitioner complains. The motion does not set out the evidence by which it is proposed to establish that the services rendered were of a character or type different from that shown at the hearing. Such further evidence, whatever it may be, would be in conflict with the testimony in the record and with the verified statements in the petition filed on appeal to the Board. Under these circumstances, the Board should not be reversed for denying the requests. See Scott v. Commissioner, 8 Cir., 117 F.2d 36, 40.
The second element of the controversy is whether petitioner was in constructive receipt of rent from its tenant, the Sanatorium Company, for the year 1938 in the amount of $8,700. Petitioner carries its accounts on a cash basis and contends that it did not so receive such rentals.
The evidence tends to show that the agreed rental for the year 1938 was $18,-000 subject to an increase in some amount on condition that the new buildings under construction at the beginning of the year should be completed and ready for occupancy before the end of the year. While the building program was under way the tenant had advanced to the petitioner on account sums totaling $10,500 and had paid on the 1938 rentals the sum of $9,300, leaving an unpaid balance, likewise carried on account, of $8,700. It was “the purpose”, so petitioner’s vice-president testified, “not to make an offsetting entry until it was determined whether the buildings would be ready.” Sometime prior to the end of the year it was known that the buildings would not be ready for occupancy at any time during the year, and consequently that the rental would not be increased. The secretary-treasurer of the petitioner at the time of the hearing, who was also its attorney during the taxable period, testified: “I claim we could offset it, but we don’t have to. * * * There was no reason why Acer could not credit $8,700 on the amount they owed Glenwood and there was no reason why they should.”
Referring to the ruling of the Commissioner including the $8,700 in income, the taxpayer, in its petition on appeal to the Board, said: “There would be a tax saving to petitioner by virtue of this ruling and it is not seriously protested, although it is not conceded that the Commissioner had the legal right to enforce such a ruling.”
The Board found that “the intention of the parties was that these mutual debts were to be treated as parts of one transaction. The offset of one debt against the other was intended and petitioner had an absolute right to make it during the tax year. Cf. Bailey v. Commissioner, 103 F.2d 448.” We think that the requirements of constructive receipt are satisfied and the petitioner could not, by merely delaying the making of a book entry, postpone this rent receipt to a future period.
The evidence supports the Board’s finding that the intention and purpose of the parties were to set off these mutual debts; to make an offsetting entry in their books when but not until it was determined whether the buildings would be ready for occupancy during the year 1938; that before the end of the year the fact that the buildings would not be ready was determinable; and that petitioner had the right to make the set-off entry within the taxable year. The consent of the tenant inhered in the agreement. The question for decision, therefore, is whether the petitioner for tax purposes had the right to delay the entry and postpone the “rent receipt to a future tax period.”
It is true, as contended by the petitioner, that “Mutual debts do not per se extinguish each other.” Bailey v. Commissioner of Internal Revenue, 5 Cir., 103 F.2d 448, 449. It is also the law that “Where the taxpayer does not receive payment of income in money or property realization may occur when the last step is taken by which he obtains the fruition of the economic gain which has already accrued to him.” Helvering v. Horst, 311 U.S. 112, 115, 61 S.Ct. 144, 146, 85 L.Ed. 75, 131 A.L.R. 655. These rules are not inconsistent with the present decision. The principle here applicable is “that the powe to dispose of income is the equivalent c ownership of it.” Harrison v. Schaffner, 312 U.S. 579, 580, 61 S.Ct. 759, 760, 85 L.Ed. 1055. The revenue acts are “not so much concerned with the refinements of title as * * * with actual command over the property [which is] taxed — the actual benefit for which the tax is paid.” Corliss v. Bowers, 281 U.S. 376, 378, 50 S.Ct. 336, 74 L.Ed. 916; Harrison v. Schaffner, supra, 312 U.S. at page 581, 61 S.Ct. 759, 85 L.Ed. 1055. The last act necessary to give petitioner command over the $8,700 of rentals for 1938 was not the book entry but the failure to complete the buildings for occupancy in that year. The right of command existed upon the occurrence of that event and any delay in making the proper book entry could not change it. Upon petitioner’s theory, if the set-off entry should never be made the tax would never accrue. Riley Inv. Co. v. Commissioner, 311 U.S. 55, 59, 61 S.Ct. 95, 85 L.Ed. 36. Negligent or willful delay in making a proper book entry cannot be used to defeat the taxing power. “* * * the taxpayer, even on the cash receipts basis, who has fully enjoyed the benefit of the economic gain represented by his right to receive income, can [not] escape taxation because he has not himself received payment of it from his obligor.” Helvering v. Horst, supra, 311 U.S. at page 116, 61 S.Ct. at page 147, 85 L.Ed. 75, 131 A.L.R. 655. The taxpayer in the instant case enjoyed the benefit of the economic gain when the right to receive credit for the rent accrued. The gain need not be collected by the taxpayer in order that it be taxable. Helvering v. Stuart, 63 S.Ct. 140, 87 L.Ed. -. Constructively received income is taxable when the amount is definitely liquidated and available to the taxpayer without restriction. Penn v. Robertson, 4 Cir., 115 F.2d 167, 175. The facts found by the Board meet these conditions.
The decision of the Board of Tax Appeals is affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | 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.
MIKVA, Circuit Judge:
This appeal and cross appeal (as well as the related case District-Realty Title Insurance Corp. v. Ensmann, 767 F.2d 1018, also released today) arise frbm appellee Ferd Schneider’s abortive attempt to sell the appellants the Clermont apartment building, located at 2106 F Street, N.W., in Washington. This court has jurisdiction on the basis of diversity of citizenship. See 28 U.S.C. § 1332 (1982).
The legal questions raised are straightforward, but the facts are convoluted. The district court’s findings consume almost twenty pages of small type. We repeat only the more salient findings here.
On February 10, 1981, Schneider agreed to sell his building to appellants, Clermont Tenants Association, Inc., (“CTA”), a District of Columbia nonprofit corporation and Dumbarton Developers, Inc. (“Dumbarton”), a District of Columbia corporation, co-partners t/a Clermont Partnership, (collectively, the purchaser) (see Land Purchase Agreement, reprinted in Record Excerpts (“R.E.”) at 319-36). Dumbarton apparently had been recruited by CTA as a developer partner; its role was to obtain the funds necessary to buy the property and make certain payments of cash and notes to CTA members. Under the terms of the Land Purchase Agreement, settlement was to have been completed 120 days following execution of the agreement. At the purchaser’s request, however, settlement was postponed twice. Finally, Schneider announced that unless “full settlement [was] made on or before 3:00 P.M., May 17, 1982,” he would consider the Land Purchase Agreement terminated. On May 17, Schneider did all that the Agreement required of him, but the purchaser failed to make settlement. Schneider then brought suit seeking a declaratory judgment that the agreement was terminated. This suit was settled under an “Agreement of Settlement and Release,” dated August 4, 1982 (“August 4 Settlement Agreement”, reprinted in R.E. at 108-13).
Under the August 4 Settlement Agreement, purchaser agreed to “consummate settlement of the Agreement on or before October 4, 1982, time being of the essence.” Apart from seven exceptions not pertinent to this appeal, the time for settlement could not be further extended for “any reason whatsoever.” The agreement further provided:
[I]n the event it fails to consummate settlement as aforesaid, the deposit in the amount of Fifty Thousand Dollars ... shall be forfeited to Schneider as liquidated damages, the Agreement will thereupon be terminated and of no further force or effect, and the parties relieved of all further liability or obligation thereunder. Clermont, Dumbarton, and Corporation agree that in the event settlement is not consummated in accordance with the terms of Paragraph 1, they shall thereupon have waived and relinquished any and all interest in or rights to purchase the property.
Thus, the purchaser was given two months — from August 4, 1982, until October 4 — to consummate settlement. Schneider was ready, willing, and able to make settlement at all times during that period, but the purchasers designated the very last day, October 4, 1982, as the earliest date at which they would be ready to make settlement.
Unbeknownst to Schneider, Dumbarton had entered into a financing arrangement with West German investor Rudolf Ensmann for the purchase and development of the property. Since early September 1982, moreover, Ensmann’s attorneys had been attempting — without success — to persuade Dumbarton to let Ensmann take title to the property at the closing. Having failed to persuade Dumbarton, Ensmann’s attorneys had begun pressing CTA to exercise its contractual option to buy out Dumbarton’s share of the partnership. As of daybreak on October 4, however, no agreement had been reached.
The events of October 4, 1982, and the days immediately following are a tangled web of mix-ups, mistakes, and miscalculations.
On the morning of October 4, Ensmann’s attorneys finally concluded an “Agreement for Assignment and Disbursement” with CTA under which CTA was to assign all of the Clermont Partnership’s right, title, and interest in the apartment building to Ensmann and do everything in its power to ensure that Ensmann perfected title to the property. Schneider was not told of this agreement. At about noon, 2106 F Street Associates (“2106”) was created as a limited partnership 99% owned by Ensmann. Schneider was not told about this development either.
Schneider and his attorney arrived at the title company at about 2:00 P.M. and had completed their part of the transaction by about 2:20 P.M. At that time, one of Dumbarton’s attorneys informed Schneider that it “might be necessary” to change the name of the grantee on the deed. Schneider’s lawyer replied that his client had no objection provided he “gets his money.” The possible new grantee was not named, and Schneider was still not informed of the agreement which had been concluded that morning.
Schneider asked the settlement officer for his payment, but was told it was not yet available. Schneider asked “when will I get my money” and was told to call the title company on Wednesday, October 6. Having fulfilled all his obligations under the Land Purchase Agreement and the August 4 Settlement Agreement, Schneider left the title company’s offices at about 2:30 P.M. At about 4:00 P.M., Schneider’s attorney phoned the title company and was informed that the purchaser had not completed settlement. He was still not informed, however, of the assignment or of the creation of 2106.
Between 4:00 and 5:00 P.M., CTA delivered to Dumbarton a document that purported to exercise CTA’s option to buy out Dumbarton’s interest in the Clermont Partnership. Dumbarton immediately informed CTA that Dumbarton was not in default as to any of its obligations, considered the purported exercise of the option invalid, and would contest it.
At about 6:00 P.M., lawyers for CTA and for 2106 delivered escrow instructions and three checks totalling $1,405,000 to the title company. Dumbarton had never authorized or joined in the escrow instructions. The instructions were defective in a number of other respects as well.
Schneider’s attorney called the title company’s offices at about 6:30 P.M. and was again told nothing except that settlement had not been completed.
At about 8:30 P.M., new escrow instructions were delivered to the title company, this time by CTA, 2106 and Dumbarton. The title company was unable to comply with the mandate of the instructions because they contained several preconditions which could not be satisfied. Specifically, the instructions required certain payments to Dumbarton, CTA, and others, for which the sums then deposited with the title company were insufficient. The instructions also required delivery to the title company of certain documents — CTA’s assignment of its interests to 2106 and Ensmann’s release of a lawsuit against Dumbarton— which either had not been delivered or had not been fully executed.
At about 10:00 A.M. on October 5, 1982, Schneider’s lawyer called the title company and learned that settlement had still not been made. At 11:00 A.M., representatives of Dumbarton, CTA, and 2106 (Ensmann) arrived at the title company, delivered more money, and began drawing up still more instructions. At 2:00 P.M., Schneider’s attorney called again. After learning that settlement was still not complete because the title company could not comply with the latest escrow instructions, Schneider decided to terminate the Land Purchase Agreement. Schneider and his lawyer appeared at the title company at about 2:50 P.M. and, upon being informed by the settlement officer that no substantial progress has been made, tendered a letter terminating the agreement and claiming the $50,000 deposit as liquidated damages. Schneider’s attorney instructed the title company to return ail documents submitted in connection with the settlement.
After Ensmann’s attorneys learned that Schneider had terminated the agreement, they drafted yet another set of escrow instructions and directed that the title company issue a check for the adjusted purchase price to Schneider.
On the morning of October 6, Schneider’s attorney received from the title company, not the documents whose return he had requested, but instead the check, a copy of a new deed naming 2106 as grantee, and a new District of Columbia Real Estate Deed Recordation Tax and Real Property Tax Return. This was the first that Schneider’s attorney had heard of 2106. The title company had forwarded a copy of CTA’s assignment of its rights to 2106; it had forwarded nothing indicating a similar assignment by Dumbarton. Schneider’s attorney was aware of disputes among Dumbarton, CTA, and their financial backer and, consequently, was leary of assuming Dumbarton’s acquiescence. He asked a lawyer who was acting for both Ensmann and 2106 whether she could obtain Dumbarton’s consent to the exercise of the option and was told that that would be “impossible.” Ensmann’s attorneys offered to indemnify Schneider for any resultant litigation.
Schneider’s attorney advised that the proffered indemnification was inadequate to protect Schneider from lawsuits claiming he had wrongfully transferred property. Thus, on October 7, 1982, Schneider returned the check and filed suit in district court, seeking a declaratory judgment that the Land Purchase Agreement was terminated, $50,000 in liquidated damages, and attorney fees. Dumbarton and CTA counterclaimed for specific performance. The district court found for Schneider, declaring the agreement terminated and holding all the defendants jointly and severally liable in the amount of $50,000, but ordered the parties to bear their own costs and fees. Defendants appealed; Schneider cross-appealed for attorney fees. We affirm all aspects of the district court’s judgment except the conclusion that 2106 is jointly and severally liable with the other defendants for the $50,000 liquidated damages.
Substantial Performance:
The appellants contend that their actions on October 4 and the two days immediately following constituted substantial performance under the contracts. Although the district court may have overstated the holding of Drazin v. American Oil Company, 395 A.2d 32 (D.C.App.1978), in asserting that the doctrine of substantial performance can never apply where time is of the essence, the district judge reached the correct result.
In Drazin, the District of Columbia Court of Appeals considered whether a unilateral act by one party could add a “time is of the essence” provision to a real estate contract that initially had not had one. The court concluded it could and denied appellant Drazin’s claim for specific performanee, noting that he had failed to meet the deadline that the defendant had imposed.
The court did not address the question of whether Drazin’s performance had been substantial or whether the substantial performance doctrine in general could apply where time is of the essence. We too need not decide whether the substantial performance doctrine has any proper application to time is of the essence contracts because it is evident that the appellants did not substantially perform. The appellants’ acts on October 4 were not sufficient to constitute substantial performance and their acts after that date may not properly be considered.
Under District of Columbia law, “time is of the essence” provisions are taken seriously and occasion a departure from the ordinary rules governing time limitations in land contracts. Generally, the time set in a real estate contract is looked upon as “an approximation of what the parties regard as a reasonable time.” Drazin, 395 A.2d at 34; Doering v. Fields, 187 Md. 484, 490, 50 A.2d 553, 555-56 (1947). Normally, neither party is held strictly to the time limit although the limit is “not nugatory” and the seller has “a right to expect that the vendees [will] be ready at about that time.” Drazin, 395 A.2d at 34. Such laxity ceases, however, where time is of the essence. In contracts for sale of land
equity treats the [time] provision as formal rather than essential, and permits the purchaser who has suffered the period to elapse to make payment after the prescribed date, and to compel performance by the vendor notwithstanding the delay, unless it appears that time is of the essence of the contract by express stipulation, or by inference from the conduct of the parties, the special purpose for which the sale was made, or other circumstances surrounding the sale.
Id.; Kasten Construction Co. v. Maple Ridge Construction Co., 245 Md. 373, 379, 226 A.2d 341, 345 (1967) (both quoting Soehnlein v. Pumphrey, 183 Md. 334, 338, 37 A.2d 843, 845 (1944)).
Given that the August 4 Settlement Agreement stated not only that “time is of the essence” but also that “the time for settlement may not be further extended for any reason whatsoever,” acts performed after the October 4 deadline may not be considered in determining whether there was substantial performance. The appellants actions before the October 4 deadline, however, do not constitute substantial performance.
As commentators have noted, see, e.g., Corbin on Contracts § 704, substantial performance is not susceptible of simple definition. It is generally conceded to exist, however, when a contracting party has failed to render full performance but the defects are, all considered, minor. Although it most often applies to construction contracts (and some cases have even limited it to that context, see, e.g., Corbett v. Freedman & Sons, 161 N.E. 415, 263 Mass. 391 (1928)), the general view is that the doctrine may apply to any contract, see Corbin on Contracts § 701. Whether a particular tender of performance is ‘substantial’ depends on the facts of the case.
Where the line is to be drawn between the important and the trivial cannot be settled by a formula. In the nature of the case, precise boundaries are impossible. The same omission may take on one aspect or another according to its setting ... Nowhere will change be tolerated, however, if it is so dominant or pervasive as in any real or substantial measure to frustrate the purpose of the contract____ The question is one of degree, to be answered ... if the inferences are certain, by the judges of the law. We must weigh the purpose to be served, the desire to be gratified, the excuse for deviation from the letter, the cruelty of enforced adherence.
Jacob & Youngs v. Kent, 129 N.E. 889; 230 N.Y. 239 (1921) (Cardozo, J.). Important factors are the character of the performance promised, the purposes and interests it was expected to serve, and the extent to which nonperformance has defeated those purposes and ends. Another key consideration is the actual receipt and enjoyment of benefits by the defendant. In short, substantial performance does not contemplate full performance but does contemplate performance of all important parts of the contract. See Corbin on Contracts § 712.
Turning to the facts at hand, we find that the performance tendered by the appellants cannot be considered substantial. The central purpose of the contract was to effect a transfer of real estate. To realize this purpose, the appellants had to pay the full purchase price to the title company (which would then issue a check to Schneider) and agree to a transfer to the entities named in the original agreement or their lawful substitutes. Neither of these acts was performed on October 4.
That the appellants paid ‘substantial’ sums of money over to the title company was of no benefit to Schneider because the appellants’ escrow instructions prevented the title company from releasing the funds. We reject appellants’ contention that the unfulfilled preconditions in the escrow instructions were merely minor details, devoid of real significance. Since the title company would not release any funds to Schneider until the full amount was deposited, these ‘minor details’ prevented Schneider from receiving any payment whatsoever on the date due, let alone the full payment to which he was entitled under the contract.
Equally important, the appellants failed to make proper provisions for the transfer of title. Schneider was contractually bound to deliver the property to the Clermont Partnership, but the partnership’s financial backer, Ensmann, was insisting upon transfer to a new entity called 2106. This controversy was not resolved on October 4, nor, so far as the record discloses, at any point thereafter.
Ensmann was able eventually to present a legally effective assignment from CTA to 2106 but admitted that it would be “impossible” to obtain a similar document from Dumbarton. The best Ensmann could do was make a lame offer to indemnify Schneider if Dumbarton sued for wrongful transfer. Indemnity is not performance and cannot be cavalierly substituted for performance. Nor is the distinction a mere technicality. Ensmann in essence had conditioned payment on the issuance of a new deed not in accordance with the Land Purchase Agreement. Such “performance” is not “substantial”; indeed under District of Columbia law, it is of no effect whatsoever. Ferguson v. Caspar, 359 A.2d 17, 24 (D.C. 1976), holds that “a tender of performance by the purchaser which contains conditions other than those specified in the contract between the parties is ineffectual.”
In sum, the August 4 Settlement Agreement made timely compliance a key term of the contract by stating both that “time is of the essence” and that the time for compliance could not be extended for “any reason whatsoever.” When we further recall the history of the case — the original provision for settlement within 120 days of the execution of the Land Purchase Agreement, the two postponements at the appellants’ request, Schneider’s ultimatum that payment be made by May 17, 1982 or the contract would terminate and appellants’ failure to meet the deadline, Schneider’s original suit for declaratory judgment and the August 4 Settlement Agreement providing the appellants with one last chance to buy the property — we have no difficulty discerning that stricter adherence to the deadline was intended than is generally the case in real estate transactions. The parties bargained for the strict construction that Schneider urges and it would be improper for the courts to put any other interpretation on the “time is of the essence” clause.
It would therefore be improper to include acts performed after October 4 in considering substantial performance. Turning to the events of October 4, we find that the appellants failed to pay the seller any money and failed also to resolve a dispute as to which entity would take title. Both of these failures go to the heart of the contract. They are material; indeed it is difficult to imagine anything more material.
Reviewing all the circumstances of the present case, we conclude that the district judge was correct in ruling that the appellants had not substantially performed their obligations under the contract within the time allotted.
Notice and Opportunity to Cure:
The appellants argue that under the terms of the Land Purchase Agreement, they were entitled to notice of default and a five-day opportunity to cure the default, which entitlements were improperly denied by Schneider’s filing suit only three days after the scheduled settlement date. The appellants suggest that the contract’s notice and cure provision applied to any and all defaults, even the most grievous. We need not determine whether this interpretation — which in effect provides an automatic extension whenever settlement is not made — is correct. We agree with the district judge that the August 4 Settlement Agreement effectively eliminated the grace period provision from the agreement between the parties.
The August 4 Settlement Agreement, reached in compromise of a lawsuit that had been filed solely because of excessive delays in making settlement under the contract to purchase, essentially provided for one last chance to complete the deal. The agreement not only asserted that “time is of the essence” but also emphatically stated that “the time for settlement may not be further extended for any reason whatsoever.”
Settlement agreements are in high judicial favor. See, e.g., Williams v. First National Bank, 216 U.S. 582, 595, 30 S.Ct. 441, 445, 54 L.Ed. 625 (1910); Autera v. Robinson, 419 F.2d 1197, 1199 (D.C.Cir. 1969). They enable the parties to avoid the expense and delay involved in full litigation of the issues and spare the court the burden of trial. The District of Columbia partakes of the general view that such an agreement voluntarily entered into cannot be repudiated by either party and will be enforced summarily by the court. See, e.g., Autera v. Robinson, 419 F.2d at 1200; see also Kelly v. Greer, 365 F.2d 669, 671 (3rd Cir.1966), cert. denied, 385 U.S. 1035, 87 S.Ct. 772, 17 L.Ed.2d 682 (1967); Cummins Diesel Michigan, Inc. v. The Falcon, 305 F.2d 721, 723 (7th Cir.1962).
A settlement agreement resolving a contract dispute is said to operate as a substituted contract, cancelling or modifying the prior contract to the extent that the two are inconsistent. See Sirota v. Econo-Car, International, Inc., 556 F.2d 676, 681 (2d Cir.1977); Jersey Central Power and Light Co. v. Local 327, IBEW, 508 F.2d 687, 703 & n. 44 (3rd Cir.1975); Restatement of Contracts § 408 (1932 & Supp. 1979); 6 Corbin on Contracts § 1293 (1962). Whether the provisions of a subsequent contract are deemed to supersede the provisions of a prior contract turns on the parties’ intent which is ascertained from the contracts themselves when they are unambiguous. See Jersey Central Power & Light Co., 508 F.2d at 703.
We find that the August 4 Settlement Agreement clearly meant for October 4, to be the last and final opportunity to settle and that an automatic five-day extension is inconsistent with the intent of the Settlement Agreement. We conclude that the settlement contract eliminated the grace period provision and that, consequently, the appellants’ claim of entitlement is without merit.
Waiver:
The appellants assert that even if Schneider had a right to demand payment on October 4, his actions on that day constituted a waiver. The appellants point to Schneider’s failure to terminate the agreement when first informed that the title company would not pay out his money before October 6 and Schneider’s apparent willingness to provide a new deed if necessary. We reject appellants’ waiver argument.
Under District of Columbia law, which we are bound to apply in this diversity case, a written contract specifying that time is of the essence can only be modified in writing. See Landow v. Georgetown-In land West Corp., 454 A.2d 310, 313 (D.C. 1982). In Landow, the District of Columbia Court of Appeals rejected arguments remarkably similar to those advanced by the appellants here. The buyer had contended that as long as he was making good faith efforts to consummate the transaction, the settlement date should be extended notwithstanding a “time is of the essence” clause. The court rejected the buyer’s argument as “without legal foundation” and “commercially impracticable.” Id.
The court noted that in a written contract where time is not of the essence, strict compliance with the date of performance may be waived orally. Where time is stated to be of the essence, however, a different rule applies. Modification of the date of settlement is then regarded as a material change which cannot be effected without a writing. Since no one here contends that Schneider’s right to demand adherence to the October 4 deadline was ever waived in writing, whether Schneider’s actions suggested a willingness to dispense with the deadline is and should be irrelevant.
A different rule would be inconsistent with public policy. Were we to adjudge acts as equivocal as Schneider’s sufficient to constitute a binding waiver of material contractual rights, we would discourage the negotiations and minor, reasonable accommodations which are the norm in the business world. The consequence would be a decrease in flexibility and an increase in litigation. Such a rule would be as unwise as it would be unprecedented in District law. Consequently, we affirm the trial court’s conclusion with respect to waiver.
Attorney Fees:
Schneider has cross-appealed from the district court’s denial of attorney fees. We affirm the district court. The cases Schneider cites fail to establish his entitlement to fees. Under the American rule, parties normally bear their own costs and fees. A fee award is an extraordinary remedy which the court grants only where specially authorized by contract or statute or where the conduct of the losing party was exceptionally bad. See, e.g., Alyeska Pipeline Co. v. Wilderness Society, 421 U.S. 240, 249-70, 95 S.Ct. 1612, 1617-28, 44 L.Ed.2d 141 (1975); Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 717-19, 87 S.Ct. 1404, 1406-07, 18 L.Ed.2d 475 (1967); Trilon Plaza Co. v. Allstate Leasing Corp., 399 A.2d 34, 37 (D.C.1979).
Schneider, rather than the appellants, initiated this lawsuit in the district court, and although the legal position of the appellants was weak and they have pursued their cause here without success, we are not convinced that they have acted “in bad faith, vexatiously, wantonly, or for oppressive reasons.” Cf. Wisconsin Avenue Associates, Inc. v. 2720 Wisconsin Avenue Cooperative Association, Inc., 385 A.2d 20, 24 (D.C.App.1978); 1901 Wyoming Avenue Cooperative Association v. Lee, 345 A.2d 456, 465 (D.C.App.1975); F.W. Berens Sales Co. v. McKinney, 310 A.2d 601, 603 (D.C.App.1973).
Nor do we accept Schneider’s claim that he is entitled to fees on a breach of contract theory. He asserts that the August 4 Settlement Agreement was a contract and that a major goal of the agreement was to avoid litigation; by forcing him to sue for declaratory judgment and then pursuing this appeal, appellants, he contends, deprived him of the benefit of his bargain. A settlement agreement is, of course, a contract, see Bullard v. CurryCloonan, 367 A.2d 127, 131 (D.C.App. 1976), and litigation in defiance of a promise not to sue could constitute a breach. But no such situation presents itself here. The August 4 Settlement Agreement contains no explicit covenant not to sue. Even if we were to find such a covenant by implication, as the law permits us to do, the covenant would go only to the merits of the controversy settled — not to the existence or terms of the Settlement Agreement itself. See Winchester Drive-In Theatre, Inc. v. Warner Bros. Pictures Distributing Corp., 358 F.2d 432, 436 (9th Cir.1966). Since we find that this suit arose from genuine disputes as to the terms and import of the settlement agreement, we reject Schneider’s breach of contract theory.
Where the trial court exercises its discretion to award or deny attorney fees, our role on review is restricted to determining whether discretion was abused. See Trilon Plaza Co., 399 A.2d at 38; Panos v. Nefflen, 205 A.2d 600, 602 (D.C.App.1964) (quoting Shima v. Brown, 140 F.2d 337, 337 (D.C.Cir.1943)). Here we have little difficulty in concluding that the trial court exercised its discretion soundly. Indeed, as indicated above, we are unaware of any precedent which would authorize the award of fees in the circumstances of this case.
Liability of 2106 F Street Associates:
Appellant 2106 objects on both procedural and substantive grounds to its being held jointly and severally liable for the $50,000 liquidated damages. 2106 contends that because it appeared as an intervenor and Schneider never amended his complaint to include specific claims against the intervenor, 2106 had neither adequate notice of nor reasonable opportunity to defend against the liquidated damages liability. 2106 further contends that it assumed no liability for damages under the agreements between it and Dumbarton and CTA. We find the first contention without merit, but agree with the second.
When a party intervenes, it becomes a full participant in the lawsuit and is treated just as if it were an original party. See District of Columbia v. Merit Systems Protection Board, 762 F.2d 129, 132 (D.C.Cir.1985); Marcaida v. Rascoe, 569 F.2d 828, 831 (5th Cir.1978). The intervenor renders itself “vulnerable to complete adjudication by the federal court of the issues in litigation between the intervenor and the adverse party.” United States v. Oregon, 657 F.2d 1009, 1014 (8th Cir.1981) (quoting 3B Moore’s Federal Practice ¶ 24.16[6] (2d ed. 1981)). It is said to assume the risk that its position will not prevail and that an order adverse to its interests will be entered. See 7A C. Wright & A. Miller, Federal Practice & Procedure § 1920, at 611 (1972). As we said recently, “the possibility that the plaintiff will be able to obtain, relief against the intervenor-defendant” is part of the “price” paid for intervention. District of Columbia, at 132.
As an intervenor, 2106 subjected itself to the plaintiff’s claims against the defendant, notwithstanding plaintiff’s failure to amend his complaint to include reference to 2106. 2106 entered the lawsuit with full awareness of the nature of Schneider’s claims against the defendants and participated actively. It argued vehemently that it was the lawful substitute for the original parties and had the right to take title to the property under the contracts negotiated by the original parties. It was aware, moreover, that Schneider’s trial brief asked for “judgment against the defendants CTA, Dumbarton, and 2106 FSA, and each of them, in the amount of $50,000” (emphasis added). Although 2106 may not have anticipated that the court would hold it liable, unpleasant surprise is not the same as unfair surprise and certainly does not constitute a due process violation in circumstances such as these. The district court therefore reasonably rejected 2106’s claim of inadequate notice and opportunity to defend. See Order, Civ. Action No. 82-2876 (D.C.D.C. Sept. 27, 1983); cf. Memorandum of Points and Authorities in Support of 2106 F Street Associates’ Motion for Reconsideration, Schneider v. Dumbarton Developers, Inc., Civ. Action No. 82-2876.
The district court erred, however, when it concluded that 2106 was jointly and severally liable for the liquidated damages. Given that appellants failed to make settlement and that Schneider lawfully terminated the contract, 2106 was under no further obligation. It was not the defendants’ assignee unless settlement was made and even if it had been, under District of Columbia law, the terms of the assignments were insufficient to impute an assumption of liability to 2106.
The agreement between 2106 and CTA, see R.E. at 122-26, and the agreement between 2106 and Dumbarton, see id. at 141-51, were drafted at the eleventh hour when the danger that the deal would fall through must have been apparent. They are structured so as to terminate if settlement is not consummated. The agreement with CTA stated:
Provided that Ensmann is able to acquire the Property at the closing, Ensmann will indemnify and hold CTA harmless from and against any and all loss, cost, damage, expenses or attorneys fees arising from any claims by any person, firm, [or] corporation____ If [however] Ensmann is not able to acquire title to the Property pursuant to the Dumbarton Agreement at Closing for any reason, this Agreement shall be void and of no further force and effect, the Title Company shall return the funds provided ... to Ensmann and neither party hereto shall have any obligation or liability to the other under this Agreement.
See id. at 124-25 (emphasis added). The agreement with Dumbarton contained a similar provision. See id. at 147. Since the district court properly found that settlement was neither made nor consummated, the assignments terminated and CTA and Dumbarton (or their successors) must bear the burden of the liquidated damages.
Even if assignments had not terminated, we would still conclude that 2106 was not liable. Under District of Columbia law an assignee is responsible only for those obligations of the assignor that he contracts to undertake. He is only liable for past breaches if he has “expressly assume[d] any duties correlative with the right assigned, there being no implication of assumption by the mere assignment.” Rittenberg v. Donohoe Construction Co., 426 A.2d 338, 341 (D.C.1981). Since the district court properly found that 2106 v/as not an assignee on October 4, it became one only after October 4, if at all; 2106 never assumed liability for the damages in question.
Schneider has contended that 2106 is attempting to “have it both ways” and should be equitably estopped from refusing to accept liability. We disagree. There can be no question that the arrangement 2106 negotiated was highly advantageous to it, but driving a hard bargain is not grounds for estoppel. We do not consider 2106’s position internally inconsistent. 2106 has argued that the purchasers are entitled to specific performance of the Land Purchase Agreement and that 2106 should take title as the assignee. If, as the district court properly determined, however, Schneider was within his rights in terminating the agreement, 2106 contends that its relationship with Dumbarton and CTA is severed and 2106 has no further obligations to either in connection with this matter. In other words, the assignment was good only for the purposes of a successful transfer of the apartment building, and, failing that, is of no further purpose or effect.
Conclusion:
Because we find that the assignments, in effect, allocated the risk of nonsettlement to Dumbarton and CTA (or their successors), we conclude that the trial court erred in holding 2106 jointly and severally liable for the liquidated damages. We reverse the trial court’s ruling on that issue. In all other respects, we affirm.
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.
PER CURIAM.
C. D. Burrus and Donald L. Troutman seek review of an order of the Secretary of Agriculture. The Secretary held that the petitioners violated the Packers and Stockyards Act, 1921, 7 U.S.C. § 181 et seq., and the regulations issued pursuant to the Act by (1) operating a livestock scale which failed to comply with requirements because it was improperly balanced; (2) selling livestock to packers at false and incorrect weights obtained by adding an arbitrary number of pounds to the purchase weights of livestock; (3) issuing and maintaining scale tickets and invoices which showed false and incorrect weights; and (4) collecting money from packers on the basis of the false records.
We have carefully reviewed the record and find that the order of the Secretary is supported by substantial evidence on the record as a whole, that no error of law appears and that an opinion would be without precedential value. For these reasons, we deny the petition for review and enforce the order of the Secretary of Agriculture without opinion. See Rule 14 of the Rules of this Court.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
These appeals are from post-judgment orders entered by the district court in two related actions.
A brief summary of both actions follows:
Defendant Henry Henderson agreed by land contract to buy a hotel from plaintiff 1507 Corporation, then Tower House, Inc., in November, 1965. The purchase price was $175,000. $25,000 thereof consisted of the down payment and three other installments; $33,436.07 thereof was to be paid in monthly installments beginning August 1, 1966; Mr. Henderson assumed an existing mortgage which presumably represented the balance. Mr. Henderson signed a note for the $33,436.07.
Civil action No. 67-C-20(S) was brought by 1507 Corporation for specific performance or foreclosure of the land contract. Both Mr.' and Mrs. Henderson were defendants. Mrs. Henderson was not a party to the land contract, but was joined as a defendant so that judgment barring her dower right could be obtained. After dismissal of counterclaims, judgment was entered February 24, 1968, directing sale of the premises upon Mr. Henderson’s failure to pay the total sum due the corporation, and barring all interests of the Hendersons in the property, if sold.
Mr. Henderson was not only in default in his obligations to pay sums to plaintiff, but had failed to pay the prior mortgage debt and judgment of foreclosure had been entered in an action brought by the mortgagee. The period of redemption expired, and on May 4, 1968, the property was sold under that judgment. Presumably because of that sale, the district court does not appear to have proceeded further with the sale it had ordered under the land contract. Mr. Henderson made several applications for amendment or re-opening of the judgment, but all were denied. An appeal from one of the denials was dismissed by this court April 14, 1969 because the appeal was not timely. Any doubt that the judgment entered February 24, 1968 adjudicated all the claims in the action and was final and appealable is dispelled by the treatment accorded it by the parties and subsequent findings and orders of the district court.
In civil action No. 67-C-21(S), 1507 Corporation sought judgment on the promissory note. The note was signed only by Mr. Henderson, and the judgment was awarded only against him, although some of the papers in the voluminous record suggest that Mrs. Henderson may at some time have been added as a defendant in the action.
Judgment in favor of 1507 Corporation was entered January 15, 1968. A receiver was appointed January 21, 1969. The receiver collected enough money to satisfy the judgment in 67-C-21(S) and on November 19, 1969 the district court ordered distribution of the funds, first to pay the fees and expenses of the receiver, then to satisfy the judgment on the note ($38,230.71), and then to pay any balance to Mr.' Henderson.
We describe each appeal and disposition thereof as follows:
No. 18,845: Mr. Henderson appealed from an order entered November 17, 1969 in 67-C-20(S) denying his motion to compel plaintiff to deliver a warranty deed. (A like order was entered in 67-C-21(S).) The theory of his motion must be that upon collection by the receiver of enough to satisfy the judgment on the note, Mr. Henderson had made full payment according to the land contract and was entitled to a warranty deed. The fatal gap in his theory is that he had failed to pay the assumed mortgage debt and this default had deprived 1507 Corporation of its ability to convey. The order appealed from was clearly correct.
In the course of the appeal Mr. Henderson attempted to argue the merits of the decisions against him on his defenses and counterclaims. He lost his right to appellate review of those decisions when he failed to appeal from the final judgment.
No. 18,SUS: Mrs. Henderson appealed from an order entered November 17, 1969 in 67-C-21(S), denying a motion she had filed November 6, 1969. She had asked for a decree reciting that the note in suit “is not a note which Mrs. Henderson signed at any time.” As already stated the note in suit was signed only by Mr. Henderson and the judgment awarded recovery only from him. If Mrs. Henderson was not a party to the action, her appeal should be dismissed for that reason. In any event her appeal is frivolous and will be dismissed.
No. 18,SU7: 1507 Corporation appealed from an order in 67-C-21(S) denying its motion for “special costs,” allegedly based on 28 U.S.C. § 1927.
That section provides: “Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case as to increase costs unreasonably and vexatiously may be required by the court to satisfy personally such excess costs.” The section is entitled “Counsel’s liability for excessive costs.”
At all stages Mr. Henderson had conducted these cases on his own behalf, without counsel.
Plaintiff 1507 Corporation sought recovery from Mr. Henderson of $15,900 for fees and disbursements of its attorney. Both in the district court and here plaintiff relied entirely on § 1927 as authority for such allowance.
About half the amount was allegedly incurred in defending plaintiff against claims raised by Mr. Henderson in other courts. As stated in plaintiff’s motion: “After the present case [67-C-21(S)] and a related case were pending in this Court, as a result of their removal to this Court by the defendant, the defendant, while actively proceeding in this Court, caused the same matters which were the subject matter of these actions to be raised in pleadings filed in three other courts of original jurisdiction and in two courts of appeal.”
The other half of the attorneys’ fees and expenses were allegedly incurred in proceedings to collect plaintiff’s judgment, made necessary by defendant’s unreasonable and vexatious conduct in an effort to avoid collection.
There is no dispute but that the district court allowed plaintiff all items of costs. authorized by 28 U.S.C. §§ 1921, 2, and 3, and no issue has been raised concerning such allowances.
The district court concluded that § 1927 does not authorize ordering recovery of costs from a party, but only from an attorney or otherwise admitted representative of a party. We agree. In our opinion the section does not deal with the question of the nature or amount of costs to be allowed, but authorizes imposition of otherwise allowable costs on counsel personally in place of the party for whom he appeared where the circumstances mentioned in the section have occurred.
As succinctly put by another court, the section “merely authorizes the taxing of such excess of costs as arose from unreasonable and vexatious conduct of an attorney, to the attorney himself, as opposed to his client, and does not create any penalty in favor of the prevailing party, nor does it sanction the taxing of any additions over regular costs.”
Other decisions are consistent with the foregoing construction of the section:
Motion Picture Patents Co. v. Steiner (C.C.A. 2d, 1912), 201 F. 63; Toledo Metal Wheel Co. v. Foyer Bros. & Co. (C.C.A. 6th, 1915), 223 F. 350, 358; Bone v. Walsh Const. Co. (S.D.Iowa, 1916), 235 F. 901; Brislin v. Killanna Holding Corporation (2d Cir., 1936), 85 F.2d 667, 671; Weiss v. United States (2d Cir., 1955), 227 F.2d 72, cert. den. 350 U.S. 936, 76 S.Ct. 308, 100 L.Ed. 817; Miles v. Dickson (5th Cir., 1967), 387 F.2d 716; Kiefel v. Las Vegas Hacienda, Inc. (7th Cir., 1968), 404 F.2d 1163, 1166, cert. den. Hubbard v. Kiefel, 395 U.S. 908, 89 S.Ct. 1750, 23 L.Ed.2d 221.
It follows that § 1927 is wholly irrelevant in this ease, and that it neither adds to nor detracts from the nature or amount of costs which the court could order Mr. Henderson to pay.
Although the district court found § 1927 inapplicable, and rejected the claim which plaintiff based upon it, the court found that Mr. Henderson had in fact multiplied the proceedings and that his conduct had been vexatious and unreasonable. The court remarked that if it were within the court’s “statutory powers to grant these special costs * * * I certainly would.”
It is the general rule “that attorney’s fees are not ordinarily recoverable in the absence of a statute or enforceable contract providing therefor,” but the rule is subject to limited exceptions.
This case does not fall within any recognized specific exception, but there is authority that “In exceptional circumstances, however, where the behavior of a litigant has reflected a willful and persistent ‘defiance of the law,’ a court of equity has the power to charge an adverse party with plaintiff’s counsel fees as well as court costs. * * * Such awards, however, are clearly reserved for exceptional eases.”
We are not prepared to hold that wilful and vexatious tactics of obstruction of justice, similar to those with which Mr. Henderson is charged, could never be a proper foundation for a recovery of attorney’s fees necessarily incurred in overcoming them, and we have considered whether it would be appropriate, in view of the district court’s remarks, to remand for consideration whether this ease calls for such recovery. In view of plaintiff’s preoccupation, however, with a wholly irrelevant statute and its failure to present the proposition to the district court or here that the use of inherent equitable power is appropriate, we decline further to burden the district court.
Appeal No. 18,346 is dismissed. The orders appealed from in Nos. 18,345 and 18,347 are affirmed. Plaintiff is allowed its costs in all three appeals.
. Jurisdiction is founded on diversity.
. In re Realty Associates Securities Corporation (E.D.N.Y.), 1943, 53 F.Supp. 1013.
. Fleisehmann Distilling Corp. v. Maier Brewing Co. (1967), 386 U.S. 714, 717-718, 87 S.Ct. 1404, 18 L.Ed.2d 475; Mills v. Electric Auto-Lite (1970), 396 U.S. 375, 391, 90 S.Ct. 616, 24 L.Ed.2d 593.
. Kahan v. Rosenstiel (3d Cir., 1970), 424 F.2d 161, 162. See: 6 Moore's Federal Practice 54.77 [2] p. 1352; Anno: Right to Counsel Fees in Federal Court, 8 L.Ed.2d 894, 912; Hill v. Franklin County Board of Education (6th Cir., 1968), 390 F.2d 583, 585; Bell v. School Board of Dewhatan County Virginia (4th Cir., 1962), 321 F.2d 494; Relax v. Atlantic Coast Line R. Co. (4th Cir., 1950), 186 F.2d 473, 181. See also discussion in Walker v. Columbia Broadcasting System, Inc., 7th Cir., 1971 418 F.2d 33.
Question: Were there cross appeals 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.
BINGHAM, Circuit Judge.
This is an action of contract brought by the plaintiff, a citizen of Rhode Island, against the defendants, citizens of Massachusetts, to recover a share of profits arising out of the sale of certain real estate in Gardner, Mass., known as the “Theater and Hotel Block.” The first two counts are for a broker’s commission. The third count, which is the only one involved here (the jury having been directed that the plaintiff could not recover on either of the first two counts), is on a contract said to have been made June 13, 1924, whereby the defendants are alleged to have agreed to pay the plaintiff 40 per cent, of the profits, which would accrue to them from a sale of the property to a certain person or concern or to any person acting for such person or concern, in consideration of the plaintiff’s disclosure of the name of the person and concern and the introduction of the defendants to such person, to enable the defendants to deal with the person or concern as a buyer of the property. The answer was a general denial. At the close of its charge to the jury, the court submitted the following questions :
“(1) Did the defendants enter into any contract with the plaintiff whereby they agreed to pay a percentage of the profits derived from the sale to Ripley or to the Giles Company of the Gardner real estate involved in this suit?
“(2) If you answer ‘Yes’ to the first question, which of the following contracts did the defendants enter into:
“A. A contract to pay 40 per cent, of the profits derived from a sale at $25,000 above mortgages? or—
“B. A contract to pay 40 per cent, of all profits derived from any sale which the defendants might thereafter make to Ripley or Giles Company?
■ “(3) What were plaintiff’s damages resulting from a breach of the contract designated by the letter ‘B’?”
After the jury had had the matter under consideration for six hours, they came into court and reported that their answer to the first question was “Yes,” but that they had so far been unable to agree upon the other questions. The court thereupon instructed the jury that “the contract established by the plaintiff’s evidence only obligated the defendants to pay 40 per cent, of $12,170, the difference between the price which the defendants were to pay for the property and the price which Ripley had agreed to pay under his written agreement with the plaintiff, and this 40 per cent, with interest from the date of writ to-day amounts to $5,161.30. You may, therefore, in view of your disposition of the first question, return a verdict for the plaintiff for the sum of $5,161.30.” To this ruling and direction of a verdict, both the plaintiff and defendants excepted. A judgment having been entered on the verdict, the plaintiff and the defendants prosecuted these cross-writs of error.
The defendants in their assignments of error complain that the court erred in denying their requests for rulings, but, as each one of them relates in whole or in part to the first two counts, upon which the plaintiff was not permitted to go to the jury, they were properly denied.
The questions presented by the remaining assignments of both plaintiff and defendants, except as to the admission of a piece of evidence, are whether the court erred: (1) in directing the jury to return a verdict for the plaintiff for $5,161.30, that being 40 per cent, of the difference between the price the defendants had agreed to pay the plaintiff for the property and the price which Ripley had agreed to pay him for it, pins interest from the date of the writ; and (2) whether there was any substantial evidence' from which the jury could find, if there was an agreement to share the profits, that the agreement jvas for 40 per cent, of the difference between the price which defendants were to pay for the property and the price which Ripley had agreed with the plaintiff to pay him under his written agreement.
The only evidence being .upon the question, as to whether there was an agreement between the plaintiff and the defendants to share the profits to be derived from a sale of the property, and, if so, what its terms were, was given by the plaintiff and his witnesses. The defendants denied the making of any contract. The evidence was that on March 6, 1924, the plaintiff made a written agreement with the defendants to sell them the property (subject to an unexpired lease of a part of the property to the Giles Company, of which Ripley was general manager) for $12,830 over existing mortgages then on the property, papers to pass May 1; that later in March, Ripley, ignorant of the March tith agreement, called on the plaintiff to obtain an extension of the lease for his company; that the plaintiff informed Ripley of his agreement with the defendants, but that there was a question whether they were going through with it; that, as a result, the plaintiff, on April 1, 1924, entered into a written contract with Ripley (he acting for the Giles Company) to sell the property for $25,000 over the mortgages, conditional on the defendants’ delivering an i instrument showing that they had no claim upon the property on account of their agreement with the plaintiff; that, ■ because of attachments put upon the property in April, the transfer of the property to the defendants was delayed until July 1; that at, an interview between the plaintiff and the defendants on June 13, before the transfer on July 1 was had, negotiations tobk place, which are the subject to this controversy; that at that time the plaintiff opened the interview by saying that he knew a man working for a large concern, who was interested in buying the property, that he could get for the defendants a handsome profit, that the man was willing to pay $25,000 above the mortgages; that, after discussing the percentage of profit the plaintiff should receive out of the transaction and agreeing that it should be 40 per cent., the plaintiff said, “before I tell you the name of the man * * * I want it understood that I am to get 40 per cent, of the profits whenever you will sell to either the firm or the man”; that, this being understood, he disclosed the name of Ripley, representing the Giles Company; that he told them that Ripley had come to him on a lease proposition; that he said he had sold the building to the defendants and that he (Ripley) should talk with them; that he also said he had told Ripley he did not think the defendants would go through with the deal, and he thought he could turn the deal his (Ripley’s) way if they gave him an offer; that the defendants said, “Yes; that is a good proposition, we will sell.” ■ The plaintiff also testified that he “did not disclose the name of Ripley or the Giles Company until after the defendants agreed to pay * * * [him'] 40 per cent, of the profits of any sale made to one or the other” of the parties he had mentioned; that, in thie defendant’s presence, he called Ripley over the phone about meeting the defendants and doing business directly with them; that a time and place of meeting was agreed upon for the following Monday; that at the time and place agreed upon the parties met, and he introduced the defendants to Ripley; -that no agreement was made with Ripley on that day; that between July and September 18th negotiations were carried on between the defendants, Ripley, and the Giles Company, resulting in a written sale agreement, pursuant to which on October 1 the defendants deeded the property to the Giles Company for $240,000, and a 20-year lease to the defendants, at $300 a month, of two stores on .the property. , <.
It was undisputed that the defendants had paid $9,214.88 in remodelling the two stores, and that the profit on the sale (not taking into account the value of the 20-year lease) was $55,000 .less the above expenditures, or $45,785.12.
In view of this evidence, and other evidence of the same nature in its support, we think the court erred in directing a verdict for the plaintiff for 40 per cent, of the $12,-170. And, while it is unnecessary to a decision of this- ease, it seems to us that there was no evidence submitted from which a jury would be warranted in finding that the profits out of which the plaintiff was to receive his percentage was the difference between what he was to receive from the defendants and what Ripley had agreed previously to pay him for the property; that the agreement, if there was any, was to pay the plaintiff a percentage of the profits derived from a sale by the defendants to Ripley or the Giles Company, whatever that might be over and above the price the defendants paid the plaintiff for the property.
In this situation it is unnecessary to pass on the question of evidence; it may not arise at another trial.
The judgment of the District Court is vacated, the verdict is set aside, and the case is remanded to that court for a new trial, with costs to Swartz.
Question: Were there cross appeals 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.
JAMES DICKSON PHILLIPS, Circuit Judge:
In this diversity case Grady Allen sued Zurich Insurance Company to recover the amount of a personal injury judgment earlier obtained by Allen against Zurich’s insured under a liability policy. Following a jury verdict in Allen’s favor, the district court granted judgment n. o. v. for Zurich on the basis that the evidence established as a matter of law that Allen was an employee of Zurich’s insured so that Zurich was not liable under an exclusion in the liability policy. On Allen’s appeal, we affirm the district court’s judgment n. o. v., but on other grounds.
I
In August 1975, Allen was assisting Zurich’s insured, Carl Scruggs, in installing a mobile home when the home, which Scruggs had placed on blocks, shifted, fell, and crushed Allen’s hand. Allen later sued Scruggs in a South Carolina state court on a negligence theory to recover for his injuries “while in the employment of the Defendant, Carl H. Scruggs, .... ” Complaint, Allen v. Scruggs, No. 76-CP-23-92 (Greenville, S.C. County Ct. C.P.). Zurich defended Scruggs under a reservation of rights clause in a general automobile liability policy issued to him. The case proceeded to trial and as part of his charge to the jury, the trial judge instructed that “[t]he first material allegation which the plaintiff must establish is that he was an employee of the defendant, with the defendant owing a duty of care to him.” Tr. at 173, Allen v. Scruggs, No. 76-CP-23-92 (Greenville, S.C. County Ct. C.P.). The jury returned a verdict for Allen of $37,000, which Scruggs has not paid.
Allen then brought suit against Zurich to collect on Scruggs’ automobile liability policy and alleged in the complaint that he and Scruggs were joint venturers. In defense, Zurich claimed that it was not liable because Allen was Scruggs’ employee at the time of his injury and the policy expressly excluded coverage for bodily injury to any employee. At trial, Allen testified that he had thought he was Scruggs’ employee in 1975, but he now characterized their relationship as working together. Scruggs supplied the equipment, solicited many of their jobs, and directed the activity leading to the injury. Allen, however, was paid a percentage of each job rather than a salary, he never received a W-2 form, he had no regular working hours, and he picked up other service work for himself on the side. During cross-examination, Allen admitted that he had testified before the South Carolina Industrial Commission in December 1975, in a deposition in February 1976, and before the state court in January 1977, that he was Scruggs’ employee and was paid a weekly salary of $250 in cash at the time of his injury. Portions of that testimony were admitted into evidence in this action. Scruggs, however, testified that Allen was not his employee, but a contract laborer. An August 1975 letter from Scruggs to the Anderson County, S. C. Department of Social Services, which corroborated Scruggs’ testimony, was admitted into evidence.
The district court permitted the case to go to the jury which returned a verdict for Allen. Zurich then moved for judgment notwithstanding the verdict on two grounds: (1) Allen’s status as an employee of Scruggs was affirmatively adjudicated in the state court proceeding and Allen is now bound by that determination and (2) the only reasonable inference to be drawn from the evidence presented at trial is that Allen was Scruggs’ employee and acting within the scope of his employment when he was injured. The district court granted the motion on the second ground. This appeal followed.
II
Zurich defended solely on the basis that Allen was Scruggs’ employee, acting in the course and scope of his employment at the time of his injury and that liability for the injury was therefore expressly excluded from the coverage of its policy. This was an affirmative defense as to which Zurich had the burden of proof. The district court correctly treated it as such. When the jury returned a verdict for Allen, the district court’s subsequent grant of judgment n. o. v. was therefore entered in favor of the party having the burden of proof on the sole dispositive issue.
There is, of course, judicial power under Fed.R.Civ.P. 50 to direct a verdict or grant judgment n. o. v. for, as well as against, the party having the burden of proof on the dispositive issues on the basis of a legal assessment of the evidence. Davis Frozen Foods, Inc. v. Norfolk Southern Railway, 204 F.2d 839 (4th Cir. 1953) (directed verdict for plaintiff); United States v. Grannis, 172 F.2d 507 (4th Cir. 1949) (same); see also Federal Insurance Co. v. Summers, 403 F.2d 971, 975-76 (1st Cir. 1968) (directed verdict for defendant with burden considered but denied). But the power is controlled by a standard so stringent that its exercise is but rarely appropriate. The standard is in critical respects different from and more demanding than that applicable to the grant of directed verdict against the proponent. As well explained by Judge McLaughlin:
[Tjhough a motion for directed verdict in favor of the proponent of an issue is cast in the same form as when made by the defending party, it requires the judge to test the body of evidence not for its insufficiency to support a finding, but rather for its overwhelming effect. He must be able to say not only that there is sufficient evidence to support the finding, even though other evidence could support as well a contrary finding, but additionally that there is insufficient evidence for permitting any different finding. The ultimate conclusion that there is no genuine issue of fact depends not on a failure to prove at least enough so that the controverted fact can be inferred, but rather depends on making impossible any other equally strong inferences once the fact in issue is at least inferable.
Mihalchak v. American Dredging Co., 266 F.2d 875, 877 (3d Cir. 1959) (footnote omitted); see also United States v. Grannis, 172 F.2d at 513.
Applying that standard to the evidence in this case, we do not think it was appropriate to grant judgment n. o. v. for Zurich on this basis. The dispositive issue was whether at the critical time Allen was Scruggs’ employee acting in the course and scope of his employment. Under controlling South Carolina law the general test whether one person is the employee of another is
“control by the employer. It is not the actual control then exercised, but whether there exists the right and authority to control and direct the particular work or undertaking, as to the manner or means of its accomplishment.... ” Bates v. Legette, 239 S.C. 25, 34-35, 121 S.E.2d 289, 293 (1961).
This court, like most, has recognized four factors bearing on the crucial right of control. These are (1) direct evidence of the right to, or exercise of, control, (2) method of payment, (3) furnishing of equipment, and (4) right to fire.
Chavis v. Watkins, 256 S.C. 30, 180 S.E.2d 648, 649 (1971).
Under this test the evidence was in substantial conflict, particularly with respect to the essentially evaluative element of the right to control. Allen’s own testimony on this element was in major respects blatantly self-serving, shot through with legal characterizations, internally inconsistent, and in flat conflict with his own earlier self-serving testimony and statements made in contexts where his interests in the nature of the relationship were diametrically different. But contradictions, inconsistencies and self-interest present questions of credibility and of probative weight for the jury, which was perfectly entitled, for example, utterly to discount all of Allen’s legal characterizations of the critical relationship as having no probative value, leaving for consideration only the raw historical facts bearing upon whether Scruggs had the right to control. See Restatement (Second) of Agency § 220, Comment m (1957). Beyond this the evidence of the method of payment and the right to fire could, depending upon credibility determinations and assessments of probative weight, lead to conflicting inferences. Only on the evidence of the furnishing of equipment was there essentially no conflict and no need for assessments of credibility; that the equipment was furnished by Scruggs was not really in dispute. Resolution of the critical agency issue requires evaluation of all the factors, however; no one of them is determinative as a matter of law; and for this reason, its resolution is ordinarily one for the trier of fact. See id. Comment c.
We must bear in mind the critical point that here the burden of persuasion was not upon Allen to establish that he was not Scruggs’ employee, but upon Zurich to establish that he was. To hold that Zurich was entitled to judgment as a matter of law we must find that not only was there sufficient evidence, so manifestly credible that it must be believed, to support a finding that Allen was Scruggs’ employee, but also that there was insufficient evidence from which the jury could rationally have made any other finding. See Mihalchak v. American Dredging Co., 266 F.2d at 877. This we cannot do, and we therefore conclude that the district court erred in granting judgment n. o. v. on this basis. This does not, however, end the matter.
Ill
Zurich contends alternatively that judgment n. o. v. was proper because Allen is legally estopped by the state court judgment to contest the fact that he was Scruggs’ employee. As indicated, in that state court action Allen expressly alleged that he was at the time of injury “in the employment of ... Scruggs.” This allegation was submitted to the state court jury as one that the plaintiff “must establish” in order to recover. By the return of a verdict in favor of Allen, Zurich says that this issue was necessarily determined in Allen’s favor, that it was essential to the resulting judgment, and that under relevant principles of collateral estoppel Allen should be now precluded from contesting the fact so established. See Restatement (Second) of Judgments § 68 (1980); Johnston-Crews Co. v. Folk, 118 S.C. 470, 111 S.E. 15 (1922). We can of course properly affirm a district court’s judgment though it was entered upon an erroneous basis, Securities & Ex change Commission v. Chenery Corp., 318 U.S. 80, 88, 63 S.Ct. 454, 459, 87 L.Ed. 626 (1943); Eltra Corp. v. Ringer, 579 F.2d 294, 298 (4th Cir. 1978), and Zurich urges that we should do that here on the basis of collateral estoppel.
While this contention is not without force, we are sufficiently concerned about a number of problems in applying collateral estoppel under the particular circumstances of this case that we decline to do so. There is the question whether the issue was actually litigated in the state action. This does not conclusively appear from our record. From our record it might be concluded that, though submitted to the jury, the issue had not actually been contested on trial. See Restatement (Second) of Judgments § 68, Comment e (1980). The burden is on the party asserting collateral estoppel to establish its predicates, and this of course includes presenting an adequate record for the purpose.
There is also a question whether Zurich is entitled as a party to the federal action to the benefit of collateral estoppel. This would depend upon whether the doctrine of mutuality of estoppel still holds in South Carolina, whose law respecting the conclusiveness of its own judgments we must apply, 28 U.S.C. § 1738, or whether, alternatively, Zurich could properly be held to be in privity with Scruggs and thereby entitled to the benefit of the state court judgment. On the first point we have been directed to no authority; and on the second, Allen has raised at least the colorable possibility of a conflict of interest between Zurich and Scruggs that might draw in question the justice of according to their relationship the privity that ordinarily would exist between insurer and insured for this purpose. Allen also urges that the issue of his employment status was not essential to the judgment in the state action, so that this critical predicate for application of collateral estoppel is missing. See Restatement (Second) of Judgments § 68, Comment h (1980). For reasons we will later develop, we are not impressed by this last contention, but we are sufficiently concerned by the other problems that we think collateral estoppel is not appropriately applied here. But neither does this end the matter.
Closely related to collateral estoppel, but dissimilar in critical respects, is another principle that we conclude should preclude Allen on the dispositive issue. In certain circumstances a party may properly be precluded as a matter of law from adopting a legal position in conflict with one earlier taken in the same or related litigation. “Judicial estoppel” is invoked in these circumstances to prevent the party from “playing fast and loose” with the courts, and to protect the essential integrity of the judicial process. See United Virginia Bank/Seaboard National v. B. F. Saul Real Estate Investment Trust, 641 F.2d 185, 190 (4th Cir. 1981); Scarano v. Central R. Co., 203 F.2d 510, 512-13 (3d Cir. 1953); Duplan Corp. v. Deering Milliken, Inc., 397 F.Supp. 1146, 1177 (D.S.C.1974).
The circumstances under which judicial estoppel may appropriately be invoked are probably not reducible to any general formulation of principle, but they may be found where neither collateral estoppel nor equitable estoppel, see Scarano v. Central R. Co., 203 F.2d at 512-13, nor any requirements of election of remedies or theories, see Eads Hide & Wool Co. v. Merrill, 252 F.2d 80, 84 (10th Cir. 1958), would apply. Its essential function and justification is to prevent the use of “intentional self-contradiction ... as a means of obtaining unfair advantage in a forum provided for suitors seeking justice.” Scarano v. Central R. Co., 203 F.2d at 513. This obviously contemplates something other than the permissible practice, now freely allowed, of simultaneously advancing in the same action inconsistent claims or defenses which can then, under appropriate judicial control, be evaluated as such by the same tribunal, thus allowing an internally consistent final decision to be reached. See Fed.R.Civ.P. 8(e)(2). That, obviously, is not what is involved here. Though perhaps not necessarily confined to situations where the party asserting the earlier contrary position there prevailed, it is obviously more appropriate in that situation. See United States v. Webber, 396 F.2d 381 (3d Cir. 1968); Parker v. Sager, 174 F.2d 657 (D.C.Cir.1949); Buder v. United States, 332 F.Supp. 345 (E.D.Mo.1971). That is the situation here.
On total balance we are persuaded that, though the principle is one to be applied with caution, it is properly applied here. Here is a party who, as the record conclusively shows, has earlier successfully asserted a legal position respecting his employment relationship with another that is completely at odds with the position now asserted. The position taken in the state court action was taken advisedly and inured to Allen’s benefit there. While the earlier assertion of a legally irrelevant, albeit inconsistent, position should seldom, if ever, lead to the application of judicial estoppel, see, e.g., Gleason v. United States, 458 F.2d 171 (3d Cir. 1972), we disagree with Allen’s contention that his earlier position in the state court action was there, in the end, legally irrelevant. The duty of care in negligence actions is not determined in a vacuum. It always arises from the particular relationship of victim and alleged tortfeasor. There is a very specific duty of care owed by employer to employee that is not necessarily the same duty that would subsist in the same general factual setting between joint venturers, independent contractors, or certainly complete strangers. Depending upon the situation, it may well be a higher duty than would arise out of any of those other relationships in the same factual context. See generally Restatement (Second) of Agency §§ 493, 497 (1957). This general principle of tort and agency law applies in South Carolina, see, e.g., Tucker v. Holly Hill Lumber Co., 200 S.C. 259, 20 S.E.2d 704 (1942), and was specifically applied in Allen’s state court action by the state judge who submitted Allen’s allegation to the jury as bearing upon his right to recover. Allen obviously thought it sufficiently important in his state court action to make a deliberate allegation that the relationship was that of employer and employee rather than any of a number of others from which different and lesser duties of care might have arisen.
We are satisfied that this is a case in which it is sufficiently important to the integrity of the federal courts that their judicial processes should not be lent to this plain example of “intentional self-contradiction ... as a means of obtaining unfair advantage... . ” Scarano v. Central R. Co., 203 F.2d at 513. For this reason we affirm the judgment of the district court granting judgment n. o. v. to the defendant Zurich.
AFFIRMED.
. With respect to the first ground, the district court held that there was no res judicata bar because the state action sounded in tort and the federal suit was an action ex contractu and there was no collateral estoppel because Allen’s status as an employee was not a material issue necessarily determined in the state action. See Part III, infra.
. In his reply brief on this appeal, Allen points out that in the state court action Zurich, defending Scruggs under its policy and on a reservation of rights, presumably took the position (against Allen’s allegation) that Allen was not Scruggs’ employee. This, says Allen, puts Zurich in a poor position to urge Allen’s equitable estoppel to change positions or relitigate the question in this action. If true, this would also obviously bear upon the privity question, assuming it still has relevance under South Carolina collateral estoppel doctrine. See Restatement (Second) of Judgments § 83, Comment d (1980). For two reasons we think the matter cannot properly be considered on this appeal. First off, assuming its relevance, the record on this appeal would not allow its fair consideration, since the specific circumstances of Zurich’s defense are not developed. Furthermore, we doubt Allen has standing to raise in this litigation any question of a conflict of interest between Zurich and Scruggs relating to the former’s defense of the state court action. That would seem a matter between insurer and insured.
. As a matter of fact, it appears uncontradicted that Allen had not only earlier taken a directly contrary position respecting the relationship in the state court action, but that he had taken the same contrary position in one state administrative proceeding where that also suited his purpose and, with Scruggs’ cooperation, a still different one when it suited both their purposes in connection with yet another state administrative matter. Whether or not these administrative proceedings would independently have provided the predicates for application of judicial estoppel, they further support the conviction that no further judicial aid should be given this particular enterprise of blowing hot and cold as the occasion demands,
. Although this is a diversity case, we consider that federal law controls the application of judic*a* estoppel, since it relates to protection of the integrity of the federal judicial process, We think that neither 28 U.S.C. § 1738, the full faith and credit statute, nor Erie R. R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), requires inquiry into the possible existence of a conflicting state ru^e-
As to the former, the question is not the effect to be accorded the state judgment as res judicata or collateral estoppel, a matter to which 28 U.S.C. § 1738 clearly does speak, see, e.g., Winters v. Lavine, 574 F.2d 46 (2d Cir. 1978), but the effect to be given in federal court to the attempt there to establish a legal/factual position directly conflicting with one earlier taken in another judicial tribunal, whether state or federal.
As to the latter, we think that in the final analysis, Byrd v. Blue Ridge Rural Elec. Coop., Inc., 356 U.S. 525, 78 S.Ct. 893, 2 L.Ed.2d 953 (1958), would dictate application of the federal rule here recognized rather than any conflicting, “outcome determinative” state rule that might be found.
. Although this ground was not specifically raised either in the trial court or on appeal, we are satisfied that under the circumstances of its close relationship to the directly contested issue of collateral estoppel we may properly rely upon it as an alternative basis for affirmance. See generally 10 C. Wright & A. Miller, Federal Practice & Procedure: Civil § 2716 (1973); cf. Yale v. National Indemnity Co., 602 F.2d 642, 650 n.18 (4th Cir. 1979) (inappropriate where issues not sufficiently developed).
Question: Were there cross appeals 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.
BOYCE F. MARTIN, Jr., Circuit Judge.
This controversy involves two taxpayers’ suits for refunds of federal income tax paid for the year 1970. Both the United States and the taxpayers have brought appeals from the judgment of the District Court.
We must determine whether gains realized from the disposition of certain real estate should be characterized as long-term capital gain, short-term capital gain, or ordinary income.
I. The Facts
On June 1, 1969, taxpayers Morrison and Case formed a partnership. Their purpose was the acquisition of real estate near Geneva, Ohio, in an area adjacent to Lake Erie and Geneva State Park. Long-range plans included transfer of the properties purchased to a corporation, which the taxpayers would form to develop and sell residential units and a recreational complex. An alternate possibility was resale of the properties in bulk to another, larger developer. Taxpayer Morrison had many years experience marketing real estate in Ohio; taxpayer Case was president of the local telephone company and well-qualified to handle arrangements for bringing utilities to the proposed project.
The partnership’s first purchase was a 3.8 acre tract located on the shore of Lake Erie near the Geneva State Park boundary. “The Behner property” contained about a dozen summer cottages. By declaration of trust dated June 27, 1969 and a warranty deed of June 30, 1969, Herbert and Nona Behner conveyed the property to the Northeastern Ohio National Bank as trustee for beneficiaries Morrison and Case and their wives. The price was $72,800, which the conveyors received from the bank.
The second acquisition was the “Johnson property,” an 8.2 acre tract containing several cottages and a few permanent homes. It was located west of the Behner property. On February 16, 1970, Morrison and Case contracted to purchase the property from George and Catherine Johnson for a price of $150,000. The taxpayers made a $2,000 down payment and agreed to pay an additional $18,000 on or before July 15, 1970. The balance of $130,000 was due on or before January 15, 1971. The contract provided 1) that title would not be transferred until the purchase price was paid in full; 2) that the taxpayers would obtain possession sixty days after the transfer of title; 3) that in lieu of interest on the deferred payments, the Johnsons would receive all rents and profits from the property until passage of title; and 4) that taxes, assessments and insurance would be prorated between the parties as of the date of transfer.
On March 15, 1970, the taxpayers acquired a third tract from Jack and Inez Nightwine. The Nightwine property adjoined the Johnson property and also contained summer cottages. The partnership obtained, for $64,456.95, the Nightwines’ rights under a 1969 purchase contract. Toward that sum, the taxpayers paid $500 on July 20, 1970 and $15,500 on October 15, 1970. They received immediate possession and assumed responsibility for all taxes and assessments.
Morrison, acting individually, contracted to purchase a fourth parcel of land on January 15, 1970. The 162-acre tract had been owned since 1965 by the “B’tawn Beach Club” partnership, consisting of taxpayer Case and his three brothers. Case did not participate in Morrison’s purchase of the B’tawn property, apparently because he wished to avoid a conflict of interest.
The B’tawn contract provided for a total price of $425,000, to be allocated among a $10,000 down payment, a payment of $290,-000 due on or before December 1, 1970 and a final payment of $125,000 to be made on or before December 31, 1970. Morrison did not, however, adhere to these terms. Instead, upon execution of the contract, he gave the B’tawn partnership a promissory note for $10,000; he did not make payment on the note until November 23, 1970. The B’tawn contract provisions governing deferred passage of title and possession were very similar to those contained in the Johnson contract.
The record indicates that the taxpayers attempted to acquire other property contiguous with the four tracts described above. Mr. Case testified, “you can’t sell to some development company in New York and Chicago and have little spots here and little spots there that are missing.” At the same time, however, the taxpayers explored the possibility of developing the property themselves; tentative plans called for the formation of a corporation to be financed by outside investors. Toward this end, they engaged an artist to prepare preliminary sketches of the proposed “Shoreland Acres,” consulted an engineer, and opened negotiations with utility companies for the provision of services to the project.
On September 22, 1970, the State of Ohio announced that the United States Department of the Interior had approved expenditures of up to $1.5 million for the expansion of nearby Geneva State Park. Shortly thereafter, the taxpayers received notice of the State’s intention to acquire the Behner, Johnson, Nightwine, and B’tawn tracts. We outline, briefly, the transactions which followed this notice of condemnation.
On November 27, 1970, the taxpayers instructed the Northeastern Ohio National Bank, as trustee, to grant the State of Ohio a thirty-day option to purchase the Behner property for $175,000. The State exercised this option and on December 7, 1970, the bank transferred title to the State. On December 29, 1970, the State issued a warrant to the bank in the amount of $175,000. The bank discharged the deed of trust on the property and paid the remainder of the $175,000 to the taxpayers.
On November 27, 1970, the taxpayers granted the State a similar option to purchase the Johnson property for $334,000. The State exercised this option on the date it was granted. On December 7, 1970, the Johnsons deeded the property to the taxpayers, who, in turn, transferred title to the State on December 11, 1970. Upon receipt of $334,000 from the State, the taxpayers paid the Johnsons the approximately $110,-000 still owning on the original purchase agreement.
Also on November 27,1970, the taxpayers granted the State an option to purchase the Nightwine property for $139,000. This sale was completed on December 11, 1970, whereupon the taxpayers paid the Night-wines the remaining balance due of $48,-457.
Morrison handled the sale of the B’tawn property in a somewhat different fashion. On December 4, 1970, the B’tawn Beach Club partnership conveyed title of the property to Howard Nazor as trustee for Morrison. Nazor was instructed not to convey title to Morrison until the latter paid the balance of $415,000 due on the original $425,000 price. The deed of trust was recorded December 11, 1970. On December 16, 1970, Nazor, as trustee for Morrison, granted an option to the State to purchase the B’tawn tract for $565,000. On December 17, before the B’tawn Beach Club partnership had received further payment from Morrison, Nazor conveyed both legal and equitable title to the state of Ohio. On December 29, 1970, the State issued a warrant for $565,000 to Nazor, who proceeded to pay the B’tawn Beach Club partnership the balance due on the original contract. He then distributed the remainder to Morrison.
The following chart summarizes the important points in the taxpayers’ real estate transactions:
II. The Controversy
In their respective income tax returns for 1970, Morrison and Case reported the gains realized from the sales of their properties as long-term capital gains. In the course of an audit, the Internal Revenue Service decided that the gains should have been reported as ordinary income. Accordingly, the Service assessed tax deficiencies against Morrison in the amount of $93,094.62 plus interest, and against Case in the amount of $53,080.56 plus interest. Each taxpayer paid his deficiency in full and filed a timely claim for refund. The Service denied both claims and Morrison and Case initiated separate actions in District Court.
Before the two suits were consolidated the United States filed a motion for partial summary judgment against Morrison. It contended that he had held, for tax purposes, the Johnson and B’tawn properties for less than six months; even if he were entitled to report his gains on the sale of these tracts as capital gains, those gains would be taxable on a short-term rather than a long-term basis. In support of its motion, the United States pointed out that Morrison’s tax liability under a short-term capital gain theory would be identical to his liability if the gains were characterized as ordinary income.
The District Court concluded that Morrison had, in fact, held the Johnson property for less than six months; to that extent, it granted the government’s motion for summary judgment. Morrison v. United States, 449 F.Supp. 654 (N.D.Ohio 1977). The Court declined to rule on the appropriate treatment of Morrison’s gain from the sale of the B’tawn property until it heard further evidence.
After trial, for which Morrison’s and Case’s suits were consolidated, the District Court ruled that the taxpayers’ sales of all four tracts generated capital gain and not ordinary income. Morrison v. United States, 449 F.Supp. 663 (N.D.Ohio 1977). The Court’s reasoning can be summarized as follows: on September 22, 1970, when Morrison and Case received formal notice of the state’s intention to acquire their properties, the taxpayers held their real estate for sale in the ordinary course of business; at the time of the actual sales to the state, however, the taxpayers held the properties for investment purposes and therefore realized gain on the disposition of capital assets.
In its discussion of the six-month holding period required for long-term capital gain taxation, the Court ruled that Case’s gain on the sale of the Johnson tract and Morrison’s gain on the sale of the B’tawn property failed to qualify as “long-term” and were, therefore, subject to “short-term” tax treatment. According to the Court, the taxpayers neither assumed the burdens nor enjoyed the benefits of ownership of these two properties until they actually obtained title to them. As noted above, this event did not take place until a few days before title was conveyed to the State.
The government did not contest that the taxpayers had held the Behner and Night-wine tracts for more than six months. Accordingly, the Court found that the gain realized on the sale of these properties was long-term capital gain and that the taxpayers were entitled to a partial refund.
We believe that the District Court achieved the correct result insofar as it determined the amount of tax Morrison and Case ultimately had to pay. However, we have profound misgivings about the rationale underlying the decision below.
III. The Issue on Appeal
On appeal, the government contends that the taxpayers held their properties “for sale to customers in the ordinary course of business.” If this position is correct, the taxpayers should have reported their gain from the disposition of the properties as ordinary income.
Section 1202 of the Internal Revenue Code (26 U.S.C.) provides preferential tax treatment for long-term capital gain. During the tax year 1970, Section 1222(3) defined long-term capital gain as gain derived from the sale of a “capital asset” held for more than six months. Section 1221(1) offers a negative definition of “capital asset”: it is property which does not fall within certain enumerated categories, among them “property held by the taxpayer primarily for sale to customers in the ordinary course of his trade of business.”
The taxpayers, of course, maintain that none of the exceptions set out in Section 1221(1)- apply to the four tracts of real estate described earlier. If they are correct, then their properties were, by definition, capital assets. Furthermore, argue the taxpayers, for purposes of federal taxation, they “held” all four properties for more than six months and were therefore entitled to report their gains as long-term capital gains.
In our review, we adhere to the rule that the preferential capital gains provisions in the tax code are to be narrowly construed. Corn Products v. Commissioner, 350 U.S. 46, 52, 76 S.Ct. 20, 24, 100 L.Ed. 29 (1955); Omer v. United States, 329 F.2d 393, 395 (6th Cir. 1964). In consequence, the taxpayers must overcome a heavy burden of proof in order to prevail.
IV. The Standard of Judicial Review
The government contends that we need not confine ourselves to a “clearly erroneous” standard of review in this case. In support of its position, it cites Third, Fourth, and Fifth Circuit decisions which indicate that the determination of whether the taxpayers held their properties “for sale in the ordinary course of business” is one of law, or “ultimate fact.” Jersey Land and Development Corp. v. United States, 539 F.2d 311, 315 (3rd Cir. 1976); Turner v. Commissioner, 540 F.2d 1249, 1252 (4th Cir. 1976); Biedenharn Realty Co. v. United States, 526 F.2d 409, 416 (5th Cir. 1976). This characterization of the issue, in effect, permits an appellate court to re-examine the evidence without giving customary deference to the original findings of the trial court.
The authorities cited by the government are undoubtedly well-reasoned; however, we are resolved to adhere to the principles expressed in Philhall v. United States, 546 F.2d 210, 214 (6th Cir. 1976), and, most recently, in Gartrell v. United States, 619 F.2d 1150 (6th Cir. 1980). We held in those cases that the determination of whether property is held “primarily for sale” depends entirely upon judicial ascertainment of the taxpayer’s intent. It is, therefore, an ordinary issue of fact, subject to reversal on appeal only if we believe the District Court’s findings were “clearly erroneous.”
V. Review of Authorities
The District Court found: 1) that the taxpayers held their properties primarily for sale to customers in the ordinary course of business; 2) that the threat of condemnation changed this purpose; but 3) that the taxpayers held the Johnson and B’tawn tracts for an insufficient period of time to qualify for long-term capital gains treatment.
The taxpayers maintain: 1) that there was no evidence to support the District Court’s first finding; 2) that the threat of condemnation confirmed the “capital” nature of their gains from sale of the properties; and 3) that they held the Johnson and B’tawn tracts for more than six months. They offer several arguments in support of the third assertion: first, that Ohio law of equitable conversion substantiates their claim to a sufficient holding period; second, that they obtained the “benefits and burdens of ownership” more than six months prior to the state’s purchases; and third, that the purchase contracts gave them “options” within the meaning of Section 1234(a) of the Code.
A. The purpose for which the taxpayers held their properties.
In Matthews v. Commissioner, 315 F.2d 101, 107 (6th Cir. 1963), we enumerated eight factors to consider .in deciding whether property is held “primarily for sale.” They are: 1) the purpose for which the property was acquired; 2) the purpose for which the property was held; 3) the extent of improvements made to the property; 4) the frequency, number, and continuity of sales; 5) the nature and substantiality of the transactions; 6) the nature and extent of the taxpayer’s dealings in similar property; 7) the extent of advertising to promote sales; and 8) whether or not the property was listed for sale either directly or through brokers. See also Broughton v. Commissioner, 333 F.2d 492, 495 (6th Cir. 1964); Gartrell v. United States, supra at 1155-56.
In this case, the taxpayers testified that they acquired the properties in order to “hold ... and develop” them. As we have already noted, they hoped to transfer the properties to a corporation, to be financed and fifty percent owned by two outside investors. The government, in its argument, emphasizes repeatedly that this plan to transfer the real estate to a corporation at costs negates any investment motive on the taxpayers’ part. This interpretation ignores that aspect of the proposed transfer which represents, quite simply, sound tax planning. Transfer of the properties at cost instead of at an appreciated figure would have the effect of postponing recognition of a taxable gain. That the taxpayers intended to use this legitimate means of avoiding an imminent tax scarcely obviates the possibility that they did, in fact, regard their properties as an investment.
Furthermore, the taxpayers did not make improvements to any of the properties; they merely maintained them in their existing condition. The properties were neither advertised nor listed for sale, and no sales in fact occurred until the state issued its condemnation notices.
The District Court was impressed with Morrison’s considerable experience in marketing Ohio real estate; it apparently inferred from his background that he was holding these particular properties primarily for sale. The government introduced no evidence whatsoever to support such a finding-a significant omission, since the Code specifically contemplates that dealers may segregate certain transactions in property similar to their stock in trade in order to qualify for capital gains tax treatment. 26 U.S.C. § 1236(a). Buono v. Commissioner, 74 T.C. No. 15, 1980 Tax Ct.Rep., Dec. 36,-925; Boykin v. Commissioner, 344 F.2d 889, 894 n. 8 (5th Cir. 1975).
In light of tne foregoing observations, we are constrained to hold that there was insufficient evidence to support the District Court’s conclusion that the taxpayers’ properties were held “primarily for sale.” Cf. Appeal of Bush, 610 F.2d 426 (6th Cir. 1979).
B. The effect of the threat of condemnation.
The District Court found that the taxpayers changed their purpose in holding the properties; under threat of condemnation, they became investors holding capital assets. The .Court based its decision on Ridgewood Land Co., Inc. v. Commissioner, 477 F.2d 135 (5th Cir. 1973); Commissioner v. Tri-S Corp., 400 F.2d 862 (10th Cir. 1968); and a Tax Court case, later reversed as Juleo, Inc. v. Commissioner, 483 F.2d 47 (3rd Cir. 1973).
Our reversal of the District Court’s ruling that the taxpayers initially held their property “primarily for sale” eliminates the need to consider the effect of the condemnation notice on these particular litigants. In view of the approach taken below, however, we wish to clarify our position on the legal issue lest this case engender confusion in future cases before the courts of this Circuit.
We agree with the Third Circuit’s rationale for reversing the Tax Court in Juleo, Inc., supra; as a corollary, we reject the suggestion that, for federal tax purposes, mere receipt of a condemnation notice automatically transforms property held “primarily for sale” into investment property. As the government notes in its brief, any property owner who receives a notice of condemnation presumably abandons whatever plans he originally entertained in favor of a new, albeit temporary, reason for holding the condemned property. Common sense application of established tax principles mitigates against giving this circumstance conclusive effect. Except as specifically provided by statute, cf. 26 U.S.C. § 1033, we decline to determine the tax consequences of a sale solely on the strength of a finding that the sale was involuntary.
Ordinarily, the characterization of an asset as “capital” or “non-capital” requires an analysis of several factors; the preceding section of this opinion illustrates just such an exercise. The addition of a condemnation notice to this calculus merely injects one more element to be considered; it does not eliminate the calculus altogether.
C. Whether the taxpayers held the B’tawn and Johnson properties for the six-month period prerequisite to preferential long-term capital gain treatment.
On appeal, the taxpayers argue that the District Court erred in concluding that gains realized on the sale of the B’tawn and Johnson properties were ineligible for taxation at the long-term capital gain rate.
They argue, first, that Ohio law of equitable conversion substantiates their claim to a sufficient holding period. Generally speaking, “State law determines what property rights and interests a taxpayer has, but federal law determines the consequences of such rights and interests for tax purposes.” Coin am v. Commissioner, 263 F.2d 119 (5th Cir. 1959).
The state law argument can be summarized as follows: in Ohio, the principle of equitable conversion invested the taxpayers with an equitable interest in the two properties. We are asked to treat this equitable interest as a capital asset which, when sold, yielded capital gains. The taxpayers assert that they obtained this equitable interest at the time they signed the purchase contracts for the two tracts, more than six months prior to disposition of the properties.
This argument is undoubtedly ingenious; however, Ohio case law does not support its application to the present facts. We quote from Sanford v. Breidenbach, 111 Ohio App. 474, 173 N.E.2d 702 (1960): “Equitable conversion does become effective in those cases in which the vendor has fulfilled all conditions and is entitled to enforce specific performance, and the parties, by their contract, intend that title shall pass upon the signing of the contract of purchase.” (Emphasis added.)
The B’tawn and Johnson contracts, described in Part I of this opinion, clearly intended no such result; on the contrary, the sellers specifically reserved title to the property until they received payment in full. Since payment took place only days before disposition of the properties, the taxpayers’ reliance on the principle of equitable conversion is misplaced.
In the alternative, the taxpayers advance the “practical” test announced by this Court in Commissioner v. Baertschi, 412 F.2d 494 (6th Cir. 1969); and Dettmers v. Commissioner, 430 F.2d 1019 (6th Cir. 1970). In those cases we held that “ownership of real property is acquired either upon delivery ... of the deed or upon transfer of the benefits and burdens of ownership, whichever occurs first.” Dettmers, supra at 1023. The taxpayers point to the fact that they maintained the properties and, in the case of the Johnson tract, applied rental income to offset the interest owed the Johnsons; from this, they ask us to infer “benefits and burdens of ownership” of a character sufficient to sustain a favorable ruling. Again, however, the purchase contracts are clear. Virtually all the “benefits and burdens of ownership” remained in the vendors until the purchase price was fully paid.
Finally, the taxpayers contend that the purchase contracts created options to buy. 26 U.S.C. § 1234(a) accords gains or losses from “privileges ■ or options to buy” the same tax treatment as the property subject to those options. Inasmuch as the properties themselves would have been capital assets in the taxpayers hands, they urge us to treat these “options” as we would treat the underlying properties. The “options” the taxpayers claim to possess would, of course, date back to the signing of the purchase contracts.
Our review of the meaning of an “option” for purposes of Section 1234 convinces us that the taxpayers did not, in fact, possess “options” within the meaning of the statute. What they did possess were bilateral contract rights, to which Section 1234 does not, by its terms, apply. In a scholarly analysis of this issue, the Court of Claims examined the language, legislative history, and Revenue Rulings pertinent to Section 1234; it concluded that an “option” is, for purposes of the statute, a very narrow concept. United States Freight Co. v. United States, 422 F.2d 887, 894-5, 190 Ct.Cl. 725 (1970). We agree, and affirm the District Court’s decision against the taxpayers’ claim to a six-month holding period.
VI. Conclusion
As we have already noted, this opinion modifies the rationale but not the actual result of the trial court’s decision. The District Court’s order directing the government to issue the taxpayers a partial refund of federal income taxes, is therefore, affirmed.
. The District Court’s approach is logically inconsistent with the treatment the tax laws accord judicially enforceable payments in general, and condemnation proceeds in particular. Thus, amounts received in settlement of a claim for lost profits are taxable as the profits would have been taxed, as ordinary income. Raytheon Production Corp. v. Commissioner, 144 F.2d 110 (1st Cir.), cert. denied, 323 U.S. 779, 65 S.Ct. 192, 89 L.Ed. 622 (1944). If the claim is for damage to a capital asset, the amount received in settlement is treated as a return of capital, taxable at capital gain rates if the recovery exceeds the asset’s basis. Farmers & Merchants Bank v. Commissioner, 59 F.2d 912 (6th Cir. 1932).
With respect to condemnation proceeds, the Code envisions the possibility of ordinary income treatment of gain realized on condemnation of inventory. Section 1231(a) provides in part for capital gain treatment of gains recognized upon condemnation of “property used in the trade or business.” Section 1231(b)(1)(B), which defines such property, however, provides as well that real estate which is held primarily for sale cannot qualify for capital gain under Section 1231.
Question: Were there cross appeals 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.
These are cross appeals from a judgment ordering a petitioner under § 8 (e) of the Selective Training and Service Act of 1940, 54 Stat. 891, 50 U.S.C.A.Appendix, § 308(e) restored to the employment from which he resigned in order to volunteer for induction into the military service, and in addition awarding him as damages the wages he would have earned in that employment from the date of his application for restoration therein to the date on which he was in fact reemployed, less, however, the amount of his actual earnings in other employment during that interval. The respondent’s appeal raises the same question considered by us in Boston & Maine Railroad v. Hayes, 1 Cir., 160 F.2d 325. There is no occasion for us to discuss it any further in this opinion. The petitioner’s appeal raises the question of the statutory authority for the District Court’s action in reducing his damages by the amount he earned in outside employment while his application for restoration to his former employment with the respondent was pending.
So far as here material § 8(e) of the Act provides that “In case any private employer fails or refuses to comply” with the applicable reemployment provisions of the Act, “the district court of the United States for the district in which such private employer maintains a place of business shall have power”, upon application by one entitled to the benefits of those provisions “to specifically require such employer to comply with such provisions, and, as an incident thereto, to compensate such person for any loss of wages or benefits suffered by reason of such employer’s unlawful action.”
The petitioner contends that this language imposes a “categorical obligation” on private employers to restore returned veterans to their jobs, if they so desire, which is specifically enforceable and therefore “cannot be escaped or evaded by the payment of compensatory, damages as an alternative.” Hence he says that he is entitled to recover without deduction all the wages he would have earned but for his former employer’s unlawful action in refusing promptly to restore him to his job. And he says that Congress must have intended to have its language so interpreted because otherwise not only would veterans be made to “bear the burden of the employer’s default” but also there would be a tendency to encourage idleness on the part of veterans who have been wrongfully refused reemployment and who sue for reinstatement.
The respondent on the other hand contends that the provision that district courts “shall have power” as an incident to restoration in employment “to compensate” for “loss of wages”, clearly indicates that Congress intended only to make returning veterans who are wrongfully denied reemployment whole, not to redress a public injury; and that to accomplish this end Congress must have intended any award of damages in these cases to he discretionary with the district court. And it says that there is nothing to indicate any abuse of discretion in the action taken by the court below in the case at bar.
Read literally the language of the sub-section supports the respondent’s argument, and we think further support for that argument is to be found in the sub-section’s legislative history.
The reemployment provisions of ' the Selective Training and Service Act of 1940 as. originally drafted by the Senate Military Affairs Committee (86 Cong.Rec. 10079, sec. 8(d)) made a private employer’s failure or refusal to comply with its terms “an unfair labor practice within the meaning of and .for all the purposes of the National Labor Relations Act [29 U.S. C.A. § 151 et seq.].” No doubt had this provision been enacted into law it would have given veterans 'wrongfully refused reemployment the benefits of the “back pay” provision of § 10(c) of the National Labor Relations Act which directs the Labor Board, upon a finding after the required hearing of an unfair labor practice, “to take such affirmative action, including reinstatement of employees with or without back pay, as will effectuate the policies of this chapter.” That is to say, it would have given the Labor Board, and presumably also the district courts, since they were given concurrent powers of enforcement and we must assume that Congress intended veterans to have the same remedies regardless of the tribunal to which they might resort, discretionary power both to order reemployment and also incidentally to award back pay or not as might be required in particular cases in order to effectuate the Congressional policy. See. Phelps Dodge Corp. v. National Labor Relations Board, 313 U.S. 177, 189 et seq., 61 S.Ct. 845, 85 L.Ed. 1271, 133 A.L.R. 1217.
The foregoing provision, however, was eliminated from subsequent drafts of the Selective Training and Service Act, and the present one, providing that district courts, and district courts only, “shall have power”, as an incident to an order directing reemployment “to compensate” veterans wrongfully denied restoration to their former jobs “for any loss of wages” suffered by them because of their employer’s unlawful action, was substituted in its stead. Clearly one purpose of this amendment was -to eliminate the Labor Board as an agency for enforcing veteran’s reemployment rights. But, in view .of the language of the amendment and its legislative background, it hardly seems that Congress also intended fundamentally to alter the nature of the rights with respect to reemployment which it had previously given to veterans. Instead it seems to us more likely that .Congress in passing the amendment was still thinking in terms of a remedial right to lost wages. Certainly the language of the amendment ’(“shall have power * * * to compensate * * * for any loss of wages”) is more consistent with the granting of a remedy to veterans than with the imposition of a penalty upon their former employers.
And there are still other indications that this is the correct interpretation of § 8(e).
In the first place Congress did not make the right to reemployment absolute. It gave that right only when the employer’s circumstances had not so changed as to make it not only not impossible, but also not “unreasonable” for the employer to reemploy the veteran. It must therefore have envisaged the probability that in the future an infinite variety of factual situations would arise, and recognizing the futility of any attempt to’ prescribe a remedy for 'every situation, it contented itself with a statement of a public policy and left the application of its policy to particular situations to the sound discretion of the district courts. Having done this with respect to the basic right to reemployment itself, we think it probable that Congress also ’ intended to do the same with respect to the incidental right to wages lost to a veteran by reason of his former employer’s unlawful refusal to rehire.
In the second place Senator Wagner in offering the amendment to § 8(e) sáid: “The amendment simply provides that in addition to entering judgment finding that the employer has violated the law and that the individual is entitled to reemployment, the court may also order that he shall receive back pay for lost wages due to the violation of the law.” [Italics supplied.] 86 Cong. Rec. 11031.
We pass the proposition that the Act imposes a categoricál obligation upon district courts to reduce the damages awarded in cases of this sort to the extent the court below reduced the petitioner’s damages in the case at bar. Our reason for so doing is that we are convinced that Congress intended at least to give district courts discretionary power to reduce damages as was done here, and this is all that has been briefed and argued and all that we need to decide in order to dispose of the instant case.
The judgment of the District Court is affirmed
It appears that while these proceedings were pending the petitioner was reeinployed by the respondent, but we are told that his reemployment was only to stop the accumulation of damages so the question of his right to restoration in employment has not become moot,
Question: Were there cross appeals 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:
On motion, the district court entered an order vacating a default judgment and at the same time refusing to quash, service. At this intermediate stage of the litigation the plaintiffs have appealed from the vacating of the default judgment and the defendants have taken a cross-appeal from the refusal to quash service.
We have recently held that an order vacating a default judgment is not final within the meaning of section 1291 of Title 28, United States Code, and, therefore, cannot support an immediate appeal. Crowe v. Ragnar Benson, Inc., 1962, 307 F.2d 73. Similarly, a refusal to quash service is not an appealable final order.
The appeal and the cross-appeal will be dismissed for lack of jurisdiction.
Question: Were there cross appeals 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.
WISDOM, Circuit Judge:
The issue in this diversity case is whether the plaintiffs, real estate brokers, are entitled under Louisiana law to recover a commission from the defendant. We agree with the district court that they are not, and we affirm the grant of summary judgment for the defendant.
The plaintiffs in this case are Eric Snyder, Allen Samuels, Inc. (“Samuels”), and Charles Keenan, three real estate brokers. The defendant is Champion Realty Corp. (“Champion”). Some time in 1974 Champion engaged Snyder and Samuels as non-exclusive agents for the sale of a large tract of land in Louisiana known as the Garyville tract. Champion offered the land for a minimum cash price of $125 an acre, or a total of $3,950,000, with Champion reserving all oil and gas rights. Champion agreed to pay any excess obtained over $125 an' acre to the brokers as their commission. Champion also agreed to “look at” any other deals that the brokers might arrange. Snyder and Samuels in turn obtained Keenan’s assistance and agreed to split the commission with him.
The brokers introduced Champion to a buyer, Brian Investments, Ltd. (“Brian”), willing to pay $150 an acre. The parties reached an agreement and put it into two documents on October 4, 1974. Champion and Brian signed an Agreement to Buy and Sell, calling for sale of the entire tract at $125 an acre, cash, with Champion reserving all gas and oil rights. Champion acknowledged the brokers’ role in arranging the sale but did not promise to pay a commission. At the same time, Brian and the brokers signed a Commission Agreement for $25 an acre.
Champion twice tendered title to Brian (on March 27 and April 28, 1975). Brian defaulted both times. Brian has never performed either of the October 4 agreements.
Sometime after the second default Champion and Brian opened direct negotiations. As a result, on May 4, 1976, they entered into a new agreement. Again the price was $125 an acre, but Champion reserved only half of the oil and gas rights. Champion also promised to pay a commission of $7.50 an acre to a broker to be designated by Brian. This sale took place on October 1, 1976, on a credit basis. Brian later designated itself as the broker to collect the $7.50 commission. The agreement made no provision for payment of any commission to the plaintiffs, nor were they notified of or invited to participate in the negotiations or agreement.
The plaintiffs sued Champion (but not Brian) in Louisiana state court; Champion removed the action to federal district court. The parties made extensive stipulations of fact. On cross-motions for summary judgment, the district court granted judgment for Champion.
The plaintiffs concede that they cannot recover from Champion in contract on the original brokerage agreement. Under that agreement, Champion’s liability for any commission was subject to the condition precedent that the sale price exceed the stated net price of $125 an acre. The plaintiffs brought in a buyer willing to pay $150 an acre, but they could not consummate a sale for any such amount.
Instead, the plaintiffs base their claim on a theory of unjust enrichment. The Louisiana courts have often invoked such a theory in proper circumstances to award equitable commissions to real estate brokers. The general rule is that when a broker brings a buyer and seller together, he is entitled to a commission on the sale even though (1) the sale takes place after the termination of the broker’s agency agreement; (2) the buyer and seller negotiate the deal themselves in the broker’s absence; (3) the sale price is less than that originally asked by the seller or offered by the buyer; or (4) there is no actual fraud or collusion to deprive the broker of his commission. J. R. Grand Agency, Inc. v. Staring, 1924, 156 La. 1094, 101 So. 723; Grace Realty Co. v. Peytavin Planting Co., 1924, 156 La. 93, 100 So. 62; Gottschalk v. Jennings, 1846, 1 La.Ann. 5; Sleet v. Gray, La.App. 1977, 351 So.2d 286; Hamberlin v. Bourgeois, La.App. 1973, 289 So.2d 358; Slimer v. White, La.App. 1973, 275 So.2d 468; Keating v. Lachney, La.App. 1968, 216 So.2d 906; Saturn Realty, Inc. v. Muller, La.App. 1967, 196 So.2d 321.
Assuming that the plaintiffs in this case were instrumental in bringing about this sale, however, it does not follow from these authorities that they may recover in unjust enrichment against Champion. The cases cited all differ from this case in one crucial respect: in every instance there was a promise to pay either a flat sum or a stated percentage of the sale price. In some cases, as in this case, the seller named a minimum net price. But in no case of recovery by a broker or real estate agent was the bargain structured so that the existence and amount of a commission depended directly on the receipt of a sale price exceeding the stated minimum. To restate the distinction: in all the cited cases the sellers were liable for some commission if they sold at any price to buyers procured by the plaintiffs. Those sellers tried to evade that liability by discharging the brokers or by dealing directly with the buyers behind the brokers’ backs. Here, in contrast, the seller agreed to pay a commission only if the brokers brought about a sale for more than $125 an acre. No such sale occurred; Champion received a net price of $117.50 an acre, gave credit instead of receiving cash, and was able to retain only half of the mineral rights. A party is not unjustly enriched because it “evades” a liability that never existed.
The plaintiffs assert that there is a fact issue as to whether Champion committed actual fraud, but they do not draw our attention to any facts that would support the accusation. A bare, conclusory assertion cannot defeat a motion for summary judgment.
The plaintiffs, somewhat uncertain how to pigeon-hole their claim, argue that, despite the terms of the brokerage contract, Champion is guilty of “legal fault”, a kind of constructive bad faith, under the civilian doctrine of culpa in contrahendo. The doctrine is, in general terms, the civilian equivalent of the common law concept of promissory estoppel. It is used as a basis for compensating one party for his expenses incurred in reliance on another party’s offer to form a unilateral contract where that offer is withdrawn before acceptance. See Comment, Culpa in Contrahendo, in German, French and Louisiana Law, 15 Tul.L. Rev. 87 (1940). It has nothing to do with this case.
We recognize that actual fraud is not a necessary element to a broker’s recovery for unjust enrichment. Nevertheless, we cannot agree that, under the Louisiana cases we have cited above, the mere act of selling to the broker’s buyer without cutting in the broker establishes bad faith. Rather, when the cases speak of bad faith, they refer to some active interference with the brokers’ ability to earn their contractual commissions. See J. R. Grand Agency, 101 So. at 724; Grace Realty, 100 So. at 63; Gottsch-aIk, 1 La.Ann. at 6-7. Here the plaintiffs had let the matter drop after Brian’s defaults; there was no continued effort with which Champion could have interfered. Nor do we agree, in the circumstances of this case, that Champion’s failure to notify the plaintiffs of the new negotiations establishes fault. Assuming that Champion had any duty to do so, the plaintiffs suffered no harm from the omission. If Champion could not persuade Brian to pay Champion’s original stated minimum net, it is unlikely that the plaintiffs could have persuaded Brian to pay a price above that minimum.
The plaintiffs complain that this result allows a seller, faced with a balky buyer, to make “price concessions” by bargaining away the broker’s commission. That, however, is an inherent feature of the type of brokerage agreement the plaintiffs made. They agreed to accept only the excess money as their commission. They likewise chose to present Brian as a customer; thereby they took the risk that Brian would back away from its promise to pay $150 an acre. To protect their commission they could have extracted a promise from Brian (as in fact they did), or they could have found another, more reliable buyer (as they did not). The plaintiffs were entitled to expect that Champion would not sell at $125 if they produced a buyer willing and able to buy at $150. They were not entitled to expect such abstinence if they did not produce such a prospect. Perhaps it is not the plaintiffs’ fault that the sale they put together did not go through, but certainly it is not Champion’s fault.
Since we find that Champion received no unjust enrichment at the plaintiffs’ expense, we conclude that Champion is entitled to judgment as a matter of law. We therefore AFFIRM the judgment of the district court.
. Eric Snyder died during pendency of the case in the district court. Gerardeen Snyder was substituted as his Executrix.
. The doctrine of unjust enrichment came from Roman law, flourished in France, had an unfriendly reception in England, is well developed in the common law states and, according to the Louisiana Supreme Court, emerged in Louisiana as early as 1814 in Meunier v. Duperron, 3 Mart. (O.S.) 285. Minyard v. Curtis Products, Inc., 1967, 251 La. 624, 205 So.2d 422. Min-yard, the leading case in Louisiana, states that the civil law action de in rem verso is an action for unjust enrichment. 205 So.2d at 427. The negotiorum gestio action offers another avenue. See Comment, Negotiorum Gestio in Louisiana, 7 Tul.L.Rev. 253 (1933). There is no specific codal article on the subject, although the action could be based on three articles. Article 21, which has no corresponding article in the French or Quebec codes, provides, in part, that “In all civil matters, where there is no express law, the judge is bound to proceed and decide according to equity”. Article 1965, defining equity, states, in part, that it rests “on the moral maxim of the law that no one ought to enrich himself at the expense of another”. Article 2294, dealing with the concept of quasi-contract, furnishes a third basis for the unjustified enrichment doctrine. See Comment, Actio De In Rem Verso in Louisiana: Minyard v. Curtis Products, Inc., 43 Tul.L.Rev. 263 (1969). See generally Nicholas, Unjustified Enrichment in Civil Law, Part I, 36 Tul.L.Rev. 603 (1962); Part II, 37 Tul.L.Rev. 49 (1962).
.To recover on an unjust enrichment theory in Louisiana, a broker must be the “procuring cause” of the final sale. Ordinarily a broker is the procuring cause if he brings the parties together. E. g., Keating, 216 So.2d at 909-10. But if the parties fail to make a sale, part ways, and then come together again on their own initiative after a lapse of time, the broker does not earn a commission on the sale if he has no hand in the renewed dealings. Ford v. Shaffer, 1918, 143 La. 635, 79 So. 172; Cramer v. Guercio, La.App. 1976, 331 So.2d 550; Turner v. Swann, 1919, 11 La.App. 689, 124 So. 717. Here there is a factual dispute as to when Brian and Champion resumed negotiations and whether these were a mere continuation of the earlier negotiations or a new start. This alone is enough to defeat the plaintiffs’ motion for summary judgment, since it creates a genuine issue as to a fact material to their right to recover. Fed.R.Civ.P. 56(c). We nevertheless affirm summary judgment for Champion because we find that it is entitled to judgment as a matter of law even if the plaintiffs were the procuring cause of the sale.
. In some cases there was no express agreement as to the amount of the brokers’ compensation. Apparently the courts assumed an implied contract to pay the prevailing percentage rate on realty brokerage agreements.
. In the case of percentage commissions, of course, the recovery is the agreed percentage of the actual sale price, even if that price is less than the original asking price. Where the brokerage agreement calls for a commission stated in dollars on a sale for a stated minimum, and the sale takes place at a lower price, the rule is less clear. In Keating the appellate court awarded the full agreed amount, 216 So.2d at 907, .910. In Grace Realty, though, the supreme court in dictum suggested a pro rata share, 100 So. at 63. In any case, the point is that in all cases there existed some liability for a commission despite sale at below the stated minimum.
. See Grace Realty, 100 So. at 64.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
TIMBERS, Circuit Judge:
John Gregory Crozier, an architect in Albany, appeals from a judgment entered in the Northern District of New York, Con. G. Cholakis, District Judge, convicting him of conspiracy to bribe a public official, in violation of 18 U.S.C. § 371 (1988), and of making false statements in subscribing a tax return, in violation of 26 U.S.C. § 7206(1) (1988). The primary object of the conspiracy was a $30,000 payment made to James J. Coyne, Jr., the Albany County Executive, who was instrumental in helping Crozier obtain a contract with Albany County to provide architectural services for a civic center (now known as the Knickerbocker Arena). Crozier received a pre-Sen-tencing Guidelines sentence of eighteen months imprisonment on the conspiracy count and a concurrent six month sentence on the false statements count. He was fined $25,000 and was required to pay a $50 special assessment on each count.
Crozier claims that the court erred in instructing the jury as to the parameters of the statute, erred in not allowing him to see the charge before summation, erred in permitting the government to elicit an alleged co-conspirator’s invocation of the Fifth Amendment before the jury, and erred in limiting his examination of a key witness. He further claims that there was insufficient evidence to support the false tax return verdict. Appellee cross appeals, claiming that appellant should be sentenced under the Guidelines.
We reject Crozier's claims on appeal and appellee’s claim on the cross appeal. We affirm the judgment of the district court finding Crozier guilty of conspiracy and filing a false tax return.
I.
We summarize only those facts and prior proceedings believed necessary to an understanding of the issues raised on appeal.
The Albany County Industrial Development Agency (IDA) oversaw the development of the civic center project from late 1984 or early 1985 until the summer of 1985. Coyne was one of the three members of the IDA. Joseph V. Zumbo, a close friend of Coyne, was its general counsel. Coyne played a prominent role in the IDA. In 1985, the IDA retained Crozier’s firm to perform preliminary studies for the construction of the civic center.
In the summer of 1985, the county legislature took control of the project. A special committee was established to oversee the project and make recommendations to the legislature. Without interviewing any other architects, the committee, in 1986, recommended that the legislature select Crozier’s firm as the architects for the project. The committee members testified that Crozier had an advantage because of the work he had already done and they were satisfied with his firm’s presentation. The County and Crozier entered into a contract on April 18, 1986.
Even though the legislature had taken charge of the project, Coyne remained quite influential in the development of the project. He frequently met with the project manager and was consulted about problems. He consulted with legislators about aspects of the project which would result in increasing Crozier’s fee and attended many of the meetings.
In June or July of 1986, Crozier claims he decided to give $30,000 to Coyne as a loan. Since both men were involved in the civic center project at that time, Crozier contends that he wanted to avoid the appearance of impropriety that would be created by giving the money directly to Coyne. He sought help from Zumbo. Crozier and Zumbo met in a restaurant. Zumbo suggested that the deal be structured as two transactions: (1) Crozier would lend $30,-000 to Zumbo, and (2) Zumbo would lend $30,000 to Coyne.
On or about July 9, 1986, Crozier’s firm issued him a $30,000 check. It initially was listed as a loan to an officer and then listed as a bonus or compensation for Crozier. Crozier then gave Zumbo a personal check for $30,000, with the notation “real estate dev.” on the check. Zumbo deposited the check in his law office’s general operating account, and gave Coyne a check from the same account for $30,000. Coyne deposited $30,000 in his personal bank account on July 9, 1986.
None of Crozier’s financial statements or loan applications for the period of 1987-89 reflects a $30,000 asset, as loans receivable generally are considered. Further, no loan documents were created in 1986 for the transaction. There was no repayment schedule and no interest charges. At trial, Zumbo testified that in 1989 he created a note from Coyne to himself, but did not recall whether he had created a note from himself to Crozier. Zumbo created a loan document between himself and Crozier in 1991, but dated it July 7, 1986, without indicating that it had been created five years later.
On September 25, 1991, Crozier was indicted in three counts. Count I charged Crozier with conspiracy under 18 U.S.C. § 371 corruptly to give or agree to give anything of value to Coyne “for or because of” Coyne’s conduct in connection with transactions involving the civic center project in violation of 18 U.S.C. former § 666(c) (hereinafter, § 666(c)). Count II charged Crozier with “knowingly, willfully, and corruptly” giving and agreeing to give $30,000 to Coyne in connection with business and transactions of Albany County and the IDA, including awarding the contracts in 1985 and 1986 to Crozier’s firm for the architectural services for the civic center project, and for the performance of the contract and change orders in violation of § 666(c).
Count III charged Crozier with filing a false tax return in violation of 26 U.S.C. § 7206(1). In 1987, Crozier’s firm issued a check for $12,000 to Clark D. Richey, C.P.A. It was posted in the corporate books and records as a professional legal fee, but actually was used as an investment in a horse partnership. An accountant for the Crozier firm testified that he contacted the firm’s bookkeeper regarding the $12,-000 payment and was told that she did not know the purpose of the expenditure, an account confirmed by the bookkeeper. Although the accountant did not recall contacting Crozier regarding the $12,000 payment, he testified that he generally dealt with Crozier directly when the bookkeeper was unable to answer a question. After its communications with Crozier Associates, the accounting firm changed the classification of the expenditure to “accounting fees.” Ultimately, the $12,000 payment was deducted on Crozier Associates’ 1987 U.S. corporate income tax return as a professional fee relating to an organizational plan. The indictment charged Crozier with signing the return under penalty of perjury, and declaring it to be true and correct, even though he knew the money was for an investment and not for the “professional fees” listed.
Throughout the trial, Crozier contended that he should be acquitted because § 666(c) prohibited only bribery — a specific, corrupt intent to influence present or future decisions. Through a motion for a judgment of acquittal prior to jury selection, Crozier argued that this critical element was missing from the indictment. There was no proof at trial of any intent to influence present or future decisions of Coyne, primarily because the contract already had been awarded when the loan was given. Crozier also sought to limit the government’s proof to a strict bribery theory through voir dire questions, objections, and proposed jury instructions.
The court instructed the jury with respect to the conspiracy charged in Count I and with respect to Count II by basically following the language of the indictment, using the “for or because of” Coyne’s conduct language. With respect to Count II, the court charged that in order to convict under § 666(c), the jury must find beyond a reasonable doubt that Crozier knowingly and willfully gave or agreed to give a thing of value to Coyne for or because of Coyne’s conduct in connection with the civic center project, and that Albany County received more than $10,000 in federal financial assistance in any one year. The court further charged that § 666(c) would be violated if
“the defendant gave or agreed to give the $30,000 for or because of conduct previously performed or to be performed by James J. Coyne, Jr., in connection with architectural services provided by the defendant relating to the Albany County Civic Center. Doesn’t matter if the thing of value was given before or after Coyne’s conduct as long as you find beyond a reasonable doubt that it was given for or because of that conduct.”
In the midst of deliberations, the court received a note from the jury requesting clarification as to whether the government must have proven all parts of Counts I and II. The court took the opportunity to advise the jury on the various elements which make up each count. As to Count I, the court instructed on the basic elements of a conspiracy, giving the jury the two theories of the object of the conspiracy: (1) if Crozier agreed to give or did give something of value to Coyne in connection with the civic center project, or (2) if Coyne solicited, accepted, or agreed to accept anything of value from Crozier because of the conduct of Coyne in connection with the civic center project. As to Count II, the court instructed that the $30,000 must have been given pursuant to an agreement between Coyne and Crozier under which Coyne would do something for Crozier in relation to the civic center project, or that the $30,-000 was given without an agreement but with the intent to influence Coyne to do something of value for Crozier in the future in relation to the civic center project. The court gave the jury special interrogatories for Count II that were consistent with the court’s instructions on that count. No such interrogatories were given for Count I.
The jury found Crozier guilty on the conspiracy charged in" Count I and for filing a false tax return charged in Count III. It acquitted him of the substantive charge in Count II.
On appeal, Crozier asserts that the conspiracy conviction was based on a gratuity theory rather than bribery, which he claims is impermissible under the statute; the court made a number of errors in its charge to the jury; the jury was prejudiced by the testimony of an alleged co-conspirator; the court excluded essential testimony; and there was insufficient evidence to support the false tax return verdict. The government cross appeals, asserting that Crozier should have been sentenced under the Guidelines.
II.
(A) Crozier’s Claim that His Conviction was on a Gratuity and not a Bribery Theory
Section 666(c) was enacted to punish corrupt payments made to state or private officials who disburse federal funds. S.Rep. No. 225, 98th Cong., 2d Sess. 369-70, reprinted in 1984 U.S.C.C.A.N. 3182, 3510-11. It was enacted to supplement 18 U.S.C. § 201 which covered both bribery and gratuities made to federal public offi-ciáis. 18 U.S.C. §§ 201(b)(1) & (c)(1)(A) (1988). Unlike § 201, however, § 666(c) does not distinguish between bribery and gratuity, creating some confusion. The language of § 666(c) is similar to the gratuity language of § 201, but the legislative history refers only to bribery and the maximum penalty under the statute is closer to the maximum penalty under § 201’s bribery provisions. United States v. Jackowe, 651 F.Supp. 1035, 1036 (S.D.N.Y.1987).
On appeal, Crozier asserts that the court erred in its jury charge. He claims that the charge with respect to Count I was ambiguous and left room for the jury to convict him on a gratuity theory, as well as on a bribery theory. Crozier asserts, however, that § 666(c) is a bribery only statute, and the fact that his conviction could have been grounded on a gratuity theory makes his conviction reversible in that the court allowed the jury to convict on a legally insufficient theory. He says that, while the court submitted special interrogatories to the jury for Count II — the substantive bribery charge — which limited the jury’s verdict to a bribery theory rather than a gratuity theory, such was not done for the conspiracy charge. He contends therefore that the jury was not instructed on a bribery only theory for the conspiracy count and there is a possibility (if not a likelihood) that the jury based his conspiracy conviction on facts which lend themselves to a gratuity theory only. He contends that his argument is bolstered by the fact that, although he was convicted for conspiracy, he was acquitted on the substantive count, for which the jury received specific instructions on a bribery only theory.
If § 666(c) were a bribery only statute, Crozier is correct in his claim that the jury charge was faulty. In the court’s initial charge, the jury was instructed that Crozier could be found guilty if he gave Coyne money “in exchange for Mr. Coyne’s performance or promise to perform some official act....” While this instruction was given for Count II, the substantive charge, it was made clear to the jury that the substantive charge was the object of the conspiracy. Further, the indictment, which the jury had during deliberations, did not charge bribery, but stated that the object of the conspiracy at issue was
“[t]o corruptly give and agree to give anything of value to James J. Coyne, Jr. because of [the] conduct of James J. Coyne Jr. in connection with the business, transaction, and series of transactions of Albany County, and its IDA, involving anything of value of $5,000 or more [,] in violation of 18 U.S.C. former § 666(c)....”
Based on the plain meaning of the indictment, therefore, there was ample leeway for a jury to convict on a gratuity theory. Even though in the midst of deliberations the court answered the jury’s question by limiting Count II to a bribery only theory, this is no cure for the earlier ambiguities. It is quite possible that, by the time this limitation was given, the jury already had reached its verdict on Count I, finding appellant guilty under the ambiguous and broader charge. Count I called for a general verdict, no interrogatories having been given. As the reviewing court, therefore, we have no way of determining what was the jury's basis for its verdict.
We reject, however, Crozier’s argument (and the interpretation given by the district court) that § 666(c) is a bribery only statute. Although Judge Sweet’s analysis of the statute in Jackowe, supra, 651 F.Supp. at 1035-36, construed § 666(e) as a bribery only statute, we believe that the statute, like § 201 (which it was enacted to supplement), should be construed to include gratuities as well.
This assertion is supported by the broad language of § 666(c) which provides:
“(c) Whoever offers, gives or agrees to give an agent of an organization or of a State or local government agency, described in subsection (a), anything of value for or because of the recipient’s conduct in any transaction or matter or any series of transactions or matters involving $5,000 or more concerning the affairs of such organization or State or local government agency, shall be imprisoned not more than ten years or fined not more than $100,000 or an amount equal to twice that offered, given or agreed to be given, whichever is greater, or both so imprisoned and fined.” (emphasis added).
The “for or because of” language of this statute includes both past acts supporting a gratuity theory and future acts necessary for a bribery theory. Moreover, § 201(c)(1)(A), the section which covers gratuities given to federal officials, provides, “[wjhoever ... gives, offers, or promises anything of value to any public official ... for or because of any official act performed ...” shall be subject to fines and imprisonment. 18 U.S.C. § 201(c) (emphasis added). It is the “for or because of” language in § 201(c)(1)(A) which distinguishes it as a gratuity section from the bribery prohibitions found in § 201(b)(1), which applies to payments or agreements to make payments with the intent to “influence” or “induce” official action. S.Rep. No. 2213, 87th Cong., 2d Sess. (1962), reprinted in 1962 U.S.C.C.A.N. 3852, 3856-57 (discussing former § 201). It logically follows, therefore, that where Congress used the same language in two statutes, the second of which was enacted to supplement the first, the same meaning should be applied to both.
This interpretation makes this case a clear one, as the facts lean more toward a gratuity theory. Moreover, we do not have to read the minds of the jurors and assume that they took the mid-deliberation jury charge for Count II and applied it to Count I. Instead, we believe that it was possible, and proper, for the jury to have found the object of the conspiracy to be payment for past influence.
Unlike Judge Sweet, we do not believe that one of the two meanings of § 201, prohibiting both bribery and gratuities given to federal officials, needs to be lost in a statute designed to extend the offense to state and local officials. The Jackowe court’s rationale for limiting the statute to only one of the theories is that the statute contains no explicit intent and therefore it must imply either intent for bribery or intent for a gratuity. We disagree. If the charge is brought on a bribery theory, then the government must prove the intent to reward an official for future conduct; if the charge is brought on a gratuity theory, the intent must be to reward the official for past conduct.
Crozier relies on the fact that an amendment added in 1986 to § 666(c), making the statute applicable only to payments made corruptly, with the intent to influence or reward an official, made § 666 applicable to gratuities. This amendment, however, is identical to an amendment made to 18 U.S.C. § 215, a bank bribery statute. The amendments were made to limit the scope of these statutes, and not to broaden them to include new theories. H.Rep. No. 99-335, 99th Cong., 2d Sess. 5 (1986), reprinted in 1986 U.S.C.C.A.N. 1782, 1786-87; H.Rep. 99-797, 99th Cong., 2d Sess. 30 (1986), reprinted in 1986 U.S.C.C.A.N. 6138, 6153 n. 9.
Judge Sweet also emphasized that § 666 is titled “Theft or Bribery Concerning Programs Receiving Federal Funds”, and that the legislative history of the statute “speaks entirely in terms of ‘bribery,’ and never uses the words ‘gratuity’ or ‘gift.’ ” Jackowe, supra, 651 F.Supp. at 1036; see S.Rep. No. 225, 98th Cong., 2d Sess. 369-70 (1984), reprinted in 1984 U.S.C.C.A.N. 3182, 3510-11 (emphasis added). The Senate Report, however, addresses the purpose of this section as one which will augment the class of persons who are liable under § 201. The report states that it was unclear under § 201 whether state or local officials were considered “public officials” per the statute. The report discusses § 201 in general terms, without limiting it to a specific section (such as the section which provides for the “bribery theory”). The report then goes on to state that the intent of enacting § 666 was to cover situations like United States v. Mosley, 659 F.2d 812 (7 Cir.1981), a case in which a state official was convicted of violating a gratuity provision of former 18 U.S.C. § 201(g), now id. § 201(c)(1)(B). Judge Sweet’s reliance on the loose use of the term “bribery” in the legislative history appears to be unfounded.
Judge Sweet also noted that the ten year maximum sentence available under § 666(c) is far closer to the fifteen year maximum term available under the bribery provision of § 201, see 18 U.S.C. § 201(b), than to the two year maximum available under the gratuity provision of § 201, id. § 201(c). Jackowe, supra, 651 F.Supp. at 1036 (citing former § 201). Judge Sweet was concerned that there might be equal protection or disproportionality problems if § 666(c) were construed to permit greater punishments to persons who give gratuities to state and local officials than to persons who give gratuities to federal officials. Whatever the merits of Judge Sweet’s constitutional concerns, they are not implicated in this case. Crozier received an eighteen month sentence on the conspiracy count, well within the two year maximum applicable to violations of § 201(c).
(B) Section 666(c) is not Void for Vagueness
Crozier asserts that § 666(c) is void for vagueness and was applied unconstitutionally against him because it does not include an explicit mens rea requirement, and fails clearly to describe the conduct it prohibits. He is correct in his claim that a statute must describe with some particularity the conduct it proscribes or requires. Kolender v. Lawson, 461 U.S. 352, 358 (1983). A statute is not unconstitutionally vague if it sufficiently alerts ordinary people as to what is prohibited, and is not applied in an arbitrary or discriminatory way. Id. at 357.
We disagree with Crozier’s assertion. We believe that the statute does contain the mens rea of intent, and therefore is not void for vagueness. Further, § 666(c) was not unconstitutional as applied to Crozier. The court clearly instructed the jury of the mens rea required by Crozier for a violation of § 666(c). In the charge with respect to Count I, the court specifically stated that the conspiracy must have been willfully formed and Crozier must have willfully joined it. The court then defined willful. The court also gave adequate instructions about the meaning of the “for or because of” language in the statute. Since we hold that § 666(c) could be violated on a gratuity theory, the fact that the court’s instruction did not adequately distinguish between gratuity and bribery is not a problem, as Crozier contends on appeal.
We hold that there was a mens rea requirement included in the statute as applied to Crozier, and the statute was not unconstitutionally vague.
(C) Crozier Did Not Receive Proposed Jury Instructions Before Summation, Nor Were His Requests For Interrogatories Granted
Crozier asserts that the court committed a “fundamental error” by not providing him with a copy of the jury instructions before his summation and by failing to submit to the jury special interrogatories requested by Crozier concerning the scope of § 666(c). Fed.R.Crim.P. 30 requires the court to rule on requests for jury instructions before summation in order to allow the parties the opportunity to refer to the instructions in their summations. “If the Rule is violated, reversal is required where the defendant can show that he was ‘substantially misled in formulating his arguments’ or otherwise prejudiced.” United States v. Eisen, 974 F.2d 246, 256 (2 Cir.1992) (quoting United States v. Smith, 629 F.2d 650, 653 (10 Cir.), cert. denied, 449 U.S. 994 (1980)).
In the instant case, at a pre-charge conference, Crozier learned of the two legal theories about which the court would instruct the jury. Also, the court never agreed to submit the interrogatories that Crozier requested, but merely stated that they would be considered. Crozier was not misled as to what the jury charge would be. While it might be better practice to allow the parties to obtain the charge before the summation, in this case reversal is not required, since Crozier was well aware of what the ultimate charge would be and was able to refer to it in his summation.
(D) Joseph Zumbo’s Invocation of Fifth Amendment in Presence of the Jury
At trial it was known to the court and counsel that, when Joseph Zumbo was called as a witness, he would invoke his Fifth Amendment privilege against self-incrimination. Crozier requested that such invocation of the privilege should be done outside the presence of the jury to alleviate the impact on the jury. The court allowed the jury to be present. Crozier now asserts that the court committed reversible error by allowing the jury to use inferences arising from a witness’ invocation of the privilege.
In Namet v. United States, 373 U.S. 179 (1963), the Supreme Court described two situations in which a witness’ invocation of his Fifth Amendment privilege before a jury in response to a prosecutor’s questions may give rise to reversible error: “1. ‘pros-ecutorial misconduct, when the government makes a conscious and flagrant attempt to build its case out of inferences arising from the use of the testimonial privilege’; and 2. when ‘in the circumstances of a given case, inferences from a witness’ refusal to answer added critical weight to the prosecution’s case in a forum not subject to cross-examination.’ ” Rado v. Connecticut, 607 F.2d 572, 581 (2 Cir.1979) (quoting Namet, supra, 373 U.S. at 186-87), cert. denied, 447 U.S. 920 (1980). In applying the Nam-et rule, our eases look to a number of factors, including
“[1] the prosecutor’s intent in calling the witness, [2] the number of questions asked, [3] their importance to the state’s case, [4] whether the prosecutor draws any inference in his closing argument from the witness’ refusal to answer ... and [5] whether the trial judge gives a curative instruction.”
Id. at 581.
In this case, first, there is no evidence that the government had an improper motive in calling Zumbo. Rather, the government extended immunity to the witness in 'order that he might be able to testify fully before the jury. Second, Zumbo asserted his privilege only three times before the jury. Third, the questions Zumbo refused to answer, whether he had aided Coyne in obtaining County employment and whether he could identify government exhibits, were peripheral to the government’s case against Crozier. Fourth, at no time during the trial did the government attempt to draw any inference from Zumbo’s assertion of his privilege. Finally, the court gave an appropriate cautionary instruction. Under these circumstances, we find no reversible error in the district court’s allowing Zumbo to assert his privilege in the jury’s presence.
(E) Zumbo’s Grand Jury Testimony and Conversation with Crozier
Crozier argues that the court erred in limiting his cross-examination of alleged co-conspirator Zumbo, precluding him from eliciting details of prior conversations between Zumbo and Crozier under the rule of completeness and in order to rebut a government theory of recent fabrication. In his examination of Zumbo, Crozier sought to bolster a defense theory that he intended the payment to Coyne to be a loan rather than an outright gift. However, as we have held in connection with § 201, any payment that the defendant subjectively believes has value, including a loan, constitutes a thing “of value” within the meaning of § 666(c). United States v. Williams, 705 F.2d 603, 622-23 (2 Cir.), cert. denied, 464 U.S. 1007 (1983); see also United States v. Gorman, 807 F.2d 1299, 1305 (6 Cir.1986) (finding loan to be thing “of value” under former 18 U.S.C. § 201(g), now id. § 201(c)(1)(B)), cert, de nied, 484 U.S. 815 (1987). Thus, the issue of whether the payment was a gift or a loan is irrelevant to the question of Crozier’s guilt or innocence in this case, and his evidentiary arguments consequently fail on the ground of relevance.
(F) Evidence to Support the Verdict of Filing a False Tax Return
Crozier claims that there was insufficient evidence to support the guilty verdict on Count III. He bases this claim on the standard used in embezzlement cases which allows the conviction to be upheld only if the evidence inexorably supports an inference of guilt and is not consistent with a theory of innocence. United States v. Lavergne, 805 F.2d 517, 522 (5 Cir.1986). This is not an embezzlement case, however, and we must look at the evidence in the light most favorable to the government. Glasser v. United States, 315 U.S. 60, 80 (1942). Based on the facts of this case, which include the books and the testimony of the bookkeeper and accountant, a rational trier of fact could have made this finding beyond a reasonable doubt. Jackson v. Virginia, 443 U.S. 307, 319 (1979).
We hold that the verdict must stand.
(G) Cross Appeal Claiming the Court Erred in not Sentencing Under the Guidelines
The government asserts that this is a “straddle case,” one that involves a conspiracy which began prior to the effective date of the Guidelines and continued after that date—November 1, 1987. The government therefore claims that Crozier should have been sentenced under the Guidelines. In this case, Crozier was convicted of a conspiracy to violate § 666(c). The conspiracy ended with the $30,000 payment to Coyne. That was what the indictment defined as the object of the conspiracy. The court correctly held that the acts which occurred after November 1, 1987 were merely acts to cover up the conspiracy and were not done in furtherance of the conspiracy. Acts of concealment, without more, do not “extend the life of the conspiracy after its main objective has been obtained.” Eisen, supra, 974 F.2d at 269 n. 8; Grunewald v. United States, 353 U.S. 391, 401 (1957).
We hold that this is not a “straddle case.” Crozier should not have been sentenced under the Guidelines.
III.
To summarize:
Section 666(c) prohibits the giving of both bribes and gratuities to state or local officials. Crozier was not wrongly convicted if the jury based its verdict on a gratuity theory. Further, the statute was applied constitutionally to Crozier. The court did not commit reversible error with regard to Zumbo’s testimony. There was sufficient evidence to support a guilty verdict on the false tax return charge. As for the cross appeal, this is not a “straddle case”; the Guidelines are not applicable.
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.
ALARCON, Circuit Judge:
John Birges and Terry Hall appeal from their convictions arising out of the bombing of Harvey’s Casino [South Lake Tahoe].
Birges was convicted of attempt to interfere with commerce by threats of violence, interstate travel in aid of racketeering, conspiracy, and transportation of explosives in interstate commerce. He asserts three claims of error: (1) that the failure of his attorney to represent him adequately denied him his sixth amendment right to the effective assistance of counsel; (2) that two communications between the judge and the jury, after the jury had retired, constituted supplemental jury instructions, requiring counsel to be informed and defendant to be present; (3) that comments made in closing argument were “harsh and vindictive”, thereby constituting prosecutorial misconduct.
Hall appeals his convictions for conspiracy and transportation of explosives in interstate commerce. Hall submits three points for review: (1) that the evidence presented at trial was not sufficient to support the finding of criminal intent; (2) that the inconsistency of the verdicts rendered by the jury required his motion for acquittal to be granted; (3) that a reference to him as a co-conspirator was improper and constituted prejudicial error.
Finally, both defendants contend that the trial court erred in denying their motions to change venue.
We find that Birges and Hall have failed to show grounds for a reversal of their convictions. The judgment of the trial court is affirmed.
FACTS
It was the government’s theory at trial that Birges, who owed extensive gambling debts to Harvey’s Casino and Harvey’s Inn, planned to extort money from Harvey’s Casino. To carry out his plans, Birges built a highly sophisticated bomb. He obtained approximately 18 cases of dynamite by breaking into a Pacific Gas & Electric building. The bomb was housed within two steel boxes: a small box, 15 inches by 12 inches which contained the dynamite and a larger box, 2V2 feet by 3V2, which was nearly three feet tall. The boxes were constructed of Vi inch thick steel plate, and were covered by a gray fabric marked with the letters IBM and fictitious part numbers. The boxes thus were made to look like a business machine, five to six feet long and three feet wide.
Birges included numerous safeguards against possible disarming. The bomb package contained a float switch, so that the bomb would detonate if flooded with water. The screws on the package were connected to electrical currents to avoid tampering. Aluminum was placed inside the plastic used to line the box; if the box were drilled, the drill would complete the connection. Switches were installed to trigger the bomb if the lid were removed. The bomb also contained a movement device: a tilt mechanism consisting of an eight inch tall metal cylinder, two to three inches in diameter, with a pendulum inside. If the box were moved, the motion would cause the pendulum to hit the sides of the cylinder and detonate the bomb.
Birges invited Hall and Willis Brown to assist him in delivering the bomb. The three men arrived in the Lake Tahoe area near daylight, and drove to the casino. Birges showed Hall and Brown which door to use to deliver the bomb. They then checked into a motel. Hall registered under the name “Joey Avetto” and set forth a false address. When they left the motel in the middle of the night, the men wiped all traces of fingerprints from the room.
The three men took the bomb to the casino and parked across the street from Harvey’s. A license plate was stolen from the rear of another van parked nearby. Birges and Hall attached it with rubber bands over their van’s existing plate.
The men then placed the bomb on a specially constructed cart, tied the cart to the back bumper of the truck and pulled into Harvey’s lot.
Birges left the other two men, and entered the casino. Hall and Brown took the cart to the casino entrance. The package was removed from the cart and pushed through the lobby to the elevator.
The device was placed in the elevator and taken up to the offices of the casino. The bomb was left in the hallway after the gray cover was removed.
The ransom note left with the bomb requested the delivery of three million dollars to a specified place in the desert. The note contained a warning that the bomb should not be touched because it might explode accidentally. The bomb exploded the following day during an attempt to deactivate it.
The case received extensive coverage in newspapers, radio and television. Most of the publicity occurred within the first two months after the bombing.
At trial, Birges admitted constructing the bomb, but testified that he did so under duress. He told the jury that people in the “mob” forced him to commit the act in order to collect the destruction insurance. According to Birges, a “mob” figure named Charlie caused two men to assault Birges in order to force him to carry out the extortion plan.
In his defense Hall testified that he was a “dupe” in the scheme. He was told they were delivering a package to the office of the casino owner as a joke and did not know that the package contained a bomb.
I.
Effectiveness of Counsel
Birges argues that he was denied his Sixth Amendment right to effective assistance of counsel because his counsel failed to subpoena witnesses and present his desired defense.
Where ineffectiveness of counsel is alleged, the defendant must point to errors or omissions in the record on appeal which establish that he did not receive adequate representation. Cooper v. Fitzharris, 586 F.2d 1325, 1332 (9th Cir.1978) (en banc), cert. denied, 440 U.S. 974, 99 S.Ct. 1542, 59 L.Ed.2d 793 (1979). He has the further burden of demonstrating from the record that there is a reasonable likelihood that counsel’s errors or omissions prejudiced his right to a fair trial. United States v. Tucker, 716 F.2d 576, 587-92 (9th Cir.1983); Cooper v. Fitzharris, 586 F.2d at 1331. See also Schneble v. Florida, 405 U.S. 427, 432, 92 S.Ct. 1056, 1060, 31 L.Ed.2d 340 (1972) (unless “reasonable possibility” that improperly admitted evidence contributed to conviction, reversal is not required); United States v. Valle-Valdez, 554 F.2d 911, 915 (9th Cir.1977) (where constitutional error occurs, defendant must show reasonable possibility of prejudice).
The customary procedure for challenging the effectiveness of defense counsel in a federal criminal trial is by collateral attack on the conviction under 28 U.S.C. § 2255. United States v. Kazni, 576 F.2d 238, 242 (9th Cir.1978). This is so because usually such a claim cannot be advanced without the development of facts outside the original record. Id.
In People v. Pope, 23 Cal.3d 412, 152 Cal.Rptr. 732, 590 P.2d 859 (1979), the California Supreme Court cogently urged reviewing courts to exercise caution in tackling insufficiency of counsel claims on direct appeal where the record is incomplete.
Otherwise, the appellate courts would become engaged in the perilous process of second-guessing. (Citation omitted) Reversals would be ordered unnecessarily in cases where there were, in fact, good reasons for the aspect of counsel’s representation under attack. Indeed, such reasons might lead a new defense counsel on retrial to do exactly what the original counsel did, making manifest the waste of judicial resources caused by reversal on an incomplete record.
People v. Pope, 23 Cal.3d 412 at 426, 152 Cal.Rptr. 732, 590 P.2d 859.
In the present case, the record is not sufficient for us to analyze the effectiveness of Birges’ counsel. We cannot ascertain from the record what evidence the requested witnesses would have provided, nor can we gauge the impact their testimony might have had on Birges’ defense.
II.
Communication with the Jury
Birges contends that his motion for a new trial was improperly denied. Specifically, he challenges the propriety of two communications between the judge and jury which occurred during jury deliberations.
A. Communication Concerning Dictionary
Birges contends that the trial judge, in response to a request, erroneously supplied a dictionary to the jury. He complains that the dictionary is a supplemental instruction, requiring counsel to be informed and defendant to be present, pursuant to Fed.R.Crim.P. 43. Rule 43 guarantees to a defendant in a criminal trial the right to be present “at every stage of the trial including the impaneling of the jury and the return of the verdict...” A violation of the rule does not compel reversal unless a reasonable possibility of prejudice is shown. United States v. Alessandrello, 637 F.2d 131, 139 (3d Cir.1980), cert. denied, 451 U.S. 949, 101 S.Ct. 2031, 68 L.Ed.2d 334 (1981).
This issue was presented to the court in United States v. Gunter, 546 F.2d 861 (10th Cir.1976), cert. denied, 431 U.S. 920, 97 S.Ct. 2189, 53 L.Ed.2d 232 (1977). In Gunter, the court stated:
The jury, while deliberating, sent a note to the judge asking for a definition of the word “tacitly.” Without consulting with counsel, the trial judge simply sent a Webster’s dictionary into the jury room. Such may well have been error, but if it be deemed error, it was most certainly harmless error. No prejudice has been shown.
Gunter, 546 F.2d at 869.
Unlike the court in Gunter, we have no doubt that the sending of a dictionary into the jury room, without consulting counsel, is error. Questions or disputes as to the meaning of terms which arise during jury deliberations should be settled by the court after consultation with counsel, in supplemental instructions. Such guidance will avoid the danger that jurors will use the dictionary to construct their own definitions of legal terms which do not accurately or fairly reflect applicable law. The meager record presented to us on this issue, however, does not demonstrate that any prejudice occurred as a result of the alleged introduction of a dictionary into the jury’s deliberations.
B. Communication Concerning the Reading of Testimony
During deliberations, the jurors sent a note to the court which read: “Is it possible for us to obtain testimony without returning to the courtroom?” The judge replied: “No! You must rely on your memory”
The decision to honor a request that the court reporter read his notes of certain testimony for the jury’s benefit after deliberation has begun is left to the discretion of the trial judge. United States v. Rohrer, 708 F.2d 429, 435 (9th Cir.1983). Such a ruling will not be disturbed on appeal, absent a showing of abuse of discretion. United States v. Baxter, 492 F.2d 150, 175 (9th Cir.1973), cert. denied, 416 U.S. 940, 94 S.Ct. 1945, 40 L.Ed.2d 292 (1974).
It is error, however, under Rule 43 for the court to deny the jury’s request without consulting counsel for their views before exercising such discretion. Had the court conferred with counsel, the trial court’s reply to the communication might have been more responsive to the jury’s question. The jury did not ask the court if it was required to rely on its memory in resolving any uncertainties as to the exact testimony of a witness. Apparently the jury wanted to know if it was possible to receive the recorded testimony of witnesses in the jury room.
Birges, however, has failed to demonstrate that the court’s error was prejudicial to his defense. See Powell v. Kroger Co., 644 F.2d 1245, 1247 (8th Cir.1981) (ex parte communication with jurors does not compel reversal where prejudice is not shown). In United States v. Medansky, 486 F.2d 807 (7th Cir.1973), cert. denied, 415 U.S. 989, 94 S.Ct. 1587, 39 L.Ed.2d 886 (1974), the jury sent a communication to the judge requesting transcripts of the trial proceedings. The judge entered the jury room and told the jurors that transcripts would not be provided; that they had to rely upon their own recollections. The reviewing court concluded that this was not prejudicial error. Id. at 816.
Birges has not demonstrated that the errors committed by the trial judge responding to the jury’s communications affected the outcome of the trial. The motion for a new trial was properly denied.
III.
Prosecutorial Misconduct
In Birges’ pro per brief, he argues that the prosecutor made use of “unnecessary, vindictive, and harsh language” in his final argument. Specifically, Birges claims that the prosecutor’s comments to the jury that Birges’ testimony contained numerous lies and that his duress defense was replete with fabrication and imagination, constitute misconduct.
“In closing arguments, both defense attorneys and prosecution attorneys are allowed reasonably wide latitude. They may strike ‘hard blows’ based upon the testimony and its inferences ...” United States v. Gorostiza, 468 F.2d 915, 916 (9th Cir.1972). Improprieties in counsel’s arguments to the jury do not constitute reversible error “unless they are so gross as probably to prejudice the defendant, and the prejudice has not been neutralized by the trial judge.” United States v. Parker, 549 F.2d 1217, 1222 (9th Cir.), cert. denied, 430 U.S. 971, 97 S.Ct. 1659, 52 L.Ed.2d 365 (1977). See also United States v. Foster, 711 F.2d 871, 883 (9th Cir.1983).
Birges failed to object to these remarks when made, and thus deprived the trial court of the opportunity to take remedial action. Because they were not brought to the attention of the court, the statements must be viewed under the “plain error” standard of review, pursuant to Fed.R. Crim.P. 52(b). United States v. Parker, 549 F.2d at 1222.
The comments made by the prosecutor did not constitute misconduct. It is neither unusual nor improper for a prosecutor to voice doubt about the veracity of a defendant who has taken the stand. The prosecutor’s interpretation of Birges’ duress claim as a “fabrication” is also well within the bounds of acceptable comment. The prosecutor’s remarks were neither grossly nor prejudicially improper.
IV.
Sufficiency of the Evidence
Hall maintains that his motion for a judgment of acquittal should have been granted. Hall acknowledges that he participated in the delivery of the explosive device to the casino, but he argues that the evidence was insufficient to show that he had the specific intent to commit the crime.
The standard of review for a motion for a judgment of acquittal is whether the evidence, considered favorably to the government, was such as to permit a rational conclusion by the jury that the accused was guilty beyond a reasonable doubt. United States v. Hazeem, 679 F.2d 770, 772 (9th Cir.1982), cert. denied, 459 U.S. 848, 103 S.Ct. 106, 74 L.Ed.2d 95 (1982).
Intent may be inferred from objective facts and the actions of the defendant. Gallion v. United States, 386 F.2d 255, 257 (9th Cir.1967). The following evidence was sufficient to justify a rational conclusion beyond a reasonable doubt that Hall had the requisite intent:
1. The physical appearance of the bomb device as packaged would have aroused the suspicion of a reasonable person.
2. The delivery involved peculiar circumstances. The package was to be delivered to the casino before 6:00 in the morning. The van was parked to one side of the parking lot in a construction area, instead of at the casino entrance.
3. The delivery van’s license plate was disguised during the delivery. The device was transferred to a cart before it was taken across the parking lot.
4. Hall registered in a Lake Tahoe Motel under a fictitious name and address.
5. Hall wiped away all fingerprints in his motel room.
Evidence of the accused’s conduct shortly before the offense which is inconsistent with innocence is relevant to prove specific intent. Cf. Kirschbaum v. United States, 407 F.2d 562, 566 (8th Cir.1969). Concealment of identity is also a commonly recognized indicator of guilty knowledge. See United States v. Greiser, 502 F.2d 1295, 1299 (9th Cir.1974); Marcoux v. United States, 405 F.2d 719, 721 (9th Cir.1968). This concept has been specifically applied to false hotel registration. United States v. Sutton, 446 F.2d 916, 922 (9th Cir.1971), cert. denied, 404 U.S. 1025, 92 S.Ct. 699, 30 L.Ed.2d 675 (1972).
The denial of Hall’s motion for a judgment of acquittal was not erroneous.
V.
Inconsistency of the Verdicts
Hall claims that there is insufficient evidence to support his conviction on Count III because of inconsistent verdicts. Hall argues that Count I of his indictment, of which he was found “not guilty,” embodies a finding of conspiracy, and thus, contradicts his conviction for conspiracy on Count III.
The four-count indictment charged Hall with- the following offenses: attempt to interfere with commerce by threats of violence, a violation of 18 U.S.C. § 1951 (Count I); interstate travel in aid of racketeering and aiding and abetting, a violation of 18 U.S.C. §§ 1952(a)(3) and 2(a) (Count II); conspiracy, a violation of 18 U.S.C. § 371 (Count III); transportation of explosives in interstate commerce and aiding and abetting, a violation of 18 U.S.C. §§ 844(d) and 2(a) (Count IV).
Hall was found guilty of Counts III and IV and was acquitted of Counts I and II.
Inconsistent verdicts may stand, even when a conviction is rationally incompatible with an acquittal, provided there is sufficient evidence to support the guilty verdict. United States v. Brandon, 633 F.2d 773, 779 (9th Cir.1980); Dunn v. United States, 284 U.S. 390, 393, 52 S.Ct. 189, 190, 76 L.Ed. 356 (1932).
We are satisfied that the evidence was sufficient to permit a rational trier of fact to conclude that Hall was guilty of the charge in Count III.
VI.
Reference to Hall as a Co-conspirator
Hall claims that the government, with the permission of the court, wrongfully referred to him as a co-conspirator during the trial. The reference occurred during the examination of one of the other defendants in the case:
Objection: [By Hall’s attorney] Your Honor, I would like the court to admonish the jurors that any statements made by another person out of this court that don’t pertain to Mr. Birges or the person making that statement are hearsay as to Mr. Hall.
Prosecutor: The statements made by a coconspirator in the course of a conspiracy are admissible against all conspirators.
Court: Yes, objection overruled, you may proceed.
A statement made by a co-conspirator during the course of and in furtherance of the conspiracy is admissible against a party under Fed.R.Evid. 801(d)(2)(D). Hall’s claim of error is not directed to the admission of such evidence. Instead he objected to the prosecutor’s use of the word “conspirator,” in the presence of the jury in responding to defense counsel’s comments.
The jury was properly instructed as to all of the essential elements of the offense of conspiracy. The jury was further instructed that it must find beyond a reasonable doubt (1) that a conspiracy existed and (2) that Hall was one of the members thereof before it could consider the statements of a co-conspirator.
The record does not demonstrate that the judge’s ruling on the objection led the jury to believe that the court had conclusively determined that Hall was a conspirator. Any error which may have occurred in permitting the discussion concerning the admissibility of a co-conspirator’s statement to occur in the presence of the jury was harmless in light of the court’s conspiracy instruction. United States v. Gonzalez, 715 F.2d 1411, 1412-13 (9th Cir. 1983).
VII.
Change of Venue
Birges and Hall each challenge the trial court’s denial of their motions for a change of venue. They urge that the extensive media coverage of the casino bombing so prejudiced potential jurors as to render the selection of an impartial jury impossible. They further contend that Nevada citizens are so protective of their gambling industry that the opportunity for a fair trial was unavailable in any city in Nevada, regardless of pretrial publicity.
The motions for change of venue were filed prior to voir dire, and were opposed by the government. An evidentiary hearing was held before a Magistrate. The motions were denied “without prejudice to the right to renew the motions at the close of voir dire.” Thereafter, the case was transferred from Reno to Las Vegas.
Birges and Hall claim that, in spite of the failure of their counsel to challenge the fairness of the jury upon completion of voir dire, this court should rule that there is sufficient evidence of inherent prejudice to constitute plain error.
A trial judge is granted broad discretion in ruling on a change of venue motion, and will only be reversed for an abuse of discretion. United States v. Flores-Elias, 650 F.2d 1149, 1150 (9th Cir.1981), cert. denied, 454 U.S. 904, 102 S.Ct. 412, 70 L.Ed.2d 223 (1982).
In the landmark case of Murphy v. Florida, 421 U.S. 794, 95 S.Ct. 2031, 44 L.Ed.2d 589 (1975), the Supreme Court examined the voir dire examination of the jurors for evidence of “actual prejudice” in reviewing petitioner’s claim that the trial court erred in denying his renewed motion for a change of venue following jury selection. The Court concluded that the voir dire indicated “no such hostility to petitioner by the jurors who served in his trial as to suggest a partiality that could not be laid aside.” 421 U.S. at 800, 95 S.Ct. at 2036.
We discussed the ramifications of pretrial publicity in United States v. Bailleaux, 685 F.2d 1105 (9th Cir.1982). There this court stated: “It is not all publicity that causes prejudice to a defendant, but only that publicity that operates to deprive the defendant of a fair trial.” 685 F.2d at 1108. In Bailleaux, we concluded that the trial court’s careful voir dire examination demonstrated that it was possible to obtain a fair and impartial jury notwithstanding prejudicial pretrial publicity. Under such circumstances, it is not prejudicial error to deny a change of venue. Id. at 1109.
In the instant matter, eight witnesses were examined and 21 exhibits were presented at the hearing on the motion for a change of venue. The magistrate’s written order contained a complete examination of the exhibits and testimony, as well as a full discussion of the applicable law.
Later, during voir dire examination, the jurors were questioned at length by the trial judge concerning any bias against the defendants. The judge also solicited questions from defense counsel to be put to the prospective jurors. The court also inquired of each juror separately as to the existence of any animosity towards Birges and Hall because of the juror’s feelings about the casino industry. None of the jurors indicated that he was prejudiced because of his attitude concerning gambling.
The voir dire examination by the trial judge established that the jurors selected to try this case were untainted by prejudice.
As noted in Murphy, during voir dire the trial court can determine whether it is possible to select a fair and impartial jury from persons subjected to persuasive publicity. During voir dire the court is no longer dealing with the likelihood that potential jurors may be biased. The trial judge is able to scrutinize the answers of actual jurors to see if they are prejudiced in order to determine whether a subsequent motion for change of venue has merit.
Here, in contrast to the procedure followed by defense counsel in Murphy, the change of venue motion was not renewed following the voir dire examination of the jury. We are satisfied that the voir dire examination produced a fair and impartial jury. The denial of the pretrial motion for change of venue was not prejudicial in light of the circumstances existing at the time of the jury selection.
AFFIRMED.
. Birges points to two statements made by the prosecutor:
1. “As far as lies on the witness stand, I think it would be a fair statement under the evidence that if the lies told by Mr. Birges on the stand were weighed against the truths told by Mr. Birges on the stand, the scales of justice would have tipped him from his chair long before he concluded his testimony. We do not want them and we do not rely on them.”
2. “I submit to you that the reason he did that (made no attempt to contact the alleged mob figure Charlie or to tell anyone that he existed prior to Birges’ attempted duress defense at trial) is fairly obvious; Charlie and the tall man and the short man do not exist. They are figments of Mr. Birges’ imagination fabricated by him to escape the responsibility of his criminal actions in what I fervantly hope will be an unsuccessful attempt to escape that responsibility.”
Question: Were there cross appeals 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 case involves allegations that twenty-six employees of the State of Illinois were discharged for political reasons in violation of their right to free association, due process and equal protection as guaranteed by the First and Fourteenth Amendments.
Plaintiffs are twenty-six state employees who, according to defendants, were necessarily “laid off;” twenty-five from the Illinois Department of Transportation (IDOT), and one from the Illinois Department of Mental Health (DMH). Defendants are either current or past officers or employees of the IDOT, DMH or Illinois Department of Personnel (IDOP).
I. Background
In 1969, a lawsuit captioned Bradley, et al. v. Cellini, et al. was filed in an Illinois State Circuit Court. The Bradley case was a mandamus action by former employees who had been discharged in May of 1969 from the IDOT and DMH. In November of 1968, Miriam Ringo, the Director of Personnel under the administration of Governor Shapiro, a Democrat, had extended civil service protection, formally called Jurisdiction B of the Personnel Code, to the positions occupied by the Bradley plaintiffs. However, in January 1969, Richard B. Ogilvie, a Republican, became Governor, and in February of 1969 his Director of Personnel expunged former Director Ringo’s extension of Jurisdiction B. Between April and June 1969, all Democratic employees in the IDOT maintenance and traffic units, approximately 3,000 workers, were discharged as “not acceptable to the agency” and were replaced by Republican workers. Twenty-five of the plaintiffs in the suit here before us were members of this group of discharged workers. On the other hand, the Bradley plaintiffs consisted of 27 maintenance and traffic workers from District 9 of the IDOT and three workers from the DMH who had been terminated by the Ogilvie administration.
On April 9, 1973, Illinois Circuit Judge Paul Verticchio issued an opinion holding that the termination of the Bradley plaintiffs was without cause, and contrary to the Personnel Code, as well as in violation of the rules of the Department of Personnel. Judge Verticchio thereupon held that the Ogilvie administration’s expungement of the Jurisdiction B extension was “void and of no effect.” As part of the court-ordered remedy, the heads of IDOT, DMH and IDOP were directed to:
restore and return each of the [Bradley] Plaintiffs to the position and title held by such Plaintiff on the date of his discharge from said position or to discharge each Plaintiff in accordance with The Personnel Code and Rules of the Department of Personnel.
That writ of Mandamus, entered May 30, 1973, added that “FAILURE TO DO SO WILL SUBJECT YOU TO PUNISHMENT FOR CONTEMPT OF THIS COURT.”
While the Bradley litigation was pending, Governor Ogilvie’s Director of Personnel on November 28, 1972, once again extended Jurisdiction B protection to the relevant positions. Coming full circle politically, the new Democratic administration of Governor Walker, in November 1973, acting thru their new Director of Personnel and a defendant in the case at bar, again attempted to remove the positions from civil service coverage, but the Illinois Civil Service Commission refused to permit the removal. It is apparent that each successive administration, since 1968, has attempted to remove the patronage employees inherited from the former administration, place its own patronage people in those positions and then to extend civil service coverage to its own new employees.
In June of 1973, the State of Illinois was experiencing financial restrictions for fiscal year 1974 (July 1,1973-June 30, 1974). The actual amount approved by the legislature for personnel services in the IDOT’s Maintenance and Traffic Units was significantly smaller than had been requested. Consequently, approximately 1,000 state employees were laid off in June 1973, 540 of whom were IDOT employees. In this restrictive fiscal setting, the defendant State officials were faced with the Bradley court’s mandate to reinstate twenty-five workers, or face the possible consequences of punishment for Contempt of the Sangamon County Circuit Court.
II. Implementation
Under the Bradley order, the officials in charge of the IDOT and DMH were then confronted with the specter of having 50 employees to do work formerly performed by 25 employees. They determined that it was necessary to layoff a number of employees equivalent to the number of those returning Bradley plaintiffs. The parties have stipulated that but for the entry of the Bradley order, none of the plaintiffs in the case at bar were scheduled to be laid off for the fiscal year ending June 30,1973. In selecting those employees for “lay off,” the defendant Robert Rhoads, the Field Officer of the IDOP, made the initial determination that those persons who actually replaced the Bradley plaintiffs in 1969 should be chosen. After consultation with Berwyn Hanley, an assistant to the Director of Personnel at the IDOP’s downtown Springfield office; with Brian Hannigan, Assistant Secretary of the IDOT; Michael Waters, who served as liaison between the IDOP and the Illinois Attorney General’s office; and Assistant Attorney General Lee Martin, the layoffs were implemented in the following fashion: in the IDOT, 15 persons who directly replaced the Bradley plaintiffs were found to still be in the positions formerly held by the Bradley plaintiffs; six persons were replacements for men who had actually replaced the Bradley plaintiffs in 1969; and, in four instances where the position could not be identified precisely, persons were laid off on a random basis from the returning Bradley plaintiffs’ team section and class, with consideration given to performance. In the DMH, the last person hired was laid off. Thereafter these twenty-six employees (the Wren plaintiffs) filed the present action for damages and injunctive relief under 42 U.S.C. § 1983, alleging violation of their rights under the First and Fourteenth Amendments. The case was tried without a jury and during trial the defendants agreed to reinstate the plaintiffs pending final adjudication of the case. On August 4, 1978 the district court entered its Memorandum Order finding that defendants had violated plaintiffs’ Due Process and First Amendment rights and ordering the then incumbent agency heads, Kramer, Boys, and deVito, to reinstate the plaintiffs. The district court also found defendants Hannigan and Rhoads were individually liable to the plaintiffs discharged from the IDOT for violation of their First Amendment rights, but the court reserved judgment on the same question as to defendants Bond, Miley and Shelton. The court dismissed defendants Jones, Knox, and Ronan. On September 17, 1979, the district court entered an order assessing approximately $393,000 in damages against Rhoads and Hannigan, in addition to costs and attorney fees.
Defendants Hannigan and Rhoads have appealed the award of damages and defendants Boys, Kramer and deVito have appéal-ed the reinstatement order. Plaintiffs have cross-appealed the dismissal of defendants Jones, Knox and Ronan as well as the failure to award overtime damages and the allocation of attorney fees. The State of Illinois, although not a party, has been permitted to file a brief as Amicus Curiae, wherein the arguments of defendants are supported.
III. First Amendment
As in the court below, plaintiffs present two First Amendment arguments. First, that their separation from State service was in furtherance of a patronage program, violating their right to free association under the rationale of Elrod v. Burns, 427 U.S. 347, 96 S.Ct. 2673, 49 L.Ed.2d 547 (1976) and Illinois State Employees Union, Council 34 v. Lewis, 473 F.2d 561 (7th Cir. 1972), cert. denied, 410 U.S. 928, 93 S.Ct. 1364, 35 L.Ed.2d 590 (1973). Secondly, plaintiffs assert that defendants denied them re-employment opportunities in furtherance of a patronage program.
Initially, we will review those cases that have addressed the conflict between political patronage and the First Amendment.
In Illinois State Employees Union, Council 34 v. Lewis, supra, a group of state employees who held non-civil service, non-confidential positions were discharged by a new Republican Secretary of State in conjunction with the Ogilvie administration. The discharged employees sought reinstatement and backpay, alleging violation of the First and Fourteenth Amendments. The district court, however, entered summary judgment for the defendant state officials. In reversing and remanding for further proceedings, then Circuit Judge, now Justice Stevens, held that the dismissal of non-civil service public employees due to their political associations or beliefs constitutes a violation of the First and Fourteenth Amendments. Judge Stevens commented on the burden of proof involved when First Amendment rights are partially curtailed:
If the conditions attached to public employment merely involve some curtailment-as opposed to abject surrender-of First Amendment rights, interests of the State “if strong enough” may justify the condition. As a procedural matter, the burden of establishing such justification rests upon the defendant. In view of the importance which the Court has consistently attached to the First Amendment rights of the citizenry, that burden is a heavy one. Without such justification, the foregoing cases demonstrate that plaintiffs have alleged an impermissible basis for their discharge. We must therefore consider the matter of justification, (footnotes omitted)
473 F.2d 561 at 572-73. The majority vote on the Lewis panel came from Senior District Judge Campbell who filed a concurring opinion wherein he stated a much more restrictive allocation of the burden of proof:
Another vexing and potentially troublesome problem which emerges from oür ruling concerns the practical application of the burden of proof standard. It goes without saying, of course, that the burden belongs to and remains with the dismissed employee. It seems equally clear that since a civil service system may not be judicially imposed upon a state or local government, that a public employer cannot be compelled to explain the reasons for termination. Indeed, the imposition of such a “burden of explanation” would run counter to the precise holding of the Supreme Court in Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). Thus, if a public employer desires to stand silent by way of a general denial to the employees’ allegations, the employee must demonstrate by the clear and convincing weight of the evidence that his dismissal resulted solely because of his political associations. Such a burden is a heavy one but in my view is necessitated by the limited nature of the right Sindermann compels us to recognize today-i. e., the right to be free from summary dismissal only where the dismissal is based solely upon a reason expressly proscribed by the First Amendment to the Constitution.
473 F.2d at 579.
In Burns v. Elrod, 509 F.2d 1133 (7th Cir. 1975), Republican deputy sheriffs brought suit for injunctive and other relief against the newly elected Democratic sheriff alleging they had been discharged in violation of the First Amendment, for the sole reason that they were not affiliated with or sponsored by the Democratic party. The district court denied their motion for preliminary injunction and dismissed the complaint. In reversing, this court, in an opinion by Senior District Judge Campbell, relied on Lewis, stating, “Although defendants argue that Lewis was wrongly decided and invite our reconsideration thereof, we decline to do so for the scholarly and persuasive reasons articulated in Judge Stevens’ opinion in Lewis” (footnotes omitted). 509 F.2d 1133, 1135. This statement could be interpreted as a change in Judge Campbell’s position on the burden of proof, although that burden of proof was not addressed in the Burns v. Elrod opinion. In Elrod v. Burns, 427 U.S. 347, 96 S.Ct. 2673, 49 L.Ed.2d 547 (1976), a plurality of the Supreme Court affirmed the Seventh Circuit in an opinion by Justice Brennan which held that public employment, even when viewed as a privilege rather than an inherent right, cannot be conditioned on the surrender of constitutionally protected rights, i. e., that the practice of patronage dismissals imposes an unconstitutional condition on the exercise of the freedom of political association and belief. Justice Brennan, in attacking patronage practices in general, applied a high level scrutiny standard to determine whether a significant impairment of these First Amendment freedoms could be justified by countervailing state interests, expressly rejecting a rational basis analysis. 427 U.S. at 362, 96 S.Ct. at 2684. Justice Brennan summarized:
In short, if conditioning the retention of public employment on the employee’s support of the in-party is to survive constitutional challenge, it must further some vital government end by a means that is least restrictive of freedom of belief and association in achieving that end, and the benefit gained must outweigh the loss of constitutionally protected rights, (footnote omitted).
427 U.S. at 363, 96 S.Ct. at 2685.
The majority votes in Elrod came in Justice Stewart’s concurrence which expressed no view on the question of political hiring, and the consideration of patronage dismissals was limited:
The single substantive question involved in this case is whether a nonpolicy-making, nonconfidential government employee can be discharged or threatened with discharge from a job that he is satisfactorily performing upon the sole ground of his political beliefs. I agree with the plurality that he cannot. See Perry v. Sindermann, 408 U.S. 593, 597-598 [92 S.Ct. 2694, 2697-2698, 33 L.Ed.2d 570].
427 U.S. at 375, 96 S.Ct. at 2690.
In Branti v. Finkel, 445 U.S. 507, 100 S.Ct. 1287, 63 L.Ed.2d 574 (1980), the Court in a majority opinion by Justice Stevens reaffirmed the plurality opinion in Elrod. Branti involved two assistant public defenders in Rockland County, New York, who sought an injunction to preserve their positions as assistant public defenders on the basis that the recently appointed Democratic County Public Defender was about to discharge them solely because they were Republicans. The district court permanently enjoined their termination, based as it was, upon the sole grounds of political belief, finding that the newly appointed Pub-lie Defender intended to replace the complaining assistants with Democrats. Both the Second Circuit and the Supreme Court affirmed. Justice Stevens, writing for the majority, stated:
If the First Amendment protects a public employee from discharge based on what he has said, it must also protect him from discharge based on what he believes. Under this line of analysis, unless the Government can demonstrate “an overriding interest,” [citing Elrod] 427 U.S. at 368, 96 S.Ct. at 2687, “of vital importance,” id. at 362, 96 S.Ct. at 2684, requiring that a person’s private beliefs conform to those of the hiring authority, his beliefs cannot be the sole basis for depriving him of continued public employment. (footnote omitted).
100 S.Ct. at 1293.
In all of the cases discussed above, the underlying fact was that the employees were or were about to be discharged solely on the basis of their political beliefs. In the case at bar, the initial inquiry must be whether the political association and beliefs of the Wren plaintiffs were the sole basis of their layoffs. The short and simple answer must be that the unusual facts of this case preclude a finding that there was such a sole basis. As the defendants point out, the Bradley order itself makes this ease unique. In view of the fiscal restrictions, the fact that there were only Republicans in the affected units and the further fact that no Democrats were hired into similar full-time positions, requires a conclusion that any potential motivation was, at most, just one of the factors in their decision.
The issue now becomes: how much of a role must the plaintiffs’ political association have played in the defendants’ decision to engage in the layoffs in order to find a First Amendment violation. The district court answered that question and allocated the burden of proof by quoting the following passage from Mt. Healthy City School District Bd. of Ed. v. Doyle, 429 U.S. 274, 287, 97 S.Ct. 568, 576, 50 L.Ed.2d 471 (1977).
Initially, in this case, the burden was properly placed upon respondent to show that his conduct was constitutionally protected, and this conduct was a “substantial factor”-or, to put it in other words, that it was a “motivating factor” [footnote omitted] in the Board’s decision not to rehire him. Respondent having carried that burden, however, the District Court should have gone on to determine whether the Board had shown by a preponderance of the evidence that it would have reached the same decision as to respondent’s reemployment even in the absence of the protected conduct.
Mt. Healthy involved an action brought by an untenured school teacher who claimed that a school board’s refusal to renew his contract violated his First Amendment rights contending that his exercise of free speech had played a substantial role in the decision not to rehire. While the plaintiff prevailed on that theory in the district and circuit courts, the Supreme Court vacated and remanded the case for application of the above-quoted test. In explaining what the Court meant by “motivating factor,” the ease of Arlington Heights v. Metropolitan Housing Corp., 429 U.S. 252, 97 S.Ct. 555, 50 L.Ed.2d 450 (1977) was cited. Arlington Heights did not involve a First Amendment challenge, but rather concerned an allegation that refusal to change the zoning of land to permit construction of racially integrated housing, violated the Equal Protection Clause. The court of appeals had reversed the district court, holding that the Village’s refusal to rezone carried a racially discriminatory effect and was, without more, unconstitutional. In reversing, the Supreme Court commented on the role a racially discriminatory motive must play before a violation of the Equal Protection Clause will be proved:
Our decision last Term in Washington v. Davis, 426 U.S. 229, 96 S.Ct. 2040, 48 L.Ed.2d 597 (1976), made it clear that official action will not be held unconstitutional solely because it results in a racially disproportionate impact. “Disproportionate impact is not irrelevant, but it is not the sole touchstone of an invidious racial discrimination.” Id. at 242, 96 S.Ct. at 2049. Proof of racially discriminatory intent or purpose is required to show a violation of the Equal Protection Clause.
******
Davis does not require a plaintiff to prove that the challenged action rested solely on racially discriminatory purposes. Rarely can it be said that a legislature or administrative body operating under a broad mandate made a decision motivated solely by a single concern, or even that a particular purpose was the “dominant” or “primary” one. In fact, it is because legislators and administrators are properly concerned with balancing numerous competing considerations that courts refrain from reviewing the merits of their decisions, absent a showing of arbitrariness or irrationality. But racial discrimination is not just another competing consideration. When there is a proof that a discriminatory purpose has been a motivating factor in the decision, this judicial deference is no longer justified, (footnotes omitted).
429 U.S. at 264-266, 97 S.Ct. at 563.
In summation, the Supreme Court stated: Respondents simply failed to carry their burden of proving that discriminatory purpose was a motivating factor in the Village’s decision. This conclusion ends the constitutional inquiry.
429 U.S. at 270-271, 97 S.Ct. at 566.
In Givhan v. Western Line Consol. School Dist., 439 U.S. 410, 99 S.Ct. 693, 58 L.Ed.2d 619 (1979), the Court commented on its Mt. Healthy holding. Givhan involved a dismissed school teacher who sought reinstatement, partially on the grounds that her right of free speech had been infringed. Specifically, she had made comments on employment policies and practices at the school which she believed to be racially discriminatory. The Fifth Circuit reversed a district court finding that the dismissal violated the teacher’s First Amendment rights. The Supreme Court, in reversing and in clarifying that its Mt. Healthy holding covered private communications between teacher and principal, first reviewed another case in which the Court faced the question of whether a public employee’s exercise of free speech was protected. The Givhan Court recounted a balancing test used in Pickering v. Board of Education, 391 U.S. 563, 88 S.Ct. 1731, 20 L.Ed.2d 811 (1968):
In Pickering a teacher was discharged for publicly criticizing, in a letter published in a local newspaper, the school board’s handling of prior bond issue proposals and its subsequent allocation of financial resources between the schools’ educational and athletic programs. Noting that the free speech rights of public employees are not absolute, the Court held that in determining whether a government employee’s speech is constitutionally protected, “the interests of the [employee], as a citizen, in commenting upon matters of public concern” must be balanced against “the interest of the State, as an employer, in promoting the efficiency of the public services it performs through its employees.” Pickering v. Board of Education, supra, 391 U.S. at 568, 88 S.Ct. at 1734.
99 S.Ct. at 696. The Givhan Court further restated its test set down in Mt. Healthy and remanded the case for application of this test:
In that case [Mt. Healthy] this Court rejected the view that a public employee must be reinstated whenever constitutionally protected conduct plays a “substantial” part in the employer’s decision to terminate. Such a rule would require reinstatement of employees that the public employer would have dismissed even if the constitutionally protected conduct had not occurred and, consequently, “could place an employee in a better position as a result of the exercise of constitutionally protected conduct than he would have occupied had he done nothing!” 429 U.S. at 285, 97 S.Ct. at 575. Thus, the Court held that once the employee has shown that his constitutionally protected conduct played a “substantial” role in the employer’s decision not to rehire him, the employer is entitled to show “by a preponderance of the evidence that it would have reached the same decision as to [the employee’s] reemployment even in the absence of the protected conduct. Id. at 287, 97 S.Ct. at 576.
Since this case was tried before Mt. Healthy was decided, it is not surprising that respondents did not attempt to prove in the District Court that the decision not to rehire petitioner would have been made even absent consideration of her “demands.” Thus, the case came to the Court of Appeals in very much the same posture as Mt. Healthy was presented in this Court. And while the District Court found that petitioner’s “criticism” was the “primary” reason for the school district’s failure to rehire her, it did not find that she would have been rehired but for her criticism.
99 S.Ct. at 697. Although the Mt. Healthy test was to be applied on remand in Givhan, the Second Circuit has recently decided that, at least in some instances, they prefer to apply the Pickering balancing test rather than the Mt. Healthy test. Janusaitis v. Middlebury Volunteer Fire Dept., 607 F.2d 17, 25 (2d Cir. 1979).
In Rosaly v. Ignacio, 593 F.2d 145 (1st Cir. 1979), the First Circuit, facing a factual situation somewhat akin to the ease at bar, applied the Mt. Healthy and Givhan holdings. In Rosaly, employees of the Puerto Rico Highway Authority alleged that their terminations were politically motivated, in violation of the First Amendment. The terminations occurred after the New Progressive Party lost the 1972 elections to the Popular Democratic Party. After a verdict and judgment for plaintiffs, the First Circuit reversed, holding that defendant officials must be given the opportunity, under the Mt. Healthy test, to prove that the terminations were necessitated by a financial crisis in the Highway Authority and were not due to their political affiliation:
The defendants maintained throughout the proceedings that the plaintiffs’ terminations were necessitated by a financial crisis in the Highway Authority and were not due in any way to their political affiliation. This, then, was a Mt. Healthy claim. The court did not adequately treat this issue. It included in its findings of fact plaintiffs’ compilation of employee statistics which indicated that after plaintiffs’ discharges the Department of Transportation granted a number of raises and promotions. We acknowledge that circumstantial evidence maybe used to show discriminatory motive in a patronage dismissal case. Gabriel v. Beni-tez, 390 F.Supp. 988, 993 (D.P.R.1975), aff’d sub nom., Rivera Morales v. Benitez de Rexach, 541 F.2d 882 (1st Cir. 1976). However, the recital of these numbers alone does not establish conclusively a discriminatory motive, especially in light of the defendants’ alleged economic justification for these increases, i. e., two of the employees who received salary increases did so because these employees took on additional duties after the integration, resulting in an overall savings in the department. But even if such evidence supports a finding of discriminatory motive, there was, as far as the record shows, no application of the Mt. Healthy test.
Although the record is lengthy, we do not feel that it provides the proper basis for us to make the factual determination called for in Givhan, supra, [439] U.S. [410] at [417], 99 S.Ct. 693 [at 697, 58 L.Ed.2d 619]. The Givhan decision adopted the procedural guidelines set out in Mt. Healthy, supra, 429 U.S. [274] at 287, 97 S.Ct. 568 [at 576, 50 L.Ed.2d 471], but articulated more precisely the test to be applied. Under Givhan, the initial burden is upon plaintiffs to show that their conduct was constitutionally protected. Plaintiffs must next establish that this conduct was a “substantial factor” or a “motivating factor” in defendants’ decision to discharge them from the Highway Authority.
If that is proven, the defendants have the burden to show by a preponderance of the evidence that they would have reached the same decision notwithstanding the protected conduct. If the plaintiffs are to recover, the court (or jury) must expressly find that plaintiffs would not have been discharged “but for” the constitutionally immunized activity. Givhan, supra, [439] U.S. [410] at [417], 99 S.Ct. 693 [at 697, 58 L.Ed.2d 619]. See Mack v. Cape Elizabeth School Board, 553 F.2d 720, 722 (1st Cir. 1977).
593 F.2d at 148-149.
In summary, under Branti and Elrod, if political association appears to be the sole basis for dismissal, then a strict scrutiny analysis should be applied. Where, as in the case at bar, political association was not the sole basis for a personnel transaction, the Mt. Healthy test should be applied to determine whether political affiliation was the motivating factor as defined in Village of Arlington Heights. However, as seen in Givhan and Janusaitis, application of the Pickering balancing test remains a possibility-
Applying the Mt. Healthy test, as restated in Rosaly, supra, plaintiffs’ “conduct” was simply their membership in the Republican party, and such political association is clearly constitutionally protected. However, the crucial burden is upon the plaintiffs to show that this conduct was the motivating factor in the layoff decision. Here we must determine whether the district court’s finding that such conduct was the motivating factor is clearly erroneous. We now hold, from a review of the testimony and other evidence before the district court, the finding that plaintiffs have satisfied their burden of proving that political affiliation was the motivating factor in their discharge is clearly erroneous. To paraphrase the Supreme Court, plaintiffs have simply failed to carry their burden, and this conclusion must end the constitutional inquiry. Assuming arguendo, that plaintiffs have satisfied the first part of the Mt. Healthy test, we find that the defendants have, by a preponderance of the evidence, established that fiscal restraints required a reduction in the affected units equivalent to the number of reinstated in Bradley employees, and that fiscal restraints justified the failure to reemploy the plaintiffs during the two year period after their layoffs. Therefore, although the same employees may not have been chosen, for example, had actual hire dates been used rather than the common seniority date of May 1, 1972, the fact would remain that some of the employees in the affected units would have to be laid off. The fact that all potentially affected employees were Republican means that the Wren plaintiffs’ political association was of no consequence, especially in light of the fact that no Democratic employees were hired into similar full-time positions in the same class during the two year period following the dates of the layoffs.
If we were to apply the Pickering balancing test in this case, we must balance the slight (if existent) infringement of the Wren plaintiffs’ First Amendment right to free political association versus the State’s clear interest in promoting the efficiency of the public services it performs through its public employees. Unlike a discharge motivated by a school teacher’s overt exercise of her right to free speech, e. g., Givhan, and unlike the blatant firing of employees of the same political party as a defeated incumbent, upon change in office, e. g., Bran-ti, the Wren plaintiffs were Republicans chosen from a larger group that consisted solely of Republicans and there was no evidence adduced that the plaintiffs had engaged in any political speech or association, other than their being registered Republicans, which had given rise to the personnel actions. The intrusion upon the Wren plaintiffs’ First Amendment freedoms was minimal, if existent.
Even assuming that there was a minimal intrusion, evaluating the State’s interest to determine whether they are of greater weight, as stated before, the State has a clear interest in utilizing its financial resources in an efficient manner. In the final analysis, that is what this case comes down to, whether the State of Illinois should have employed the Bradley plaintiffs without any equivalent reduction in personnel. In view of the involuntary requirement that the Bradley plaintiffs be reinstated, and of the fiscal exigencies, we hold that the State’s interest in maintaining prudent control over the efficient use of their resources outweighs any minimal impact on the plaintiffs’ right to political association.
At this point, we should comment on the district court’s heavy reliance on the history of patronage in Illinois politics. Although historical background is a proper factor in determining present motivation, e. g., Arlington Heights, supra, 429 U.S. at 267, 97 S.Ct. at 564, we believe that too great an emphasis was placed on this factor, and we are not persuaded that the political maneuverings of previous administrations, and even previous maneuverings of some of the Wren defendants, can be said to be the reason for the personnel actions here contested.
IV. Due Process
The following procedures were utilized in the case at bar. On or about June 30, 1973, plaintiffs received notices of their layoffs which read: “Layoff occasioned by Judge Verticchio’s order in No. 2795-69 in the Circuit of Sangamon County.” Under the Personnel Rules, each plaintiff was entitled as a laid off certified employee to petition the Director of Personnel within 15 days of receipt of the layoff notice for a reconsideration of his decision approving the notice. As part of that procedure, the Director was required to “review and investigate the application of the personnel rules and validity of the layoff.” Personnel Rule 2-596. Written notice to the employee of the final decision of the Director was required.
In the case at bar, defendants at first were confused about the jurisdiction of the IDOP to review the layoffs here because the actions occurred as the result of a court order. Some of the men laid off filed a mandamus action in the Circuit Court for Sangamon County seeking reinstatement. However, there was testimony to the effect that meetings were being scheduled as part of the reconsideration procedure for all of the laid-off employees who requested them. Such a meeting for plaintiff Patterson was held on September 28, 1973. Defendant Jones upheld Patterson’s layoff and sent written notice of his decision to Patterson’s attorney. No other meeting had been held when this action was commenced on October 18, 1973, and the parties stipulated that none would be held during the pendency of this litigation.
In finding that there was a violation of plaintiffs’ due process rights which justified injunctive relief, the court below stated:
Under the unique circumstances of this case, I believe that plaintiffs’ rights to due process of law were violated. The defendants’ response to the Bradley order, and the manner in which Bradley was implemented established the plaintiffs here as necessary parties to the Bradley litigation. They were not made party and thus were unable to protect the interest they had in their employment. They were denied due process of law.
457 F.Supp. at 239.
Plaintiffs contend here, as in the trial court, that, as certified employees they had a property interest protected by due process, that this property interest could not be terminated without adequate notice and a prior hearing, and that the prior hearing to which they were entitled was either a judicial hearing in the context of being parties to the Bradley case itself, a predismissal administrative hearing, or the discharge proceedings provided under the Illinois Personnel Code.
Initially, we hold that the district court erred in finding that the Wren plaintiffs were necessary parties to the Bradley proceeding, and that they were denied due process by not being joined. During the four year history of the Bradley proceeding, it would have been impracticable to join as parties every possible employee who might have been affected by the Bradley order. There would have been hundreds of potentially affected workers, with no certain way of determining which, if any, would have to be laid off. Cordes v. Isaacs, 27 Ill.2d 383, 189 N.E.2d 236 (1963), stands for the proposition that incumbent employees are not necessary parties to a proceeding for reinstatement of a former employee if the reinstatement proceeding would not adjudicate the employment rights of the incumbents. Such is the case here, in that the employment rights of the Wren plaintiffs were not adjudicated in the Bradley proceeding. Only upon implementation by the defendant State officials did the Bradley order first affect the Wren plaintiffs. In Powell v. Jones, 56 Ill.2d 70, 305 N.E.2d 166 (1973), the Illinois Supreme Court held that an employee discharged for cause is entitled to more extensive procedures (e. g., Ill.Rev. Stat.Ch. 127, 63b111) than is an employee laid off for financial reasons (e. g., Personnel Rules 2-596). The Powell court described the post-layoff procedures that are available in cases such as the one at bar, and held that ordinarily there is no right to a hearing before a layoff. This court has previously followed the Powell decision. Mims v. Board of Education, 523 F.2d 711, 715 (7th Cir. 1975). We note that the Powell court specifically limited its holding to situations that did not involve allegations of political motivation. 56 Ill.2d at 74, 305 N.E.2d at 168. However, where political allegations have been found to be without merit, we will not.grant relief for failure to provide a pre-layoff hearing. We hold that no pre-layoff hearing was required. In so ruling, we are mindful of the limited role a federal court must take in judging the procedures afforded a state employee in personnel transactions. Bishop v. Wood, 426 U.S. 341, 96 S.Ct. 2074, 48 L.Ed.2d 684 (1976).
V. Conclusion
We find no merit in plaintiffs’ equal protection and substantive due process argument, and our decisions above moot the issues raised in plaintiffs’ cross-appeal.
REVERSED AND REMANDED to the District Court for further proceedings in accordance with this opinion.
. Langhome Bond, individually and as former Secretary to IDOT; the present Secretary of IDOT, John Kramer; the former administrative assistant to Bond, Brian Hannigan; IDOT District 9 assistant district engineer, Richard Mi-ley; IDOT District 9 business manager, Donald Shelton; the former Director of IDOP, Nolan B. Jones; the present Director of IDOP, William R. Boys; IDOP chief field officer, Robert Rhoads; an IDOP employee, David Knox; the present Director of DMH, Robert deVito; and the former administrative aid to the Director of DMH, Alfred P. Ronan.
. Circuit Court of Sangamon County, No. 2795-69.
. One of the plaintiffs chose not to return.
. Judgment Order filed May 3, 1973 in Circuit Court, Sangamon County, No. 2795-69.
. Approximately 10.4% below the proposed budget.
. Although the district court made the general conclusion that “defendant’s evidence does not establish to my satisfaction, that fiscal restraints required the layoff of a number of current employees equivalent to the number of Bradley plaintiffs”, 457 F.Supp. at 243, as developed below, we hold that finding to be clearly erroneous.
. Reported at 457 F.Supp. 234.
. Justice Brennan was joined by Justices White and Marshall.
. Justice Stewart was joined by Justice Black-mun.
. Justice Stevens had not participated in the Seventh Circuit Elrod decision.
. Branti dealt with the question of whether certain employees had a confidential relationship with the employer which would justify a patronage dismissal. Such a factual question is not present in the case at bar.
. The date when civil service protections were extended to employees in the affected units.
. We are not persuaded that summer junior laborers or “ghost employees” are in the same class as the Wren plaintiffs.
. Plaintiffs -appellees claim they
Question: Were there cross appeals 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.
STONE, Circuit Judge.
This is an appeal from an order denying a motion to dissolve an order restraining sale of real estate to satisfy a default on a deed of trust covering the property. The appeal is by the trustee and the note holder.
In 1929, the Marner Realty Company, a Missouri corporation, executed a deed of trust upon certain real estate in St. Louis, Mo., to secure payment of a note for $60,-000 (with semiannual interest notes) due April 1, 1934. The deed of trust contained the usual provisions as to payment of taxes and as to acceleration for default in payment of taxes or of interest notes. General taxes beginning with 1930 became delinquent and had to be paid by the note holder, as well as a special assessment tax. These delinquencies with an unpaid interest note total something over $9,000. Exercising the right of acceleration, the trustee, on February 8, 1934, commenced the twenty-day advertisement of sale required by the deed of trust.
The day following (February 9, 1934), the Marner Company transferred this property to David J. Collins, Sr., for an expressed consideration of $100. As matter of fact, no actual consideration was agreed to be paid or was paid by Collins. On February 12, 1934, Collins filed a debtor’s petition under section 74 of the Bankruptcy Act (as amended by the Acts of March 3, 1933, 47 Stat. 1467, § 1, and of June 7, 1934, § 2, 48 Stat. 922, 923 [11 USCA § 202]). The same day, the debtor filed in that proceeding a petition to enjoin the above sale. The following day, and without notice to appellants, an order was entered restraining such sale “until further instructions of this court.” The trustee and the note holder filed, on February 19, 1934 (refiled February 20,1934), a petition to dissolve the above order and to authorize the sale to proceed. This petition, after setting forth the deed of trust and other matters leading up to the sale, contained the allegations following:
“That the said David J. Collins, Sr., was and is the sole stockholder, except for directors’ qualifying shares, of the said Mar-ner Realty Company and was and is its President; that the above described property constituted either the only asset of said corporation or substantially all of its assets; that said corporation was at the time of said transfer unable to pay its debts as they accrued in the ordinary course of business and was insolvent, and was about to lose through said foreclosure sale its principal or only asset; that your petitioners are unadvised as to the consideration paid by the said David J. Collins, Sr., but state upon information and belief that said corporation received either nothing or no substantial consideration for said deed. Your petitioners further state that the said transfer from Marner Realty Company to David J. Collins, Sr., was not a bona fide transaction, but was entered into for the purpose of hindering, delaying and defrauding the creditors of Marner Realty Company, and more particularly Mercantile-Commerce Bank and Trust Company, and that said transfer was made for the purpose of attempting to prevent the sale of said property by said successor trustee through placing title in David J. Collins, Sr., with the intent and purpose of immediately filing the above entitled cause and using said proceeding as a means of preventing said sale and hindering and ■ delaying Mercantile-Commerce Bank and Trust Company in collecting its indebtedness from said Marner Realty Com-; pany through the sale of said .property; that the said .transfer to David J. Collins, Sr., and the subsequent filing of this proceeding were all part and parcel of an unlawful and fraudulent scheme and device to place said property of said Marner Realty Company beyond the reach of its creditors, and particularly of Mercantile-Commerce Bank and Trust Company, and to hinder and delay said creditors, and particularly Mercantile-Commerce Bank and Trust Company, from collecting their debts against said corporation or proceeding against said property, and the said conduct on the part of said David J. Collins, Sr., constitutes a fraud upon these petitioners and upon the Court; that said transfer is void as to creditors of Marner Realty Company and particularly as to Mercantile-Commerce Bank and Trust Company.”
February 23, 1934, this petition was denied, and petitioners .appealed.
Evidence was introduced at the hearing on the motion to dissolve. It was admitted by the debtor that he was the owner of all of the capital stock of the Marner Realty Company, that no consideration was paid or agreed to be paid by him for the property transferred to him by the company, and that t-he transfer to him was made “with the contemplation that when the deed was executed and delivered debtor proceedings would be begun by the grantee.” The undisputed evidence was that there was a default under the deed of trust of “about $9,000.00”; that the corporate organization and dealings were maintained as to this property.
It is difficult to understand any legal principle upon which denial of the petition to dissolve the restraining order could be based,' and we are not favored by any brief or argument for appellee attempting to sustain such action. The statute expressly denies debtor petitions, for compositions and extensions, to corporations. Because of such prohibition, the Marner Company was powerless to protect itself from the result of its repeated and continued defaults under the deed of trust. The plan resulted, to convey this property to an individual who could avail himself of this' statute. The. purpose of the entire transaction and of every move in it was to hinder and delay a creditor in collecting a just debt then due. The recent case of Shapiro v. Wilgus, 287 U. S. 348, 53. S. Ct. 142, 77 L. Ed. 355, 85 A. L. R. 128, clearly rules the situation here. There an individual found it necessary to convey his property to a corporation in order to secure an equity receivership for the purpose of hindering and delaying two creditors who were threatening suit against him. Here a corporation finds it necessary to convey its property to an individual in order to secure the protection of this statute for the purpose of hindering and delaying its creditor from collecting a debt. The language of the court (page 355 of 287 U. S., 53 S. Ct. 142, 144), that the entire transaction was “a scheme whereby the form of a judicial remedy was to supply a protective cover for a fraudulent design,” is directly applicable to the transaction here. The design there, as here, was to hinder and delay creditors.
Conveyances to hinder or delay creditors in their rights of collection or realization of payment are legal fraud both in Missouri (R. S. 1929, § 3117 [Mo. St. Ann. § 3117, p. 1946]; Citizens’ Bank v. McElvain, 280 Mo. 505, 510, 511, 219 S. W. 75) and generally (First National Bank v. Flershem, 290 U. S. 504, 518, 54 S. Ct. 298, 78 L. Ed. 465, 90 A. L. R. 391; Shapiro v. Wilgus, 287 U. S. 348, 354, 53 S. Ct. 142, 77 L. Ed. 355, 85 A. L. R. 128).
Nor is appellee aided by the circumstance that he was sole owner of the stock of the corporation. While courts will look through corporate organizations to individuals where such is necessary to protect a public or a private right — that is, to prevent injusticer — they will do so sparingly and only when such is required to prevent injustice. Obviously, it would never be done to further perpetration of a fraud. Ordinarily, the corporation will be regarded as a separate legal entity. This is true even though there be but a single stockholder. Dalton v. Bowers, 287 U. S. 404, 410, 53 S. Ct. 205, 77 L. Ed. 389; Burnet v. Commonwealth Improvement Co., 287 U. S. 415, 419, 53 S. Ct. 198, 77 L. Ed. 399; Oldham v. Chicago & N. W. Ry. Co., 52 F.(2d) 111, 114 (C. C. A. 8); Majestic Co. v. Orpheum Circuit, 21 F.(2d) 720, 724 (C. C. A. 8).
,[4] The transcript contains an order by the referee in bankruptcy (entered after this appeal) appointing a custodian to take possession of this property, manage and preserve it, collect the rents, and retain custody of such proceeds until further order. Appellants urge here that the funds so arising and in the custody of the custodian should, after deduction of a reasonable fee for the custodian, be applied to reduce this indebtedness. This should be done. Since this conveyance is fraudulent as to the creditors of the corporation, it is clear that the income from this property is income of the corporation in so far as the rights of- its creditors are concerned. Under no theory can the creditors of the individual (Collins) have any rights thereto equal to those of the corporate creditors. Therefore the funds of the custodian should be devoted to satisfaction of the corporate debts. The undisputed evidence is that there are no corporate debts except this one. Hence the funds, less a reasonable allowance to the custodian, should be paid over to appellant Mercantile-Commerce Bank & Trust Company (the note holder here) to be applied upon this indebtedness.
The case is remanded, with instructions to enter an order or orders dissolving the restraining order, permitting sale under the deed of trust, and paying over funds of the custodian, all in accordance with this opinion.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
ALSCHULER, Circuit Judge.
. The controversy relates to the federal estate tax upon the gross estate of Samuel R. Kaufman, deceased. The issues are whether, under section 402, Revenue Act of 1921 (42 Stat. 278) an inter vivos gift of 4,434 shares of corporate stock of Congress Hotel Company to the wife by the deceased, made within two years of his death, was in contemplation of death and therefore includable for taxation in bis gross estate, and whether certain real estate held by deceased and his wife by the entirety was includable in his gross estate.
The Commissioner included the items in the gross estate and found a deficiency accordingly, and upon appeal the Board of Tax Appeals held both items were properly included. 5 B. T. A. 31.
The order of the Board was not then reviewable by the Circuit Court of Appeals and. the tax having been paid, suit to recover it back was brought in the District Court against the Collector of Internal Revenue of the revenue district wherein it was paid. The court held that the stoek was transferred by deceased in contemplation of death and was includable for taxation in the gross estate, denying recovery therefor, from which holding the executors appeal (No. 5002); and that the real estate held by the entirety was not includable, giving judgment for the executors for the tax paid thereon, wherefrom the Collector appeals (No. 5003).
Deceased, a resident of Chicago, died April 29, 1922, aged 58 years. By his will, executed about five months previously, his property, passed to his wife and their three children. The wife and the elder son were made executors, but the son, not then having reached his majority, could not qualify under the law of Illinois.
In scheduling the gross estate, the executrix, his wife, did not include 4,434 shares of the stock of Congress Hotel Company, valued at $443,400, and 400 shares of Chatham 6 Phenix National Bank stock, valued at $94,800. The Commissioner increased the value of the gross estate by including therein these amounts and the real estate held by the entirety, which resulted in a substantial deficiency. The bank stock is not here involved.
In October, 1915, deceased and his brother Nathan, who held stock in the hotel company, made an agreement that in ease of the death of either the stoek of the one dying might be purchased by the survivor at the par value thereof, the purchaser to give his ten-year note therefor, stoek represented by any stoek dividend to be included without cost. Nathan died in 1918 owning 5,900 shares, of which Samuel purchased 4,371 shares, giving his note therefor. In 1919 a 50 per cent, stoek dividend was declared, and, after Samuel’s death, these original and dividend shares were transferred to the payee of the note, who surrendered and canceled the note.
In 1918 Samuel and three other brothers, all holding hotel stock, entered into a contract similar to that with Nathan. One of these brothers died, and, pursuant to the agreement, his stoek passed to the survivors.
Samuel became worried by reason of the fact that his then holding of the stock (14,000 shares) was much more than that of the brothers, and in case of his death his surviving brothers could buy his stoek at a price much less than he deemed its value to be, whereby his own family would, as he thought, be unduly deprived. He consulted his attorney, who advised him the contract was effective only as to such stoek as the one dying had at the time of his death, and that stock disposed of before his death would not be subject to the agreement. The attorney further advised him that, as he had for some time contemplated giving a portion of his Congress Hotel stoek to his wife, it would be well for him to carry out this intent and give it to her at once, and thus relievo those shares from the burden of the contract. He thereupon made plans to arrange his indebtedness secured by such stock so that ho would have some of the stoek clear. By December, 1921, he had free from his obligations the 4,434 shares of the stock which he thereupon procured to be transferred to- his wife on the books of the company. In the same month he took the stock certificates to New York, where she then was, and gave them to her, saying to her, “There is the stock I have been promising you for so long.” She then placed the certificates in her safety deposit box in New York with her other valuables, to which she alone had access, and there, up to her husband’s death, it remained.
On April 20, 1920, deceased made a gift to his wife of $84,500 of liberty bonds, which in 1921, upon his advice, she exchanged for the Chatham & Phenix Bank stoek, which was held to be no part of the gross estate.
In 1916 Samuel became ill and his appendix was removed. Prom this he fully recovered. In 1919 he was indisposed with a cold and was examined by his physician, who found he had a slightly enlarged liver. He had no further illness until the spring of 1921, when he contracted influenza, from which he apparently recovered, and he then went to New York, where he suffered a relapse and developed an intestinal condition which involved the gall duets and produced jaundice. He also had erysipelas in the ear and neck, and poisoning, which caused him to he delirious for several weeks, involving nearly every organ of the body. This illness covered April and part of May, 1921. Thereafter he steadily improved, and he went to his summer camp in Michigan, as was his custom; and on his return to Chicago in October his health was better than before his illness. He continued in active management of his large affairs, particularly in the management of the Congress Hotel and several other business ventures, and enjoyed and continued to enjoy good health to the night of April 29, 1922, when he was suddenly stricken and died in a few hours from gastric hemorrhage, an ailment which does not appear to have had relation to any prior illness.
On January 1, 1922, the hotel company declared a 4 per cent, dividend, amounting on these shares to $17,737, which, at the request of deceased, was paid by the hotel company to him. On April 1,1922, a further dividend of 2 per cent, was declared, which was likewise paid to him, both sums being deposited in his bank account.
The Board of Tax Appeals, after finding the facts, reached the conclusion and held that this gift of stock was not made by deceased in contemplation of death, but that by reason of the fact of his drawing the dividends after the transfer of the stock the transfer was one intended to take effect in possession or enjoyment at or after his death, and was therefore taxable under the statute.
This reason for the Board’s holding is not now, nor was it in the District Court, urged by the Collector in support of the inclusion of the shares in the gross estate. Under the decision by this court in Hodgkins v. Commissioner, 44 F.(2d) 43, 45, and Smith v. Commissioner, 59 F.(2d) 533, 536, such contention could not have been maintained.
The findings and opinion of the Board were in evidence before the District Court, and no evidence was offered in that court which- tended to overcome the Board’s conclusion that the transfer was not made in contemplation of death. It is contended for the executors that in this state of the record the court was bound to accept the conclusion on that subject which the Board reached. With this contention we are not in accord.
•The.Board’s finding on this subject is its conclusion from the specific facts which it found; and the statute makes the findings prima facie evidence. This would not preclude the court from hearing other evidence bearing on those findings, nor from reaching an ultimate conclusion different from that reached by the Board, upon the facts as they were found by the Board. If it were otherwise, then in the suit of a taxpayer for refund of taxes paid the court would practically be precluded from reaching a conclusion different from that reached by the Board, unless before the District Court, further evidence was adduced to overcome the prima facie effect of the Board’s findings. If the District Court may not reach its ultimate findings from the evidentiary facts as found by the Board, the statute giving to the taxpayer the action for refund would be a practical nullity where no further evidence was heard by the court.
If no other evidence is adduced before the court than that afforded by the findings of fact by the Board, it is nevertheless for the court to determine whether, upon this evidence, the proper conclusion was reached; and upon appeal from the judgment of the. District Court thereon it is for this 'court to examine the facts as the record shows them to be, and therefrom determine whether in its judgment the District Court reached the proper conclusion.
What is a gift in contemplation of death has been many times considered by the courts. A definition which would cover all circumstances which may arise could not be formulated. In United States v. Wells, 283 U. S. 102, at page 119, 51 S. Ct. 446, 452, 75 L. Ed. 867, it was said:
“There is no escape from the necessity of carefully scrutinizing the circumstances of each case to detect the dominant motive of the donor in the light of his bodily and mental condition, and thus to give effect to the manifest purpose of "the statute.”
This quotation is preceded by a discussion so cogent and clarifying in its application to the instant ease that we specially refer to so much thereof as begins at the bottom of page 117 of 283 U. S., 51 S. Ct. 452, with the words “old age,” and continuing to the beginning of the above quotation on page 119 of 283 U. S., 51 S. Ct. 452, although the entire opinion, which is quite lengthy, is highly illuminative.
There is striking parallel between the facts in the Wells Case and those here. Wells died August 17, 1921, leaving a wife and five children, and Kaufman on April 29, 1922^ leaving a wife and three children. Each had had at intervals several illnesses, some quite serious, up to about six months preceding the transfer, and each lived some five months or more thereafter. Wells had been informed a few months before his transfer that he had eaneer of the bowels, although at the time of the transfer he had been told he was about cured, and be felt well and transacted his business affairs, which were considerable. Kaufman also had spells of specific illness, at least one of them quite serious, but from which he had fully recovered, and for about seven months prior to the transfer he was apparently well and attended to his large affairs, including the management of the Congress Hotel at Chicago. Each of them had previously given a large amount to members of their respective families — Wells to his children, and Kaufman to his wife for the use of herself and children, having given them $84,-500 in United States bonds over two years before bis death. Wells’ gift of stocks to his children was about half of his million dollar estate, and at about the same time he made this gift he made his will and a property settlement with his wife; and Kaufman’s gift of the 4,434 shares was about half of his gross estate, and he then also made his will as heretofore stated.
In each ease there was evidence of a specific motive for the making of the transfer, other than contemplation of death. Wells wished his children, while he was living and could advise them, to have experience in handling property in order better to qualify them for property management while he lived, and for managing what they would receive on his death. Kaufman had promised to give his wife shares of the Congress Hotel stock, and he had the further motive of relieving so much of the stock as he would give hear from the contractual option of his brothers to purchase the stock in case they survived him.
But counsel for the government contend that this very motive indicates that the transfer was made in contemplation of death, since the contracted option for purchase would become effective only in case of his death leaving one or more of his brothers surviving. Indeed, this is the main, if not the sole, reason advanced in support of the proposition that the transfer was in contemplation of death. We cannot see it in this light. What decedent sought to achieve in this respect could not have been effected by will. No testamentary disposition could have relieved the stock from operation of the option, which the decedent had conceived to he a substantially detrimental element in the value of the stock. Ho had taken up with his brothers the matter of eliminating the option, hut without result up to the time of the transfer. A transfer of the stock made with the view of relieving it from the potential option of the contract is not in the nature of a testamentary disposition of the stock, and such a motive is not to be regarded as indicating a transfer in contemplation of death, but rather a transfer made in contemplation of the contract.
In this respect the situation is again quite comparable to that in the Wells Case. Wells wished his children to have the experience of managing property while he was yet alive and could advise them, so that after his death they would be better able to manage it, and any other property he would leave them. While, of course, he realized that some time he would die, yet the transfers he made were not for any such reason alone'in contemplation of death, within the construction given that phrase by the Supremo Court in deciding the Wells Case against the contention that the transfer was there made in contemplation of death, reversing the lower court which had decided otherwise.
In one significant respect there is a decided difference between the eases. At the time of the respective transfers Wells was aged 73 and Kaufman 58. While it is true, as said in the Wells opinion, that “old age may give premonitions and promptings independent of mortal disease. Yet age in itself cannot be regarded as furnishing a decisive test,” yet in a donor at 58 contemplation of death would *not be so readily inferred as in one at 73.
Where the motivating cause for the transfer is something other than the transferor’s contemplation of his death, bo such cause laudable or otherwise, the statute can have no application, and the transferred; property may not ho included for taxation in the transferor’s gross estate.
We axe satisfied that upon this record, on the authority of United States v. Wells, the rebuttable statutory presumption of contemplation of death, where the death ensued less than two years after the transfer, has been overcome, and that a motivating cause for the transfer other than contemplation of death definitely appears.
Respecting the appeal of the government from so. much of the decree of the District Court as awarded refund for the tax paid oñ the real estate held by Kaufman and his wife as tenants by the entirety, we conclude that the case is governed by the decision of the Supreme Court in Griswold v. Helvering, Commissioner, 290 U. S. 56, 54 S. Ct. 5, 78 L. Ed.- (decided November 6, 1933 — after the District Court’s decision herein), affirming the decision of this court in the same ease. 62 F.(2d) 591. In that case, as here, the tenancy was created prior to 1916. It was there held that, since the acts passed after that year and prior to the death did not purport to be retroactive, provision in those acts for including in the gross estate the whole property held by the entirety did not apply to such tenancies as were created before 1916, and that thus only half the value of such property was includable in the gross estate of the deceased tenant by the entirety.
The death here occurred while the statutory provisions were .the same as in the Griswold Case. The District Court held that no part of the real' estate was indudable in the gross estate of deceased for taxation, and gave the executors judgment for $291, which was the amount of the tax which had been assessed and paid. Under the Griswold Case we conclude that the refund should be for one-half thereof, $145.50.
The judgment is reversed, and the cause is remanded to the District Court with direction to award a judgment for the tax paid upon said shares of stock of the Congress Hotel Company, plus $145.50 of the tax paid on the said real estate, together with statutory interest on both amounts.
"Sec. 402. That the value of the gross estate of the decedent shall be determined by including the value at the time of his death of all property— * ** *
"(c) To the extent of any interest therein of which the decedent has at any time made a transfer, or with respect to which ho has at any time created a trust, in contemplation of or intended to take effect in possession or enjoyment at or after his death (whether such transfer or trust is made or created before or after the passage of this Act), except in case of a bona fide sale for a fair consideration in money or money’s worth. Any transfer of a material part of his property in the nature of a final disposition or distribution thereof, made by the decedent within two years prior to his death without such a consideration, shall, unless shown to the contrary, be deeraftd to have been made in contemplation of death within the meaning of this title;
“(d) To the extent of the interest therein held jointly or as tenants in the entirety by the decedent and any other person. * • *
Question: Were there cross appeals 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 Jones seeks review of' an order of the district court denying, after an evidentiary hearing where he was represented by court-appointed counsel, his petition for a writ of habeas corpus. Appellant pled guilty and was convicted by the State of Florida of assault with intent to commit manslaughter after retained counsel negotiated a reduction of the charge from one of assault with intent to commit murder in the first degree. His principal contention is that his plea was fraudulently induced by his counsel’s promise that he would “walk out a free man” if he did so. Jones, five relatives, and a friend testified to this effect at the plenary hearing in the district court.
Appellant’s former counsel testified that on the day the guilty plea was entered, the appellant had been concerned whether he would be jailed immediately and that such a statement may have been made to assure the appellant that he would remain at liberty under his bond pending pre-sentence investigation. The attorney emphatically denied that the appellant was promised freedom if he pleaded guilty and further testified that he had informed his client that a prison sentence could be imposed.
The district court held that the plea was voluntarily and understandingly entered, and that the appellant had not proved that he was denied effective assistance of counsel. Rule 52(a), F.R.Civ.P., provides in part that “Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses.” After a careful review of the record, we have concluded that the district court’s findings are not clearly erroneous and that summary disposition of this appeal without oral argument is appropriate. Accordingly, the Clerk of this Court has been directed, pursuant to new Rule 18 of the Rules of the United States Court of Appeals for the Fifth Circuit, to transfer this case to the summary calendar and notify the parties in writing of the transfer.
Affirmed.
APPENDIX
RULES OF THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
RULE 17
DOCKET CONTROL
In the interest of docket control, the chief judge may from time to time, in his discretion, appoint a panel or panels to review pending cases for appropriate assignment or disposition under Rules 18, 19 or 20 or any other rule of this court.
RULE 18
SUMMARY CALENDAR
(a) Whenever the court, sua sponte or on suggestion of a party, concludes that a case is of such character as not to justify oral argument, the case may be placed on the summary calendar.
(b) A separate summary calendar will be maintained for those cases to be considered without oral argument. Cases will be placed on the summary calendar by the clerk, pursuant to directions from the court.
(c) Notice in writing shall be given to the parties or their counsel of the transfer of the case to the summary calendar.
RULE 19
MOTION TO DISMISS OF AFFIRM
Within fifteen days after the appeal has been docketed in this court, the ap-pellee may file a motion to dismiss or a motion to affirm. Where appropriate, a motion to affirm may be united in the alternative with a motion to dismiss. The fifteen day provision may be waived by the court on proper showing of reasonable excuse for delay in filing a motion to dismiss or affirm, upon such terms and conditions as the court may prescribe, or such waiver may be granted sua sponte on the part of the court.
(a) The court will receive a motion to dismiss any appeal on the ground that the appeal is not within the jurisdiction of this court.
(b) The court will receive a motion to affirm the judgment sought to be reviewed on the ground that it is manifest that the questions on which the decision of the cause depends are so unsubstantial as not to need further argument.
The motion to dismiss or affirm shall be filed with the clerk in conformity with Rule 27 of the Federal Rules of Appellate Procedure.
The appellant shall have ten days from the date of receipt of the motion to dismiss or affirm within which to file a response opposing the motion. Such response may be typewritten and four copies, with proof of service, shall be filed with the clerk. Upon the filing of such response, or the expiration of the time allowed therefor, or express waiver of the right to file, the record on appeal, motion and response shall be distributed by the clerk to the court for its consideration.
After consideration of the papers distributed pursuant to the foregoing paragraph the court will enter an appropriate order.
The time for filing briefs pursuant to Rule 31 of the Federal Rules of Appellate Procedure shall not be tolled or extended by the filing of a motion to dismiss or affirm.
RULE 20
FRIVOLOUS AND UNMERITORIOUS APPEALS
If upon the hearing of any interlocutory motion or as a result of a review under Rule 17, it shall appear to the court that the appeal is frivolous and entirely without merit, the appeal will be dismissed without the notice contemplated in Rules 18 and 19.
. In order to establish a docket control procedure the Fifth Circuit adopted new Rules 17-20 on December 6, 1968. All four of these new rules are reproduced in the Appendix to this opinion. For a general discussion of the need for and propriety of summary review of certain appeals, see Groendyke Transport, Inc. v. Davis, 5th Cir., 406 F.2d 1158 [January 2, 1969], For cases heretofore placed on summary calendar, see Wittner v. United States of America, 5th Cir., 1969, 406 F.2d 1165; United States of America v. One Olivetti Electric 10-Key Adding Machine, 5th Cir. 1969, 406 F.2d 1167; United States of America v. One 6.5 mm. Mannlicher-Carcano Military Rifle, etc. and John J. King, 5th Cir. 1969, 406 F.2d 1170; National Labor Relations Board v. Great Atlantic & Pacific Tea Company, Inc., 5th Cir. 1969, 406 F.2d 1173; and Thompson v. White, Warden, 5th Cir. 1969, 406 F.2d 1176.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
K. K. HALL, Circuit Judge:
The State of Maryland appeals from the grant of a writ of habeas corpus issued by the district court setting aside the state court conviction of Roland Anderson because of misconduct on the part of the trial judge. We find that the trial judge committed error and we do not condone what he did. However, the overwhelming evidence supports the conviction, and therefore we find the error harmless beyond a reasonable doubt. Chapman v. California, 386 U.S. 18, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967). Accordingly, we reverse.
Eleanor Davis was a sixty-two year old widow, living alone in Annapolis, Maryland. On the night of April 26, 1970, sometime between the hours of 10:00 p. m. and 2:00 a. m., she was raped and murdered in her bed. Her bloody and battered body was found the next morning by her adult son.
The day after the murder, the police brought Roland Anderson in for questioning. They did not arrest him then, but he agreed to be fingerprinted and he gave the police hair and saliva samples. He and his parents also consented to allow the police to search their home. During the search of the defendant’s bedroom, the officers found a pair of trousers with blood stains and seminal stains on them. When questioned, Anderson admitted having worn those pants on the night of the murder. Also, there were fingerprints and palmprints found inside Mrs. Davis’ bathroom window ledge and on her bathtub, which turned out to be the defendant’s. By May 8, the police had amassed enough evidence to consider Anderson a prime suspect, and they placed him under arrest.
Anderson signed a written confession after giving a detailed oral account of the crime. He related the following sequence of events: Having entered Mrs. Davis’ apartment through the bathroom window, he worked his way through the apartment looking for money. Mrs. Davis woke up while he was in her bedroom and recognized him. He knocked her unconscious with his fist. Then a “funny feeling” came over him and he raped her. When he remembered that she would be able to identify him, he decided to kill her. He searched around and found a hammer and a butcher knife. Returning to the bedroom, he beat her over the head with the hammer, and then, because she was still moaning, he slashed her left wrist with the knife. He left, taking the knife and the hammer, which he put into a brown paper bag and stuffed into the garbage can behind his house.
Item by item, the evidence corroborated the confession as follows:
1. Confession : He entered the apartment through the bathroom window.
Evidence : His fingerprints and palm-prints were found inside the bathroom window ledge and on the bathtub.
2. Confession : He searched through the apartment for money.
Evidence : Mrs. Davis was an impeccable housekeeper, yet her bureau drawers were found partially open, as if someone had been rummaging through them.
3. Confession: Mrs. Davis woke up and recognized him.
Evidence: They lived in the same neighborhood.
4. Confession: He knocked her unconscious.
Evidence : The state’s pathologist who testified at trial concluded that Mrs. Davis was raped while she was unconscious.
5. Confession : He raped Mrs. Davis.
Evidence : The autopsy report noted the presence of semen in Mrs. Davis’ vagina. Pubic hairs which were microscopically similar to Mrs. Davis’ were found on the trousers Anderson admitted having worn on the night of the crime. Seminal secretions found on the bedsheets and on Anderson’s clothing evidenced the présence of both of their blood groups. The last is a particularly telling point because Mrs. Davis had an uncommon blood type.
6. Confession : He hit Mrs. Davis over the head with the hammer.
Evidence: The pathologist testified that the murderer had smashed Mrs. Davis’'head with a blunt instrument causing gaping scalp wounds, numerous skull fractures, and bruising of the brain.
7. Confession: He slashed her left wrist to kill her.
Evidence: Although the pathologist testified that the head injuries alone would have been fatal, the direct cause of Mrs. Davis’ death was a deep cut on her left wrist.
8. Confession: He found a hammer and a knife, and took them with him when he left.
Evidence: Mrs. Davis’ son testified that a hammer was missing from his mother’s belongings.
In sum, the factual evidence matched the confession so exactly as to remove all reasonable possibility of coincidence.
Nevertheless, the defendant asserted that he was nowhere near the scene of the crime, but that he had been at Phyllis Cook’s house on the night of the murder. Ms. Cook and Clinton Roberts both confirmed his story. Roberts testified that he and Anderson had left for Cook’s house some time after 9:30 p.m. Although Cook did not know what time they had arrived, she said she knew Anderson had been at her house until 3:00 or 3:30 a. m.
After both sides had rested, the state’s attorney told the judge that he thought the alibi witnesses had lied. The judge called Cook and Roberts into his chambers and admonished them about the consequences of perjury, whereupon they both agreed to change their stories. The judge then reconvened court and told the jury that the two alibi witnesses had lied in their earlier testimony and wanted to revise their statements. As the witnesses took the stand again, the judge cautioned them that they were being given one last chance to tell the truth. Roberts then admitted that he could have been mistaken about the time he left Anderson’s neighborhood that evening, and conceded that it could have been as late as 10:30 or 11:00 p. m. Cook, in turn, acknowledged that she could not be sure if Anderson had been at her house for the entire time between 1:00 a. m. and 3:00 a. m.
The jury found Anderson guilty. We find no reason to question the validity of that verdict.
Anderson tried to establish an alibi with two witnesses who from the start were not positive about the exact amount of time they had spent with him. All the later testimony did was to emphasize how vague their memories actually were. Furthermore, even if Cook and Roberts had never changed their stories, Anderson’s alibi defense would have been unavailing. As we outlined above, the evidence corroborated his confession in every detail. Only the murderer could have given as exact an account of the crime as Anderson did.
In the past, courts have gone to extraordinary lengths in the name of liberty to free guilty people on technicalities. Under the facts of this case, we refuse to adopt that practice. Roland Anderson was found guilty by a jury of his peers. That conviction is supported by a large body of evidence and cannot be impugned by the trial judge’s error.
We have considered the other issues Anderson has raised and we find them to be without merit. Accordingly, we reverse the decision of the district court and hold that the petition for a writ of habeas corpus is denied.
REVERSED.
. Anderson was fifteen years old at the time of the crime. Before questioning him, a police officer read him his Miranda rights and explained them to him in the presence of his parents. During the explanation, the officer stopped frequently and another officer asked them if they understood what was being said. Once the defendant had been fully advised of his rights, he and his parents signed a waiver of rights form.
After a couple of hours of questioning, he confessed to the crime. The officer then prepared a written confession and Anderson signed it.
At trial, Anderson tried to disavow the written confession, claiming that he had only a seventh grade education and could not read what he was signing. His argument has no merit. The questioning agent testified about the oral statement in which the defendant had related the details of the murder. The signed confession was merely that statement reduced to writing. Anderson was able to tell about the enme even if he could not read many of his words once they were written down.
. Anderson said that he had gone into Mrs. Davis’ apartment through the bathroom window about three months earlier to help her get in when she had locked her keys inside. He said that at that time Mrs. Davis had told him that she was so forgetful about her keys that she had to keep her bathroom window unlocked.
. These items were never recovered.
. In disputing his confession, Anderson asserted that his fingerprints were in Mrs. Davis’ bathroom because he had gone in through the bathroom window to help her get into her apartment when she had locked herself out about three months earlier. This explanation is patently incredible. No juror could believe that the defendant’s fingerprints would have remained on Mrs. Davis’ bathtub for three months.
. Mrs. Davis belonged to blood group B; Anderson belongs to blood group A. According to expert testimony adduced at trial, evidence of a person’s blood type can be found in body secretions such as saliva, semen, and vaginal fluids. Thus, the presence of both types in the secretions is easily explained: Anderson’s semen could have contributed the type A factor; Mrs. Davis’ vaginal discharge could have contributed the type B factor.
. An expert at trial testified that only 10% of the population belongs to blood group B.
. The judge said,
Mr. Foreman, ladies and gentlemen of the jury at the conclusion of this case two of the witnesses who testified have indicated to the Court that they told an untruth in their testimony and desire an opportunity to correct that before you ladies and gentlemen before this case concludes. As a matter of law, the Court must afford a witness an opportunity to purge himself or herself of perjury. For that purpose we are recalling these two witnesses to the stand to give them an opportunity to revise their stories to what they are now saying is the correct testimony.
. To Ms. Cook, in the presence of the jury, the judge said,
You have indicated to the Court that a portion of the testimony that you previously gave under oath in this case was false. The Court now affords you an opportunity to correct that testimony by telling the" truth and to purge yourself of the perjury you have committed. This is the last chance you will be given in this trial to tell the truth.
Before Roberts took the stand again, the judge spoke with him, in front of the jury, as follows:
Judge Bowen: At the conclusion of the testimony in this case you indicated to the Court that some portions of the testimony you had given before this jury were false. You asked the Court for an opportunity to purge yourself of this crime by being afforded an opportunity to tell the truth to the jury. This is your opportunity to tell the truth. It is the last one you are going to get in this trial. A. Yes sir.
Judge Bowen: You better make good use of it.
. Compare e.g., United States v. Bates, 468 F.2d 1252 (5th Cir. 1972). In Bates, a key witness for the prosecution completely changed his testimony after he had been accused of perjury. Unlike that case, the altered testimony here could better be characterized as a clarification.
. Anderson claims ineffective assistance of counsel. The only arguable instance of ineffective assistance is counsel’s failure to object when the judge commented to the jury about the alibi witnesses’ testimony. However, since we hold those acts to have been harmless error, counsel’s failure to object can not 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.
WOODLEY, Circuit Judge.
Joseph BoucMe, a seaman aboard the steam barge Adorns was injured when, in the performance of Ms duty, he fell over a known obstacle on the deck. After he had received some treatment furnished by the Maryland Casualty Company, insurer of barge and owner against liability for such injuries, Bouchie filed a libel against the barge for expenses of maintenance and cure (care), and for damages based on negligence. The court dismissed the libel, and tMs appeal followed.
Questions whether the respondent was negligent and the libellant entitled to damages, and whether, having been injured in the service of the ship, he is, wholly without the ingredient of negligence, entitled to expenses for maintenance and cure, Saunders v. Luckenbach Co. (D. C.) 262 F. 845; The Osceola, 189 U. S. 158, 23 S, Ct. 483, 47 L. Ed. 760, all disappear from the case if the release which the libellant gave the Casualty Company on behalf of the insured barge and her owner, and offered in defense of the action, is valid.
The libellant attacks the validity of the release because of duress under which he signed it, of fraud practiced by the Casualty Company in changing its terms, and' of mistake in signing it, calling our attention to his position as a mariner and therefore a ward of the court of admiralty, whose rights are tenderly guarded, and whose acts, when waiving or yielding his rights, are carefully scrutinized. He invokes the rule stated in Riegel v. Higgins (D. C.) 241 F. 718, 722, and elaborated in The Henry S. Grove (D. C.) 22 F.(2d) 444, 446:
“ ‘Releases by seamen are never conclusive, except when made knowingly and intentionally, and with a full understanding of the situation.’ This being true, the doubt should be resolved in favor of the libelant. A court should be slow to hold that a release becomes operative as to a matter of liability of which the releasing party may have been in ignorance, and which, in fairly interpreting the document, was not in contemplation of the parties when it was made. Tug Ross Coddingtort, 40 F.(2d) -- 1924 A. M. C. 615.”
The facts and contentions concerning the release are these:
The libellant badly needed $125 with which to procure a new set of teeth. The Casualty Company offered him $75. After several sharp conferences the company surrendered and paid him $125, receiving in return the release which the libellant now says he was, because of pain he was suffering, and his need of money, forced to sign. However pain and need of money may have induced him, to sign what otherwise is a valid release, these moving considerations, which emanated within himself, not from the Casualty Company, do not amount, ás he contends, to legal duress and undue influence. The Pennsylvania (D. C.) 98 F. 744; The Topsy (D. C.) 44 F. 631.
The release, evidently a short form regularly used by the Casualty Company, is partly printed, with blanks for the names of parties to meet every case, and partly in typewriting to meet the instant ease. The libellant says that the paper he signed contained no typewriting,. but, following the printed matter, there was a blank space. This, in effect, is a charge that the paper was altered by additions after it was signed. The printing — the usual legal form — is a release and discharge of the owner from all liability arising from “all actions, causes of action, clhims and demands for” loss or injury “sustained * * * in consequence of” — then follows in typewriting the date, place and character of, the accident and injury in suit. There is nothing in the typewritten part of the instrument that adds to or varies the sense or legal effect of the printed part, which is an unequivocal release and discharge. We are discussing this matter at some length because of our regard, or responsibility, for seamen. We realize that a release of this kind is not a bar preventing inquiry into the seaman’s rights. It can always be looked into. The Topsy (D. C.) 44 F. 631; The David Pratt, 1 Ware, 510, Fed. Cas. No. 3597. But a release of this kind, formally signed, sealed, and witnessed, is, however, prima facie good, and cannot be set aside unless it was obtained by duress, mistake, or, in this case, by fraud, in that the instrument admitted in evidence is not in all respects the instrument the seaman signed. Thompson v. Paussat, Pet. C. C. 182, Fed. Cas. No. 13954; The Ship Neptune, 1 Pet. Adm. 180, Fed. Cas. No. 17569. [4] On the meager evidence of an altered instrument, we are constrained to> hold against the seaman on the issue of fraud. This judgment is supported by his act of accepting, and receiving the money on, the cheek which passed in the transaction on whose face it appears that the money represented by the check was “in full settlement of all liability settlement in the ease of Joseph Bouehie v. S. C. Loveland, Inc. (owner of the barge), on account of injury sustained December 1, 1926,” which is the injury on the date stated in the typewriting of the release.
.The libellant realizing that to put the release out of the ease he must sustain.the burden of proving that he signed it through duress,, fraud, or mistake, says, Anally, that he signed it through mistake in that he did not read it, and “thought it was a. receipt for the $125 (he) was getting.” There is no' evidence that the libellant could not read. There is evidence that he looked at the paper. He signed it. He is therefore, presumed to have known and understood its contents. The Henry S. Grove (D. C.) 22 F.(2d) 444. Had he read it, he could not have been misled into believing it was anything short of a release. There is no evidence that the Casualty Company did anything to induce him to sign the paper other than tender him a check for the amount agreed upon, or said anything to make him believe it was a mere receipt. Indeed, the record is bare of a suggestion that the libellant was tricked into signing the paper by false representations of the company’s agent. The Annie L. Mulford (D. C.) 107 F. 525; The Belvedere (D. C.) 100 F. 498. After a careful consideration of the testimony, we aré constrained to hold that there is far too little to have justified the trial court, or to justify this court, on trial de novo, in declaring the paper invalid because of duress, fraud, or mistake.
As the release constitutes a complete defense to the action, the decree dismissing the libel 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.
WILKINSON, Circuit Judge:
Dennis Stockton was tried before a jury in the Circuit Court of Patrick County, Virginia, for the murder for hire of Kenneth Arnder. The guilt phase of Stockton’s trial lasted for two days and, on March 28, 1983, the jury found him guilty of capital murder. The sentencing phase of the trial took place the following day. The jury recommended that Stockton be sentenced to death.
Stockton petitioned for federal habeas relief pursuant to 28 U.S.C. § 2254, seeking to have his death sentence vacated and his conviction overturned. He contends that his sentence was tainted by prejudicial comments made to the jurors during their deliberations. While several members of the jury lunched at the Owl Diner on the day they deliberated Stockton’s sentence, the proprietor of the diner approached the jurors and told them, among other things, that “they ought to fry the son of a bitch.” We think such communications denied Stockton his right to a fair and impartial jury during the sentencing deliberations. We therefore affirm the district court’s judgment vacating Stockton’s death sentence. The state shall have the choice of either reducing his sentence to one of life imprisonment or sentencing him anew.
Stockton also claims that he was denied a fair trial on several grounds, including other extrajudicial contacts with jurors during the guilt phase of his trial, the admission of testimony describing his commission of a second murder, improper jury deliberations, and prosecutorial misconduct. We hold that Stockton was not denied a fair trial in the guilt phase of the proceedings, and we affirm the judgment of the district court denying habeas relief on his conviction.
I.
On July 25, 1978, the body of eighteen year old Kenneth Arnder was discovered in a remote area of Surry County, North Carolina. Arnder had been shot in the head and both of his hands had been severed at the wrists. The parties stipulated that the cause of death was either the wound to the head, the severing of the hands, or both.
Stockton was arrested for Arnder’s murder on June 25, 1982, in Patrick County, Virginia, a small county in southside Virginia with a population of less than 20,000 people. He was tried in the Circuit Court of Patrick County on March 21 to 24, 1983. His arrest and trial generated considerable local publicity. The print and broadcast media featured reports of the trial and pretrial proceedings as well as accounts of investigations connecting Stockton to several local murders, the discovery of the victims’ bodies, and Stockton’s past criminal history. In one newspaper article, Stockton was labeled “Surry County’s public enemy number one” and compared to Charles Manson.
The evidence presented against Stockton at his trial was substantial. Randy Bowman testified that he, Stockton, Ronnie Tate, “Sunshine” Hatcher, and Diane and Tommy McBride were at McBride's home in June of 1978 when Tommy McBride offered Bowman $1,500 to kill the “Arnder boy,” who had offended McBride in a drug deal. Stockton offered to do the job because he needed to make money. Stockton and McBride then went into another room together.
Arnder’s mother testified that she last saw her son alive on July 20, 1978. That evening Arnder left his mother’s home with Stockton to camp out in a picnic area in Patrick County to avoid difficulties arising from his involvement. with some stolen property. Arnder’s body was found five days later. Further evidence at trial included Robert Gates’ testimony that in July of 1979 he witnessed Stockton shoot and kill Ronnie Tate for “running his mouth” about the Arnder killing. There was also testimony that on several occasions Stockton had admitted to killing Arnder.
On March 23, 1983, the jury found Stockton guilty of the murder for hire of Kenneth Arnder. On the following day, pursuant to Virginia’s bifurcated trial procedure for capital crimes, the jury fixed Stockton’s sentence.
During the sentencing deliberations, the jury broke for lunch. At least two groups of jurors, one group of three women and another of three or four men, ate at the Owl Diner, a restaurant near the courthouse. The atmosphere at the diner was a casual one. One juror recognized two court deputies at a nearby table and James Blackard, a witness subpoenaed to testify at the trial, was seated with his wife in a booth across the aisle from a group of male jurors. The Blackards testified that Glenn Puckett, the owner of the Owl Diner, approached the jurors and inquired whether they had reached a decision yet. One of the men replied that they had all decided except for “one damned woman.” Puckett then commented to the jurors that he thought “they ought to fry the son of a bitch.” According to the Blackards, Puckett remained and conversed with the jurors for several minutes.
The jurors resumed sentencing deliberations after the lunch break. They concluded that Stockton was likely to “commit criminal acts of violence that would constitute a continuing serious threat to society” and that his conduct was “outrageously or wantonly vile, horrible, or inhuman” and fixed his sentence at death.
The trial court held a post-conviction hearing on June 7, 1983. At the hearing, the court took testimony concerning the Owl Diner incident. The court concluded from the evidence presented that Puckett had asked members of the jury whether they had reached a decision, but that Stockton had suffered no prejudice as a result of that query. The court also indicated that something else may have been said but that the witnesses did not know what it was. The court then entered final judgment against Stockton and imposed the death sentence.
Stockton perfected a direct appeal of his conviction to the Supreme Court of Virginia. The conviction and sentence were affirmed. Stockton v. Commonwealth, 227 Va. 124, 314 S.E.2d 371 (1984). Certiorari was denied by the United States Supreme Court. Stockton v. Virginia, 469 U.S. 873, 105 S.Ct. 229, 83 L.Ed.2d 158 (1984).
After some further state proceedings, Stockton’s execution was scheduled for October 3, 1986. Stockton petitioned the United States District Court for the Western District of Virginia for a stay of execution and federal habeas corpus relief. The stay was granted on October 2, 1986. A hearing was then held on the habeas petition, and on June 18, 1987, the district court granted Stockton a writ of habeas corpus vacating his death sentence and granting him a new sentencing hearing or a reduction of his sentence to life imprisonment. The Commonwealth appeals and Stockton cross appeals the district court’s denial of relief with respect to his conviction.
II.
Glenn Puckett approached a group of jurors while they lunched at the Owl Diner on the day they deliberated Stockton’s sentence. After inquiring about the progress of their deliberations, Puckett told the jurors that he thought “they ought to fry the son of a bitch.” The import of this comment is the primary issue in this case.
A.
The Commonwealth argues that the defendant bears the burden of establishing that unauthorized third party communications with members of the jury resulted in actual juror partiality. It is true that the defendant must first establish both that an unauthorized contact was made and that it was of such a character as to reasonably draw into question the integrity of the verdict. Once such a contact has been established, however, the government bears the burden of demonstrating the absence of prejudice.
The Sixth Amendment guarantees a criminal defendant the right to trial by an impartial jury. No right touches more the heart of fairness in a trial. The fact that there was here no threat or inducement, no invasion of the sanctity of jury room deliberations, does not still the sense that something went awry. The Supreme Court has long recognized the dangers to impartiality posed by unauthorized communications between third parties and members of the jury. Almost a century ago the Court declared that “[pjrivate communications, possibly prejudicial, between jurors and third persons, or witnesses, or the officer in charge, are absolutely forbidden, and invalidate the verdict, at least unless their harmlessness is made to appear.” Mattox v. United States, 146 U.S. 140, 150, 13 S.Ct. 50, 53, 36 L.Ed. 917 (1892). In Remmer v. United States, 347 U.S. 227, 74 S.Ct. 450, 98 L.Ed. 654 (1954), the Court reinforced the rule set forth in Mattox:
In a criminal case, any private communication, contact, or tampering, directly or indirectly, with a juror during a trial about the matter pending before the jury is, for obvious reasons, deemed presumptively prejudicial ... The presumption is not conclusive, but the burden rests heavily upon the Government to establish, after notice to and hearing of the defendant, that such contact with the juror was harmless to the defendant.
Id. at 229, 74 S.Ct. at 451.
The rules of evidence make it difficult for either party to offer direct proof of the impact that an improper contact may have had on the deliberations of the jury. See Fed.R.Evid. 606(b); Mattox, 146 U.S. at 149, 13 S.Ct. at 53 (quoting Woodward v. Leavitt, 107 Mass. 453 (1871)) (“the evidence of jurors as to the motives and influences which affected their deliberations, is inadmissible either to impeach or to support the verdict”). The right to an impartial jury belongs to the defendant, however; thus a rebuttable presumption of prejudice attaches to the impermissible communication. While juror testimony concerning the effect of the outside communication on the minds of the jurors is inadmissible, the state may rebut the presumption of prejudice through whatever circumstantial evidence is available, including juror testimony on the facts and circumstances surrounding the extraneous communication. This circuit has held in the civil context that the party supporting the jury’s verdict must overcome the rebuttable presumption of prejudice that attaches once an impermissible contact with the jury has been established. Haley v. Blue Ridge Transfer Co., 802 F.2d 1532, 1535-37 (4th Cir.1986). If this was true in the civil context, it would appear no less applicable to a criminal trial.
We cannot accept the Commonwealth’s argument that the presumption of prejudice attaching to extrajudicial communications was overturned by the Supreme Court in Tanner v. United States, — U.S. -, 107 S.Ct. 2739, 97 L.Ed.2d 90 (1987) or Smith v. Phillips, 455 U.S. 209, 102 S.Ct. 940, 71 L.Ed.2d 78 (1982). Neither of those cases dealt with the question at issue here — the effect of a third party communication to the jury about the case. In Tanner, the Court held that juror testimony concerning drug and alcohol use by members of the jury during the trial was inadmissible in a post-verdict evidentiary hearing under Rule 606(b) of the Federal Rules of Evidence and was not required by the Sixth Amendment. Tanner, 107 S.Ct. at 2750-51. The defendant’s Sixth Amendment right to a competent and unimpaired jury was held to be amply protected by the opportunity to examine a juror’s suitability during voir dire and to introduce non-juror evidence of juror misconduct and impairment in a post-verdict evidentiary hearing. Id. at 2751.
In Phillips, the Court declined to impute bias to a juror who, during the course of trial, applied for employment as an investigator with the district attorney’s office. The Court again noted that the beliefs, biases, and preferences of every juror may be explored and exposed by the defendant at voir dire. Further, when some external manifestation of a juror’s predisposition subsequently calls the juror’s impartiality into question, the defendant is afforded the opportunity to establish the juror’s actual bias. Id. 455 U.S. at 215-17, 102 S.Ct. at 945-46. Where, however, the danger is not one of juror impairment or predisposition, but rather the effect of an extraneous communication upon the deliberative process of the jury, the defendant’s right to an impartial jury requires that the government bear the burden of establishing the nonprejudicial character of the contact. See, e.g., Haley, 802 F.2d at 1535-36 and n. 5 (civil case); United States v. Butler, 822 F.2d 1191, 1195-96 and n. 2 (D.C.Cir.1987); United States v. Littlefield, 752 F.2d 1429, 1431-32 (9th Cir.1985). But see United States v. Pennell, 737 F.2d 521, 532 (6th Cir.1984), cert. denied, 469 U.S. 1158, 105 S.Ct. 906, 83 L.Ed.2d 921 (1985).
Although neither Tanner nor Phillips dealt directly with extraneous communications to members of the jury, those cases are nonetheless instructive in any situation where a jury verdict is being impeached. The benefits of ensuring the finality of the jury’s verdict and avoiding needless harassment of jurors by the losing party are relevant in all such cases. See Tanner, 107 S.Ct. at 2749-50. Thus, jury verdicts are not to be lightly cast aside. Our system of criminal justice rests in large measure upon a confidence in conscientious juror deliberations and juror attentiveness, both to the evidence at trial and to the instructions of the trial judge. This confidence is not to be displaced every time a third party communication reaches the ears of a juror during trial. See id. at 2747-48; Phillips, 455 U.S. at 209, 102 S.Ct. at 940. Thus, while a presumption of prejudice attaches to an impermissible communication, the presumption is not one to be casually invoked.
When this sequence of proof involves fact-finding by the state courts, those determinations must be afforded further deference in federal habeas proceedings. Sumner v. Mata, 449 U.S. 539, 550, 101 S.Ct. 764, 770, 66 L.Ed.2d 722 (1981). Testimony on the Owl Diner incident was taken by the state trial court in a post-conviction hearing. Unfortunately, the trial court failed to make a factual finding on the critical questions presented here: whether Puckett commented to the jurors that “they ought to fry the son of a bitch” and, if so, whether that juror contact was prejudicial. Since “the merits of the factual dispute were not resolved in the state hearings,” the federal habeas court properly held an evidentiary hearing on the question. Townsend v. Sain, 372 U.S. 293, 313-16, 83 S.Ct. 745, 757-59, 9 L.Ed.2d 770 (1963); 28 U.S.C. § 2254(d)(1).
B.
We agree with the district court that Puckett's comment posed a potential for prejudice that was too serious to ignore.
We note at the outset that Puckett did not deny making the offending remark. In fact, he testified before the district court that “knowing me, I could have said it.” Excerpts from juror depositions and the testimony of James Blackard and Ginger [Blackard] Hall, who overheard the conversation, were also received by the court.
Based upon this evidence the district court found that
[t]he testimony of Blackard and Hall clearly shows that some of the jurors were contacted by Puckett. Their testimony is corroborated by some of the juror testimony as well as that of Puckett. Moreover, their testimony and the corroboration leave little doubt that the matter discussed by Puckett was the focus of the jury’s deliberations, i.e., whether to impose a life or death sentence upon Stockton.
The district court further concluded that “it is just as clear that Puckett’s comments were not ‘innocuous.’ Indeed, a comment could be no more pointed tha[n] ‘I hope you fry the son-of-a-bitch.’ Even the milder characterization of Puckett’s comments as being ‘nasty’ or ‘unfavorable to Stockton’ would not permit a finding of being ‘clearly innocuous.’ ” These findings are amply supported by the evidence.
The circumstances surrounding Puckett’s comments do not, as the Commonwealth suggests, rebut the presumption of prejudice that attaches to this contact. This was no mere offhand comment. Puckett knew that he was addressing his opinion to members of the jury — his comment about what should happen to Stockton was preceded by an inquiry as to whether the jurors had reached a decision. Further, the comment bore on the exact issue — whether to impose the death penalty — that the jurors were deliberating at that time. Puckett’s comment was then followed by several minutes of conversation between Puckett and the jurors, the subject of which is unknown. While the Commonwealth disputes the district court’s characterization of Puckett as “a rather prominent local figure,” it is not unfair to assume that a local restaurant owner was a source or barometer of local sentiment. The fact that Puckett’s comment was not mentioned in jury deliberations does not persuade us that it had no prejudicial impact upon the jurors’ minds. Indeed, two jurors still remembered the essence of the Owl Diner incident four years after it occurred.
Emotional environments require that the deliberateness of jury decisionmaking be preserved. Stockton’s trial generated intense publicity and interest within this small community. The details of the murder of which he stood accused understandably occasioned outrage. The casualness with which the trial was conducted stands in sharp contrast to this charged milieu. We do not hold that the trial court abused its discretion in refusing to grant a change of venue or to sequester the jury. Stockton, 314 S.E.2d at 380. We are troubled, however, by the trial court’s failure to take more modest steps to protect the jurors from community sentiment. Throughout the brief trial and sentencing deliberations, jurors were simply released for lunch. They dined in small groups in restaurants near the courthouse frequented by the attorneys, witnesses, and court personnel. Contrast Andrews v. Shulsen, 600 F.Supp. 408, 419 (C.D.Utah 1984) (jurors kept together and away from others and provided a separate dining room). They were approached by interested citizens curious about the progress of their deliberations. Although many jurors attempted dutifully to ignore expressions of public opinion and to avoid commenting on the case, they were powerless to avoid contact with the public. As a result they were exposed to the type of pointed and prejudicial suggestion whose utterance encourages the all too human tendency to pursue the popular course.
III.
Stockton challenges the validity of his underlying conviction on several grounds. We find no violation of Stockton’s rights with regard to the guilt phase of his trial. We thus affirm the district court’s denial of habeas relief with respect to the jury’s verdict that Stockton was guilty of murder for hire.
A.
Stockton argues that his conviction should have been reversed because the juror depositions ordered by the district court indicate that there were extrajudicial contacts with members of the jury during the course of the trial. We reject this contention for two reasons.
First, unlike the Owl Diner incident, no mention of these additional jury contacts was ever made at any stage of the state court proceedings. Although Stockton claims he learned of these contacts for the first time as a result of juror depositions conducted in federal court, he has failed to demonstrate sufficient cause for not attempting to pursue in state court a line of inquiry that surely was suggested by his claim of jury partiality as a result of the denial of his motions for sequestration of the jury and a change of venue. Raising stale claims for the first time in federal court is precisely what the Supreme Court has warned litigants to avoid. Murray v. Corner, 477 U.S. 478, 106 S.Ct. 2639, 91 L.Ed.2d 397 (1986); Wainwright v. Sykes, 433 U.S. 72, 90, 97 S.Ct. 2497, 2508, 53 L.Ed.2d 594 (1977) (criminal trial and sen-tenting in state court is the “decisive and portentous event”).
Secondly, reversal is not required anytime a juror hears anything at all about a case. Even the most scrupulous jurors may not be able to avoid overhearing all comment on a trial. Jurors are not rendered “partial” simply because they become aware of the existence of negative community sentiment. “The safeguards of juror impartiality, such as voir dire and protective instructions from the trial judge, are not infallible; it is virtually impossible to shield jurors from every contact or influence that might theoretically affect their vote.” Smith v. Phillips, 455 U.S. at 217, 102 S.Ct. at 946. However, “due process does not require a new trial every time a juror has been placed in a potentially compromising situation. Were that the rule, few trials would be constitutionally acceptable.” Id.
The other alleged contacts differed markedly from the Owl Diner incident. While some of the jurors had the general impression that public sentiment disfavored the defendant, their recollection of specific instances of third party communications was vague. Juror Bowman recalled a neighbor telling her, “You probably know what I think, but I can’t tell you.” She testified that strangers occasionally commented that they thought Stockton was guilty. She “figured ... that most people were in favor of the death penalty,” but she properly excused herself when people began to discuss the trial. Juror Hughes testified that “people naturally think ‘well he shot this man in the head and cut his hands off, you’re going to put the noose around his neck, right?’ ” When asked if anyone told him that Stockton should be given the death penalty, Hughes responded, “No, sure didn’t.”
As noted above, Stockton bears the initial burden of establishing both that the extrajudicial contacts occurred and that they were of such a nature as to reasonably cast doubt on the validity of the jury’s verdict. See Haley, 802 F.2d at 1537 and n. 9. Stockton has failed to carry his burden in that regard. Other than the Owl Diner incident, there is no clear evidence of instances in which so pointed an expression of community displeasure was communicated directly to members of the jury. We are satisfied from the nature and context of these contacts that they were indeed innocuous and did not prejudice the jury’s deliberation of Stockton’s guilt or render that phase of his trial unfair.
B.
We likewise find no merit to Stockton’s claim that his right to a fair trial was violated by improper deliberations by subgroups of jurors. The district court found, and the record reveals, that the only evidence relating to charges of improper deliberations concerned conversations between three jurors who shared a ride to and from the courthouse. These conversations consisted in part of small talk about the manner in which the trial was being conducted and the appearance of certain witnesses. The question of defendant’s guilt or innocence was not discussed. It is certainly permissible for jurors to carpool to and from court without giving rise to a question of subset deliberations. It may also be unrealistic to think that jurors will never comment to each other on any matter related to a trial. Even if these conversations violated the trial court’s instructions to the jurors not to discuss matters relating to the trial, there is no evidence that the merits of the case were deliberated. There was thus no prejudice to the defendant as to warrant a new trial. See United States v. Klee, 494 F.2d 394, 396 (9th Cir.), cert. denied 419 U.S. 835, 95 S.Ct. 62, 42 L.Ed.2d 61 (1974).
C.
The evidence presented against Stockton at his trial included the testimony of Robert Gates, an eyewitness to the murder of Ronnie Tate. Gates testified that in July of 1979, he saw Stockton shoot and kill Tate for “running his mouth” about the Arnder murder. Stockton testified on his own behalf that he had killed Tate in self-defense when Tate, who was “real messed up on drugs,” pulled a gun on him. The state called Gates in rebuttal. Gates testified in graphic detail about how Stockton killed Tate in cold blood. He testified that Stockton shot Tate in the chest. Stockton then walked over to Tate and told him to get up or he would shoot him in the face. About five minutes after Stockton shot Tate the first time, Stockton shot Tate twice more as he begged for his life. Stockton then forced Gates to dig a grave for Tate’s body and threatened to do the same thing to Gates if he talked about the murders.
Stockton reiterates here the claim previously raised on his direct state appeal, that this testimony was so inflammatory and prejudicial as to amount to a denial of his due process right to a fair trial. We agree with the Virginia Supreme Court, however, which held that “the testimony was so relevant and probative to the truth-finding process that its probative value greatly outweighed any prejudicial effect.” Stockton, 314 S.E.2d at 383; see United States v. Pate, 426 F.2d 1083, 1086 (7th Cir.1970), cert. denied, 400 U.S. 995, 91 S.Ct. 469, 27 L.Ed.2d 445 (1971).
As the Virginia Supreme Court observed: The only reasonable inference which can be drawn from Gates’ testimony is that Tate knew Stockton killed Arnder, and Stockton, believing Tate was telling others about the murder, killed Tate to silence him. Clearly, the two offenses were interrelated, and Gates’ testimony showed both Stockton’s guilty knowledge of Arnder’s murder and his desire to conceal his guilt.
Stockton, 314 S.E.2d at 383.
It is true that the details of the Tate murder were gruesome, but this was unavoidable due to the nature of the act. Probative evidence of knowledge is not rendered inadmissible simply because it depicts a hideous crime. Moreover, the admissibility of evidence is generally a matter of state law which does not properly concern a federal habeas court unless it impugns the fundamental fairness of the trial. Grundler v. North Carolina, 283 F.2d 798, 802 (4th Cir.1960). Stockton was not denied due process by the introduction of this evidence, the relevance and probative value of which outweighed any possibility of unfair prejudice to him.
D.
Stockton contends that Commonwealth Attorneys engaged in several acts of misconduct designed to discredit the testimony of Stockton and principal defense witnesses, which denied him due process. We find these contentions meritless.
Randy Bowman testified that in July of 1978, when he, Stockton, Ronnie Tate, “Sunshine” Hatcher, and Tommy and Diane McBride were at the McBrides’ house, Tommy McBride offered Bowman $1,500 to kill Kenneth Arnder. He further testified that Stockton offered to do the job because he needed money. This testimony conflicted with that of Tommy and Diane McBride. Tommy McBride testified that he did not offer to pay Stockton, Bowman, or anyone else to kill Arnder. Diane McBride testified that the events described by Bowman never took place.
Stockton contends that the Commonwealth indicted Tommy McBride as the principal in the murder for hire of Arnder for the sole purpose of impeaching his testimony on behalf of Stockton. Both the Virginia Supreme Court and the federal district court found no evidence to support this claim. The fact that McBride’s indictment was obtained two weeks before Stockton’s trial, was served on the day McBride testified, and was dismissed three weeks after Stockton’s sentence so McBride could be prosecuted in North Carolina does not give rise to an inference of an improper motive on the part of the state. In fact, any inference must be to the contrary since, under Virginia law, the indictment had to be brought by the action of a grand jury which must find probable cause to return a “true bill.” See Virginia Code § 19.2-191 (1983).
Furthermore, Stockton has failed to show that he was in any way prejudiced by the government’s use of the indictment to impeach McBride. McBride’s prior criminal record already put his credibility in doubt. McBride was allegedly the principal in the murder for hire. His involvement in the murder could have been argued with or without the indictment. McBride’s incentive to deny hiring Stockton to kill Arnder remained the same whether or not he was under indictment, and Diane McBride was similarly interested in protecting her husband in either case. The evidence amply supports the state court’s conclusion that Stockton failed to prove his allegations of improper motive and that, in any event, the indictment resulted in no prejudice to Stockton. Stockton, 314 S.E.2d at 387.
Stockton also alleges prosecutorial misconduct as a result of improper cross-examination of him by the state. No objection to this testimony was made until the day after it was presented. The Virginia Supreme Court found that Stockton had waived his objection to this evidence by failing to object contemporaneously to its introduction. See Stockton, 314 S.E.2d at 384 n. 2. The state court’s finding of procedural noncompliance under state law binds the federal courts, and Stockton has failed to establish “cause and prejudice” for his failure to follow Virginia’s contemporaneous objection rule. Wainwright v. Sykes, 433 U.S. at 86-87, 97 S.Ct. at 2506-07.
E.
Stockton contends that the district court improperly refused to consider newly discovered evidence that Bowman had lied when he testified that Stockton accepted McBride’s offer to pay $1,500 for the murder of Kenneth Arnder. The newly discovered evidence consists of the affidavit of Bowman’s cellmate, Frank Cox, in which Cox stated that Bowman told him that “he [Bowman] had lied at the trial of Stockton.” Stockton argues that Bowman’s testimony was the only evidence that Arnder was murdered for hire and that evidence challenging the credibility of that testimony is highly material.
We disagree. To warrant a federal evi-dentiary hearing on the basis of newly discovered evidence, the “evidence must bear upon the constitutionality of the applicant’s detention; the existence merely of newly discovered evidence relevant to the guilt of a state prisoner is not a ground for relief on federal habeas corpus.” Townsend v. Sain, 372 U.S. at 317, 83 S.Ct. at 759. The grounds for habeas relief on the basis of newly discovered evidence are exceedingly narrow:
When public officers connive at or knowingly acquiesce in the use of perjured evidence, their misconduct denies a defendant due process of law. Recantation of testimony alone, however, is insufficient to set aside a conviction on the ground that the due process clause has been violated. A habeas corpus petitioner must show that the prosecutor or other government officers knew the testimony in question was false in order to prevail.
Thompson v. Garrison, 516 F.2d 986, 988 (4th Cir.1975) (citations omitted), cert. denied, 423 U.S. 933, 96 S.Ct. 287, 46 L.Ed.2d 263 (1975).
Stockton has made no allegations of prosecutorial misconduct with respect to Bowman’s testimony. In addition, the evidence he proffers is not of such a nature as to bring about a different trial result. There has been no proffer that Bowman would himself recant his prior testimony and it is questionable whether Cox’s hearsay testimony of Bowman’s alleged statements would be admissible at trial. This hearsay evidence addressed only the credibility of Bowman’s testimony, which had been contradicted by four other witnesses, including the defendant. Stockton is therefore not entitled to relief on this ground.
IV.
The judgment of the district court denying habeas relief on Stockton’s conviction of murder for hire is affirmed. The judgment vacating his death sentence and imposing a sentence of life imprisonment or awarding a new sentencing hearing is also
AFFIRMED.
. The Commonwealth argues that Stockton is procedurally barred from raising in his federal habeas proceeding the claim that he was denied a fair trial by an impartial jury as a result of the Owl Diner incident. See Wainwright v. Sykes, 433 U.S. 72, 97 S.Ct. 2497, 53 L.Ed.2d 594 (1977). We disagree. Although the issue was not framed with the precision that one would prefer, Stockton’s briefs to the Virginia Supreme Court raised the question of jury impartiality in light of Puckett’s comments to the jurors in the Owl Diner and the general emotionalism that surrounded his trial. In addressing the trial court’s refusal to grant a change of venue, Stockton argued in his briefs:
A witness testified that the foreman and two other jurors were at the Owl Diner having lunch and he heard the owner discussing the case briefly with those jurors. According to the witness, the restaurant owner had said to the foreman that he hoped "they fry that son of a bitch.” ... So now we must wonder: was the verdict the product of the quiet, cool impartiality of jurors who truly stood "indifferent” to the cause, or is the verdict tainted by all the above factors? ... The fact that twelve good men and women may have tried their best to give the defendant a fair and impartial trial is of no moment. The question is whether they stood "indifferent to the cause” or impartial as a deliberative body. It would ignore human nature and common sense not to be seriously and gravely concerned about the impartiality of the jury that convicted Stockton.
Stockton’s briefs "fairly presented” his constitutional claim of juror partiality to the Virginia Supreme Court giving the state courts “a fair opportunity to consider ... [that] claim and to correct [the] asserted constitutional defect." See Picard v. Connor, 404 U.S. 270, 276-77, 92 S.Ct. 509, 512-13, 30 L.Ed.2d 438 (1971). In sum, we do not believe that Stockton’s claim is procedurally barred on federal habeas by virtue of a failure to raise it before the Virginia Supreme Court.
. In the state trial court hearing James Blackard testified that Glenn Puckett "came up and asked [the group of jurors] if they had come to a verdict yet.... And then Glen Puckett says something to the effect, said I hope they fry that son-of-a-bitch." Ginger Blackard testified that “Glen Puckett, the owner of the diner came up and was talking to them about the trial. He wanted to know if they had reached a verdict, and one of them ... said that all of them had decided except for one woman.” On cross-examination, she stated that Puckett “sat down and talked to them but I wasn’t paying any attention to what they were talking about.” The jury foreman, Gary Cockram, also testified at the hearing. He testified that “[o]ther than the comment of are you about to reach a decision ... no other discussion that I recall took place concerning the case.”
After hearing this testimony the trial court stated:
If I understand Mr. and Mrs. Blackard’s statement as to what they heard was said, was that this Mr. Puckett asked if they had reached a decision and some comment was made they
had all decided but one woman. I feel that statement in itself is not prejudicial, not harmful and Mr. Puckett says they didn’t discuss anything further. Mr. and Mrs. Blackard seem to suspect that maybe something else was said but they don’t know what was said. So, based upon that, I see no harm or prejudice in the statement that was made and I’ll overrule the motion.
Two things concern us regarding the trial court's conclusions. Contrary to the trial court’s statement, Puckett had not testified at the state post-trial hearing. Secondly, James Blackard’s testimony specifically mentioned the offending comment, but the trial court did not address it in its holding. We obviously do not require state factfinding to address all the minutiae of defendants’ claims, but it is not unrealistic to expect more than an ambiguous response to contentions of this consequence. We therefore agree with the district court that "the trial court did not make findings as to the issue of Puckett’s comments to the jurors at the Owl Diner. This issue was not specifically addressed when the ruling was made.”
Question: Were there cross appeals 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.
COFFIN, Senior Circuit Judge.
This case requires us to add another chapter, still not the final one, to an already lengthy saga concerning the constitutionality of Puerto Rico’s system of mandatory bar membership. In the decision on appeal, the United States District Court for the District of Puerto Rico held that compelled membership in the bar association known as the Colegio de Abogados de Puerto Rico (“Colegio”) is unconstitutional in its present form. Schneider v. Colegio de Abogados de Puerto Rico, 682 F.Supp. 674 (D.P.R.1988). The district court also invalidated statutes requiring that lawyers affix official stamps, sold by the Colegio, to all court documents. We agree that the present system is constitutionally deficient, and therefore in large part affirm the conclusions of the district court. We modify the court’s judgment, however, to delay temporarily an injunction prohibiting mandatory dues so that the Colegio may remain integrated while it attempts to correct its constitutional defects. We also limit the court’s holding on the stamp statutes.
I. Legal and Factual Background
We detailed the origins and early history of this case at length when the dispute last came before us. See Romany v. Colegio de Abogados de Puerto Rico, 742 F.2d 32 (1st Cir.1984). The district court in its most recent decision also set forth a thorough review of the prior proceedings. See Colegio, 682 F.Supp. at 675-679. We see no need to repeat, once again, the full factual and procedural background of this case. This opinion therefore shall contain only that history necessary for a full understanding of the issues we decide today.
Accordingly, we begin this background section by stating briefly the constitutional claim raised by plaintiffs' and reviewing the federal law relevant to that claim. The next subsection describes the Colegio system as it presently exists. We then review the district court’s decision. In Section II of the opinion, we briefly discuss jurisdiction and appealability issues. Section III contains our analysis and conclusions. The remaining sections discuss the stamp issue and damages, and provide a brief summary of the opinion.
A. Constitutional Principles
Plaintiffs, five attorneys, claim that Puerto Rico’s mandatory system of bar membership violates their First Amendment freedom of association by depriving them of the right not to associate with the Colegio, which conducts activities they find objectionable. Their primary complaint is that the Colegio uses their compulsory dues and fees to publicly espouse views and support causes, with which they disagree, on controversial issues far removed from the immediate concerns of lawyers. These issues have in the past included supporting the Sandinista Front for National Liberation in Nicaragua, forcing the United States Navy to leave the island of Vieques, stopping the draft, and amending the electoral law in Puerto Rico. See Schneider v. Colegio de Abogados de Puerto Rico, 565 F.Supp. 963, 966-971 (D.P.R.1983); 682 F.Supp. at 679-681.
In a decision reached after oral argument in this case, and for which we held up our opinion, the United States Supreme Court addressed a virtually identical claim made by 21 members of the California bar. In Keller v. State Bar of California, — U.S. -, 110 S.Ct. 2228, 110 L.Ed.2d 1 (1990), the Court reaffirmed its earlier conclusion that compelled membership in a state bar association, and the exaction of compulsory dues, do not per se violate an individual’s First Amendment rights, see Lathrop v. Donahue, 367 U.S. 820, 81 S.Ct. 1826, 6 L.Ed.2d 1191 (1961). The Court went on, however, to establish for the first time that the principles it previously had developed for the permissible use of compulsory union dues are equally applicable for the use of mandatory bar dues.
Abood [v. Detroit Board of Education, 431 U.S. 209 [97 S.Ct. 1782, 52 L.Ed.2d 261] (1977)] held that a union could not expend a dissenting individual’s dues for ideological activities not “germane” to the purpose for which compelled association was justified: collective bargaining. Here the compelled association and integrated bar is justified by the State’s interest in regulating the legal profession and improving the quality of legal services. The State Bar may therefore constitutionally fund activities germane to those goals out of the mandatory dues of all members. It may not, however, in such manner fund activities of an ideological nature which fall outside of those areas of activity.
110 S.Ct. at 2236.
The Supreme Court recognized that its limitation on the use of mandatory bar dues was not self-executing and that a difficult problem remained in defining the class of activities germane to “regulating the legal profession and improving the quality of legal services.” Id. The Court again found the union context helpful in setting guiding principles, and quoted from its decision in Ellis v. Railway Clerks, 466 U.S. 435, 448, 104 S.Ct. 1883, 1892, 80 L.Ed.2d 428 (1984):
“[W]hen employees such as petitioners object to being burdened with particular union expenditures, the test must be whether the challenged expenditures are necessarily or reasonably incurred for the purpose of performing the duties of an exclusive representative of the employees in dealing with the employer on labor-management issues. Under this standard, objecting employees may be compelled to pay their fair share of not only the direct costs of negotiating and administering a collective-bargaining contract and of settling grievances and disputes, but also the expenses of activities or undertakings normally or reasonably employed to implement or effectuate the duties of the union as exclusive representative of the employees in the bargaining unit.”
We think these principles are useful guidelines for determining permissible expenditures in the present context as well. Thus, the guiding standard must be whether the challenged expenditures are necessarily or reasonably incurred for the purpose of regulating the legal profession or ‘improving the quality of the legal service available to the people of the State.’ Lathrop, 367 U.S., at 843 [81 S.Ct. at 1838] (plurality opinion).
110 S.Ct. at 2236. Even with this standard, however, the Court acknowledged that the line will be difficult to draw
between those State Bar activities in which the officials and members of the Bar are acting essentially as professional advisors to those ultimately charged with the regulation of the legal profession, on the one hand, and those activities having political or ideological coloration which are not reasonably related to the advancement of such goals____ But the extreme ends of the spectrum are clear: Compulsory dues may not be expended to endorse or advance a gun control or nuclear weapons freeze initiative; at the other end of the spectrum petitioners have no valid constitutional objection to their compulsory dues being spent for activities connected with disciplining members of the bar or proposing ethical codes for the profession.
Id. at 2237.
The Court in Keller also acknowledged that state bar associations may encounter added inconvenience or burden in ensuring that compulsory dues are used only for permissible purposes, but observed that “ ‘such additional burden or inconvenience is hardly sufficient to justify contravention of the constitutional mandate,’ ” 110 S.Ct. at 2237 (quoting Keller v. State Bar, 47 Cal.3d 1152, 1192, 255 Cal.Rptr. 542, 568, 767 P.2d 1020, 1046 (1989) (Kaufman, J., concurring and dissenting)).
The Court therefore held that a permissible system of mandatory bar membership must include a mechanism for protecting the rights of dissenting members to withhold financial support of activities that fall outside the bar’s core purposes. On the limited record before it, the Court declined to speculate on the various methods a bar association might adopt to accomplish the required segregation of funds. The justices noted, however, that the procedure they deemed adequate for unions in Teachers v. Hudson, 475 U.S. 292, 106 S.Ct. 1066, 89 L.Ed.2d 232 (1986), also would suffice in the bar setting. 110 S.Ct. at 2237. In Hudson, the Court held that “the constitutional requirements for the collection of... fees include an adequate explanation of the basis for the fee, a reasonably prompt opportunity to challenge the amount of the fee before an impartial decisionmaker, and an escrow for the amounts reasonably in dispute while such challenges are pending.” 475 U.S. at 310, 106 S.Ct. at 1078.
Before turning to our analysis of whether the Colegio system, which is modeled after the Hudson procedure, fulfills these constitutional requirements, we complete our background summary by describing that system and why the district court found that it is inadequate to protect its members’ First Amendment rights.
B. The Colegio System
In 1982, in the course of state proceedings involving some of the attorneys who are plaintiffs in this federal case, the Supreme Court of Puerto Rico upheld under state law compulsory membership in the Colegio and compulsory financial support of the bar. See Colegio de Abogados v. Schneider, 112 D.P.R. 540, 12 Official Translations of the Opinions of the Supreme Court of Puerto Rico 676 (1982). Consistent with federal law, however, the court held that lawyers who dissented from ideological activities not related to the Colegio’s purposes must have the right to prevent the use of their funds for those activities. The court ordered that a remedy be designed to protect the dissenters’ right to object and, in a 1986 ruling, it adopted the rebate and escrow procedure that is challenged in this case (“the 1986 Rule”). Schneider v. Colegio de Abogados, 117 D.P.R. 504 (1986), Official Translation of the Supreme Court of Puerto Rico, slip op. (June 26, 1986) (hereinafter Schneider, Official Translation).
The elements of the Supreme Court procedure are as follows:
1. An interest-bearing escrow account must be set up, into which 15 percent of dissenting attorneys’ dues will be deposited.
2. Dissenting attorneys may, at the time they pay their dues, file a general objection to the use of their dues for ideological activities unrelated to the core purposes of the Colegio, and eventually receive a refund of the proportion of their dues based on the cost of all activities found to be “objectionable,” or
3. Attorneys may object on a case-by-case basis throughout the year, receiving a proportionate refund based on the cost of the specific activities to which they objected.
4. A three-member panel, composed of retired members of the Puerto Rico judiciary, will determine which activities are truly “objectionable” and whether the 15 percent escrow figure should be modified at some later date. This Review Board has promulgated regulations governing the objection procedure. See App. II at 323-344.
5. Dissenting members may not object to the use of their funds for activities related to any of 15 listed “functions and purposes” of the Colegio. Schneider, Official Translation, slip op. at 17-18.
C. The District Court Opinion
1. Defects. The district court found two significant defects in the Supreme Court’s remedy. First, it held that the 1986 Rule fails to limit adequately the types of activities that may be funded with compulsory fees. Second, the method used to accommodate dissenting members, including the 15% escrow, falls short of the procedures required by the Supreme Court for protecting dissenters’ rights. We now describe its findings with regard to each of these in some detail.
a. Activities Suitable for Compulsory Funding. The 1986 Rule provides for mandatory support for all “[activities comprised within the Bar Association’s purposes and ends which are germane thereto.” Schneider, Official Translation, slip op. at 17. In other words, if an activity promotes a purpose of the Colegio, dissenters may be compelled to subsidize it. The problem, in the district court’s view, is that the Puerto Rico Supreme Court has defined too broadly the “purposes and ends” that justify mandatory financial support. The court in particular rejected two purposes articulated by the Puerto Rico court in support of the integrated bar: “ ‘the creation of a strongly pluralistic society,’ ” Schneider, Official Translation, slip op. at 13 (quoting Schneider, 112 D.P.R. at 549) and “contributing] to the betterment of the administration of justice,” id. at 18.
The district court’s concern was that almost any activity could be said to advance one or both of these interests, and that dissenting lawyers therefore would be compelled to accept the Colegio’s publicly expressed viewpoint as representing them on a vast number of sensitive issues. “Accepting these standards as the guides to determine permissible bar activity,” the court stated, “would be tantamount to a complete abdication of the court’s duty to protect dissenting attorneys’ First Amendment rights.” 682 F.Supp. at 683.
The district court therefore articulated its own list of “permissible purposes” for which financial support may be compelled. These purposes, which the court acknowledged may not be exhaustive, all revolve around the role of the lawyer as lawyer, rather than relying on the lawyer’s more generic role as an informed and perhaps influential member of a complex society. The four areas are: monitoring attorney discipline, ensuring attorney competence, increasing the availability of legal services and improving court operations. Activities that promote one or more of these purposes, and which therefore may be funded by mandatory dues and fees, could include continuing legal education programs, legal aid services, public education on substantive areas of the law (e.g., landlord-tenant) that would help citizens recognize and enforce their legal rights, and public commentary on such matters as rules of evidence and attorney advertising.
b. Procedures. The district court found procedural problems with the 15% escrow amount and with the manner of filing objections.
The escrow system is inadequate, the district court held, because the 1986 Rule fails to require a detailed accounting showing how the Colegio spends its funds, and how it calculated the 15% setaside. The court relied on Hudson in holding that the Colegio each year must precisely calculate the escrow percentage based on its projected budget and its estimate of expenditures to be made for objectionable purposes. 682 F.Supp. at 687-688. It held that the Colegio not only must explain the basis for the escrow amount, but also must justify the entire amount to be collected. The court further held that the Colegio must include a “buffer” in the escrow percentage to ensure that, if the impermissible expenditures exceed the amounts budgeted for them, the funds required to be returned to dissenting members do not exceed the es-crowed amount.
The other procedural problem noted by the district court is the requirement that dissenters file objections to specific activities in order to receive a refund. The court held that, under Abood, a dissenter may not be required to object specifically to an activity because this “ 'would confront an individual... with the dilemma of relinquishing either his right to withhold his support of ideological causes to which he objects or his freedom to maintain his own beliefs without public disclosure.’ ” 682 F.Supp. at 689 (quoting Abood, 431 U.S. at 241, 97 S.Ct. at 1802).
2. State of the Record. The district court unquestionably was bothered by the state of the record before it. Despite repeated invitations, defendants failed to present evidence concerning the extent of the Colegio’s non-ideological activities. Instead, they urged the court to take judicial notice of the lengthy list of law-related activities conducted by the Colegio that was contained in the 1986 opinion of the Supreme Court of Puerto Rico. See Schneider, 682 F.Supp. at 692-94 (Appendix A). See also Schneider, Official Translation, slip op. at 25-43 (Appendix listing activities). That court had found that the Colegio’s ideological activities were de minimis. Id. at 13.
In contrast to the lack of evidence regarding non-ideological activities, the district court received substantial evidence of the partisan political activities undertaken by the Colegio. See 682 F.Supp. at 679-681. No party, however, provided the court with quantitative or comparative data showing what percentage of Colegio activities typically are devoted to each category. Accordingly, the court felt obliged to conclude “that the ideological activities of the Colegio constitute a large and inseparable proportion of the Colegio’s total activities.” 682 F.Supp. at 681.
Despite the problems it found, the district court stated its belief that the Colegio could devise a lawful procedure incorporating most of the features of the 1986 Rule. 682 F.Supp. at 691. In the absence of appropriate modifications, however, the court held that the Colegio either must cease all ideological activities not germane to its core purposes or it may not compel membership. So long as the status quo remained, defendants were enjoined from taking any action against any lawyer for failing to pay fees to the Colegio.
II. Jurisdiction and Appealability
Before delving into our own discussion of the Colegio mandatory membership system, we briefly address the parties’ various contentions that the case is not properly before us. The defendants claim that principles of federalism, res judicata and collateral estoppel bar our review. Plaintiffs argue that defendants failed to perfect their appeals because of untimely and incorrect filings. We reject all of these claims.
Jurisdiction and Preclusion. It is well-established that lower federal courts have no jurisdiction to hear appeals from state court decisions, even if the state judgment is challenged as unconstitutional. Review of state decisions may be obtained only in the United States Supreme Court. See D. C. Court of Appeals v. Feldman, 460 U.S. 462, 476, 103 S.Ct. 1303, 1311, 75 L.Ed.2d 206 (1983); Rooker v. Fidelity Trust Co., 263 U.S. 413, 416, 44 S.Ct. 149, 150, 68 L.Ed. 362 (1923). See also 28 U.S.C. § 1257. In Feldman, the Supreme Court considered the so-called Rooker doctrine specifically in the context of attorney challenges to rules and regulations governing the bar, in that instance relating to bar admission. The Court carefully distinguished between “general challenges to state bar rules, promulgated by state courts in nonjudicial proceedings” — for which there is jurisdiction in the lower federal courts — and “challenges to state-court decisions in particular cases arising out of judicial proceedings,” 460 U.S. at 486, 103 S.Ct. at 1317 — for which there is not.
Defendants claim that the Rooker doctrine is triggered in this case because plaintiffs are, in effect, attempting to appeal the Puerto Rico Supreme Court’s decisions in the Schneider case. According to defendants, the 1986 Rule was the particular judicial remedy ordered in the original Commonwealth Schneider case, and the district court therefore had no jurisdiction to consider its validity.
We disagree, primarily for the reasons identified by the district court. 670 F.Supp. 1098, 1100-1103. The fate of attorneys Schneider and Ramos — the particular judicial decision made in the Commonwealth court — is not at issue here. Plaintiffs challenge not the outcome of that specific case, but the general Colegio system of mandatory bar membership, as defined by various statutory provisions and the 1986 Rule. Although the motivation for the 1986 Rule originated with the Schneider-Ramos case, we are persuaded that the Supreme Court invoked its inherent powers over the bar to go beyond their individual complaints to accomplish needed bar reform. See Romany, 742 F.2d at 34 n. 3, 40 & 42 (Puerto Rico Supreme Court has “unique latitude” to regulate the bar). That the court chose to combine its rule-making with its adjudication in the form of a single opinion does not detract from the nonjudicial nature of the Rule. See Feldman, 460 U.S. at 482, 103 S.Ct. at 1314 (“ ‘[T]he form of the proceeding is not significant. It is the nature and effect which is controlling.’ ”) (quoting In re Summers, 325 U.S. 561, 567, 65 S.Ct. 1307, 1311, 89 L.Ed. 1795 (1945)). See also Zimmerman v. Grievance Com. of Fifth Jud. Dist., 726 F.2d 85, 86 (2d Cir.1984) (referring to the possibility of a combined adjudication and rulemaking in single opinion); Razatos v. Colorado Supreme Court, 746 F.2d 1429, 1433 (10th Cir.1984) (finding jurisdiction after noting that “[t]he distinction is often difficult to draw” between “general challenges to state bar rules as promulgated and challenges to state court decisions in particular cases.”)
Moreover, a contrary conclusion on the nature of the 1986 Rule would have little impact on this litigation because only two of the plaintiffs were parties in the state court; thus, even if jurisdiction were improper as to them, the case would continue on behalf of the remaining plaintiffs. See In re Justices of the Supreme Court of Puerto Rico, 695 F.2d 17, 26 (1st Cir.1982).
As for defendants’ invocation of res judicata and collateral estoppel as bars to this action, we note that the district court first rejected these claims in 1982, and that that decision was not challenged in the subsequent appeal to this court. See Romany, 742 F.2d at 37 n. 6. Nothing that has occurred either in the Puerto Rico Supreme Court or the district court since that time convinces us that we should now open up that issue for full review. Moreover, unlike jurisdiction, preclusion is a matter subject to some flexibility in application. See Berrios Rivera v. British Ropes, Ltd., 575 F.2d 966, 970 (1st Cir.1978) (Puerto Rico courts have recognized that “in certain cases, the policies of res judicata are not well served by literal application of the procedural rules of the courts.”) Accordingly, without further analysis, we choose to treat the district court’s 1982 ruling on preclusion as establishing the law of the case. See 18 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 4478, at 801 (1981) (if a “matter is omitted from one appeal... it may be held foreclosed on a later appeal to the same court as a matter of law of the ease”).
Appealability. Plaintiffs contend that both the Colegio and the Secretaries filed untimely appeals from the wrong judgments. Appeals must be filed “within 30 days of the judgment or order appealed from,” Fed.R.App.P. 4(a)(1), and courts of appeals have jurisdiction only over “[fjinal decisions,” 28 U.S.C. § 1291. Before addressing the merits of plaintiffs’ argument, we review the procedural chronology.
The district court issued a full opinion on the merits on March 3, 1988, but delayed entering final judgment until after the defendants had an opportunity to modify the remedy to bring it into compliance with the court’s guidelines. The defendants made no changes, and the court issued an opinion on May 27 entering judgment in accordance with the March 3 decision. That May 27 decision was formally entered on the docket on either May 31 or June 1. On June 13, the Colegio filed a motion requesting additional findings of fact, which was denied by the district court on July 15. Both the Colegio and Secretaries filed their appeals on August 10.
The Colegio appealed from the court’s March 3 order and from the July 15 denial of its motion for additional findings of fact. The Secretaries’ notice of appeal sought review of a June 17 judgment.
It is worth noting at the outset of our discussion that if form alone were to govern, we would have to dismiss both appeals of the merits. The Secretaries appealed from a nonexistent judgment on June 17, while the Colegio appealed from a non-final judgment — the one on March 3. It would disserve the interests of justice, however, if we dismissed the appeals on these grounds. Indeed, the Secretaries apparently made no more than a clerical mistake in referring to a June 17 judgment, which should not bar appellate review. See Foman v. Davis, 371 U.S. 178, 181, 83 S.Ct. 227, 229, 9 L.Ed.2d 222 (1962). The Colegio, while committing more than clerical error, undoubtedly appealed from the March 3 decision because it contained the district court’s full analysis. With regard to both appellants, there is no doubt as to the nature of their appeals, and avoiding decision on the merits would be contrary to the spirit of the Federal Rules of Civil Procedure. Id.
As for timing, we accept the district court’s conclusion that the Colegio’s motion for additional findings of fact was timely, extending the time for filing an appeal of the court’s judgment until 30 days following the court’s decision on that motion. See Fed.R.App.P. 4(a)(4) (timely motion by any party extends time for appeal). Both the Colegio and the Secretaries met that extended deadline.
III. Discussion
We begin by stating that, in most significant respects, we agree with the district court’s legal conclusions and its disposition of this case. We nevertheless write at some length so that we may respond to arguments made by both plaintiffs and defendants, and so that, in some instances, we may elaborate on the district court’s discussion in ways that we hope will prove helpful to defendants in administering a constitutional procedure for protecting dissenters’ rights.
Our review of the Colegio system requires us to answer three primary questions: what activities may be funded with compulsory dues? does the 1986 Rule adequately protect the right of dissenters not to contribute to other activities? and what steps must defendants take to fulfill their constitutional obligations to dissenters? We address each of them in turn.
A. What activities may be funded with compulsory dues?
The district court’s view that an integrated bar may use compulsory dues only for activities directly related to the lawyering profession and the operation of the judicial system accords with the Supreme Court’s subsequent pronouncements in Keller. See supra p. 624. To be sure, Puerto Rico’s legislature and Supreme Court evidently envision purposes for the Colegio extending far beyond a “professional advis- or” role. See Keller, 110 S.Ct. at 2235; Schneider, Official Translation, slip op. at 13. But even if it persuasively could be argued that lawyers in Puerto Rico play a distinctive role in creating a pluralistic society, and that collective political action by lawyers is therefore uniquely central to the mission of the Puerto Rico bar, compulsory funding of non-legal ideological activities would impose too great a burden on the First Amendment rights of individual members to be constitutionally acceptable. Lawyers who wish collectively to advocate certain political views can band together in a voluntary association, without coercing those with different views to join their ranks.
The Supreme Court cases upholding compelled membership rest on an implicit assumption that “ ‘the cause which justified bringing the group together,’ ” see Abood, 431 U.S. at 223, 97 S.Ct. at 1793 (quoting Machinists v. Street, 367 U.S. 740, 778, 81 S.Ct. 1784, 1805, 6 L.Ed.2d 1141 (1961) (Douglas, J., concurring)), would be sufficiently narrow that dissenting employees would be forced to associate against their will in only a limited way. As the district court recognized, if objecting members could be required to subsidize any activity that promoted the creation of a strongly pluralistic society, the limitation on compulsory support carved out in Abood would be meaningless.
Thus, the district court correctly set the boundaries for the Colegio’s use of compulsory dues. The court also described various activities that fall within those boundaries, see supra p. 626, and we endorse its list. The district court’s discussion of activities, however, dwelled primarily on bar programs that we think fall at an extreme end of the spectrum, and for which there would be little dispute that compulsory financing would be appropriate. We therefore think it worth adding to its catalog both some general principles and some specific examples to assist in categorizing activities as either appropriate or inappropriate for compulsory funding.
Before we begin that list, however, it is necessary to review the United States Supreme Court’s rather sketchy references to the propriety of using compulsory dues for “nongermane, nonideological expenditures,” Hudson, 475 U.S. at 304 n. 13, 106 S.Ct. at 1074 n. 13. These would include, for example, the costs of members’ life insurance or purely social activities. In Hudson, the most recent compulsory union dues case, the Court specifically refrained from deciding whether “the category of impermissible expenditures included all those that were not germane to collective bargaining, even if they might not be characterized as ‘political or ideological,’ ” id. at 299, 304 n. 13, 106 S.Ct. at 1072, 1074 n. 13.
In an earlier case, however, the Court had considered whether expenditures for union social activities could be financed with compulsory dues. See Ellis, 466 U.S. at 449-50, 456, 104 S.Ct. at 1893, 1896. After concluding that the Railway Labor Act permitted the union to charge all employees for such expenses, the Court only briefly addressed the First Amendment question:
Petitioners do not explicitly contend that union social activities implicate serious First Amendment interests. We need not determine whether contributing money to such affairs is an act triggering First Amendment protection. To the extent it is, the communicative content is not inherent in the act, but stems from the union’s involvement in it. The objection is that these are union social hours. Therefore, the fact that the employee is forced to contribute does not increase the infringement of his First Amendment rights already resulting from the compelled contribution to the union. Petitioners may feel that their money is not being well-spent, but that does not mean they have a First Amendment complaint.
466 U.S. at 456, 104 S.Ct. at 1896 (emphasis in original).
Despite the Supreme Court’s reluctance in Hudson to confront the “constitutional nongermaneness question,” we think the quoted discussion from Ellis provides the appropriate analysis for resolving the issue. Moreover, not only is the First Amendment not a factor, but “[t]he very nature of the free-rider problem and the governmental interest in overcoming it require that the union have a certain flexibility in its use of compelled funds.” Ellis, 466 U.S. at 456, 104 S.Ct. at 1896. We therefore conclude, as did the district court, that activities incidental to the operation of an association — such as social events and the provision of insurance to members— may be financed with mandatory fees.
We now offer several other examples of expenditures that may and may not be mandatorily funded:
1. Political activities, including lobbying, may be funded from compulsory dues so long as the target issues are narrowly limited to regulating the legal profession or improving the quality of legal service available to the residents of Puerto Rico. See Keller, 110 S.Ct. at 2236-37. Thus, for example, the Colegio could lobby in favor of budget appropriations for new judicial positions or increased salaries for government attorneys, or against statutory limitations on attorney advertising or requirements for the certification of legal specialists. Cf. Gibson v. The Florida Bar, 798 F.2d 1564, 1569 & n. 4 (11th Cir.1986).
It would not be permissible, however, to use mandatory dues for such lobbying if the Colegio’s position rested upon partisan political views rather than on lawyerly concerns. For example, while it would be appropriate for the Colegio generally to lobby regarding attorney advertising, it may not use mandatory dues to advocate restrictions only on advertising for legal services in aid of (or opposed to) family planning agencies or abortion clinics. It likewise would be impermissible for the Colegio, to use mandatory dues to lobby on any issue pertaining to the political status of Puerto Rico, even if arguably related to the legal profession or the quality of legal services.
2. Among the activities that could not properly be funded with mandatory dues would be lobbying on controversial bills to change the law in ways not directly linked to the legal profession or the judicial system. For example, the bar could not use dissenting members’ funds to promote a system of no-fault automobile insurance, endorse a pro-life amendment to the Commonwealth constitution or generate support for a death penalty. See Keller, 110 S.Ct. at 2237.
We see no problem, however, in the Colegio’s participation in efforts to amend technical, non-ideological aspects of substantive law. For example, the Wisconsin state bar’s 1975 legislative program included advocacy on two bills that would appear to have engendered no controversy: one making it clear that land contracts enjoy the same exemption from the Wisconsin Consumer Act as do first lien mortgages, and the other simplifying condominium transactions by abolishing a requirement that floor plans be recorded. See T. Schneyer, “The Incoherence of the Unified Bar Concept: Generalizing from the Wisconsin Case,” 1983 Am.B.Found.Res.J. 1, 31 (1983) (hereinafter “Unified Bar Concept”). Another example falling into this category would be a bill to allow notaries to use either a stamp or a seal on documents. All of these measures appear politically noncontroversial and designed merely to “ ‘improv[e] the quality of the legal service available to the people of the [Commonwealth],’ ” Keller, 110 S.Ct. at 2236 (quoting Lathrop, 367 U.S. at 843, 81 S.Ct. at 1838).
3. Among the Colegio’s activities that clearly fall outside the narrow categories for which financial support may be compelled are the following Colegio-sponsored committees: the Committee for the Study of the Constitutional Development of Puerto Rico from 1977 to 1984, which, among other business, has published a report on the “Procedural Requirements for Decolonization of the United Nations Organization” ; the Electoral Process Committee, which was created “to enhance the level of political debate in our country, to enforce compliance with the laws governing the voting process and to frame a code of ethics to regulate public debate among political candidates”; the Special Committee on Nuclear Armament and the Nuclear Arms Ban Treaty in Latin America, and the Committee for the Study of the Proposed Territorial Demarcation of the San Juan and Rio Piedras Delegations. See Schneider, Official Translation, slip op. at 48-49; 53; 54.
4. In many instances, it is likely that activities that may be subsidized with mandatory dues will be combined with those that may not. Consider, for example, a hypothetical annual meeting where business matters of direct concern to the regulation of the legal profession will be discussed, but where the chaplain opens with a long prayer for the health of Fidel Castro, and the featured speaker is a prominent Sandanista. Even if the business meeting takes two hours, and the prayer and speech together take only 35 minutes, we think it likely that the atmosphere would have become so partisan that the proportionate cost of the whole meeting should be deducted from a dissenter’s dues. In other words, where the permissible and impermissible are intertwined beyond separation, the objector should be entitled to a full rebate for the cost of the function.
The district court made a similar observation with respect to the Bar’s publications, holding that “[ejach publication stands or falls... as an indivisible entity, depending on its editorial policy.” 682 F.Supp. at 686. If a magazine is devoted to educational articles about the legal profession or the quality of the legal services available in the Commonwealth, it may be funded by compulsory dues. A magazine that publishes markedly political and ideological material may not rely on that source of funding (unless, perhaps, the magazine publishes a broad spectrum of counterbalancing views).
This list, obviously, is not intended to be exhaustive, but it hopefully will provide some context within which to evaluate other activities.
B. Does the 1986 rule adequately protect the right of dissenters NOT to contribute to other activities?
It is not disputed that the Colegio regularly has engaged in activities that may not be funded with compulsory dues. Assuming that it continues to do so in the future, it must ensure that dissenters’ dues are used only for activities germane to the bar’s core functions or for other pursuits incidental to the operation of a bar association. The district court concluded that the procedures specified in the 1986 Rule are inadequate to accomplish that task. We agree.
Before turning to the specific procedural deficiencies of the Rule, however, we note our previous observation that there is an argument to be made that “the Colegio’s penchant for ideological contention is so pervasive and unremitting... that Puerto Rico cannot constitutionally force dissenters to join,” Romany, 742 F.2d at 40-41. Although the present record leaves that argument unresolved, we are not yet prepared to hold that a rebate and escrow system to protect dissenters is necessarily unworkable. The district court believed that such a system could work and it is clear that the Colegio does engage in some activities that serve the core purposes of a bar association identified by the Supreme Court in Keller. Thus, while leaving open the possibility that no such system would suffice, our comments on the Rule are based on the assumption that it could be modified to meet constitutional requirements. But see L. Tribe, American Constitutional Law § 12-4 at 805 n. 5 (2d ed. 1988) (in the case of unions, it may be preferable to require ideological activities
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | B | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
MARTIN, Circuit Judge.
The contestants agree that the decisive question to be answered on this appeal is whether the owner of a process patent who also owns a patent for a machine designed for operation in conjunction with the patented process may, by license agreement, control the selling price of the article produced by use of the patented machine and process, where no patent covers the article sold.
The appeal is from the judgment of the District Court dismissing, on motion for summary judgment, the bill of complaint of the appellant licensor for equitable relief against the violation by the appellee licensee of the price control clause of the license agreement.
The process patent (Edgar, Reissue No. 18,246), owned by the appellant, BarberColman Company, covered a method of grinding hobs, and its machine patent (Edgar, Reissue No. 18,247) described a “hob-grinding machine.” Appellant concedes that “hobs, ground and unground, have been long known to the trade and are not covered by patents,” and that its process patent covers only a particular method of grinding hobs.
A hob is a hardened steel tool used to cut gears, splined shafts, sprockets, ratchets and other toothed elements for use in automobiles and in many kinds of precision machinery. Accuracy in the form, surface smoothness and dimensions of hobs is essential. In the hardening process, hobs suffer slight deformations, which might not prevent their use for cutting gears employed for ordinary purposes, but would be destructive of the higher degree of accuracy of contour required for precision work. Perfection of contour can be attained only by grinding, which, for a long time, has been practiced in the art.
The appellant’s patents cover only a particular method of grinding hobs and a machine for the performance of that method. In his affidavit, attached to the bill of complaint, appellant’s Works Manager admitted that “ground hobs are made and sold today, and have been for many years, that are not ground on the machine or according to the method” of the appellant’s patents. The affiant stated, moreover: “The defendant in this case [the appellee, National Tool Company] claims to have and to use a method for grinding hobs, the use of which admittedly does not infringe the plaintiff’s patent.”
The appellant has based its business of manufacturing and grinding hobs on its Edgar Patents. Its own operations account for about one-lhird of all hobs ground in the United States, exclusive of the hobs manufactured and ground by its licensees, all of whom covenanted that they would not sell in the United States ground hobs manufactured by the use of appellant’s patented method at prices lower than those maintained by the appellant in selling ground hobs of its own manufacture.
The license agreement between the appellant licensor and the appellee granted the right to manufacture, but not to sell, the patented machine and to use the patented process for the commercial production of ground hobs. Neither the machine nor the method were designed to produce hobs, but only to perform the single function of grinding.
A number of similar agreements had been made with other tool companies at the time of the execution of the license agreement in controversy, it being recited in that document that the appellant was willing to open further its monopoly “to the use of other manufacturers for the grinding of hobs and the building of hob-grinding machines for their own respective uses therefor upon payment of a reasonable royalty, provided it be assured that in so doing the ground-hob business of itself and its Licensees be not ruined or injured by the cutting of prices.” To that end, the seventh paragraph of the license agreement provided that the appellee licensee would not sell, for use in the United States, ground hobs produced by any machine or in accordance with any method covered by the two Letters Patent owned by appellant for less than the prices established from time to time for the sale by appellant “of the same or equivalent items.”
Appellant insists that this price maintenance clause in the license agreement is lawful. Its argument is that, inasmuch as the owner of a product patent has the right to fix the price at which his licensee shall sell the patented product, the owner of a process patent has a corresponding right to fix the price at which his licensee to use the process may sell the product manufactured through its use.
The doctrine of Bement & Sons v. National Harrow Company, 186 U.S. 70, 91, 22 S.Ct. 747, 755, 46 L.Ed. 1058, is appellant’s chief dependence. In the Bement case, sweeping pronouncement was made that “the general rule is absolute freedom in the use or sale of rights under the patent laws of the United States.” The Supreme Court elucidated: “The very object of these laws is monopoly, and the rule is, with few exceptions, that any conditions which are not in their very nature illegal with regard to this kind of property, imposed by the patentee and agreed to by the licensee for the right to manufacture or use or sell the article, will be upheld by the courts. The fact that the conditions in the contracts keep up the monopoly or fix prices does not render them illegal.” The holding in the case, however, merely sustained the right of the patentee of an article to license the manufacture and sale of the patented article upon condition that the licensee should charge a fixed minimum sales price for it.
In another decision emphasized by appellant, United States v. General Electric Company, 272 U.S. 476, 485, 493, 47 S.Ct. 192, 198, 71 L.Ed. 362, the Supreme Court said that “price fixing is usually the essence of that which secures proper reward to the patentee”; that it is immaterial how widespread his monopoly may become, so long as “he makes no effort to fasten upon ownership of the articles he sells control of the prices at which his purchaser shall sell”; and that only when in com- ‘ bination with others the patentee “steps out of the scope of his patent rights and seeks to control anil restrain those to whom he has sold his patented articles in their subsequent disposition of what is theirs” does he come within the operation of the AntiTrust Act, 15 U.S.CA. §$ 1-7, 15 note. The authority of Bement & Sons v. National Harrow Company, supra, was said not to have been shaken by intervening decisions of the court. But, for their relevancy upon the instant issue, these two opinions of the Supreme Court may be evaluated only by thoughtful study of numerous other decisions of the court in the field of constant conflict between the principle that a patentee has, by statute, 35 U.S.C.A. § 40 “the exclusive right to make, use, and vend” his invention or discovery, and the inhibition by the AntiTrust laws of the United States, and to a degree by the common law as well, of restraint of trade or commerce and of unlawful combination in restraint or monopoly of trade or commerce.
Only those opinions of the highest court which appear to furnish true guidance upon the issue here will be reviewed, and those selected will be discussed in chronological order, which seems the clearest method of exposition of the expanding juristic concept of appropriate restraint of monopoly.
Chief Justice Taney, in Bloomer v. McQuewan, 14 How. 539, 55 U.S. 539, 549, 14 L.Ed. 532, decided in 1852, declared that the purchaser of a patented implement or machine for use “in the ordinary pursuits of life” exercises in its use no rights created by the Act of Congress, and does not derive title by virtue of the franchise or exclusive privilege granted to the patentee; and that, when the machine passes to the hands of the purchaser, it is no longer within the limits of the monopoly, or under protection of the Act of Congress.
With credit to this eminent authoritative source, Mr. Justice Miller, in Adams v. Burke, 1873, 17 Wall. 453, 84 U.S. 453, 456, 21 L.Ed. 700, asserted that when the patentee or his assignee sells a machine, whose sole value is in its use, and receives in the act of sale all the royalty or consideration claimed “for the use of his invention in that particular machine,” he parts with the right to restrict the purchaser’s ,use.
In Bauer & Cie v. O’Donnell, 229 U.S. 1, 18, 33 S.Ct. 616, 57 L.Ed. 1041, 50 L.R.A., N.S., 1185, Ann.Cas.1915A, 150, the Supreme Court quoted the language of Adams v. Burke condensed in the foregoing paragraph; and held that a patentee may not by notice limit the price at which future retail sales of a patented article may be made, when the article is in the hands of a retailer by purchase from a jobber, who has paid to the agent of the patentee the full price asked for the article sold.
The evolution of the motion picture industry occasioned the Supreme Court to hold that neither a patentee nor his assignee may license another to manufacture and sell a patented motion picture machine and, by a mere notice attached thereto, limit its use by the purchaser or his lessee to unpatented films constituting no part of the patented machine. Motion Picture Patents Company v. Universal Film Manufacturing Company, 243 U.S. 502, 516, 519, 37 S.Ct. 416, 61 L.Ed. 871, L.R.A.1917E, 1187, Ann.Cas.1918A, 959. It was pointed out that, following the decision of the Button-Fastener case, Heaton-Peninsular Button Fastener Co. v. Eureka Specialty Co., 6 Cir., 77 F. 288, 35 L.R.A. 728, the contention had been made widely that the owner of a patent has the right, under penalty of patent infringement, to fix the price at which his patented article may be sold and resold, but that in Bauer v. O’Donnell, supra, the Supreme Court had refused to place that interpretation upon the Act of Congress. Mr. Justice Clarke said [243 U.S. 502, 37 S.Ct. 421, 61 L.Ed. 871, L.R.A.1917E, 1187, Ann.Cas.1918A, 959]: “A restriction which would give to the plaintiff such a potential power for evil over an industry which must be recognized as an important element in the amusement life of the nation, under the conclusions we have stated in this opinion, is plainly void, because wholly without the scope and purpose of our patent laws, and •because, if sustained, it would be gravely injurious, to that public interest, which we have seen is more a favorite of the law than is the promotion of private fortunes.”
The observation should be made that, in the Motion Picture case, decision was not based upon the effect of the Sherman or Clayton Acts; but that in United States v. Trenton Potteries Company, 273 U.S. 392, 47 S.Ct. 377, 71 L.Ed. 700, 50 A.L.R. 989, the Sherman Anti-Trust Law, 15 U.S.C.A. § 1-7, 15 note, was directly involved, though not in the context of patent monopoly. Stating that the Sherman Act and interpretative judicial decisions respecting it are based upon the assumption that the public interest is best protected from the evils of monopoly and price control by the maintenance of competition, the Court held that an agreement, among those controlling more than eighty percent of the business of manufacturing and distributing sanitary pottery in the United States, to fix and maintain uniform prices, whether reasonable or not, was violative of the Sherman Act.
Finding the relief sought indistinguishable from that denied in the Motion Picture case, the Supreme Court again held, in Carbice Corporation of America v. American Patents Development Corporation, 283 U.S. 27, 31, that a patentee may not lawfully exact, as the condition of a license, that unpatented materials used in connection with his invention be purchased exclusively from him. The patentee and its exclusive licensee had neither sold nor licensed others to sell “complete transportation packages,” but had merely supplied one of the several materials used in the packages, in which the claimed invention was employment of solid carbon dioxide in a new combination. The Court declared that no monopoly had been granted in the commodity and that the attempt to secure one could not be sanctioned. Conceding that a patentee may prohibit the manufacture, sale or use of his invention, or grant licenses upon terms consistent with the limited scope of the patent monopoly (United States v. General Electric Company, supra), charge royalties and license fees, the opinion stated that an attempt to limit a licensee to the use of unpatented materials purchased from the licensor is comparable to an attempt by the patentee to fix the price at which the patented article may be resold. The attempt to use a patent unreasonably to restrain commerce was considered not only beyond the scope of the grant of the patent, but also in direct violation of the Anti-Trust Acts. The opinion writer noted that the Clayton Act of October 15, 1914, c. 323, sec. 3, 38 Stat. 731, 15 U.S.C.A. § 14, prohibits any lease, sale, contract, or agreement tending to create a monopoly in any line of commerce, and is applicable to all goods, wares, merchandise, machinery, supplies or other commodities, whether patented or unpatented.
Again writing for the court, Mr. Justice Brandéis, in Leitch Manufacturing Co. v. Barber Company, 302 U.S. 458, 463, 58 S.Ct. 288, 82 L.Ed. 371, explained that the rule of the Carbice case applies, regardless of the nature of the device by which the owner of a patent seeks to effect an unauthorized extension of his monopoly; and that the rule applies whether the patent be for a machine, a product or a process.
Upon charges of violation of the Sherman Anti-Trust Act, 26 Stat. 209, 15 U.S. C.A., sec. 1, as amended August 17, 1937, 50 Stat. 693, 15 U.S.C.A. § 1, the Government brought suit in a United States District Court to restrain a corporation and its officers from granting, under patents controlled by the corporation, licenses to jobbers to sell and distribute lead-treated motor fuel, and from enforcing provisions in licenses to oil refiners which restricted their sale of the motor fuel to the licensed jobbers. The Supreme Court upheld the action of the District Court in deciding the controversy in favor of the Government, cited and adhered to its previous opinions relating to the scope of the patent monopoly, and stated that by the authorized sales of the fuel by refiners to jobbers the patent monopoly over the fuel was exhausted; and that, after the sale, neither the patentee nor the refiners could longer rely upon the patents for the exercise of any control over the price at which the fuel might be resold. Ethyl Gasoline Corporation v. United States, 309 U.S. 436, 455, 459, 60 S.Ct. 618, 84 L.Ed. 852.
In United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 218, 60 S.Ct. 811, 84 L.Ed. 1129, the statement was made that for more than forty years the Supreme Court had consistently and without deviation adhered to the principle that price-fixing agreements are unlawful per se under the Sherman Act; that no showing of so-called competitive abuses or evils which those agreements were designed to eliminate or alleviate might be interposed as a defense; and that this well established rule had been reaffirmed in clear and unequivocal terms in Ethyl Gasoline Corporation v. United States, supra,
On January 5, 1942, the Supreme Court promulgated two opinions which resolve all doubt, if any be left, as to the correctness of the course pursued by the District Court in dismissing the instant civil action on motion for summary judgment: Morton Salt Co. v. Suppiger Co., 314 U.S. 488, 62 S.Ct. 402, 86 L.Ed. 363; B. B. Chemical Co. v. Ellis, 314 U.S. 495, 62 S.Ct. 406, 86 L.Ed. 367. In the first of these cases, the patentee of a machine for depositing salt tablets brought suit for an injunction and an accounting for alleged infringement of its patent. The defense was that the plaintiff was making use of its patent to restrain the sale of salt tablets in competition with its own sale of unpatented tablets, by requiring licensees to use with the patented machines only tablets sold by the plaintiff. The District Court, on motion for summary judgment, dismissed the complaint and the Supreme Court affirmed that action. It was deemed unnecessary to decide whether there had been a violation of the Clayton Act, for the reason that a court of equity will not aid the protection of patent monopoly, when attempted to be used as the effective means of restraining competition with the patentee’s sale of an unpatented article. Attention was directed to the principle of general application that courts and especially courts of equity may appropriately withhold their aid where the plaintiff is using the right asserted contrary to the public interest. In the second case, the holding was that the owner of a method patent who authorizes manufacturers to use it only with materials furnished by him could not enjoin infringement by one who supplies the manufacturer with materials for use by the patented method and aids in such use.
A few months after the opinion in the Salt Company and Chemical Company' cases, supra, were delivered, the Supreme Court on May 11, 1942, again announced simultaneously two opinions, which indicate that the judgment in the case at bar should be affirmed: United States v. Univis Lens Co., 316 U.S. 241, 250, 251, 62 S.Ct. 1088, 86 L.Ed. 1408; United States v. Masonite Corporation, 316 U.S. 265, 280, 282, 62 S.Ct. 1070, 86 L.Ed. 1461.
It would be of no avail to lengthen this opinion unduly by describing the complicated licensing system disclosed in the Univis Lens case. The rationale of the decision is revealed in the following language of the Chief Justice (op. 250, 251, of 316 U.S., page 1093 of 62 S.Ct., 86 L.Ed. 1461): “ * * * where one has sold an uncompleted article which, because it embodies essential features of his patented invention, is within the protection of his patent, and has destined the article to be finished by the purchaser in conformity to the patent, he has sold his invention so far as it is or may be embodied in that particular article. The reward he has demanded and received is for the article and the invention which it embodies and which his vendee is to practice upon it. He has thus parted with his right to assert the patent monopoly with respect to it and is no longer free to control the price at which it may be sold either in its unfinished or finished form.”
In the Masonite case, numerous corporations, in active competition as dealers in building materials, had entered into a combination whereby one of the group, a manufacturer and seller of “hardboard,” for which he held a patent, constituted the other members of the group del credere agents for the sale of “hardboard” at prices fixed by the owner of the patent. The Supreme Court held [316 U.S. 265, 62 S.Ct. 1079, 86 L.Ed. 1461] that “the power of this type of combination to inflict the kind of public' injury which the Sherman Act condemns renders it illegal per se.” The opinion writer said that “since patents are privileges restrictive of a free economy, the rights which Congress has attached to them must be strictly construed so as not to derogate from the general law beyond the necessary requirements of the patent statute.”
The decisions and pronouncements of the Supreme Court which have been reviewed so plainly demonstrate that the judgment of the District Court was correct that citation of opinions of inferior courts of the United States would merely add surplusage. Suffice it to say that Sylvania Industrial Corporation v. Visking Corporation, 4 Cir., 132 F.2d 947, 955, applied the same principles which we have found pertinent here. We are not in accord with the decision in Straight Side Basket Corporation v. Webster Basket Co., 2 Cir., 82 F.2d 245. The two cases from this circuit,, cited by appellant, shed no light on the instant controversy. Fulton Co. v. Bishop & Babcock Co., 6 Cir., 17 F.2d 1006; Warner v. Tennessee Products Corporation, 6 Cir., 57 F.2d 642.
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.
MAJOR, Chief Judge.
This action was commenced for the alleged infringement of claims 7 and 10 of patent No. 2,108,727, entitled “Mop,” issued. February 15, 1938, to K. S. Rogers. At that time the patent was owned by Niles Metalcraft Company, a Michigan corporation, but ownership was, during the pendency of the action, transferred to Levant C. Rogers and Dorothy Rogers, co-partners doing business as Niles Metalcraft Company, which was substituted as a party plaintiff. The other plaintiff, Artmoore Company, is the exclusive distributor of the mop manufactured under the patent in suit. Levant C. Rogers is a brother of K. S. Rogers, the inventor of the patent, now deceased. The defendant Leslie Hoffman is an official and manager of the defendant Dayless Manufacturing Company, Inc., which manufactures the alleged infringing mop.
The subject matter of the patent relates particularly to a mop employing sponge rubber as a mopping element. The object of the invention as stated in its specifications “is to provide a mop * * * with novel means for extracting water from the mop element * * * in which the carrier for the mopping element serves to guide a shiftable wringing roller assembly * * * a mop with a sponge rubber mop head with respect to which a rigid roller journaling frame is shiftable to extract water and dirt from the sponge rubber by compressing the same in a movement toward the outer end thereof.”
The patent contains ten claims but, as stated, only two are in issue. Claim 7 reads: “A mop comprising a handle, a carrier unit having an expansible mopping member therein, a rigid frame unit arching the carrier, said frame unit having rollers at opposite sides thereof in fixed predetermined spaced relation and engaging opposite sides of the mopping member, one of said units being re-ciprocable relative to the other to wring said mopping member between said rollers and means carried by the handle and cooperating with said handle to mount said units and effect said reciprocation.” Claim 10 reads: “A device as set forth in claim 7 wherein the mopping member is formed from a resilient expansible material and normally bulging whereby said frame and rollers will be held by the bulging thereof in inoperative position.”
After a rather extended hearing, the District Judge rendered a memorandum opinion, 109 F.Supp. 181, 186, made findings of fact and conclusions drawn therefrom. It was found and concluded that the claims in issue were valid and infringed. The court also found and concluded that defendants’ conduct in connection with the manufacture and sale of the alleged infringing mop constituted “wilful and wanton infringement.” A judgment was entered December 31, 1952, predicated upon the findings and conclusions thus noted, sustaining the validity of the claims in issue and their wanton and wilful infringement by defendants, awarding damages to plaintiffs with reference to a special master for an accounting, and enjoining and restraining defendants in the manufacture or sale of a mop embodying the claims in suit. The judgment also awarded to plaintiffs taxable costs and reasonable attorney fees to be recovered from defendants. From this judgment the appeal comes to this court.
While there are certain subsidiary issues, such as the asserted improper admission of testimony and file wrapper estoppel, the principal issues relate to the validity of the claims, their infringement by defendants and, if there be infringement, whether it was wilful and wanton.
On the issue of validity the findings of the District Court in abbreviated form are: The patent covers a mop employing a sponge rubber mopping element with novel means for extracting water from the mopping element. The mop includes a unit in which a rubber sponge is clamped firmly in a steel channel, a unit including a rigid bridge having four legs straddling the opposite sides of the channel and journaling two steel pins mounting rubber rolls in a fixed position and in engagement with the opposite sides of the mopping member, a handle, and means including a lever carried by the handle and cooperating with the handle to effect a reciprocal relationship between the units to wring the mopping member between the rollers. The combination and arrangement of the parts causes them to maintain their proper relation when used for cleaning purposes even though no latches and springs are employed; permits a progressive compressive wringing of the flared part of the sponge between fixedly spaced rollers, with the expansion of the sponge assisting return of the rollers and the operating lever to an inoperative position and also serving to hold the same in inoperative position after release of the lever; and the fixed spacing of the rollers by the rigid frame unit assures a uniform and regulated action over an extended period of time.
The findings further relate that the patented mop possesses a number of advantages resulting from the combination and arrangement of its parts, and from its novel rigid frame unit providing fixed spacing of the rollers. Plaintiffs’ mop has been in commercial use since 1935, and it embodies the invention of claims 7 and 10 of the Rogers patent. Plaintiffs’ commercial mop sold to the trade for over five times as much as conventional rag string mops, but nevertheless over 2,000,000 have been sold and it has met with acceptance by housewives and other users because of its advantages. Prior to the invention of the patent in suit, no self-wringing mop with attached wringing rollers had been made available to the public. None of the devices of the expired prior art patents relied upon by defendants to anticipate the claims of the patent in suit was practical as a self-wringing mop.
On the issue of validity we start, as we must in all patent cases and as the District Court no doubt did, with the presumption of validity which attaches to the grant. This presumption is not an idle gesture, as defendants would have us believe, but is a positive factor which must be overcome by one who asserts invalidity. Radio Corporation of America v. Radio Engineering Laboratories, 293 U.S. 1, 8, 54 S.Ct. 752, 78 L.Ed. 1453; Mumm v. Jacob E. Decker & Sons, 301 U.S. 168, 171, 57 S.Ct. 675, 81 L.Ed. 983. In addition, we have the findings of fact made by the District Court, which we are not at liberty on review to ignore unless clearly erroneous. Federal Rule Civil Practice 52, 28 U.S.C.A. Thus, the defendants are faced with the difficult problem of not only overcoming the presumption in favor of validity but in demonstrating that the .findings of the District Court sustaining validity are clearly erroneous.
While the defendants at the trial introduced many prior art patents and publications in an attempt to show that the patent in suit was anticipated^ by the prior art, only five of such patents are relied upon in this court. However, we need mention only three, because they are asserted to be the most pertinent. They are Rogers No. 2,008,615, Kawasaki No. 1,137,760, and Sanguinet No. 1,352,-837, and much stress is laid upon the fact that these three patents were not cited in the patent office. We have read the oral testimony, examined the documentary evidence and physical exhibits, and we are satisfied that the record supports the findings as made. Any doubt which we might entertain is dispelled by the keen analysis made by the District Court (Judge Perry) of the principles embodied in the patent in suit as well as the teachings of the prior art. We discern no reason to ignore the findings thus made, and certainly we cannot hold that they are clearly erroneous. Having .thus concluded, no good purpose could be .served by a (detailed analysis either of the patent in suit.,or. of the prior art relied upon to anticipate.
Defendants’ . argument based on these prior art patents, not cited in the patent office, is not convincing. It has been held, and we think with logic, that it is as reasonable to conclude that a prior art patent not cited was considered and cast aside because not .pertinent, as to conclude that it was inadvertently overlooked. Adler Sign Letter Co. v. Wagner Sign Service, 7 Cir., 112 F.2d 264, 267; Charles Peckat Mfg. Co. v. Jacobs, 7 Cir., 178 F.2d 794, 802. In any event, both Kawasaki (issued in 1915) and Sanguinet (issued in 1920) have long since expired and, so far as this record discloses, neither during their lifetime nor since their demise have they been used for any purpose until they were brought forth in an effort to invalidate the patent in suit. It is unrealistic to reason that Rogers did nothing more than might be expected of the skilled mechanic, when neither the owners of such prior art patents nor any member of the public after their expiration discovered that their teachings were worth reducing to practice. Especially is this true in view of the fact that the field was wide open and that Rogers was the first to disclose a sponge rubber mop with a wringing attachment, which was placed in manufacture and on the market. The wide acclaim with which it was received by housewives is proof of. its utility and is at least some indication of its novelty. While those of the prior art disclosed without result, Rogers reduced his disclosure to practice, and with success.
The District Court, on the issue of infringement, in its memorandum opinion stated:
“In determining whether an accused device or composition infringes a valid patent, resort must be had in the first instance to the words of .the claim. . If the accused matter falls clearly within the claim, infringement is made .out. The .accused device.infringes if it performs, the same function in substantially the same way. Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U.S. 605, 70 S.Ct. 854, 94 L.Ed. 1097. Details of the accused mop. and its operation have been set out in an earlier portion of this memorandum. It is the view, of this Court that this accused device falls within the claims of the patent in suit; it therefore infringes,the patent. Despite the mathematical refinements of the defendants’ expert witness regarding the effect of the stress of the mop upon the frame unit in the accused device, the Court, as it. views this device, easily observes that it possesses a rigid and not a resilient frame unit. The Court also observes that the rollers are held in a retracted position by the flared sponge mop in the accused device. Upon examination of both devices, the Court arrives at the view that the accused device performs the same function in substantially the same way. In this comparison, the Court observes only one difference between the two devices. The patent in suit illustrates the sponge carrier secured on the end of the handle and the roller carrier connected to the pivoted operating lever. In the accused device, the roller carrier is secured on the end of the handle and the sponge carrier is connected to the pivoted operating lever. This change of parts does not affect the operation of the device as compared to the patented device, nor does it alter the results accomplished by the defendants’ device as compared to those accomplished by the patented device. This is a transposition and reversal of parts, which do not avoid infringement. Chicago Lock Co. v. Tratsch, 7 Cir., 72 F.2d 482, Hunt v. Armour & Co., 7 Cir., 185 F.2d 722.”
We think this reasoning of the District Court is justified by the record and that the findings relative to infringement are sufficiently supported. At any rate, we cannot conclude that the findings in this respect are clearly erroneous. It .may be, as argued by defendants, that their mop possesses some advantages .over the mop in suit, but there was little, if any, difference in the end result and it was produced in substantially the same way. And we agree with the District Court that there is no basis in the history of the proceedings in the patent office for the application of the doctrine of file wrapper estoppel.
While we have little, if any, difficulty in accepting the findings and conclusions of the District Court on the issue of validity and infringement, we think a more serious question is presented on the issue as to whether such infringement was wilful and wanton. On this issue, the burden was not upon the defendant Hoffman to prove exoneration but upon the plaintiffs to substantiate the charge. It has been held that a bona fide and reasonable belief that a patent was invalid removes the infringement from the class designated as wanton and wilful. Packwood v. Briggs & Stratton Corp., D.C., 99 F.Supp. 803, 808; Pennington Engineering Co. v. Houde Engineering Corp., D.C., 43 F.Supp. 698, 699, 707, affirmed 2 Cir., 136 F.2d 210. See also Associated Plastics Companies v. Gits Molding Corp., 7 Cir., 182 F.2d 1000, 1006.
The finding of the District Court on the issue under discussion is in substance that Hoffman was an agent of and selling plaintiffs’ mop in the city of Chicago for practically two years prior to his commencement of the manufacture and sale of the accused mop, and that he commenced such manufacture and sale without giving notice to plaintiffs; that prior to the time when plaintiffs learned of Hoffman’s activities they made a number of referrals of inquiries from prospective purchasers and salesmen; further, that Hoffman as an officer and general manager of Dayless Manufacturing Company directed its activities while still a trusted employee of plaintiff Artmoore Company, with full knowledge of the patent device in suit, and that plaintiffs did not know of such activities and of the relationship between Hoffman and Dayless Manufacturing Company.
Defendants challenge, and not without merit, the finding that Hoffman was an agent or employee of plaintiffs and assert that he was merely an independent contractor. In our view, however, it is not too important as to how Hoffman’s relationship with the plaintiffs be characterized. It is not open to dispute but that Hoffman was granted a franchise by plaintiffs for an exclusive territory so that he might develop a clientele for the sale of mops. It is also plain that the dispute or friction which developed between the parties was due to the fact that other distributors of plaintiffs’ mop invaded the territory which had been assigned to Hoffman. Hoffman naturally complained of this invasion of his territory, without any action being taken by plaintiffs. It was at this time or shortly thereafter that Hoffman commenced the manufacture and sale of the infringing mop.
The weakness of plaintiffs' position is accentuated by their argument in this court, predicated almost entirely upon an affidavit of Hoffman filed in opposition to a motion for preliminary injunction and introduced in the instant case by plaintiffs as Exhibit 17. The only statement in this affidavit referred to in plaintiffs’ brief is as follows: “That at no time did affiant receive any information from the Artmoore Company concerning the names and locations of other franchise sales representatives or distributors for the Artmoore Company in other locations and areas.”
Our attention is then called to testimony alleged to prove the falsity of the quoted statement. Assuming that which we think is doubtful, that is, that such falsity is shown, we are not able to discern its materiality. In fact, it is not contended that this alleged false statement bore any materiality to the issue of Hoffman’s conduct. It is only utilized by plaintiffs to cast doubt or suspicion upon other portions of Hoffman's affidavit. For instance, it is argued that proof of a false statement by Hoffman in the respect shown raises a doubt or question as to the truthfulness of certain material statements found in the affidavit. Even if such be the case, the argument is of no benefit to plaintiffs. Certainly it cannot be thought that plaintiffs sustained the burden of proof by merely casting a doubt upon an exhibit which they offered. More than that, Exhibit 17 was offered by plaintiffs because of one statement, asserted as an admission against interest, to the effect that defendants manufactured and sold the accused mop. It was upon defendants’ insistence that the entire affidavit was offered by plaintiffs, rather than the particular portion referred to. Under these circumstances we do not think plaintiffs can escape the undenied and unimpeaehed statements of Hoffman as contained in the affidavit. The affidavit is lengthy and we need not set it forth in any detail. It is sufficient to state that it contains a plausible and reasonable explanation of Hoffman’s conduct. Among other things it shows that Hoffman after considerable experimentation designed the accused mop, that he consulted a named patent counsel (about whose qualifications there can be no question) for the purpose of ascertaining whether his newly designed mop was an infringement of any unexpired valid patents, and particularly the patent in suit. Further, it shows that in a report dated April 14, 1950, Hoffman was advised by his patent counsel that his construction did not infringe any valid claim of the patent in suit, and that it was only after such report that manufacture of the accused mop was commenced.
The record may furnish a basis for criticizing Hoffman. He no doubt would appear in a better light if he had notified plaintiffs of a severance of his relationship with them and of his plans to manufacture his own mop, but under the circumstances we do not think his failure in this respect constitutes wilful and wanton conduct. While there is proof that plaintiffs made a considerable number of referrals to defendants, there is no proof that they were actually received. Assuming, however, that such was the case from the fact that they were placed in the United States mail by plaintiffs, there is no proof that they were utilized by Hoffman. Furthermore, there is no proof that Hoffman sold or represented his mop to be that of plaintiffs, or that he practiced any fraud or deception. Plaintiffs’ suspicion as to Hoffman’s activities appears to have been further aroused from the fact that defendants did not call him as a witness at the trial. We see no reason, however, why defendants should have called Hoffman to testify in explanation of his conduct when that had been given in detail in his affidavit which had been introduced by plaintiffs.
While Hoffman’s activities, as we have said, may constitute a proper basis for criticism — they may even raise a suspicion of improper conduct — yet we are of the opinion that they are grossly deficient as the basis for a finding or conclusion that they were wilful and wanton, and particularly is this so when we remember that the burden was upon the plaintiffs to establish the charge.
That portion of the judgment adjudicating the validity of the claims in suit and their infringement by the defenders is affirmed. That portion of the judgment adjudicating wilful and wanton infringement is reversed, with directions that the accounting and further proceedings be had consistent therewith.
Question: Were there cross appeals 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.
VINSON, Associate Justice.
This is an action to review a wage order applicable to the woolen industry made by the Administrator of the Fair Labor Standards Act of 1938. The chief issue is whether the Administrator in defining the woolen industry complied with the requirements of the Act.
The Administrator’s research staff placed before him a proposed definition of the textile industry which recommended the inclusion of wool mixtures up to some point but the exact percentage was left open. After consultation with interested parties, cotton and wool manufacturers, who believed that the line of demarcation should be correlated with the wage differential between the cotton and the wool industries, the Administrator asked the advice of Industry Committee No. I (Textile). That Committee, after study by a subcommittee, recommended the appointment of a separate committee to represent the woolen industry, its members to come from the present industry committee in order that it might consider minimum wages and the line of distinction as joint problems. Whereupon the Administrator appointed 15 persons to Industry Committee IA; five members were from Committee I; there were no duplications among employer representatives. Committee IA held meetings, heard evidence, and then by a vote of 8-4 tentatively recommended a minimum wage of 36 cents. The recommendation was tentative because the jurisdiction of Committee IA and of Committee I was not finally determined. Committee IA then appointed a subcommittee to confer with a subcommittee of Committee I as to the appropriate line of demarcation. But upon reporting to their respective committees the matter reached an impasse. In a joint meeting Committee IA voted unanimously that yarns and fabrics containing any wool be subject to the tentatively set 36 cent woolen minimum wage, and Committee I voted 9-7 for the line of demarcation that was adopted under the N.I.R.A. The textile wage, other than for woolens, had been tentatively set at 32% cents by Committee I.
Thereafter the Administrator redefined the jurisdiction of the two committees following in the main the line under the N. I. R. A. He defined the woolen industry to include:
(In respect of yarns) “(f) The manufacturing or processing of all yarns (other than carpet yarns) spun from wool or animal fiber (other than silk) in combination with cotton, silk, flax, jute or any synthetic fiber; except the manufacturing or processing on systems other than the woolen system of yarns containing not more than 45 percent by weight of wool or animal fiber (other than silk) in combination with cotton, silk, flax, jute or any synthetic fiber”.
(In respect of fabrics) “(g) The manufacturing, dyeing or other finishing of the products enumerated in clauses (b), (c), (d), and (e) from wool or animal fiber (other than silk) in combination with cotton, silk, flax, jute or any synthetic fiber; except products containing not more than 25 percent by weight of wool or animal fiber (other than silk), with a margin of tolerance of 2 percent to meet the exigencies of manufacture.”
The definitions for the textile industry were correlated to these.
Thereupon Committee No. IA (Woolen) objected unanimously to the definition, but nonetheless, recommended the 36 cent wage for its products by a vote of 9-4. Committee No. I (Textile) recommended the 32% cent wage by a vote of 13-6.
Upon these recommendations there was a hearing before a presiding officer appointed by the Administrator, and oral argument before the latter after briefs had been received. Six weeks later the Administrator issued his opinion, findings, and order which put into effect the recommendations as made.
I. Are the Definitions Judicially Reviewable?
At the outset, the Administrator argues that in view of certain Supreme Court language in the Opp Cotton Mills case, it is doubtful whether one can obtain a court review of a definition. “The basic facts to be ascertained administratively are whether the prescribed wage as applied to an industry will substantially curtail employment, and whether to attain the legislative end there is need for wage differentials applicable to classes in industry. The inclusion of a given product in one industry or another, where both are subject to the Act, principally concerns convenience in administering the Act. For the provisions for classification with appropriate wage differentials afford ample opportunity for fixing an appropriate wage with respect to any product whether it is placed in one industry or another.” (Ital. supplied by respondent.)
As the statement of the case reveals, the trouble in getting Committees I and IA to agree to the precise line of distinction was due to the tentative and uncertain difference in the wage rates to be recommended for competing products and the fact that they were competing products. The Cotton and Wool manufacturers stated the critical problem when they first advised the Administrator. The respondent’s brief summarizes the manufacturers’ position: “It was believed that the line of demarcation should be related to the extent of the differential of the rates between the two industries.” What the wage rates shall be and where the lines should be drawn between related competitive products like these are questions which have to be resolved more or less at the same time. With this in mind, that related definitions achieve their chief significance in relation to the wage orders and the wage orders have their primary meaning when correlated to definitions, it is fitting to reitalicize the Supreme Court language. “The inclusion of a given product in one industry or another, where both are subject to the Act, principally concerns convenience in administering the Act. For the provisions for classification with appropriate wage differentials affords ample opportunity for fixing an appropriate wage with respect to any product whether it is placed in one industry or another.” (Ital. ours.) We have no doubt, then, that the definition is an inextricable part of a wage order and is judicially reviewable.
II. Is the Administrator to Consider Competitive Conditions between Industries ?
Competitive conditions are certainly material to related classifications. The next question is whether the Act contemplates the Administrator taking into account the competitive conditions between industries and whether in some instances at least he must do so. That his classifications within an industry will not be lightly disturbed has been pointed out in the Southern Garments case. The same rule will apply here.
The Administrator argues that the definitions of the woolen and textile industries do not raise questions of classification under Section 8(c), “since that section applies only to differentials within an industry subject to a particular committee’s jurisdiction.” (Ital. respondent’s.) Inasmuch as industry is defined as an industry, or a branch of an industry, or a group of industries, the words that should be italicized are “a particular committee’s jurisdiction”. It is clear that if one committee had existed for the woolen and textile industries, it would have had to take into account competitive conditions in making any classifications. Under section 8(d) it is clear that the Administrator would have had to do the same. Now while it may be possible to argue that if two' committees are appointed neither will have to consider and report on the effect of competitive conditions outside of its jurisdiction (although it might be wise to do so), it is not reasonable to contend that by appointing two committees the Administrator may ignore competitive conditions between similar products in industries related as closely as are the instant ones. Otherwise by mere form the Administrator could escape the responsibility that should be his in fixing 'nationwide minimum wages — a responsibility comparable to the fixing of freight classifications by the Interstate Commerce Commission.
Does the Act adapt itself to this sensible interpretation? In Section 2(a) Congress finds, inter alia, that there were labor conditions in existence which constituted an unfair method of competition. Section 2 (b) declares it to be the policy of the Act to correct and to eliminate as quickly as possible these conditions. Section 8(a) states, “With a view to carrying out the policy of this Act [chapter] by reaching, as rapidly as is economically feasible without substantially curtailing employment,” the universal minimum wage of 40 cents, the Administrator shall from time to time convene the committees and the committees shall from time to time make recommendations. Economically feasible would seem to include competitive conditions. With the broad policy of this Act we see no reason to construe this general phrase to mean that everything is economically feasible which does not substantially curtail employment. Then Section 8(d) provides that the Administrator shall approve the committee recommendations if he finds certain things “taking into consideration the same factors as are required to be considered, by the industry committee, will carry out the purposes of this section.” As has been stated if a committee embraces more than one industry, it would have to consider competitive conditions over all of its subject matter when it made any classification, likewise, the Administrator. Now a committee with narrower jurisdiction might not be in a position to do this but the Administrator is. A consideration of the competitive conditions of the same or similar products of closely related industries (which might have been called an industry) would seem to “carry out the purposes” of Section 8. Even if this Section will not stand such a close reading certainly the general findings and declaration of policy in Section 2 can be used as background in construing the particular subsection 8(d). We hold, therefore, that under the facts of this case the Administrator was under a duty to consider the competitive condition between the cotton and wool manufacturers in making a definition that draws a line of demarcation resulting in some types of yarn being made under a 32% cent minimum and other similar yarns under a 36 cent minimum wage, and some mixed fabrics being subject to a 32% cent wage, and others, 36.
III. Competitive Conditions Raised by the Fabric Definition.
We consider first the fabric definition which states in substance that fabrics containing more than 25% wool are subject to a 36 cent minimum wage and that fabrics containing not more than 25% wool are subject to a 32% cent minimum wage. Petitioners point out that the Administrator justified this line because the former fabrics are usually made in woolen mills, the latter in textile mills. Petitioners contend that the only specific evidence to this effect was'in respect of blankets, but admit that, “it is a fair inference from the evidence that most of the part-wool fabrics made in cotton mills prior to the time of the hearing were in the range of percentages from 25% down.” Nonetheless, petitioners assert that there is a disadvantage to the woolen mills because their production of mixed fabrics containing 25% or less wool will be made of yarns which fall within the woolen industry (36 cents) while such fabrics made in the cotton mills will be made of yarns which fall within the cotton industry (32% cents). This argument really goes to the merit of the yarn definition.Hence in looking to the separate fabric making branch of the industries we see no competitive unfairness in the definition. Just as a cotton mill making a fabric of more than 25% wool will have to pay a minimum wage of 36 cents so a woolen mill making a fabric of not more than 25% wool will be subject to a minimum wage order of 32% cents. We conclude that the Administrator’s determination that the combined effect of the woolen and textile wage rates will give no competitive advantages to any group in either industry is entirely proper in respect of fabrics.
IV. Competitive Conditions Raised by the Yarn Definition.
The yarn definition, however, causes greater difficulty. This definition states in substance that yarns containing any amount of wool when made on a “woolen system” are subj ect to the 36 cent order while yams made on a “cotton system” unless containing over 45% wool are subject to the 32% cent order. Thus the minimum wage of those working on yarns with any amount of wool through 45% depends upon whether a cotton or a woolen system is being used. The distinction between the systems may be epitomized by saying that the former uses ring spindles, the latter, “mules”.
We agree with petitioners that such a distinction prima facie gives a competitive disadvantage to the woolen industry. The respondent argues that the definition is reasonable, nonetheless, for -the Administrator may distinguish industries upon a mill as well as a product basis. The mill basis makes possible a definition which does not so completely cüt across plant lines. But the avoidance of this does not alone justify such a classification for we have seen that one of the purposed of the Act is to eliminate as rapidly as practicable competitive advantages due to substandard wages, and we have determined that in this case the Administrator was bound to adequately consider the competitive conditions.
The Administrator, however, did consider competitive conditions and found that “the 36 cent minimum will not cause competitive disadvantage to the Woolen Industry as defined or to any group in the industry which is engaged in the manufacture of wool mixtures subject to this recommended rate.” Our task, then, is to determine whether there was substantial evidence to support this finding.
V. The Evidence to Support the Administrator’s Conclusion on the Yarn Definition.
The petitioners after pointing out the prima facie unreasonableness of the definition proceed to present persuasive arguments, but they point to no specific evidence showing a competitive disadvantage. We shall, therefore, present a main part of the Administrator’s general evidence and analyze it much as the petitioners have done to ascertain whether it supports the finding.
The evidence with which we deal does not show that the distinction created by the yarn definition is justified because of any significant difference between the yarn produced on a woolen and on a cotton system. (We disregard entirely certain evidence objected to by petitioners which tended to show such significant differences.) But that is not the only kind of evidence that will justify a finding of no competitive disadvantage.
It was shown because of the high average wages paid in the woolen industry that the 36 cent minimum will increase the wage bill of the industry only .57%. The application of the 26% ratio of labor costs to total manufacturing costs results in a .15% increase in the latter. That certainly falls within de minimus. The minimum wage therefore plays an insignificant part in the situation that may give a competitive disadvantage to the woolen industry. This analysis is applicable to yarns for the average wage there is 52.3 cents while for the whole industry it is 53.9. But this does not deal specifically with part-wool yarns. As petitioners have pointed out it is reasonable to infer that the average wage in the part-wool branch of the woolen industry would be lower because it is in competition with similar textile products. The part-wool yarn branch is a substantial portion of the whole, however, and its wages would be recognizably reflected in the total average. It is also possible to infer aside from this that a part is roughly in line with the whole. The finding made is compatible with these latter inferences. Petitioners cannot support their case upon review by merely showing another inference. They could have guarded themselves against the finding made by submitting specific evidence on the part-wool yarn branch if such evidence, favorable to them, was in existence.
Of course, the Administrator’s resolution of the difficult problem may not remove all competitive disadvantages due to low wages. It is the purpose of Congress to eliminate such unfair competition. But the elimination is to be done only as rapidly as practicable. That is primarily a matter for administrative decision and we are not an administrative tribunal. The scope and the extent of judicial scrutiny over administrative action depends upon the statute, the adequacy of the process below, and a sound relationship between the two branches of government. Taking these factors into account here we find no error.
Affirmed.
29 U.S.C.A. § 201 et seq. The Act has been discussed by the Supreme Court in United States v. Darby, 312 U.S. 100, 61 S.Ct. 451, 85 L.Ed. 609, 132 A.L.R. 1430, and Opp Cotton Mills v. Administrator, 312 U.S. 126, 61 S.Ct. 524, 85 L.Ed. 624, and by this court in Southern Garment Manufacturers Association v. Administrator, • — • App.D.C. —, 122 F.2d 622, decided June 30, 1941, and Andree & Seedman, Inc. v. Administrator, -App.D.C. —, 122 F.2d 634.
312 U.S. 126, 61 S.Ct. 524, 85 L.Ed. 624.
312 U.S. at page 145, 61 S.Ct. at page 533, 85 L.Ed. 624.
312 U.S. at pages 149, 150, 61 S.Ct. at pages 534, 535, 85 L.Ed. 624.
Southern Garment Manufacturers As-so. v. Administrator, — App.D.C. -, 122 F.2d 622.
29 U.S.C.A. § 208 (c).
29 U.S.C.A. § 203 (h).
29 U.S.C.A. § 208 (d).
29 U.S.O.A. § 202 (a).
29 U.S.O.A. § 202 (b).
29 U.S.O.A. § 208 (a).
Naturally this consideration of competitive conditions by the Administrator must be limited to the record made at the hearing before him. With the duty upon the Administrator to consider the competitive conditions between closely related industries, he should call for evidence on this issue, if such evidence is not adduced by the interested parties. Here, evidence and argument on this issue was presented by the parties.
Compare, Golding, The Industry Committee Provisions of The Fair Labor Standards Act (1941) 50 Yale L.J. 1141, 1151-7.
Compare Northern Pac. Ry. Co. v. Dep’t of Public Works, 268 U.S. 39, 45 S.Ct. 412, 69 L.Ed. 836.
Compare, “The committee realizes that undesirable labor conditions of long standing shown by evidence to exist in our country cannot be blotted out overnight, and that geographical and industrial diversifies in a nation as large and as heterogeneous as ours cannot be ignored. Practical statesmanship suggests the wisdom of a cautious legislative approach to the progressive realization of these social and economic objectives.” Sen. Rep. No. 884, 75th Cong., 1st Sess. (1937), 4.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
In these cases the appellants, who were subcontractors on a construction project which was abandoned by the prime contractor before completion, seek to enforce mechanic’s liens upon the alleged balance of the contract price which remained unexpended after the owner had completed the work, as permitted by § 38-104, D. C. Code (1961). These cases are here for the second time. Reference is made to our opinion on the first appeal for a statement of the facts and issues.
The owner claimed that, in finishing the work after the prime contractor abandoned it, it had been necessary to expend more than the unpaid balance of the contract price at the time of abandonment, as a result of which there was no fund in which the subcontractors were entitled to share. The latter claimed that the owner had erroneously included in its computation the sum of $4,375 allegedly paid to another subcontractor for replacing equipment he had previously furnished and installed, but later had tortiously removed; that, with that amount eliminated, there was more than enough left in the owner’s hands to satisfy their liens which aggregated about $4,000.
We held, inter alia, that any amount paid the wrongdoing subcontractor for doing what he was already bound to do could not be regarded as a part of the expense of finishing the work. On remand, the District Court had the task of determining the amount, if any, paid by the owner to the wrongdoer. After hearing evidence the court held that the amount so paid was $800 instead of $4,375 as claimed by the appellants; and that, as a result, the unexpended portion of the contract price in which the claiming subcontractors are entitled to share ratably is $660. Judgment having been entered accordingly, the lienholders again appeal.
Although there was conflict in the evidence, it contained support for the findings of the trial judge and therefore we cannot say the findings are clearly erroneous. Hence the judgment appealed from must be upheld.
Affirmed.
. National Brick & Supply Co. v. Baylor, 112 U.S.App.D.C. 73, 299 F.2d 454 (1962).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
Opinion for the Court filed by Circuit Judge BORK.
Opinion concurring in part and dissenting in part filed by Senior Circuit Judge Mac-KINNON.
BORK, Circuit Judge:
Petitioners challenge the Federal Communications Commission’s decision not to apply three forms of political broadcast regulation to a new technology, teletext. Teletext provides a means of transmitting textual and graphic material to the television screens of home viewers.
The Communications Act of 1934, 47 U.S.C. § 312(a)(7) (1982), requires broadcast licensees to “allow reasonable access... for the use of a broadcasting station by a legally qualified candidate for Federal elective office on behalf of his candidacy.” In addition, under 47 U.S.C. § 315(a) (1982), if the licensee “permit[s] any person who is a legally qualified candidate for any public office to use a broadcasting station,” he or she incurs the additional obligation of “afford[ing] equal opportunities to all other such candidates for that office.” Complementing these statutory.provisions, there exists a form of political broadcast regulation that the Commission created early in its history in the name of its mandate to ensure the use of the airwaves in the “public ‘convenience, interest, or necessity.’ ” See Red Lion Broadcasting v. FCC, 395 U.S. 367, 376-77, 89 S.Ct. 1794, 1799, 23 L.Ed.2d 371 (1969). The “fairness doctrine,” as this policy is known, “provides that broadcasters have certain obligations to afford reasonable opportunity for the discussion of conflicting views on issues of public importance.” 47 C.F.R. § 73.1910 (1985).
The case before us presents the question whether the Commission erred in determining that these three political broadcast provisions do not apply to teletext. Because we find that the Commission acted reasonably with respect to section 312(a)(7) and the fairness doctrine, but erroneously held section 315 not to apply to teletext, we affirm in part and reverse in part, and remand to the Commission for further proceedings.
I.
The technologically novel element of teletext service is its utilization of an otherwise unused portion of the television broadcast signal. Television signals are not continuous but are sent in pulses. The human eye retains the image from one pulse to the next so that the picture is perceived as uninterrupted. The time between the pulses of regular television broadcasting (“main signal” transmission) is known as the "vertical blanking interval,” and can be used for pulses that constitute teletext transmission. As treated by the Commission in the docket now before us, “teletext” refers exclusively to such over-the-air transmissions, and not to transmission of text and graphics by way of cable or telephone. Main signal operators now control and operate teletext, though the FCC has authorized the operation of teletext “on a franchise basis” or through the “leaspng] of space to multiple users.” See Report and Order, 53 Rad.Reg.2d (P & F) 1309, 1321 (1983). The Commission, however, admonished licensees “that they remain responsible for all broadcast related teletext provided via the station’s facilities, whether produced in-house or obtained from outside sources.” Id.
To receive teletext, the viewer must have a device to decode the signal carrying the textual information and graphics. Currently, viewers may purchase teletext decoders in retail stores selling television sets. In the future, at least some television manufacturers will build decoding equipment into selected television models. Broadcasters of teletext thus have no control over who obtains the ability to decode teletext signals.
The teletext viewer begins typically by watching the display of a table of contents, which indicates what information is available and at which pages it appears. A “page” is a screen of information. Viewers may then view the information they want by flipping to the page where the desired material appears. Present teletext programming includes data of general interest such as news, sports, weather, community events, and advertising, though nothing precludes broadcasters from displaying information that appeals to audiences with special interests. Main channel broadcasting may notify viewers of material available on teletext. While teletext can display text and high-resolution graphics, no sound accompanies the visual transmissions under teletext technology. Teletext is supported by advertiser fees and involves no charge to the public.
On November 27, 1981, the FCC released a Notice of Proposed Rulemaking to explore possible authorization for television stations to operate teletext systems. See 46 Fed.Reg. 60,851 (1981). The Commission announced its goal "to provide a regulatory environment that is conducive to the emergence and implementation of new technology and new uses of the [broadcast] spectrum.” Id. The Commission added that “[i]n the case of teletext, the available evidence appears to indicate that the forces of competition and the open market are well suited to obtaining the kinds and amounts of service that are most desirable in terms of the public interest.” Id. at 60,852. The Notice therefore proposed that “teletext... be treated as an ancial-lary [sic] service” and that “[s]tations... not be required to observe service guidelines or other performance standards.” Id. at 60,853.
In its Report and Order, 53 Rad.Reg.2d (P & F) 1309 (1983), the Commission addressed the applicability of political broadcast requirements to teletext and concluded that “as a matter of law,... sections [312(a)(7) and 315] need not be applied to teletext service,” and that applying these provisions would be “both unnecessary and unwise as a matter of policy.” Id. at 1322. Moreover, the Commission “conclude[d] that the Fairness Doctrine should not be applied to teletext services.” Id. at 1324. Thus, the Report and Order sought to adopt an approach of non-regulation of teletext under any of the political broadcasting provisions administered by the FCC.
The Commission noted that section 312(a)(7) guarantees federal candidates only “ ‘reasonable access’ ” to “a broadcasting station” and considered what access would be “reasonable” when dealing with “variant broadcast services” such as teletext. See 53 Rad.Reg.2d (P & F) at 1322. Relying on Commission Policy in Enforcing Section 312(a)(7) of the Communications Act of 1934, 68 F.C.C.2d 1079, 1093 (1983), the FCC suggested that by providing a candidate access to the broad television audience attracted to the station’s regular broadcast operation a licensee satisfied its section 312(a)(7) duties even if the broadcaster at the same time denied access to the more limited audience viewing the “ancillary or subsidiary” teletext service. See 53 Rad.Reg.2d (P & F) at 1322-23.
In contrast, the Commission found section 315 wholly inapposite to teletext. Noting that a broadcast “use” triggered section 315’s substantive obligations, that a “use” required “a personal appearance by a legally qualified candidate by voice or picture,” and that the textual and graphics nature of teletext made it “inherently not a medium by which a candidate [could] make a personal appearance,” the Commission held that teletext could not trigger the requirements of section 315. See 53 Rad. Reg.2d (P & F) at 1323. The Commission also reasoned that teletext differed from “traditional broadcast programming” because it does not have the powerful audiovisual capabilities of main-channel broadcasting, and, therefore, does not pose the danger of “abuse” of these powerful sound and image “uses” that Congress envisioned in enacting section 315. See id.
The Commission reserved its most elaborate analysis for the fairness doctrine. It began with the contention that the fairness doctrine is a Commission-made policy, and that Congress did not codify the fairness doctrine when it added language recognizing that policy in the course of a 1959 amendment to section 315. 53 Rad.Reg.2d (P & F) at 1323. Thus, the 1959 amendment does not compel extension of the fairness doctrine to “new services... which did not even exist” at the time, and applications of the doctrine to serve the public interest rests in the Commission’s “sound judgment and discretion.” See id.
The Commission then determined that it should not apply the fairness doctrine to teletext, “primarily [because of] a recognition that teletext’s unique blending of the print medium with radio technology fundamentally distinguishes it from traditional broadcast programming.” 53 Rad.Reg.2d (P & F) at 1324. Noting that “scarcity” of broadcast frequencies provided the first amendment justification of the fairness doctrine’s application to traditional broadcast media, the Commission posited an “[i]mplicit... assumption that... power to communicate ideas through sound and visual images... is significantly different from traditional avenues of communication because of the immediacy of the medium.” Id. In other words, because scarcity inheres in all provisions of goods and services, including the provision of information through print media, the lessened first amendment protection of broadcast regulation must also rely upon the powerful character of traditional broadcasting. Because teletext “more closely resembles... other print communication media such as newspapers and magazines,” the Commission found the “scarcity” rationale, as reinterpreted, insufficient to justify regulating teletext.
The Commission also reasoned that teletext, as a print medium in an “arena of competition... includpng] all other sources of print material,” would not encounter the same degree of scarcity, in the usual sense, as the sound and visual images of regular programming. See 53 Rad. Reg.2d (P & F) at 1324. Thus, the Commission felt it constitutionally suspect to apply the fairness doctrine to teletext. And, in light of its obligation to “encourage, not frustrate, the[] development” of new services like teletext, the FCC decided, therefore, to heed concerns of commenters that teletext services might not prove “viable if... burdened by Fairness Doctrine obligations” and to exempt teletext from the fairness doctrine. See id.
Two motions for reconsideration of the decision not to apply content regulation to teletext were filed. Media Access Project (“MAP”), a petitioner in this appeal, argued that “[t]eletext... is intended for the general public,” and, therefore, falls within the definition of “broadcasting” in the Communications Act of 1934 and triggers broadcast regulation. See J.A. at 111-12. MAP argued that section 312(a)(7) required a licensee “ ‘to tailor [its] responses [to requests for air time] to accommodate, as much as reasonably possible, a candidate’s stated purposes in seeking air time,' ” an individualized approach inconsistent with the sweeping holding of the Report and Order. See J.A. at 112 (citing Columbia Broadcasting System, Inc. v. FCC, 453 U.S. 367, 387, 101 S.Ct. 2813, 2825, 69 L.Ed.2d 706 (1981)). MAP generally contended that teletext had broad audience potential, a good capacity to convey political information, and that the Commission must ensure access to teletext service. See id. at 113.
With respect to section 315, MAP took issue with the FCC’s view that teletext does not meet the standards for a “use.” First, MAP argued that teletext could “produce graphic images, including... perfectly recognizable portraits of... candidates,” and, therefore, met the Commission’s prior definition of a “use” as “ ‘any broadcast or cablecast of a candidate’s voice or picture.’” See J.A. at 116, 117. But even if teletext had not possessed such visual capabilities, MAP urged that the Commission would have a duty to redefine “use” to account for this new form of broadcasting technology. See J.A. at 117.
As for the fairness doctrine, MAP contended that “[t]he standard of fairness... inheres in the public interest standard” the FCC is charged with enforcing, and that by the 1959 amendments “Congress did not merely ‘ratify’ the Commission’s fairness doctrine... [but] clearly made [it] a binding part of the statute.” J.A. at 118, 119. MAP argued, therefore, that the FCC lacked the discretion to refuse to apply the fairness doctrine to teletext broadcast operations.
The other Petition for Reconsideration, filed by Henry Geller, Donna N. Lampert, and Philip A. Rubin, made many of the same legal arguments put forward by MAP. Their petition added that the characterization of “teletext as ‘ancillary,’ ‘novel,’ or ‘a print medium’ ” could not avoid the requirements of political broadcast regulation, and that the scarcity doctrine had nothing to do with the “immediacy” of traditional broadcasting’s sounds and images. J.A. at 126-27 & n. 6. This petition also urged that the full panoply of political broadcasting regulation be applied to teletext.
On November 8, 1984, the Commission rejected these petitions in a Memorandum Opinion and Order, 101 F.C.C.2d 827 (1985). While the Memorandum Opinion and Order largely rehearsed the points made in the Commission’s earlier decision, the Commission elaborated upon the legal relevance of the differences between teletext and traditional broadcasting:
We consider teletext clearly as an ancillary service not strictly related to the traditional broadcast mode of mass communication. First, the very definition of teletext confined the service to traditional print and textual data transmission. Thus, although these data will be transmitted at some point through the use of the electromagnetic spectrum, its primary and overriding feature will be its historical and cultural connection to the print media, especially books, magazines and newspapers. Users of this medium will not be listening or viewing teletext in any traditional broadcasting sense, but instead will be reading it, and thus be able to skip, scan and select the desired material in ways that are incomparable to anything in the history of broadcasting and broadcast regulation. In this light, we believe that the content regulations created for traditional broadcast operations are simply out of place in this new print-related textual data transmission medium. We decline to attribute to Congress an intent to extend broadcast content regulation... to this new medium.
Id. at 833 (citations and footnote omitted; emphasis in original).
The Commission also provided further explanation of its first amendment theory and made clear that it meant this theory to cover the applicability of all forms of political broadcasting regulation to teletext. Relying upon Miami Herald Publishing Co. v. Tornillo, 418 U.S. 241, 94 S.Ct. 2831, 41 L.Ed.2d 730 (1974) (striking down a state’s newspaper right-of-reply statute as running afoul of the first amendment’s protection of editorial judgment and control), and asserting that it considered teletext a “print medium” for first amendment purposes, see 101 F.C.C.2d at 834 & n. 16, the Commission found that “neither the letter nor the purposes of the First Amendment would be served by... a ruling” that would “require[] [the Commission] to intrude into the editorial judgments of teletext editors.” 71c?. at 834. Given Tomillo’s clear refusal to allow interference with editorial judgments in the print media and “the historical sensitivity of Congress to these [first amendment] issues,” the Commission would not “construe the intent of Congress to apply Section 315 and similar statutory provisions, and... associated rules and policies, to the teletext medium.” Id. (footnote omitted). Accordingly, the Commission adhered to the results of its earlier Report and Order.
On June 3, 1985, the Telecommunications Research and Action Center and the Media Access Project (“TRAC/MAP”) filed a petition for review in this court, largely renewing the substantive legal arguments asserted in the petitions for reconsideration below. Because the Commission’s interpretation of the first amendment affects its analysis of political broadcasting regulation and teletext at several points, we discuss that interpretation first. We then address the petitioners’ contentions with respect to section 312(a)(7), section 315, and the fairness doctrine in that order.
II.
In the Commission’s view the regulation of teletext’s “unique blend of the print medium with radio technology” raises first amendment problems not associated with the regulation of traditional broadcasting. Thus, the argument goes, existing Supreme Court precedent upholding political content regulation of traditional broadcasting does not necessarily justify the application of such regulation to the new medium of teletext. While not concluding that this application to a “print medium” like teletext would violate the first amendment, the Commission suggested that its application of that regulation would be sufficiently suspect to justify not imputing to Congress an intent to apply “section 315 and similar statutory provisions, and... associated rules and policies, to the teletext medium.” 101 F.C.C.2d at 834. To appreciate the Commission’s argument, a brief discussion of the case law will be useful.
In Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 89 S.Ct. 1794, 23 L.Ed.2d 371 (1969), the Supreme Court rejected a first amendment challenge to the fairness doctrine and related rules governing personal attacks and political editorials by licensees. In reasoning that applies generally to political broadcasting regulation, the Court found justification for limiting first amendment protection of broadcasting in the “scarcity doctrine.” Given the fact of a limited number of broadcast frequencies and the “massive” problem of broadcast interference, the Court remarked that “only a tiny fraction of those with resources and intelligence can hope to communicate by radio at the same time if intelligible communication is to be had, even if the entire radio spectrum is utilized in the present state of commercially acceptable technology.” Id. at 388, 89 S.Ct. at 1805. The Court observed that this necessitated the division of the radio spectrum into usable portions, the assignment of subdivisions of the frequency to individual users, and regulation under which the “Government... tell[s] some applicants that they [cannot]... broadcast at all because there [is] room for only a few.” Id. Therefore, the Court asserted, because “there are substantially more individuals who want to broadcast than there are frequencies to allocate, it is idle to posit an unabridgeable First Amendment right to broadcast comparable to the right of every individual to speak, write or publish.” Id.
Observing that licensees and those who can obtain no license have identical first amendment rights, the Court in Red Lion further concluded that
[t]here is nothing in the First Amendment which prevents the Government from requiring a licensee to share his frequency with others and to conduct himself as a proxy or fiduciary with obligations to present those views and voices which are representative of his community and which would otherwise, by necessity, be barred from the airwaves.
395 U.S. at 389, 89 S.Ct. at 1806. The Court then enunciated the classic formulation of the scarcity doctrine:
Because of the scarcity of radio frequencies, the Government is permitted to put restraints on licensees in favor of others whose views should be expressed on this unique medium. But the people as a whole retain their interest in free speech by radio and their collective right to have the medium function consistently with the ends and purposes of the First Amendment. It is the right of the viewers and listeners, not the right of the broadcasters, which is paramount.
Id. at 390, 89 S.Ct. at 1806. It was on this principle that the Court found no first amendment infirmity in political broadcast regulation.
The Commission believes, however, that the regulation of teletext falls not within the permissive approach of Red Lion, but rather within the strict first amendment rule applied to content regulation of the print media. In Miami Herald Publishing Co. v. Tornillo, 418 U.S. 241, 94 S.Ct. 2831, 41 L.Ed.2d 730 (1974), the Court struck down an editorial right-of-reply statute that applied to newspapers. The content regulation in Tomillo bore a strong resemblance to that upheld in Red Lion. In Tomillo the Court held that such regulation impermissibly interfered with the newspapers’ “editorial control and judgment.” Id. at 258, 94 S.Ct. at 2840. The Court made the broad assertion that “[i]t has yet to be demonstrated how governmental regulation of this crucial [editorial] process can be exercised consistent with the First Amendment guarantees of a free press.” Id. If the Commission’s view is correct, and Tomillo rather than Red Lion applies to teletext, that service is entitled to greater first amendment protections than ordinary broadcasting and it would be proper, at a minimum, to construe political broadcasting provisions narrowly to avoid constitutionally suspect results.
The Commission has offered two grounds for its view that Tomillo rather than Red Lion is pertinent. Both reasons relate to the textual nature of teletext service. First, the Commission read an “immediacy” component into the scarcity doctrine:
Implicit in the “scarcity” rationale... is an assumption that broadcasters, through their access to the radio spectrum, possess a power to communicate ideas through sound and visual images in a manner that is significantly different from traditional avenues of communication because of the immediacy of the medium.
53 Rad.Reg.2d (P & F) at 1324. Second, the Commission held that the print nature of teletext “more closely resembles, and will largely compete with, other print communication media such as newspapers and magazines.” Id. Under this analysis, scarcity of alternative first amendment resources does not exist with respect to teletext. We address these points in turn.
With respect to the first argument, the deficiencies of the scarcity rationale as a basis for depriving broadcasting of full first amendment protection, have led some to think that it is the immediacy and the power of broadcasting that causes its differential treatment. Whether or not that is true, we are unwilling to endorse an argument that makes the very effectiveness of speech the justification for according it less first amendment protection. More important, the Supreme Court’s articulation of the scarcity doctrine contains no hint of any immediacy rationale. The Court based its reasoning entirely on the physical scarcity of broadcasting frequencies, which, it thought, permitted attaching fiduciary duties to the receipt of a license to use a frequency. This “immediacy” distinction cannot, therefore, be employed to affect the ability of the Commission to regulate public affairs broadcasting on teletext to ensure “the right of the public to receive suitable access to social, political, esthetic, moral, and other ideas and experiences.” Red Lion, 395 U.S. at 390, 89 S.Ct. at 1807.
The Commission’s second distinction— that a textual medium is not scarce insofar as it competes with other “print media”— also fails to dislodge the hold of Red Lion. The dispositive fact is that teletext is transmitted over broadcast frequencies that the Supreme Court has ruled scarce and this makes teletext’s content regulable. We can understand, however, why the Commission thought it could reason in this fashion. The basic difficulty in this entire area is that the line drawn between the print media and the broadcast media, resting as it does on the physical scarcity of the latter, is a distinction without a difference. Employing the scarcity concept as an analytic tool, particularly with respect to new and unforeseen technologies, inevitably leads to strained reasoning and artificial results.
It is certainly true that broadcast frequencies are scarce but it is unclear why that fact justifies content regulation of broadcasting in a way that would be intolerable if applied to the editorial process of the print media. All economic goods are scarce, not least the newsprint, ink, delivery trucks, computers, and other resources that go into the production and dissemination of print journalism. Not everyone who wishes to publish a newspaper, or even a pamphlet, may do so. Since scarcity is a universal fact, it can hardly explain regulation in one context and not another. The attempt to use a universal fact as a distinguishing principle necessarily leads to analytical confusion.
Neither is content regulation explained by the fact that broadcasters face the problem of interference, so that the government must define useable frequencies and protect those frequencies from encroachment. This governmental definition of frequencies is another instance of a universal fact that does not offer an explanatory principle for differing treatment. A publisher can deliver his newspapers only because government provides streets and regulates traffic on the streets by allocating rights of way. Yet no one would contend that the necessity for these governmental functions, which are certainly analogous to the government’s function in allocating broadcast frequencies, could justify regulation of the content of a newspaper to ensure that it serves the needs of the citizens.
There may be ways to reconcile Red Lion and Tomillo but the “scarcity” of broadcast frequencies does not appear capable of doing so. Perhaps the Supreme Court will one day revisit this area of the law and either eliminate the distinction between print and broadcast media, surely by pronouncing Tomillo applicable to both, or announce a constitutional distinction that is more usable than the present one. In the meantime, neither we nor the Commission are free to seek new rationales to remedy the inadequacy of the doctrine in this area. The attempt to do that has led the Commission to find “implicit” considerations in the law that are not really there. The Supreme Court has drawn a first amendment distinction between broadcast and print media on a premise of the physical scarcity of broadcast frequencies. Teletext, whatever its similarities to print media, uses broadcast frequencies, and that, given Red Lion, would seem to be that.
The Commission, therefore, cannot on first amendment grounds refuse to apply to teletext such regulation as is constitutionally permissible when applied to other, more traditional, broadcast media. We now turn to the consideration of the particular regulation at issue in this case.
III.
Section 312(a)(7) states that “[t]he Commission may revoke any station license or construction permit... for willful or repeated failure to allow reasonable access to or to permit purchase of reasonable amounts of time for the use of a broadcasting station by a legally qualified candidate for Federal elective office on behalf of his candidacy.” 47 U.S.C. § 312(a)(7) (1982). The question here is the rationality of the Commission’s decision about the applicability of this provision to teletext.
At the outset, we state what we understand the Commission’s decision to be. In introducing its legal analysis, the Commission stated: “As discussed below, we have concluded that, as a matter of law,... sections [312(a)(7) and 315] need not be applied to teletext service.” 53 Rad.Reg.2d (P & F) at 1322. The Commission stated that “the statutory requirement of affording reasonable access is adequately satisfied by permitting federal candidates access to a licensee’s regular broadcast operation; it does not require access to ancillary or subsidiary service offerings like teletext.” Id. The Report and Order’s analysis of section 312(a)(7) concluded by stating that the Commission “perceive[d] no legal requirement that licensees grant federal candidates access to their teletext offerings.” Id. at 1323. Finally, in rejecting reconsideration of this issue in its Memorandum Opinion and Order, the FCC asserted: “Guided as we are in such matters by a reasonableness standard, we find that a broadcaster could satisfy the ‘reasonable access’ rights of a candidate without use of teletext.” 101 F.C.C.2d at 834. We find it clear, therefore, that the Commission believes that a broadcaster cannot be deemed to have acted unreasonably under the statute on the ground that he or she adopts a policy refusing to permit any access to teletext. We now turn to our analysis of the Commission’s conclusion on this point.
The scope of review in this case is quite narrow. In Columbia Broadcasting System, Inc. v. FCC, 453 U.S. 367, 386, 101 S.Ct. 2813, 2825, 69 L.Ed.2d 706 (1981) (“CBS”), the Supreme Court stated that, in enacting section 312(a)(7), Congress “[e]ssentially... adopted a ‘rule of reason’ and charged the Commission with its enforcement.” The Court also asserted that Congress “did not give guidance on how the Commission should implement the statute’s access requirement.” Id. In such a case, where Congress has left a gap in the statutory scheme, “there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation. Such legislative regulations are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute.” Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 837, 843-44, 104 S.Ct. 2778, 2782-83, 81 L.Ed. 694 (1984) (footnote omitted). In the determination of whether the agency’s decision has run afoul of these standards, the parties challenging the agency action bear the burden of proof. See San Luis Obispo Mothers for Peace v. United States Nuclear Regulatory Commission, 789 F.2d 26, 37 (D.C.Cir.1986) (en banc). Thus, we approach the question of the agency’s construction of section 312(a)(7) with significant “judicial deference,” CBS, 453 U.S. at 390, 101 S.Ct. at 2827, and we must uphold that construction if it is a “reasonable” one. Chevron, 467 U.S. at 844, 104 S.Ct. 2783. We now examine whether the “Commission’s action represents a reasoned attempt to effectuate the statute’s access requirement.” CBS, 453 U.S. at 390, 101 S.Ct. at 2827.
Petitioners argue that section 312(a)(7), as interpreted by the Commission and the Supreme Court, “prohibit[s]... blanket bans on candidate advertising and require[s] broadcasters to accommodate the reasonable needs of candidates.” Brief for TRAC/MAP at 49. These standards, they contend, foreclose the Commission’s adopting a general rule allowing a broadcaster to bar candidates from access to teletext without running afoul of section 312(a)(7). If we agree with petitioners that the Commission’s decision in the teletext docket was inconsistent with the approach previously adopted by the Commission and approved by the Supreme Court, we must reverse and remand unless the agency has supplied “a reasoned analysis indicating that prior policies and standards are being deliberately changed, not casually ignored.” Greater Boston Television Corp. v. FCC, 444 F.2d 841, 852 (D.C.Cir.1970), cert. denied, 403 U.S. 923, 91 S.Ct. 2233, 29 L.Ed.2d 701 (1971).
Petitioners rely heavily upon CBS. The Supreme Court in CBS reviewed the FCC’s construction of section 312(a)(7) in connection with a determination that the television networks had failed to give President Carter reasonable access in order to announce his bid for reelection. In upholding the Commission’s finding of a violation, the Court also upheld the individualized, case-by-case approach that the Commission had adopted in enforcing section 312(a)(7), see, e.g., Commission Policy in Enforcing Section 312(a)(7) of the Communications Act, 68 F.C.C.2d 1079 (1978) ("1978 Policy Statement”). The Court described the Commission’s policy as follows:
[Section 312(a)(7) ] requests must be considered on an individualized basis, and broadcasters are required to tailor their responses to accommodate, as much as reasonably possible, a candidate’s stated purposes in seeking air time.... If broadcasters take the appropriate factors into account and act reasonably and in good faith, their decisions will be entitled to deference even if the Commission’s analysis would have differed in the first instance. But if broadcasters adopt “across-the-board policies” and do not attempt to respond to the individualized situation of a particular candidate, the Commission is not compelled to sustain their denial of access.
CBS, 453 U.S. at 387-88,101 S.Ct. at 2825-26 (citations omitted). The Court approved the rationality of the Commission’s standards proscribing the use of “blanket rules” to govern access and requiring that “each request... be examined on its own merits.” See id. at 389, 101 S.Ct. at 2826. Acknowledging that “the adoption of uniform policies might well prove more convenient for broadcasters,” the Court nonetheless accepted the Commission’s view that “such an approach would allow personal campaign strategies and exigencies of the political process to be ignored.” Id. Because “§ 312(a)(7) assures a right of reasonable access to individual candidates for federal elective office, and the Commission’s requirement that their requests be considered on an individualized basis is consistent with that guarantee,” the Court upheld the Commission’s approach. Id. (emphasis in original).
Contrary to petitioners’ assertions, there is, we believe, no conflict between the Commission’s section 312(a)(7) policy, as approved by the Supreme Court in CBS, and the decision made in the teletext docket. When the Supreme Court approved the Commission’s policy of proscribing “blanket rules” or “uniform policies” concerning access, this meant only that broadcasters could not adopt policies that would effectively nullify the statute’s rule of reason approach to granting access to federal candidates. This does not, and could not, suggest, however, that no rules may be applied in the determination of what access is reasonable under the statute. Reasonableness does not mean that an impressionistic judgment must be made in every case. It would be impossible to follow a consistent policy with respect to reasonableness without framing some rules to guide the decisions in particular cases. A rule of reason, as the course of antitrust law shows, implies a middle range of cases which require the individualized judgment and a nice balancing of competing factors. Within a rule of reason, however, there are also cases at the extremities of the spectrum where reasonableness or unreasonableness is clear. Thus, there are areas of per se legality and illegality within any rule of reason. In the context of section 312(a)(7), Congress has empowered the Commission to establish rules and regulations to guide broadcasters in their determination of what access is reasonable, see CBS, 453 U.S. at 386, 101 S.Ct. at 2825 (citing 47 U.S.C. § 303(r)), and, while the Commission has principally developed standards on a case-by-case basis, it has also identified some of the extreme cases in which the reasonableness or unreasonableness of a practice is clear.
The Court in fact approved the use of per se rules by assenting to the Commission’s policy limiting the applicability of section 312(a)(7) to the period after a campaign commences, a limitation nowhere found in the statute. In this respect, the Court explained: “By confining the applicability of the statute to the period after the campaign begins, the Commission has limited its impact on broadcasters and given substance to its command of reasonable access.” CBS, 453 U.S. at 388, 101 S.Ct. at 2826 (emphasis in original). This amounts to a rule of. per se reasonableness: refusing access to a qualified federal candidate before the beginning of a campaign will never be held unreasonable under section 312(a)(7). Thus, when the Court stated that “the Commission’s standards proscribe blanket rules concerning access,” see 453 U.S. at 389, 101 S.Ct. at 2826, it was necessarily referring to rules whose effect would be to eliminate the case-by-case approach in the vast middle ground where reasonableness or unreasonableness is not clear. It did not mean that the Commission had foreclosed itself from adopting any rules defining the clear cases under the statute. In the teletext decision, that is all the Commission did; it merely adopted a rule of per se reasonableness as to a minor portion of the station’s operations because it believed the reasonableness of that exclusion to be clear.
The acceptability of this approach is also shown by the Commission’s treatment of subscription television (“STV”) under section 312(a)(7) in its 1978 Policy Statement, 68 F.C.C.2d at 1093. In that decision, the Commission accepted the argument that an STV station should not have to provide access for political broadcasting during the prime time hours that it is broadcasting because that would destroy one of the major incentives for such a service, “uninterrupted entertainment programming.” Id. The Commission reasoned that
[t]he purpose of giving to Federal candidates the right to prime time spots and programming is based upon the fact that prime time generally is the period of maximum audience potential. Since subscription television programming is generally geared to selective audiences it would appear that those stations engaged in STV have their maximum audience potential outside of normal prime time viewing periods. Therefore, we do not believe that reasonable access requires STV stations to make available to Federal candidates those periods of time in which they are engaged in STV programming.
Id. The Commission’s reasoning clearly supports the general principle that the Commission can permit licensees to block out periods of time in which it would not be unreasonable to deny all access. Moreover, it appears that limited audience potential in the period of time foreclosed and the interest of preserving the vitality of the service are permissible factors in the determination of such general rules. Thus, in light of the Commission’s approach to section 312(a)(7) in general and its holding in the STV decision in particular, we find that the general approach taken in the teletext docket is consistent with existing Commission precedent and the case-by-case approach utilized under section 312(a)(7).
Nor do we think that the Supreme Court’s approving description of Commission policy “requir[ing] [broadcasters] to tailor
Question: Were there cross appeals 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:
Richard Blake Draper appeals sentences imposed following his guilty pleas to an indictment and an information, each charging a separate count of unarmed bank robbery, in violation of 18 U.S.C. § 2113(a). Draper contends the district court erred in adjusting his offense level upward for obstruction of justice pursuant to U.S.S.G. § 3C1.1. We affirm.
I.
In July 1991, Draper was charged with bank robbery in a one count indictment to which he pleaded guilty. Sentencing was scheduled for November 25. In the meantime, the district court permitted Draper to remain at large, subject to the conditions of his pretrial release. These conditions required, among other things, that Draper “[rjeside at a community treatment center.”
Shortly after Draper pleaded guilty, the government sought a warrant for his arrest when he failed to return to his assigned treatment center. The district court issued the requested warrant, and Draper was arrested approximately two weeks later. In the interim, he robbed another bank. With this complication, Draper requested and received a continuance of the November 25 sentencing. He was then charged for, and pleaded guilty to, the second bank robbery.
The two bank robbery convictions were consolidated for sentencing. In calculating Draper’s offense level under the Sentencing Guidelines for the first bank robbery, the presentence report recommended a two-point upward adjustment “since the defendant has willfully obstructed or impeded the administration of justice by escaping from custody before sentencing ..., pursuant to Guideline 3C1.1 (App. Note 3(e)).”
Draper objected to this recommendation on the ground that he was not in custody when he failed to return to his assigned residence. In response, the probation office noted that, because Draper appeared eligible to receive credit toward his sentence for time served at the community treatment center, “it would appear that the defendant’s stay at CCRC is a form of custody and he obstructed justice when he escaped from this confinement while awaiting sentencing.”
At sentencing, Draper also argued that the obstruction of justice guideline does not expressly apply to violations of pre-trial release conditions. The government responded that “Guideline section 3C1.1 is there ... for the court to take into account any sort of obstructive conduct on the part of the defendant.” The government also asserted that, but for Draper’s rearrest, he would not have appeared for sentencing. Draper countered that “it’s [not] clear that [he] would not have appeared at sentencing.”
The district court ruled “that defendant obstructed justice because he violated the conditions of his release from the community corrections center by failing to report to the corrections center, thereby impeding the administration of justice.” The court imposed, and Draper timely appeals, two concurrent 87-month sentences.
II.
A.
Draper was sentenced February 24, 1992. Accordingly, the November 1,1991 version of the Sentencing Guidelines applies. See United States v. Mooneyham, 938 F.2d 139, 140 (9th Cir.), cert. denied, — U.S. -, 112 S.Ct. 443, 116 L.Ed.2d 461 (1991). We “review de novo whether a defendant’s conduct constitutes obstruction of justice under U.S.S.G. § 3C1.1.” United States v. Morales, 977 F.2d 1330, 1331 (9th Cir.1992), cert. denied, — U.S. -, 113 S.Ct. 1399, 122 L.Ed.2d 772 (1993). Underlying factual findings are reviewed for clear error. Id. at 1330-31.
B.
The relevant version of Guidelines section 3C1.1 provides that, “[i]f the defendant willfully obstructed or impeded, or attempted to obstruct or impede, the administration of justice during the investigation, prosecution, or sentencing of the instant offense, [then] increase the offense level by 2 levels.” (Emphasis added.) The guideline’s mens rea element “requires that the defendant ‘consciously act with the purpose of obstructing justice.’ ” United States v. Lofton, 905 F.2d 1315, 1317 (9th Cir.) (quoting United States v. Stroud, 893 F.2d 504, 507 (2d Cir.1990)), cert. denied, 498 U.S. 948, 111 S.Ct. 365, 112 L.Ed.2d 328 (1990).
In interpreting and applying a sentencing guideline, “courts should always consider the [accompanying] commentary, regardless of how clear the guideline may appear on its face.” United States v. Anderson, 942 F.2d 606, 612 (9th Cir.1991) (en banc). The commentary to Guidelines section 3C1.1 notes that “[o]bstructive conduct can vary widely in nature, degree of planning, and seriousness.” U.S.S.G. § 3C1.1, comment, (n. 2). Yet the commentary also recognizes that not all obstructive conduct warrants an upward adjustment in offense level. Some conduct should instead “be sanctioned by the determination of the particular sentence within the otherwise applicable guideline range.” Id.
The commentary provides a “non-exhaustive list of examples of the types of conduct to which this enhancement applies.” Id. comment, (n. 3). This list includes “escaping or attempting to escape from custody before trial or sentencing; or willfully failing to appear, as ordered, for a judicial proceeding.” Id. This language also indicates that it is enough that a defendant escape; she or he need not also miss a “judicial proceeding” before the guideline applies. See also Morales, 977 F.2d at 1331 (“Whether justice is actually obstructed or impeded is irrelevant to the application of this section.”).
On the other hand, the commentary indicates that “avoiding or fleeing from arrest” is an example “of the types of conduct that ... do not warrant application of this enhancement,” but can be sanctioned in the choice of a sentence within the otherwise applicable guideline range. U.S.S.G. § 3C1.1 comment, (n. 4). Whether conduct amounts to an obstruction of justice should be determined with reference to the commentary’s examples of included and excluded conduct. Id. comment, (n. 2).
C.
We confronted the dichotomy between escaping from custody and fleeing arrest in United States v. Mondello, 927 F.2d 1463 (9th Cir.1991). In that ease, we upheld an obstruction adjustment where the defendant was released from detention before his luggage could be searched. When marijuana was found in the bags, authorities contacted Mondello’s attorney, who unsuccessfully tried to arrange for the defendant’s surrender. After eluding authorities for two weeks, Mondello was spotted driving on a freeway. He fled from his car and was arrested after a forty minute chase. Id. at 1465.
In upholding the obstruction adjustment, we observed that
Mondello’s flight did not occur in the immediate aftermath of his crime. The crime had taken place three weeks before. Mondello had already been arrested for the offense and told he was a suspect in a criminal case. This is far from the situation where, for example, a criminal is surprised in the act of committing a crime and makes an evasive dodge to avoid apprehension. .. .
Mondello, 927 F.2d at 1466-67 & n. 4.
By contrast, we held that it was error to apply an obstruction adjustment under the facts in United States v. Madera-Gallegos, 945 F.2d 264 (9th Cir.1991). In that ease, the defendants apparently suspected that something had gone awry with their drug transactions and fled their home minutes before authorities arrived to arrest them. Id. at 265-66. Police then spent 200 hours over the next nine months searching for the defendants. Id. at 266. Defendants admitted they knew they were wanted. Id. Yet in reversing the district court’s application of the obstruction guideline, we distinguished Mondello:
Mondello was arrested, knew that he was expected to turn himself in, and then “played a cat-and-mouse game of avoiding the authorities.” Here the Gallegos were not arrested and fled to Mexico immediately after the drug deal turned sour. There is no evidence that, once found, they made any efforts to impede authorities.
945 F.2d at 268 (citation omitted). The events thus amounted only to “avoiding or fleeing from arrest,” despite the nine-month period in which defendants knowingly remained at large. Id.; accord United States v. Sanchez, 928 F.2d 1450, 1458-59 (6th Cir.1991) (reversing obstruction adjustment where defendants had no obligation to remain at their residence after their eoconspir-ator had been arrested).
As these cases suggest, a narrow or technical reading of the term “custody” is not appropriate in deciding whether an “escap[e] or attempt[ ] to escape from custody before trial or sentencing” warrants an upward adjustment in offense level. Instead, for purposes of the obstruction guideline, “custody” need only involve some degree of official control over a defendant such that a subsequent evasion amounts to more than mere “avoiding or fleeing from arrest.” Stated differently, the defendant must have been submitted, willfully or otherwise, to the due process of law before the obstruction adjustment can obtain.
D.
The present case is easily distinguished from Madera-Gallegos; indeed, it represents a clearer obstruction of justice than in Mondello. Draper not only had been arrested, but his escape came after he agreed to conditions of release specified by the district court. Regardless of whether he escaped from “custody” in any technical sense of the word, Draper undoubtedly “attempt[ed] to escape justice” after having been submitted to process. Mondello, 927 F.2d at 1467 n. 4. Draper’s act was more than “avoiding or fleeing from arrest” because, as in Mondello, Draper had already been “arrested for his offense and was expected to surrender himself.” Id. Instead of returning to the community corrections center, he remained at large for about two weeks, the same as the defendant in Mondel-lo. Thus, our decision in Mondello controls this case.
Draper argues that a two week absence is not sufficient to warrant the obstruction adjustment. He distinguishes his position from United States v. Perry, 908 F.2d 56 (6th Cir.), cert. denied, 498 U.S. 1002, 111 S.Ct. 565, 112 L.Ed.2d 571 (1990), where the defendant received an obstruction adjustment after remaining at large for eight months. We reject this argument; a two week absence is more than enough. Mondello, 927 F.2d at 1466-67; see also United States v. George, 911 F.2d 1028, 1030 (5th Cir.1990) (affirming upward departure for obstruction of justice where “authorities quickly apprehended” defendant). The Sixth Circuit’s Perry decision thus supports application of the obstruction adjustment here, as does the common interpretation of our decision in United States v. Avila, 905 F.2d 295 (9th Cir.1990).
Draper further contends that, because his release violation did not have a significant impact on trial or sentencing proceedings, it should not be viewed as an obstruction of justice. However, Draper overlooks the fact that his sentencing, originally scheduled for November 25, 1991, was postponed due in part to the release violation. Furthermore, for purposes of the obstruction adjustment, it is irrelevant whether justice is actually obstructed or impeded. Morales, 977 F.2d at 1331. It is sufficient that the conduct in question has the potential for obstructing the investigation, prosecution, or sentencing of the instant offense. See United States v. Baker, 894 F.2d 1083, 1084 (9th Cir.1990).
For the foregoing reasons, we now make explicit what we suggested in Avila: Absconding from pretrial release merits an upward adjustment pursuant to Guidelines section 3C1.1. We add, however, that the obstruction adjustment is not appropriate simply because a defendant violated some condition of his or her release. As previously mentioned, some conduct is better taken into account simply by choosing a sentence within the otherwise applicable guideline range.
Finally, we reject Draper’s contention, asserted at oral argument, that in leaving the community treatment center he was merely attempting to escape intolerable conditions, Without ruling on the viability of a necessity-type defense, we find the district court did not clearly err in concluding that Draper intended to obstruct justice and therefore possessed the mental state required under Guidelines section 3C1.1.
III.
Because absconding from pretrial release amounts to escape from custody under the Sentencing Guidelines, the district court did not err in imposing an obstruction adjustment in this case.
AFFIRMED.
. The parties do not dispute, and we find no reason to question, that the obstruction of justice adjustment affects Draper’s sentence in both cases.
... As stated above, we are not dealing with a simple flight from arrest. Mondello had already been arrested for his offense and was expected to surrender himself. Instead, he decided to hide out for two weeks and then [to] engage in a forty minute ruse to avoid capture. We decline to adopt a cramped reading of note 4(d) [which excludes mere avoidance of arrest from obstruction of justice guideline] that would ignore the realities of this case, where there was an attempt to escape justice and not just the scene of a crime.
. Indeed, Guidelines section 3C1.1 and its accompanying commentary indicate that a simple attempt to escape is sufficient to warrant the obstruction adjustment. See U.S.S.G. § 3C1.1 & comment (n. 3(e)); see also, e.g., United States v. Keats, 937 F.2d 58, 67-68 (2d Cir.) (affirming obstruction adjustment where evidence indicated that defendant was about to leave country prior to trial), cert. denied,-U.S.-, 112 S.Ct. 399, 116 L.Ed.2d 348 (1991).
. Several courts have read Avila as holding that “absconding from pretrial release [is an] obstruction[] of justice.” E.g., United States v. Valdiosera-Codinez, 932 F.2d 1093, 1100 (5th Cir.1991). However, these interpretations overlook the point that Avila did not rule on whether the release violation merited an obstruction adjustment. See Avila, 905 F.2d at 297.
.We have no doubt that absconding from pretrial release potentially obstructs or impedes the administration of justice. In this case, the government points to additional work by the Pretrial Services office, the district court, and law enforcement agents necessitated by Draper's violation of his release conditions. Cf. George, 911 F.2d at 1030-31 (affirming upward departure from Guidelines range under similar circumstances and noting "significant disruption” caused by absconding from release conditions).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer: | A | songer_crossapp |
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
WISDOM, Senior Circuit Judge:
This appeal presents the question whether a personal injury claim based on breach of warranty on a consumer product is cognizable under the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301-2312 (1982). The plaintiffs filed suit under the Magnuson-Moss Warranty Act (MMWA) and the Texas Deceptive Trade Practices Act, alleging that they sustained personal injuries and other incidental damages from exposure to formaldehyde fumes within a mobile home manufactured by one defendant and sold by another defendant. The district court ruled that state law determines both the type and the amount of damages that are recoverable under the MMWA. Because Texas law allows the recovery of damages for a personal injury caused by a breach of an implied warranty, the court held that such a claim could be brought in federal court under the MMWA. The jury returned a verdict for the plaintiffs. We hold that personal injury claims arising from breach of warranty are not cognizable under the MMWA. Accordingly, we vacate the judgment and remand with instructions to dismiss the case for lack of subject matter jurisdiction.
I.
FACTS
The plaintiffs, Sue Boelens and her minor daughters Jennifer Renea and Juli Marie, purchased a mobile home in March 1980 that was sold by the defendant Republic Homes of Texas, Inc. and manufactured by the defendant Redman Homes, Inc. It was assembled from wood products that contained urea formaldehyde resin as a bonding agent. The United States Department of Housing and Urban Development inspected and certified the home. The seller did not tell Mrs. Boelens that the home contained formaldehyde. While living in the home in Scurry, Texas, from April to September 1980, the plaintiffs experienced various physical problems and noticed an unpleasant odor. Toward the end of the summer of 1980, Juli was hospitalized and diagnosed as having viral hepatitis. Five months later, after learning that Juli had been exposed to formaldehyde in her home, Juli’s physician changed his final diagnosis to chemical hepatitis caused by exposure to formaldehyde fumes.
The plaintiffs filed suit, alleging that they sustained personal injuries and incidental economic damages, predicating jurisdiction upon the MMWA, 15 U.S.C. §§ 2301-2312 (1982), and 28 U.S.C. § 1331 (1982). The plaintiffs added pendent claims for strict products liability, negligent failure to warn of a health hazard, breach of express and implied warranties under the Texas Uniform Commercial Code, and violation of the Texas Deceptive Trade Practices Act (DTPA), Tex.Bus. & Comm.Code Ann. §§ 17.41-17.63 (Vernon Supp.1984). The plaintiffs also sought common law punitive damages and treble damages under the DTPA.
The defendants filed cross-claims for contribution and indemnity against various suppliers of the component parts used in the assembly of the mobile home. One of the third party defendants, Manville Forest Products Corp., filed a motion to dismiss on the ground that the MMWA provides only for the recovery of economic damages and not for the recovery of personal injury damages. Because the plaintiffs in their complaint had asked for economic damages of less than $50,000 — the amount-in-controversy requirement of the MMWA — Man-ville argued that the court should dismiss for lack of subject matter jurisdiction. The court denied Manville’s motion in an order concluding that the MMWA federalizes state warranty law and that the plaintiffs’ claim under Texas law for personal injury damages for breach of warranty was therefore properly before the court. The district court subsequently approved settlement agreements with some of the third party defendant suppliers, and, over the objections of the defendants, severed the cross-claims and third-party claims against the suppliers.
The case was tried before a jury in April 1983. The jury found that the mobile home was unfit for human habitation and that both of the defendants knowingly violated the DTPA and were grossly negligent in their failure to warn of the formaldehyde fumes in the mobile homes. The jury found actual damages of $178,903.80 and assessed $112,500 in common law punitive damages and $93,750 in discretionary damages under the DTPA. The district court entered judgment for the actual and punitive damages, then later granted a motion for JNOV with respect to $20,000 of future medical expenses. The district court also awarded $236,854.94 to the plaintiffs for attorneys fees, costs, and expenses, and amended the judgment to allow the defendants a $120,000 credit against actual damages on account of the plaintiffs’ pretrial settlements with third party suppliers of components for the mobile home. This appeal followed.
II.
A CLAIM FOR PERSONAL INJURY DAMAGES FOR BREACH OF WARRANTY IS NOT COGNIZABLE UNDER THE MMWA
A. Overview of the MMWA
The Magnuson-Moss Warranty Act was Congress’s first comprehensive attempt to deal at the federal level with problems of consumer warranties. “The draftsmen believed that warranties on consumer products often were too complex to be understood, too varied for consumers to make intelligent market comparisons, and too restrictive for meaningful warranty protection.” Schroeder, Private Actions under the Magnuson-Moss Warranty Act, 66 Calif.L.Rev. 1, 2 (1978). As Judge Jesse E. Eschbach put it, “One of the prime concerns addressed in the Act was the warranty wherein the large print giveth but the small print taketh away.” Gorman v. Saf-T-Mate, Inc., N.D.Ind.1981, 513 F.Supp. 1028, 1035. The Act creates minimum disclosure standards for written consumer product warranties and defines minimum content standards for such warranties. The Act does not require that a seller give a warranty on a consumer product, but if a warranty is given, it must comply with the terms of the Act.
A written warranty for a consumer product costing more than ten dollars is subject to the following substantive obligations of the Act. The warranty must be “clearly and conspicuously” designated as a “full” or a “limited” warranty. 15 U.S.C. § 2303 (1982). A “full” warranty must comply with certain minimum standards:
1. The party obligated under a full warranty must remedy defective products without charge. Id. § 2304(a)(1).
2. No limitation may be imposed on the duration of any state law implied warranty on the product. Id. § 2304(a)(2).
3. The warrantor may not exclude or limit consequential damages for breach of any written or implied warranty on the product, unless such exclusion or limitation conspicuously appears on the face of the warranty. Id. § 2304(a)(3).
4. If the product or a component thereof is defective after a reasonable number of attempts by the warrantor to remedy the defects, the warrantor must permit the consumer to elect either a refund or replacement without charge of the product. Id. § 2304(a)(4).
Although “limited” warranties are not subject to these standards, the Act does provide that the terms of a limited warranty may limit the duration of implied warranties only to the duration of the written warranty, and such limitation must be “conscionable” and “set forth in clear and unmistakable language and prominently displayed on the face of the warranty.” Id. § 2308. Finally, subject to rules promulgated by the Federal Trade Commission, both full and limited warranties must “fully and conspicuously disclose in simple and readily understood language [their] terms and conditions”. Id. § 2302(a).
The MMWA confers both public and private enforcement powers. The Federal Trade Commission or the Attorney General may sue to restrain any warrantor from making a deceptive warranty or from violating the Act. Id. § 2310(c). The FTC may treat a violation of the Act as an unfair or deceptive trade practice under the Federal Trade Commission Act, 15 U.S.C. § 45(a)(1) (1982). 15 U.S.C. § 2310(b) (1982). The private enforcement rights conferred by the MMWA are perhaps the most far-reaching aspects of the statute. The scope of those rights is at issue in this case. We now turn to that issue.
B. The Scope of Private Enforcement Rights Under the MMWA
The provisions of the MMWA that create a private cause of action permit a “consumer” to sue a warrantor for (1) a violation of the substantive provisions of the Act, or (2) breach of a written or implied warranty. Specifically, in § 2310 the Act provides:
(d) (1) Subject to subsection (a)(3) and (e) of this section, a consumer who is damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under this chapter, or under a written warranty, implied warranty, or service contract, may bring suit for damages and other legal and equitable relief—
(A) in any court of competent jurisdiction in any State or the District of Columbia; or
(B) in an appropriate district court of the United States, subject to paragraph (3) of this subsection.
(3) No claim shall be cognizable in a suit brought under paragraph (1)(B) of this subsection—
(A) if the amount in controversy of any individual claim is less than the sum or value of $25;
(B) if the amount in controversy is less than the sum or value of $50,000 (exclusive of interests and costs) computed on the basis of all claims to be determined in this suit; or
(C) if the action is brought as a class action, and the number of named plaintiffs is less than one hundred.
(e) No action (other than a class action or an action respecting a warranty to which subsection (a)(3) of this section applies) may be brought under subsection (d) of this section for failure to comply with any obligation under any written or implied warranty or service contract... unless the person obligated under the warranty or service contract is afforded a reasonable opportunity to cure such failure to comply....
The plaintiffs’ amended complaint in this case makes a claim under the MMWA only for breach of warranty; no claim for breach of the substantive obligations of the Act is asserted. The plaintiffs argue that § 2310(d) of the MMWA authorizes suit in federal court by a consumer against a war-rantor for breach of any implied warranties arising under state law. They maintain that any damages for such breach, including personal injury damages, that are recoverable under state law may also be recovered under the MMWA. Texas law allows recovery of personal injury damages for breach of an implied warranty under the Texas Uniform Commercial Code. Garcia v. Texas Instruments, Inc., 610 S.W.2d 456, 462 (Tex.1980). The plaintiffs therefore conclude that their personal injury claim was properly brought under the MMWA.
The defendants respond that § 2311(b)(2) explicitly precludes the recovery of personal injury damages arising out of a breach of an implied warranty; clause B clarifies the congressional intent that the Act not operate as a preemptive statute. That section provides:
Nothing in this chapter (other than sections 2308 and 2304(a)(2) and (4) of this title) shall (A) affect the liability of, or impose liability on, any person for personal injury, or (B) supersede any provision of State law regarding consequential damages for injury to the person or other injury.
15 U.S.C. § 2311(b)(2) (1982). The plaintiffs read this section to mean only that the MMWA itself creates no new substantive right to personal injury damages, but if State law provides that right, it is cognizable under the MMWA.
The only two reported decisions that have' squarely faced the issue have held that the MMWA does not create a federal cause of action for state law personal injury claims for breach of warranty. See Bush v. American Motors Sales Corp., D.Colo.1984, 575 F.Supp. 1581, 1582; Gorman v. Saf-T-Mate, Inc., N.D.Ind.1981, 513 F.Supp. 1028, 1032-36. The district court in this case declined to follow Saf-T-Mate. The court relied instead on MacKenzie v. Chrysler Corp., 5 Cir.1979, 607 F.2d 1162, for its ruling that a federal court “must look to state law to determine the amount and type of damages available to the plaintiffs under the Magnuson-Moss Warranty Act.” Record at 949. We must therefore decide whether MacKenzie controls this case and, if not, what is the proper interpretation of § 2311(b)(2) of the MMWA.
1. MacKenzie is Not Dispositive of This Case
In MacKenzie, the plaintiff had purchased a station wagon manufactured by the defendant. The car had numerous problems that required the plaintiff to return it to the dealer several times for repair. The plaintiff sued the manufacturer of the car for breach of an express warranty and for breach of implied warranties under Mississippi law. The district court refused to submit an instruction to the jury regarding the MMWA, because the court found that the MMWA was not applicable to the warranty involved in the case, and that even if it were, it would overlap the implied warranty of merchantibility under Mississippi law, thereby making such an instruction redundant. The plaintiff alleged that this refusal was error.
This Court held on appeal that, because the plaintiff “would have been entitled to recover no more under the Magnuson-Moss Warranty Act than he did recover under the court's instructions regarding the express and implied warranties set out by Mississippi law,... the court’s failure to grant [the plaintiff’s] requested charge, if error, was harmless and therefore insufficient to require reversal.” MacKenzie v. Chrysler Corp., 5 Cir.1979, 607 F.2d 1162, 1166. We noted that the MMWA “is virtually silent as to the amount and type of damages which may be awarded for breach of an express limited warranty.” Id. We stated, however, that “the legislative history clearly implies that a resort to state law is proper in determining the applicable measure of damages under the Act.” Id. (emphasis added). We then concluded that the district court’s instructions concerning the measure of the plaintiff’s damages were correct under Mississippi law. Id. at 1166-67.
No claim for personal injury damages was made in MacKenzie. The plaintiff sought only damages for economic loss. No issue was raised whether this type of damages was recoverable under the MMWA. Indeed, many cases make clear that damages for economic loss — usually measured under the relevant state’s Uniform Commercial Code as the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted — are recoverable under the MMWA. See, e.g., In re General Motors Corp. Engine Interchange Litigation, 7 Cir., 594 F.2d 1106,1132 n. 44, cert. denied, 1979, 444 U.S. 870, 100 S.Ct. 146, 62 L.Ed.2d 95; Skelton v. General Motors Corp., N.D.Ill.1980, 500 F.Supp. 1181,1191, rev’d on other grounds, 7 Cir.1981, 660 F.2d 311, cert. denied, 1982, 456 U.S. 974, 102 S.Ct. 2238, 72 L.Ed.2d 848; Novosel v. Northway Motor Car Corp., N.D.N.Y. 1978, 460 F.Supp. 541, 545. Given that damages for economic loss may be assumed to be recoverable under the MMWA, we held in MacKenzie that a resort to state law was proper to determine “the applicable measure of damages”. MacKenzie, 607 F.2d at 1166. We had no occasion to decide what types of damages are cognizable under the MMWA or to consider the effect of § 2311(b)(2) on liability for personal injury under the MMWA. We therefore conclude that MacKenzie is not dispositive of the issue before us.
2. The Scope of Personal Injury Liability Under the MMWA
Section 2311(b)(2) of the MMWA provides that “[njothing in this chapter (other than sections 2308 and 2304(a)(2) and (4) of this title) shall (A) affect the liability of, or impose liability on, any person for personal injury....” It is evident from this language that, except for the' sections recited in the parentheses, the MMWA itself creates no new cause of action for personal injury damages. The excepted sections, however, do affect potential liability for personal injury. Section 2308 forbids disclaimers of implied warranties and § 2304(a)(2) prohibits full warrantors from limiting the duration of implied warranty coverage. Turning to the legislative history, we note that “[sjection 108 of the bill [§ 2308 of 15 U.S.C.] (relating to prohibition on disclaimers on implied warranties) could be read to impose liability on persons to the extent it prohibits the disclaimer of implied warranties.” S.Conf.Rep. No. 1408, 93d Cong., 2d Sess., reprinted in [1974] U.S.Code Cong. & Ad.News 7702, 7755, 7760. If, therefore, a warrantor violated the provisions of either § 2308 or § 2304 — for example, by disclaiming implied warranties or by limiting the duration of implied warranty coverage in a warranty purporting to be a “full” warranty — the warrantee could sue for the violation and recover damages for personal injury because the express exceptions to § 2311(b)(2) would remove such a suit from the reach of that section. See Denicola, The Magnuson-Moss Warranty Act: Making Consumer Product Warranty a Federal Case, 44 Fordham L.Rev. 273, 290, 292 (1975). Such a suit, however, would be an action under § 2310(d)(1) for failure “to comply with any obligation under this chapter”, because §§ 2308 and 2304 create substantive obligations. It would not be a suit “under a written warranty [or] implied warranty” within the meaning of § 2310(d)(1).
By contrast, where there has not been a violation of the substantive provisions of §§ 2308 or 2304, the exceptions to § 2311(b)(2) are inoperative and the express language of § 2311(b)(2) bars liability for personal injury. We therefore conclude that § 2311(b)(2) sets up a dichotomy between personal injury claims based on a breach of the substantive provisions of §§ 2308 and 2304, which are cognizable under the MMWA, and personal injury claims based only on a breach of warranty, which are not cognizable under the MMWA. Our conclusion is confirmed by the legislative history of the Act:
The disclaimer on the imposition of liability contained in section 111(b)(2)(A) [§ 2311(b)(2)(A) of 15 U.S.C.] does not operate to negate the provisions of section 108 [§ 2308 of 15 U.S.C.] since the imposition of liability language relates to the consequences flowing from the existence of a warranty or service contract.
S.Conf.Rep. No. 1408, 93d Cong., 2d Sess., reprinted in [1974] U.S.Code Cong. & Ad. News 7755, 7760. This passage impels the conclusion that the language of § 2311(b)(2)(A) prohibiting the imposition of liability for personal injury applies to claims “flowing from the existence of a warranty”, i.e., to claims based directly upon a breach of warranty (express or implied), as opposed to claims based upon a violation of the substantive provisions of the MMWA. Therefore, because § 2308 is a substantive provision, the passage concludes that the “disclaimer on the imposition of liability contained in [§ 2311(b)(2)(A)] does not operate to negate the provisions of [§ 2308]”.
Our conclusion that the MMWA does, not create a federal cause of action for personal injury damages based solely on a breach of warranty is buttressed by two additional considerations. First, one of the main purposes of the MMWA was to create effective remedies for an aggrieved consumer with a small claim for which a remedy might not otherwise exist. For example, the Senate Report noted that “[bjecause enforcement of the warranty through the courts is prohibitively expensive, there exists no currently available remedy for consumers to enforce warranty obligations.” S.Rep. No. 151, 93d Cong., 1st Sess. 7 (1973). Congress realized that the ultimate solution to these enforcement problems would not be found wholly within the overburdened judicial system. Accordingly, § 2310(a)(1) of the MMWA states that “Congress hereby declares it to be its policy to encourage warrantors to establish procedures whereby consumer disputes are fairly and expeditiously settled through informal dispute settlement mechanisms.” Section 2310(a)(3) requires that if a warrantor sets up an informal dispute resolution procedure that satisfies FTC rules, the warrantor may require that a consumer resort to such procedure before commencing a suit for relief.
Moreover, § 2310(d)(3)(B) allows the claims of consumers to be aggregated in a class action to satisfy the $50,000 amount-in-controversy requirement of that section. Each individual claim need be only $25. 15 U.S.C. § 2310(d)(3)(A) (1982). In the legislative history it was brought out, in discussing class actions under the Act, that § 2310(d) “is remedial in nature and is designed to facilitate relief which would otherwise not be available as a practical matter for individual consumers.” H.R.Rep. No. 1107, 93d Cong., 2d Sess., reprinted in [1974] U.S.Code Cong. & Ad.News 7702, 7724. The Act therefore creates a remedy for cases in which a large number of consumers have purchased an unsatisfactory product, but the price of the product is so small that it would not be practicable for an individual consumer to litigate for damages. Section 2310(d)(2) provides that consumers who prevail in actions under the MMWA may be allowed by the court to recover cost and expenses, including attorneys fees.
The legislative history of the Act, a close analysis of its language, and consideration of its objectives leads this Court inexorably to the conclusion that claims for personal injury damages are not the kind of claims for which a remedy would be otherwise unavailable. These claims are generally of sufficient size to make it practicable and reasonable to litigate them. Certainly this is true of those claims that would satisfy the $50,000 amount-in-controversy requirement of the MMWA. State courts provide an effective forum, and a plaintiff can usually have the case brought on a contingency fee basis. Congress therefore had no reason that we can ferret out for bringing personal injury claims into the federal courts other than through diversity jurisdiction. We conclude that our reading of § 2311(b)(2) is consistent with the overall purpose of the structure of remedial measures created by the Act.
The second consideration that supports our construction of § 2311(b)(2) is the rule that statutes conferring jurisdiction on federal courts are to be strictly construed, and doubts resolved against federal jurisdiction. See Phillips v. Osborne, 9 Cir.1968, 403 F.2d 826, 828; F & S Construction Co. v. Jensen, 10 Cir.1964, 337 F.2d 160, 161; Russell v. New Amsterdam Casualty Co., 8 Cir.1964, 325 F.2d 996, 998. The plaintiffs’ construction of the MMWA would allow virtually any state products liability action for personal injury damages not related to the workplace to be brought into federal court, subject only to the amount-in-controversy requirement. Absent a clear statement of intention from Congress, there is a presumption against a statutory construction that would significantly affect the federal-state balance. United States v. Bass, 1971, 404 U.S. 336, 349-50, 92 S.Ct. 515, 523, 30 L.Ed.2d 488, 497-98; Apex Hosiery Co. v. Leader, 1940, 310 U.S. 469, 513, 60 S.Ct. 982, 1002, 84 L.Ed. 1311, 1334. We refuse to read the jurisdictional provisions of the MMWA as broadly as the plaintiffs urge us, especially in the face of the express limiting language of § 2311(b)(2).
3. Summary.
We agree with the conclusion of the district court in Saf-T-Mate:
Section 2311(b)(2) states expressly what §§ 2304 and 2308 fairly imply: Congress was content to let the question of personal injury products liability remain a matter of state-law causes of action, except to the extent that certain substantive provisions in the Magnuson-Moss Act overrule contrary state laws relating to the warrantor’s ability to disclaim personal injury liability.
Gorman v. Saf-T-Mate, Inc., N.D.Ind.1981, 513 F.Supp. 1028, 1035. We hold that § 2311(b)(2) of the MMWA prohibits claims arising from personal injury based solely on a breach of warranty, express or implied. One may, however, recover personal injury damages under the MMWA where there has been a violation of the substantive provisions of § 2308 (prohibiting disclaimer of implied warranties), § 2304(a)(2) (prohibiting full warrantors from limiting the duration of implied warranty coverage) or § 2304(a)(3) (prohibiting full warrantors from excluding or limiting consequential damages unless such exclusion or limitation conspicuously appears on the face of the warranty).
III.
THE PLAINTIFFS HAVE NOT MET THE AMOUNT IN CONTROVERSY REQUIREMENT OF THE MMWA
A. State Law Determines Whether Punitive Damages are Available Under the MMWA
Section 2310(d)(3)(B) provides that no claim is cognizable under the MMWA unless the amount in controversy is at least $50,000. To determine whether the amount in controversy requirement is satisfied, we must look to the complaint. The amount stated in the complaint is itself dispositive of jurisdiction if the claim is apparently made in good faith, unless it appears to a legal certainty that the claim is really for less than the jurisdictional amount. E.g., St. Paul Mercury Indemnity Co. v. Red Cab Co., 1938, 303 U.S. 283, 288-89, 58 S.Ct. 586, 590, 82 L.Ed. 845, 848; Dassinger v. South Central Bell Telephone Co., 5 Cir.1974, 505 F.2d 672, 673-74.
The amended complaint in this case seeks the following damages: (1) $2,479.20 for past medical expenses of Juli and Jennifer Boelens; (2) an unspecified amount for alleged future medical expenses of Juli and Jennifer Boelens; (3) $600,000, $150,000, and $100,000, respectively, for Juli, Jennifer, and Sue Boelens for physical' pain, mental anguish, physical impairment, the loss of enjoyment and loss of quality of life, and increased risk of cancer; (4) $1,000,000 in punitive damages; (5) $15,-946.33 for the lost investment in the mobile home and for additional costs of alternative housing for the plaintiffs up to the time of trial; (6) $25,000 for the displacement of the plaintiffs from their home and the anxiety and inconvenience caused thereby; and (7) an unspecified amount of attorneys fees.
These claims for damages may be grouped for jurisdictional purposes into the following categories:
1. Damages for personal injury of $877,479.20 (items 1-3 and 6).
2. Economic loss damages of $15,946.33 (item 5).
3. Punitive damages of $1,000,000 (item 4).
4. Attorneys fees (item 7).
Damages for economic loss’ are clearly recoverable under the MMWA, and those damages may be used to satisfy the amount-in-controversy requirement. Because of our holding that personal injury damages for breach of warranty are not recoverable under the MMWA, these damages may not be counted toward satisfaction of the amount-in-controversy requirement. Nor may the claim for attorneys fees be used to satisfy the jurisdictional amount, because § 2310(d)(3) requires that the amount in controversy be calculated “exclusive of interests and costs”. Attorneys fees are “costs” within the meaning of § 2310(d)(3). Saval v. BL Ltd., 4 Cir. 1983, 710 F.2d 1027, 1032-33. The plaintiffs can satisfy the amount-in-controversy requirement of $50,000 only if their claim for punitive damages may be counted along with the claim for economic loss.
Punitive damages are recoverable under the MMWA for breach of warranty only if they may be recovered in a breach of warranty action brought under the governing state law. Saval v. BL Ltd., 4 Cir.1983, 710 F.2d 1027, 1033; Schaffer v. Chrysler Corp., N.D.Ind.1982, 544 F.Supp. 182, 184-85; Lieb v. American Motors Corp., S.D.N.Y.1982, 538 F.Supp. 127, 132-33; Novosel v. Northway Motor Car Corp., S.D.N.Y.1978, 460 F.Supp. 541, 545. The parties agree that the relevant state law in this case is that of Texas. We therefore must examine whether Texas law permits the recovery of punitive damages for breach of warranty.
B. Texas Law Does Not Permit Recovery of Punitive Damages For Breach of Warranty
Texas law follows the rule that “exemplary damages cannot be recovered for a simple breach of contract, where the breach is not accompanied by a tort, even though the breach is brought about capriciously and with malice.” A.L. Carter Lumber Co. v. Saide, 140 Tex. 523, 168 S.W.2d 629, 631 (1943). “Texas law is clear that exemplary damages cannot be awarded for a contract action.” Fredonia Broadcasting Corp. v. RCA Corp., 5 Cir. 1973, 481 F.2d 781, 804, cert. denied, 1978, 439 U.S. 859, 99 S.Ct. 177, 58 L.Ed.2d 167. “This case falls into the category of a suit for breach of contract, for which the proper redress is money judgment for actual damages, and for which exemplary damages are not authorized.” Graham v. Turner, 472 S.W.2d 831, 838 (Tex.Civ.App.1971). The rules that govern actions for breach of warranty are the same as those governing actions for breach of contract. Canon, U.S.A. v. Carson Map Co., 647 S.W.2d 321, 323 (Tex.App.1982); see Henderson v. Ford Motor Co., 547 S.W.2d 663, 669 (Tex.Civ. App.1977).
When, however, “a distinct, wilful tort is alleged and proved in connection with a suit upon a contract, one may recover punitive damages”. City Products Corp. v. Berman, 610 S.W.2d 446, 450 (Tex.1980). The plaintiffs argue that the jury’s finding that the defendants were grossly negligent for their failure to warn the plaintiffs about formaldehyde fumes would support an award under Texas law of punitive damages as a contemporaneous tort with the breach of an implied warranty. The plaintiffs conclude that their claim for punitive damages may therefore be used to satisfy the jurisdictional amount in controversy.
We do not agree. It is evident from the cases that Texas law awards punitive damages for the accompanying tort, not for the breach of warranty itself. To recover punitive damages, “an independent tort” must be separately pleaded and proved. Amoco Production Co. v. Alexander, 622 S.W.2d 563, 571 (Tex.1981); see Texas Power & Light Co. v. Barnhill, 639 S.W.2d 331, 334 (Tex.App.1982). Compare Canon, U.S.A. v. Carson Map Co., Inc., 647 S.W.2d 321, 323-24 (Tex.App.1982), holding that the defendant’s actions in breach of warranty “lacked the requisite distinct tort aspects necessary as a predicate for the award of exemplary damages”. “[T]he exemplary damages are allowed not for the breach but for the tort.” National Finance Co. v. Fregia, 78 S.W.2d 1081, 1082 (Tex.Civ.App. 1935). For example, in Koenning v. Manco Corp., 521 S.W.2d 691 (Tex.Civ.App. 1975), the plaintiff claimed that the defendants’ actions with respect to a natural gas lease constituted both a breach of contract and tortious fraud and gross negligence. The court held that, because the tort claim, which formed the basis upon which the plaintiff might recover exemplary damages, was barred by the statute of limitations, the only right left upon which the plaintiff could sue was that created by contract, and exemplary damages were therefore not available. Id. at 703.
The plaintiffs rely on Charalambous v. Jean Lafitte Corp., 652 S.W.2d 521 (Tex. App.1983), to support their contention that Texas law allows recovery of punitive damages for acts in breach of contract that “contemporaneously” constitute a tort. In Charalambous, the plaintiffs sued for breach of a commercial lease. The trial court granted the defendants’ motion to disregard the jury finding of exemplary damages on the ground that exemplary damages are not recoverable in actions for breach of ordinary commercial contracts. On appeal, the court reversed and awarded exemplary damages because it found that “the plaintiffs have established a constructive eviction which is a tort.” Id. at 526. It is clear, however, that the court awarded exemplary damages for the tort alone:
Under our holding that the eviction cause of action was in tort and that the unchallenged Special Issue No. 9 [relating to whether the defendants acted with conscious indifference to the rights of the plaintiffs in making the eviction] became the foundation for the award of exemplary damages, we sustain the plaintiffs’ first point to the effect that the trial court erred in disregarding the jury finding of exemplary damages.
Id. at 527 (emphasis added).
We conclude that Texas courts distinguish a contract or warranty action from a tort action and award punitive damages only for the tort, if it has been independently pleaded and proved. Texas law does not allow punitive damages for a breach of warranty per se. The plaintiffs in the case before us therefore may not count their claim for punitive damages toward satisfaction of the jurisdictional amount in controversy for their claim for breach of warranty. Although the plaintiffs have also pleaded an independent cause of action in tort — for which punitive damages are cognizable under Texas law— that cause of action is a pendent state law claim and cannot be used to confer jurisdiction.
IV.
CONCLUSION
The plaintiffs’ claim for damages for personal injury arising from breach of warranty is not cognizable under the MMWA. Because Texas law does not allow punitive damages for a breach of warranty per se and because attorneys fees are “costs” within the meaning of § 2310(d)(3), only the plaintiffs’ claim for economic loss may be counted toward satisfaction of the jurisdictional amount. Because that claim is for $15,946.33, the plaintiffs do not meet the $50,000 amount-in-controversy requirement. The only federal question raised by the plaintiffs was the cause of action for breach of warranty under the MMWA. That claim did not confer jurisdiction; the pendent state law claims therefore must be dismissed. “Even where substantial time and resources have been expended in the trial of an action in federal court, pendent state claims must be dismissed if it later is determined that there never existed a federal claim sufficient to invoke the jurisdiction of the federal court.” Crane Co. v. American Standard, Inc., 2 Cir.1979, 603 F.2d 244, 254.
The judgment of the district court is VACATED and the case is remanded with instructions to dismiss for lack of subject matter jurisdiction.
. The children’s pediatrician testified that he believed the girls’ problems had been caused by formaldehyde exposure. Three medical specialists retained by the defendants examined the plaintiffs or their medical records and found no evidence of any injury caused by exposure to formaldehyde fumes. Mrs. Boelens admitted that she had suffered each of her symptoms, and that the children had experienced some of their symptoms, before moving into the mobile home.
The Texas Department of Health tested the mobile home for formaldehyde fumes using a Draeger Tube pump and found formaldehyde in quantities of from seven to ten parts per million (ppm). Dr. James Beall, a toxicologist and member of the Federal Panel on Formaldehyde, testified that most people would find 0.10 ppm of formaldehyde to be uncomfortable in a living environment. There was evidence, however, that the tests were unreliable. The Draeger Tube had not been calibrated for about two years before the test, even though OSHA regulations require calibration immediately before the test. The Draeger Tube test is not certified by NIOSH and is no longer used by the Texas Department of Health.
Question: Were there cross appeals 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 case is before us on petition to review a decision and order of the National Labor Relations Board (the “Board”) filed by Cumberland Farms, Inc. (the “Company”), and the cross-application of the Board to enforce its order. The Board found that the Company violated §§ 8(a)(1) and (3) of the National Labor Relations Act (the “Act”), 29 U.S.C. §§ 158(a)(1) and (3) (1973), by engaging in coercive interrogation of its employees regarding their union activities, discharging employees because of these activities, and threatening to arrest a union agent while he distributed handbills on public property. Accordingly, the Board ordered the Company to reinstate the discharged employees with back pay, and to post notices admitting these violations and disclaiming future illegal action.
The Company challenges the findings of the Board, claiming that they are unsupported by substantial evidence on the record considered as a whole. We disagree and thus affirm the Board’s order.
THE FACTS
The record supports the Board’s finding of the following facts. The Company owns a dairy business that operates four plants, including one in Florence, New Jersey. In the summer of 1990, the United Food and Commercial Workers, Local 1360, United Food and Commercial Worker’s International, AFL-CIO (the “Union”) began organizing in this plant. Two employees, John Mariano and John Bartosh, distributed union authorization cards to the employees.
Shortly after they began the membership drive, their immediate supervisor, Company foreman John Messner, questioned them on several occasions regarding their actions and progress. Thomas Sweeney, the Company's Human Resources Director, also questioned Mariano about his union activities in the presence of Bartosh. Mariano and Bartosh admitted involvement with the drive.
On August 3, 1990, six days after Mariano and Bartosh began distributing Union authorization cards, the Company issued a letter to the employees urging them not to sign. At 5:30 p.m. of the same day, Emanuel Cavaco, the Company’s Manager of Dairy Operations, Robert Wood, the Florence plant manager, Sweeney, and plant engineer Allen Canney met with Mariano in a conference room and stated that they had received complaints about his distribution of union authorization cards. Mariano responded that he distributed them during non-working time. Cavaco contended, however, that given the number of complaints received, he must have engaged in these activities during working hours as well. The meeting became more confrontational when Cavaco accused Mariano of violating a Company no-solicitation rule. After further questioning Cavaco stated, “John, we took you out of the cooler; we put you in with the maintenance to learn something, and this is how you repay us. Do you have anything to say for yourself?” When Mariano said no, Cavaco suspended him indefinitely. Wood and Canney then escorted Mariano off the property and denied him access to his locker. Upon reaching the gate Wood said, “John, didn’t we just speak [about a salary increase] a ... week before this—and then you pull something like this? Do you have anything to say?”
Mariano left with the impression that the Company would further investigate. However, a week later, although no further inquiry was made, Mariano received a letter from the Company terminating him due to a “comprehensive investigation concerning the no-solicitation policies.”
On the day that Mariano was suspended, Cavaco, Sweeney, and Wood subjected Bar-tosh to a similar interrogation regarding alleged complaints against him for violation of the no-solicitation rule. Bartosh flatly denied these charges. Cavaco reminded Bartosh that the Company treated him favorably by moving him to the maintenance department and that he therefore “owed them.” Bartosh was then escorted off the Company premises after he locked his tools. When Bartosh returned to the plant to retrieve his tools, Wood fired him for having solicited on company property.
On August 16, various non-employee union organizers, including Mariano and Bar-tosh, distributed union handbills on the public highway near the Company’s plant entrance. Although the organizers were on public property, three Company security officers told one of them that they were on Company property and would be arrested if they did not leave. When they arrived, the Florence police officers indicated that, the handbillers were not violating the law.
STANDARD OF REVIEW
We uphold the Board’s findings of a violation as long as substantial evidence on the record as a whole supports them, even if we would have reached a different conclusion. 29 U.S.C. §§ 160(e) and (f).
ANALYSIS
I. Coercive Interrogation
Section 8(a)(1) of the Act protects employees from coercive interrogation regarding their union activities. NLRB v. Otis Hosp., 545 F.2d 252, 256 (1st Cir.1976). The existence of coercion is generally a factual issue and depends on the totality of the circumstances, id., including the setting of the interrogation and the status of the interrogators. P.S.C. Resources, Inc. v. NLRB, 576 F.2d 380, 383 (1st Cir.1978). An interrogation need not contain explicit threats to be coercive. NLRB v. Gogin, 575 F.2d 596, 600 (7th Cir.1978).
Given the circumstances of this case, we cannot conclude that the evidence does not support the Board’s findings regarding the coercive nature of the interrogations. A team of high level managers confronted Mariano and Bartosh shortly after they began their concerted activities, questioned them about their Union affiliation, and accused them of ingratitude. Moreover, during the confrontations, the managers denied Mariano and Bartosh access to the evidence against them, and in essence, denied them an opportunity to defend themselves. Accordingly, the Board reasonably found the interrogations coercive.
II. Interfering with Lawful Union Activities
An employer lacks a legitimate interest in interfering with union activities which occur away from the employer’s property. Threatening to call the police, in the presence of employees, to interfere with lawful union activity violates the Act. NLRB v. Schlegel Oklahoma, Inc., 644 F.2d 842, 843 (10th Cir.1981). In the present case, Company security officers threatened to have the union organizers arrested in front of Mariano and Bartosh, who as unfair labor practice dischargees, continued to retain employee status under the Act, see 29 U.S.C. § 152(3). Accordingly, the Board correctly concluded that the threat violated Section 8(a)(1) of the Act.
III. Discharge
When an employer discharges an employee for supporting a union, he violates the Act, 29 U.S.C. § 158(a)(3), unless he proves that he would have taken the same action in the absence of the employee’s union activities. NLRB v. Amber Delivery Serv., Inc., 651 F.2d 57, 68-69 (1st Cir.1981). The employer fails to meet this burden, however, if the proposed reason for discharge is shown to be a mere pretext to disguise discrimination. NLRB v. Pilgrim Foods, Inc., 591 F.2d 110, 118 (1st Cir.1979).
In reaching its determination on motive, the Board may consider the timing of the discharge, id. at 117, any differences in the application of disciplinary rules, NLRB v. S.E. Nichols, Inc., 862 F.2d 952, 959 (2d Cir.1988), cert. denied, 490 U.S. 1108, 109 S.Ct. 3162, 104 L.Ed.2d 1025 (1989), the procedures used for discharge, NLRB v. American Spring Bed Mfg. Co., 670 F.2d 1236, 1245 (1st Cir.1982), the investigation of the purported reasons for the discharge, Sioux Products, Inc. v. NLRB, 684 F.2d 1251, 1259 (7th Cir.1982), and the purported justifications for the ultimate actions, American Spring Bed Mfg. Co., 670 F.2d at 1245.
We conclude that substantial evidence on the record as a whole supports the Board’s findings regarding the discharges of Mariano and Bartosh. The Company admits that it discharged the employees for distributing union authorization cards. It argues, however, that by distributing those cards, Mariano and Bartosh were soliciting, and that the no-solicitation rule therefore justified the discharges.
We conclude, as did the Board, that the Company’s reliance on the no-solicitation rule was a pretext to justify discharges for engaging in union activity. At the time of the discharges, the Company knew that Mariano and Bartosh were the in-plant leaders of the union’s organizational effort. The Company then coercively interrogated them and then discharged them based solely upon a cursory investigation, affording them no opportunity to defend themselves. Moreover, the Company’s employees were generally unaware of the no-solicitation rule, much less its enforcement. Indeed, Mariano and Bartosh were the only employees that the Company ever disciplined for alleged violations of the no-solicitation rule. Accordingly, the Board reasonably determined that the no-solicitation rule was merely a pretextual justification for an illegal discharge.
In a final attempt to salvage the validity of the discharges, the Company claimed that Mariano and Bartosh engaged in time card irregularities. However, the Company failed to even mention this serious accusation at the time of the employees’ discharges. Thus, the Board reasonably afforded no credit to this argument.
CONCLUSION
We have considered all other allegations made by the Company and conclude that they lack merit. The Board’s judgment was rational and effectively promotes the goals of the Act. As such, we affirm the Board’s order.
The petition for review is denied and the Board’s request for enforcement of its order is granted.
Costs to the Board.
. The Board’s order is reported at Cumberland Farms, Inc., 307 N.L.R.B. 231 (1992).
. On one occasion, Messner said, "I heard you guys are giving out union cards. I'm all for the union; how’s the guys responding? Are you getting a lot signed?” On another occasion, he said: "How are you guys doing? Have you got a lot of cards signed? How’s the guys responding? I’m all for the union.”
.Sweeney asked, "Hey, John, ... anything new I should know about around here, like the union?”
Question: Were there cross appeals 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.
Judgment affirmed on the opinion below, 52 F.Supp. 665.
Question: Were there cross appeals 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
Before GIBBONS, Chief Judge, and WEIS and GREENBERG, Circuit Judges.
GREENBERG, Circuit Judge.
This matter is on appeal from an order filed in the district court on June 30, 1987 dismissing this action with prejudice and granting motions by defendants for sanctions in the form of attorney’s fees against plaintiffs’ attorneys under Fed.R.Civ.P. 11 and Fed.R.Civ.P. 37.
The complaint was filed on May 19, 1986 by the firm of Chamlin, Schottland, Rosen, Cavanagh & Uliano on behalf of plaintiffs Tedd Bartels, Stanley Brodowski and Antone Carvalho, all members of Sports Arena Employees Local 137, against that union and two of its officers, Howard Wise and William Eggeling, and against the New Jersey Sports & Exposition Authority. In the first count plaintiffs alleged that the union was their bargaining representative with the Authority as successor to the Monmouth Park Jockey Club for the Monmouth Park Race Track. The count further set forth that as a result of a breach of the collective bargaining agreement, on or about May 7, 1984 plaintiffs were denied employment at the Park and that the union breached its duty to represent plaintiffs fairly and refused to process a grievance filed by Bartels regarding the work denial. As a result plaintiffs lost several months employment in the summer of 1984 and lost income and other benefits.
In their second count plaintiffs alleged that on or about May 24, 1985 they were again denied employment at Monmouth Park in direct violation of their rights by defendants’ breach of the collective bargaining agreement. They further asserted that the union failed to represent them properly and refused to take Bartel’s grievance to arbitration. In the third count plaintiffs charged that from May 5,1984 to May 7, 1984 and in May 1985 Wise and Eggeling willfully and maliciously conspired with agents of Monmouth Park to ignore the collective bargaining agreement, breached their obligations as union officers and tortiously interfered with plaintiffs’ contractual rights.
Following the filing of separate answers, one on behalf of the union and its officers, and the other by the Authority, the parties engaged in rather contentious discovery, the details of which need not be recounted. Then on December 24, 1986 plaintiffs filed a motion in the district court seeking an order dismissing the action without prejudice as to the union and its officers and with prejudice as to the Authority. In an affidavit attached to the motion a member of the Chamlin firm indicated that the orders were being sought as there were proof problems in the liability theories being asserted for breach of the duty of fair representation and that only the tortious interference with contractual rights claims which would be more properly advanced in state court merited pursuit. Thereafter the Authority filed a motion for costs and attorney’s fees under Fed.R.Civ.P. 11 and Fed.R.Civ.P. 37 and the union and its officers filed a motion to dismiss the complaint with prejudice and sought sanctions under Fed.R.Civ.P. 11.
Oral argument was held on the motions on February 2, 1987 following which the district judge ruled that the action was barred by the six months period of limitations set forth in DelCostello v. International Brotherhood of Teamsters, 462 U.S. 151, 103 S.Ct. 2281, 76 L.Ed.2d 476 (1983), for bringing actions against employers and unions for breach of a collective bargaining agreement by the employer and breach by the union of its duty of fair representation of the employee. The judge pointed out that the period of limitations runs from when it was apparent or should have been apparent that no action would be taken and that the plaintiffs should have known that the union was not going to take any action on their behalf no later than on May 1984 for the first event and May 1985 for the second. Thus, the first two counts were untimely as the complaint was filed May 19, 1986. The third count was barred as the judge held that the exclusive remedy for the wrongs alleged was the action for breach of the duty of fair representation. Accordingly, the judge ruled that the entire complaint would be dismissed with prejudice. The judge then said that he would enter an order for sanctions after the submission of affidavits but entered no order for dismissal.
Following the submission of various documents, including a certification of a member of the Chamlin firm in which he requested that if sanctions were to be imposed they be “awarded against our firm, and not against our clients” and in which he said “[fjrankly, I missed the six-month statute of limitations as it applied to this case, and as created by the decision of the United States Supreme Court in the Del-Costello case,” the judge filed a letter opinion on June 30, 1987 awarding costs and counsel fees of $3,503 to the union and $4,000 to the Authority. On the same day an order was filed denying plaintiffs’ motion for a voluntary dismissal without prejudice, granting defendants’ motions for dismissal with prejudice and requiring that plaintiffs’ attorneys pay the foregoing awards. On July 28, 1987 plaintiffs appealed from the order of June 30, 1987. The Chamlin firm did not join in the appeal and has not separately appealed.
Subsequently, the attorney for the Authority addressed a letter to the Chamlin firm suggesting that this court did not have jurisdiction as the appeal on the merits was untimely and plaintiffs lacked standing to appeal from an award of fees against their attorneys as they were not aggrieved by the order. A copy of the letter was sent to the Clerk of the Court. While it would have been a better procedure for the Authority to move to dismiss the appeal rather than simply writing the letter, inasmuch as the matters raised were jurisdictional we considered them and directed the parties to address letters to the court regarding these issues. After this direction the appeal as to the Authority was dismissed by stipulation; however jurisdictional questions remain inasmuch as the appeal continues against the union and its officers.
We deal first with the timeliness of the appeal on the merits. No order was entered on the court’s oral decision to dismiss the action on February 13, 1987. Rather the judge indicated that there would be a further decision on sanctions and the docket sheet in the district court indicated that an order was to be submitted. In fact, the order entered on June 30, 1987 reflected both the decision on the merits and the subsequent determination regarding sanctions. Inasmuch as the court on February 13, 1987 made it clear that further action was contemplated before a judgment was actually entered, we calculate the time for appeal on all issues from June 30,1987, the date that the order was entered. See Fed.R.Civ.P. 58; Lone Star Motor Import, Inc. v. Citroen Cars Corp., 288 F.2d 69, 73 n. 5 (5th Cir.1961); 6A Moore’s Federal Practice ¶ 58.05[2] (1986). Thus the appeal is timely. Fed.R.App.P. 4(a)(1).
Plaintiffs advance two contentions on appeal. They assert that the sanctions should not have been entered against their attorneys and argue that the complaint was timely. They do not suggest that the judge erred in holding that their only possible cause of action was for breach of the duty of fair representation and thus we will not consider that issue.
We will not review the imposition of sanctions as plaintiffs have no standing to appeal from the order providing for them as they were imposed only against the Chamlin firm. See Marshak v. Tonetti, 813 F.2d 13, 21-22 (1st Cir.1987). Further, it is clear that while there are variables as to when an attorney against whom a sanction has been imposed may do so, depending upon whether the underlying action is pending and whether the attorney is still of record in it, there is no doubt at all but that at some point an attorney subjected to a sanction may appeal. See Glaser v. Cincinnati Milacron, Inc., 808 F.2d 285 (3d Cir.1986); Eavenson, Auchmuty & Greenwald v. Holtzman, 775 F.2d 535 (3d Cir.1985); Eastern Maico Distributors v. Maico-Fahrzeugfabrik, 658 F.2d 944 (3d Cir.1981). See also 9 Moore’s Federal Practice ¶ 203.06 (1987). Accordingly, to the extent that plaintiffs appeal from the order for sanctions the appeal will be dismissed.
We do, however, consider whether the judge correctly held that the action was barred by the statute of limitations. In their brief plaintiffs correctly state that the “claim can be characterized as a hybrid § 301/fair representation claim.” DelCos-tello held that a hybrid claim under section 301 of the Labor Management Relations Act, 29 U.S.C. § 185, against the employer for breach of the collective bargaining agreement and against a union for breach of the duty of fair representation is subject to the six months limitation period in section 10(b) of the National Labor Relations Act, 29 U.S.C. § 160(b), for bringing unfair labor practice charges before the National Labor Relations Board. Thus, this action is prima facie barred.
Plaintiffs seek to circumvent DelCostello in two ways. First, they point out that the N.L.R.B. will not assert its jurisdiction under section 8 of the National Labor Relations Act, dealing with unfair labor practices, 29 U.S.C. § 158, to consider charges of unfair labor practices in the horseracing industry. See 29 C.F.R. § 103.3 (1987). Second, they argue that the complaint was filed within six months of the actions’ accrual as their complaint was of a continuing nature as demonstrated by the circumstance that even after it was filed the union allegedly continued to act wrongfully toward them.
We find no merit in either of these contentions. There is no suggestion in Del- Costello that the Court’s decision was in any way tied to a consideration of whether the N.L.R.B. would exercise its jurisdiction over an unfair labor practice charge involving the subject matter of the complaint. Rather the Court looked to the similarity in the nature of claims that a union breached its duty of fair representation and engaged in unfair labor practices. 462 U.S. at 169-70, 103 S.Ct. at 2293-94. Further, DelCostello was based in part on the Court’s belief that adoption of a six months statute of limitations properly balanced the competing interests in labor management relations, the promotion of stable bargaining relationships and the finality of private settlements, against the employee’s desire to set aside what he considers was an unfair settlement under the collective bargaining system. DelCostello, 462 U.S. at 171, 103 S.Ct. at 2294. The importance of this policy is in no way lessened by the circumstance that the N.L.R.B. will not take jurisdiction over the dispute.
We see no merit to plaintiffs’ contention that because of the union’s allegedly ongoing wrongdoing, the complaint was timely. Regardless of what the union may or may not have done within the six months before the complaint was filed, the allegations in the complaint are clearly confined to events ending about one year before it was filed. Thus we have no occasion to consider whether claims otherwise barred continue to be viable if a breach of the duty of fair representations continues to within six months of the filing of a complaint.
In view of the aforesaid, insofar as plaintiffs appeal from the imposition of sanctions in the order of June 30, 1987, their appeal will be dismissed. To the extent that they otherwise appeal the judgment will be affirmed.
. It should be noted that when plaintiffs first sought representation from the Chamlin firm the six months limitation period had already expired.
. The order may have imperfectly reflected the motions filed as it appears that the authority did not move to dismiss. Thus it was apparently the judge’s intention to grant plaintiffs’ motion to dismiss as to the Authority with prejudice. In any event it is clear that the action was dismissed with prejudice as to all defendants. Plaintiffs do not contend that to the extent that the dismissal was predicated on the statute of limitations it should have been without prejudice on a theory that the court did not reach the merits of the case but merely held that a remedy was barred. See Osmundsen v. Todd Pacific Shipyard, 755 F.2d 730, 733 (9th Cir.1985). Rather they argue that the complaint was timely. See also Fed.R.Civ.P. 41(b).
. In this regard we note that as all proceedings in the district court were terminated by the order of June 30, 1987 which imposed the sanctions, there is no doubt that when plaintiffs appealed, the Chamlin firm could also have appealed.
. In view of this disposition we have not set forth the reasons for the court's imposition of sanctions.
.In fact Bartels did make a charge to the N.L.R. B. and was advised by an N.L.R.B. attorney by letter of February 19, 1986 that the Board "has determined that it will not assert its jurisdiction in proceedings under Section 8 of the Act which involve the horseracing industry."
Question: Were there cross appeals 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
GIBBONS, Circuit Judge.
I. INTRODUCTION
We have before us appeals and cross-appeals from a final judgment entered in a private antitrust case. The following determinations in the district court are being challenged: (1) the finding of a violation of § 7 of the Clayton Act, 15 U.S.C. § 18; (2) the correctness of the trial judge’s calculation of attorney fees and costs; and (3) the propriety of the trial judge’s entry of a divestiture order in a private antitrust case.
The complaint in this complicated litigation was filed on June 14, 1966 by Treadway Companies, Inc. (then known as National Bowl-O-Mat Corp.) and ten wholly-owned subsidiaries through which it operated bowling centers throughout the United States. The plaintiffs charged Brunswick Corporation (Brunswick), a manufacturer and distributor of bowling equipment, with: (1) entering into resale price maintenance contracts in violation of § 1 of the Sherman Act, 15 U.S.C. § 1 (First Claim); (2) monopolizing and attempting to monopolize the business of operating bowling centers in various markets in which Treadway operated competing centers, thus violating § 2 of the Sherman Act, 15 U.S.C. § 2 (Second Claim); and (3) acquiring and operating bowling centers in the Poughkeepsie, New York, Pueblo, Colorado, and Paramus, New Jersey market areas which had the effect of substantially lessening competition or tending to create a monopoly in violation of § 7 of the Clayton Act, 15 U.S.C. § 18 (Third Claim). During a pre-trial conference held on March 6, 1973, the Sherman Act § 1 claim was abandoned. The § 2 Sherman Act claim and the § 7 Clayton Act claim went to trial. The jury returned a verdict in Brunswick’s favor on the Sherman Act claim. No appeal has been taken from this determination. However, the jury found in favor of three of the plaintiffs — Pueblo Bowl-O-Mat, Inc., Holiday Bowl-O-Mat, Inc., and Bowl-O-Mat Para-mus Operations — on the § 7 Clayton Act claim. Damages were awarded in the following amounts:
(1) Pueblo Bowl-O-Mat, Inc., Pueblo, Colorado $ 964,830
(2) Holiday Bowl-O-Mat, Inc., Poughkeepsie, New York $ 298,800
(3) Bowl-O-Mat Paramus Operations, Paramus, New Jersey $1,094,400
Pursuant to § 4 of the Clayton Act, 15 U.S.C. § 15, the district court trebled each of these awards, and on May 31, 1973 entered judgment on the damage claims for $7,074,090. As a result of Brunswick’s post-trial motions, which were in all other respects denied, the district court granted a new trial as to Pueblo Bowl-O-Mat, Inc., unless Pueblo consented to a remittitur of $499,050. Treadway Cos., Inc. v. Brunswick Corp., 364 F.Supp. 316, 326 (D.N.J.1973) (deeision on post-trial motions). Pueblo did consent, and on October 5, 1973 an order was entered reducing Pueblo’s treble damage recovery to $2,395,440. Thus the total damage award was $6,575,040. The district court also considered plaintiffs’ application for an award of costs and attorney fees. On April 2, 1974 judgment was entered in the district court awarding $428,468 as attorney fees, and $18,509.32 as costs. On September 24, 1974, after the appeals both by plaintiffs and Brunswick from this award were dismissed by this court, the district court entered an order pursuant to Rule 54(b), Fed.R.Civ.P. directing the following: (1) that the May 31, 1973 judgment, and the October 5, 1973 and April 2, 1974 orders, be entered as final; (2) that the entries be made nunc pro tunc as of their original dates for the purpose of fixing the time from which interest at the legal rate would accrue; (3) that the entries be made as of September 24, 1974 for the purpose of taking any appeals. The district court retained jurisdiction over the claim for equitable relief pursuant to § 16 of the Clayton Act, 15 U.S.C. § 26.
Brunswick appeals from the damage award of $6,575,040; from the award of attorney fees and costs; and from the district court’s decision awarding interest from the time of the original judgment and order rather than from the time of the Rule 54(b) certification. Brunswick does not dispute the amount of the award of attorney fees and costs assuming the jury verdict is allowed to stand. It contends, howev.er, that if the verdict is set aside the award of fees and costs must also be set aside. Treadway appeals from the calculation of the fee award contending that it was too low.
On November 15, 1974, the district court filed an opinion, and on January 9, 1975 entered a final judgment, pursuant to § 16 of the Clayton Act, enjoining Brunswick from acquiring any existing bowling centers in the Pueblo, Para-mus and Poughkeepsie/Wappingers Falls areas and ordering divestiture of centers previously acquired in those areas. Brunswick filed an appeal from this judgment. On February 14, 1975 this court entered an order directing that Brunswick’s appeal from the injunction and divestiture judgment (No. 75-1152) be consolidated with Brunswick’s other appeal (No. 74^-2127) and with plaintiffs’ cross-appeal (No. 74-2128).
Brunswick’s contentions, listed below in the order in which they shall be considered, present these questions:
(A) With respect to the jury verdict:
(1) Does the record establish a prima facie violation of § 7 of the Clayton Act by Brunswick?
(2) Are treble damages pursuant to § 4 of the Clayton Act recoverable by litigants in the plaintiffs’ positions solely for a violation of § 7 of the Clayton Act?
(3) Did the court properly instruct the jury as to the elements of a Clayton Act § 7 case?
(4) Was the jury properly instructed on § 4 damages?
(B) With respect to the injunction and divestiture order:
(1) Was there evidence in the record sufficient to support the court’s finding of a Clayton Act § 7 violation?
(2) Does § 16 of the Clayton Act authorize the entry of a divestiture order, at the insistence of a private litigant, to redress a violation of Clayton Act § 7?
Plaintiffs’ main contention on their cross-appeal is that the criteria for fee awards laid down in Lindy Brothers Builders, Inc. v. American Radiator & Standard Sanitary Corp., 487 F.2d 161 (3d Cir. 1973) and reiterated in Merola v. Atlantic Richfield Co., 493 F.2d 292 (3d Cir. 1974), while properly applied by the district court, have no place in fully litigated antitrust actions. Rather, it is argued that these criteria should be applied only in class action settlements.
Virtually all of the issues before us are of first impression in this circuit and many are of first impression nationally. The antitrust questions arise because of the unique interaction among the Clayton Act § 7 which proscribes acquisitions having an effect which “may substantially... lessen competition, or. tend to create a monopoly” and the private remedy provisions of § 4 and § 16 of the same act. A statutory prohibition aimed neither at existing conspiracies nor restraints, nor at existing or attempted monopolizations, but at incipient tendencies, presents problems of private enforcement not frequently encountered. Indeed this is perhaps the first case in which an award of money damages has been made to a private plaintiff for an alleged violation of § 7. Thus the district court was exploring largely virgin antitrust territory. Certain errors were committed in this new territory which warrant a new trial. Reconsideration of the fee award will be required as well.
II. THE INDUSTRY BACKGROUND
Brunswick is one of the two largest manufacturers, distributors and financiers of bowling alley equipment in the United States. Its chief competitor is the American Machine and Foundry Company (AMF), a company about equal in size. Prior to 1964 Brunswick supplied the bowling recreation industry with large quantities of equipment such as lanes and automatic pinsetters. Since this equipment required a substantial capital investment Brunswick also financed the equipment on extended secured credit terms. In the early 1960’s, however, the bowling recreation industry went into a sharp decline. The plaintiffs attribute this decline to overexpansion in the industry. They blame Brunswick for this overexpansion, claiming that it financed too many centers, and in particular, that it saturated certain areas with facilities so as to make competitive success impossible.
Simultaneously with the decline in the industry there occurred a collection problem. Defaults on equipment loans became commonplace. Numerous bowling center proprietors were in such hopeless financial straits that it became clear that there was no reasonable prospect of payment. Exercising its chattel security rights, Brunswick made numerous repossessions, and attempted to dispose of the repossessed equipment at discount prices. Such sales, however, did not keep pace with repossessions. Brunswick’s efforts to lease repossessed lanes to new independent proprietors proved unsuccessful. Over the years Brunswick had borrowed close to $300 million in order to finance the manufacture and sale of bowling equipment. By late 1964 its receivables were in excess of $400 million of which more than $100 million dollars were over 90 days delinquent. Brunswick was clearly in serious financial difficulty.
In an effort to reverse its deteriorating condition, Brunswick’s management decided on a plan. In those cases in which attempts to collect receivables failed, it would repossess the equipment and attempt to sell it in place to third parties. If no sale could be effected Brunswick would then consider operating the failing centers itself if there appeared to be any reasonable prospect that a positive cash flow would result.
In January, 1965 Brunswick formed a Bowling Center Operations Division (BCOD) charged with the responsibility of evaluating centers and operating those which could produce a positive cash flow. This development was disclosed by Brunswick’s president to a meeting of the Bowling Proprietors Association, a retail level trade group, in 1965.
Between 1965 and 1972 BCOD evaluated over 600 defaulting centers for possible operation, commenced operating 222 of these, disposed of 11 to third parties, and closed 43 which proved unable to develop a positive cash flow. The highest number operated by Brunswick at any one time was 169. The largest number of centers taken over by Brunswick for operation in any year was 124 in 1965. Of these, centers in three areas are the subject of this appeal. They are Dutchess Lanes in Poughkeepsie, New York, Belmont Lanes in Pueblo, Colorado, and Fair Lawn Lanes, Interstate Lanes, Ten-Pin-on-the-Mall and Lodi Lanes in or near Paramus, New Jersey.
In each of the local retail market areas a Treadway subsidiary operated a bowling center competing for retail customers with the bowling centers taken over by Brunswick. The parties concede that each of these areas, Poughkeepsie, Pueblo, and Paramus, is a separate retail market for recreational bowling. Tread-way does not manufacture or distribute bowling equipment or supplies.
The method used by Brunswick in taking over the operation of the six centers in issue was not identical. For our purposes, however, we can generalize. The acquisitions in question were by a major manufacturer of bowling equipment and supplies who took over bowling centers by means of stock or asset purchases. These newly-acquired facilities competed horizontally at the retail level with Treadway facilities and were kept in business by Brunswick when they otherwise would have failed.
We can conclude our background survey of the bowling industry by noting that Brunswick now operates the largest number of retail bowling centers in the United States — 167. The next largest retail bowling chain operates only 32 centers, and the rest of the retail market is fragmented among smaller chains and individual operators. It is conceded that the relevant market is local, however, not national. Brunswick’s net assets far exceed the net assets of any other chain of bowling centers and it enjoys those additional advantages which accrue from being the manufacturer of the equipment used in its centers.
III. SUMMARY OF PLAINTIFFS’ § 7 THEORY
This case involves a “deep pocket” manufacturer’s decision to integrate vertically forward into local re;ail markets and to compete with smaller competitors having shallower pockets. The jury verdict in favor of Brunswick on the Sherman Act § 2 claim establishes that this forward integration was not done in an attempt to monopolize the local retail bowling market. Plaintiffs contend, however, that the entry of such a competitor into these markets had the potential for lessening horizontal competition and that such potential lessening of competition suffices to establish a § 7 violation. It is therefore argued that Brunswick’s presence in these markets was illegal, and that plaintiffs suffered damages within the meaning of § 4. These damages were suffered, it is suggested, because in the absence of that illegal presence the acquired centers would have gone out of business thus effectively transferring customers to Treadway’s centers.
IV. WAS A PRIMA FACIE VIOLATION OF § 7 ESTABLISHED?
A. The potential effect on competition.
This case does not present the classic § 7 problem of a merger with, or a purchase of assets from, a competitor on the same competitive level. Nevertheless, Brunswick’s acquisitions had two aspects of possible significance for § 7 purposes. First, Brunswick was a major manufacturer integrating vertically forward into its customer market. Second, it was a giant entering local markets inhabited by pygmies. While both factors may have significance for purposes of § 7, in this case the first factor standing alone is not significant.
A major vice of vertical combinations is market foreclosure to competing manufacturers. See Brown Shoe Co. v. United States, 370 U.S. 294, 323-24, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962). But in the bowling industry there is only insubstantial continuous distribution from manufacturer to retailer. The principal products of the manufacturing end of the industry — pinsetters and alleys — are one-shot affairs, and the sales of these products by Brunswick had already taken place long before their reacquisition. It cannot be said, and it has not been shown, that AMF suffered or was likely to suffer any market foreclosure as a result of those reacquisitions. Moreover, Treadway is neither an actual nor a potential competitor at the manufacturing level, and hence is not a potential market foreclosure victim. Thus it probably lacks standing to assert the manufacturer’s market foreclosure issue. In any event, manufacturer’s market foreclosure is not the theory Treadway advances.
The second characteristic of the acquisition, however, is its potential effect on retail level competition. The entry of a giant into a market of pygmies certainly suggests the possibility of a lessening of horizontal retail competition. This is because such a new entrant has greater ease of entry into the market, can accomplish cost-savings by investing in new equipment, can resort to low or below cost sales to sustain itself against competition for a longer period, and can obtain more favorable credit terms. There is evidence from which the jury could have found that several of these factors applied to Brunswick’s acquisitions in the Poughkeepsie, Paramus and Pueblo markets. Treadway urges that this evidence suffices to sustain the verdict that there was a § 7 violation. Brunswick, on the other hand, argues that there must be a showing of actual lessening of competition before the jury can find such a violation. We think, however, that Brunswick’s argument confuses the showing which must be made to sustain recovery under § 4 with that which must be made to show a § 7 violation..
Three § 7 cases suggest that there was sufficient evidence here to go to the jury on the theory that Brunswick’s entry into a local retail market both created the possibility of substantially lessening horizontal retail competition and tended toward the creation of a retail monopoly. Although these cases arose in three different merger contexts, they all involved the potential effect of mergers on horizontal competition.
Brown Shoe Co. v. United States, supra, involved a merger in which a major shoe manufacturer and retailer (Brown) acquired another retailer (Kinney). Thus, the merger had both vertical and horizontal aspects. First, the Court held that the vertical aspect of the merger— Brown’s acquisition of a retailer — had potential market foreclosing effects for competing manufacturers and thus violated § 7. Second, the Court held that the Brown-Kinney combination had a potential for substantially lessening competition at the retail level. This conclusion was reached even though Brown and Kinney, in combination, controlled but a small percentage of the retail shoe market, and even though Brown and Kinney had competed in only a small fraction of the geographic markets before the merger. It is true that since they did compete at retail, at least in a fraction of the geographic markets, the combination fits the classic § 7 pattern of a merger of competitors at the same level. But the significance of Brown Shoe lies less in that fact than in the Court’s analysis of the probable effect of the merger on horizontal retail competition. Brown and Kinney in combination controlled only a small percentage of the retail shoe market. Yet, the Court declined to look at the mere quantitative substantiality of the resulting concentration. Instead it looked at qualitative substantiality. Among the qualitative factors which it mentioned were: (1) the fragmented nature of the retail industry; (2) the ability of a strong national chain to insulate selected outlets from the vagaries of local competition in selected locations; (3) the style leadership of the large chains and its effect on competitors’ inventories; (4) the ability of an integrated manufacturer-retailer to eliminate wholesalers by increasing the volume of its retail purchases from its manufacturing division; and (5) the historical tendency toward concentration in the industry. 370 U.S. at 344-45, 82 S.Ct. 1502. Finally, the court perceived in § 7 a congressional intention to protect small competitors even at the short run expense of consumers. It wrote:
“[EJxpansion is not rendered unlawful by the mere fact that small independent stores may be adversely affected. It is competition, not competitors, which the- Act protects. But we cannot fail to recognize Congress’ desire to promote competition through the protection of viable, small, locally owned businesses. Congress appreciated that occasional higher costs and prices might result from the maintenance of fragmented industries and markets. It resolved these competing considerations in favor of decentralization. We must give effect to that decision.” 370 U.S. at 344, 82 S.Ct. at 1534.
Of the major qualitative substantiality factors referred to in Brown Shoe there is evidence in this case tending to show that at least four may have been operative in the retail bowling recreation industry: a fragmented industry, the ability of a strong national chain to insulate itself from competitive vagaries in a local market, Brunswick’s promotional (style) leadership, and, after the debacle of the early 1960’s, the tendency toward concentration. This is not to suggest that the evidence on any such factor was undisputed.
The qualitative substantiality approach of Brown Shoe pointed out rather clearly that although Brown and Kinney were retail competitors this factor was not of crucial significance for purposes of § 7. Many of the factors could result from the vertical integration of a pygmy into a giant in any wholesale or retail market. Shortly after Brown Shoe Chief Justice (then Judge) Burger so read the case. Reynolds Metals Co. v. FTC, 114 U.S.App.D.C. 2, 309 F.2d 223 (1962). There a manufacturer of aluminum, Reynolds, acquired its customer, Arrow, a converter of aluminum into florist foil. The florist foil conversion industry was a line of commerce which consisted of approximately eight competitors who sold to 700 wholesale florist outlets. The District of Columbia Circuit refused to set aside an FTC order requiring divestiture. The court held, on the authority of Brown Shoe, that Arrow’s assimilation into Reynolds’ enormous capital structure and resources gave it an immediate advantage over its competitors. This advantage might have had the effect of substantially lessening competition or might have tended to create a monopoly.
In 1967 the Supreme Court made explicit what had been implicit in Brown Shoe — that a merger or acquisition fell within § 7 even though the acquiring corporation and the acquired one were not competitors and even though the transaction did not involve potential market foreclosure of suppliers. In FTC v. Procter & Gamble Co., 386 U.S. 568, 87 S.Ct. 1224, 18 L.Ed.2d 303 (1967), it affirmed an FTC determination that Procter & Gamble’s acquisition of Clorox Chemical Company in a “product extension” merger violated § 7. Horizontal competition in the household bleach market was threatened, the Court concluded, because Clorox, already a dominant force in that market, would have the benefit of Procter & Gamble’s advertising discounts, retailing distribution network, and deep pocket. New entrants into the bleach market might be discouraged, active competition might be inhibited by fear of retaliation from so strong a force, below cost sales might be financed by Procter & Gamble’s deep pocket.
The marketing of household bleach is, of course, only remotely comparable to the marketing of recreational bowling. But the Court’s analysis in Procter & Gamble shows that Chief Justice Burger’s reading of Brown Shoe was correct. In some industries the acquisition of a competitor by a deep pocket parent can have sufficient potential to harm horizontal competitors so as to violate § 7. There was sufficient evidence of such potential here to submit the case to the jury on the issue of effect on competitors.
B. The “in commerce” requirement.
Section 7 applies when a corporation “engaged in commerce” acquires the stock or assets of “another corporation engaged also in commerce.” At the time this case was tried, the Third Circuit was committed to the proposition that the Clayton Act § 7, like §§ 1 and 2 of the Sherman Act, represented an exercise of Congress’ full powers under the commerce clause. In Transamerica Corp. v. Board of Governors, 206 F.2d 163, 166 (3d Cir.), cert. denied, 346 U.S. 901, 74 S.Ct. 225, 98 L.Ed. 401 (1953), Judge Maris wrote that Congress, in enacting § 7, intended “to exercise its power under the commerce clause of the Constitution to the fullest extent.”
Had the district court been possessed of perfect foresight, it would have foreseen a major development in § 7 law that was just over the horizon. In United States v. American Building Maintenance Industries, 422 U.S. 271, 95 S.Ct. 2150, 45 L.Ed.2d 177 (1975), the Supreme Court considered the jurisdictional reach of § 7. It concluded that unlike §§ 1 and 2 of the Sherman Act, § 7 did not encompass the whole of the commerce power. Effectively, Transamerica Corp. v. Board of Governors, supra, had been overruled. The Supreme Court wrote:
“In sum, neither the legislative history nor the remedial purpose of § 7 of the Clayton Act, as amended and re-enacted in 1950, supports an expansion of the scope of § 7 beyond that defined by its express language. Accordingly, we hold that the phrase ‘engaged in commerce’ as used in § 7 of the Clayton Act means engaged in the flow of interstate commerce, and was not intended to reach all corporations engaged in activities subject to the federal commerce power.” 422 U.S. at 283, 95 S.Ct. at 2157.
Applying this new standard to the record before us is a problem of no little difficulty. In fact, had the district court granted a motion to dismiss at the close of the plaintiffs’ case, on the ground that the new § 7 threshold had not been met, we might have been inclined to affirm that decision. There was, however, some evidence in the record to suggest that at least some of the acquired bowling centers may have made purchases of pins, pinsetter parts and perhaps other supplies, directly from Brunswick, rather than from local distributors. Thus, they arguably were engaged “in the flow of interstate commerce” within the meaning of the new § 7 test. We think it would be unjust, given the intervening change in the law, to find that the evidence presented was insufficient to cross the jurisdictional threshold and thus order that the district court dismiss the case. We think it more appropriate, consistent with the way in which we will ultimately dispose of the case, to have the “in commerce” question relitigated, with the plaintiffs’ being given an opportunity to satisfy the new and more stringent jurisdictional test. See 28 U. S.C. § 2106.
V. DOES § 4 PROVIDE A PRIVATE REMEDY FOR THIS § 7 VIOLATION?
Until the Supreme Court read the first paragraph of § 7 disjunctively in the du Pont eases so that it covered not only the horizontal acquisition of a competitor, but also acquisitions of non-competitors, the possibility of private recovery for a § 7 violation was remote. Du Pont involved a § 7 violation resulting from du Pont’s acquisition of a 23% stock interest in General Motors, a company to which du Pont supplied paint and fabric. Subsequently, minority stockholders of General Motors brought a derivative action against du Pont seeking (1) § 4 damages from du Pont for the § 7 violation found in the government case, (2) damages for violations of §§ 1 and 2 of the Sherman Act, and (3) damages for a breach of a common law fiduciary duty. In an interlocutory decision, the district court held that since § 7 violations involved potential restraints or monopolizations such violations could not support recoveries under § 4 for injuries to business or property. The case proceeded to trial on the Sherman Act and fiduciary duty claims and resulted in a judgment for du Pont. On appeal from this final judgment the Second Circuit reversed the earlier interlocutory holding that a § 7 violation could not be the basis for a § 4 recovery. Gottesman v. General Motors Corp., 414 F.2d 956 (2d Cir. 1969). (Gottesman I). Judge Feinberg’s opinion required, in effect, that the plaintiff show (1) a violation of § 7, (2) an actual injury causally connected to the violation, and (3) damages of a reasonably certain amount flowing from the causally connected injury. The § 7 violation in the du Pont-General Motors case was the potential market foreclosing effect of du Pont’s 23% ownership of a large customer for automotive fabrics and finishes. The great significance of Gottesman I was that it did not hold that only those foreclosed from the General Motors market could recover. General Motors itself, which was not in the fabrics and finishes business, could recover as well. The Second Circuit remanded to the district court for a reconsideration of the evidence in the light of this interpretation of the interaction between § 7 and § 4.
On remand, the district court again held for du Pont. When appealed, the Second Circuit, in an opinion by Judge Maris, affirmed. Gottesman v. General Motors Corp., 436 F.2d 1205 (2d Cir.), cert. denied 403 U.S. 911, 91 S.Ct. 2208, 29 L.Ed.2d 689 (1971) (Gottesman II). It is in this latter opinion that the Second Circuit fully considered the damage issue. Damages were not awarded because General Motors stockholders did not prove that the company paid a higher price to du Pont for fabric and finishes than was charged to other du Pont customers and did not prove that the materials in question could have been purchased on the open market, at lower prices, with equal quality and service. Plaintiffs did not prove, in other words, that General Motors’ business or property had been injured.
Brunswick and Treadway attach diametrically opposed significance to Gottesman I and II. Brunswick’s theory is that there can be a § 4 recovery only if there is an actual foreclosure of competitors or an actual lessening of competition which results in injury.- That approach may work in a situation such as du Pont-General Motors where the § 7 violation depends upon the potential for market foreclosure. A party losing foreclosed sales might then recover lost profits, and the foreclosed customer, such as General Motors, might recover overcharges. But when the § 7 violation depends upon the potential injury to a horizontal competitor at the same level as the acquired company, Brunswick’s approach would virtually preclude recovery by the competitor until he has been driven out of business.
Brunswick also focuses on the “substantially to lessen competition” language of § 7 and urges that no recovery can be had when activity in the marketplace has the effect of preserving a competitor and reducing consumer prices. But to focus on short run beneficial effects on consumer prices is to disregard the disjunctive “or tend to create a monopoly” clause in § 7, and to confuse injury to the public with injury to competitors. The public is not injured while a potential monopolist is vigorously competing to achieve monopoly power, though that injury may come later. Competitors, on the other hand, are injured in their business or property in a short-run period of predatory competition. Brunswick would permit recovery only when there is an injury to competition (such as market foreclosure) and an injury to the competitor.
Treadway’s theory differs from Brunswick’s. It argues that if an acquisition is illegal under § 7 because it has a sufficient potential to injure competition or to tend to create a monopoly, then the mere presence of the violator in the market which in fact produces a causally linked injury to the business or property of the competitor suffices for a § 4 recovery. To require more it urges, is to force a private plaintiff to prove a Sherman Act § 1 or § 2 violation and to eliminate private damage recoveries for § 7 violations. Under Treadway’s theory it can recover the profits on any sales which it lost by virtue of Brunswick’s presence, or any sales which it would have gained in Brunswick’s absence.
Treadway’s interpretation of the interaction between § 7 and § 4 obviously has far-reaching ramifications. Nevertheless we believe it to be more consistent with the purposes of § 7 to hold that illegal presence which causes injury to the business or property of a competitor is compensable under § 4. This is not to say that proof of a § 7 violation will permit every competitor of the acquired company to recover automatically. As can be seen from Gottesman II, the proof of causal connection and of damage still is formidable.
We hold, then, that a horizontal competitor of a company acquired by a deep pocket parent in violation of § 7 can recover damages under § 4 if it shows injury in fact causally related to the violator’s presence in the market, whether or not that injury flows from or results in an actual lessening of competition. In this case there was sufficient evidence to go to the jury on the fact of such injury, although as we indicate hereafter there are difficulties with the manner in which the issue was framed in the court’s charge.
VI. DID THE COURT PROPERLY CHARGE A § 7 VIOLATION?
A. The impact on competition.
In presenting the case to the jury the district court first charged on the Sherman Act § 2 aspects on which, as we pointed out above, there was a verdict for Brunswick. The court then turned to the § 7 count, explaining that there were three elements involved in determining whether Brunswick violated that section: (1) the relevant lines of commerce, (2) the relevant geographic markets, and (3) “the likely anticompetitive effects of the acquisition of bowling centers in the relevant local market.” (4 App. at 2268a). The court then indicated that there were three relevant geographic markets for bowling center operations, and continued:
“You must decide whether the effect of the acquisition of bowling centers by Brunswick may be substantially to lessen competition or tend to create a monopoly in that ‘line of commerce’ and ‘section of the country.’
The determination of this question will establish whether or not this acquisition was a violation of Section 7 of the Clayton Act.
This determination must be made in light of several factors: the primary index of legality is the market share of the acquired and acquiring companies and the extent of concentration in the industry.
An acquisition which produces a firm controlling and undue percentage of the relevant market and resulting in a significant increase in concentration is presumptively unlawful, unless the defendants can overcome this presumption by other evidence to establish the vigor of competition or affirmative justifications in support of the acquisition.
While market shares are not determinative of legality of an acquisition, I instruct you that high market shares and significant increases in concentration may be sufficient in itself to establish a violation of Section 7. Section 7 of the Clayton Act may be violated either by showing a reasonable probability of a substantial lessening of competition in the future or by showing a substantial lessening of competition which has already occurred.” (4 App. at 2269a-70a).
This charge, in the context of the acquisition of retail outlets in relatively small geographic markets, was virtually a directed verdict. Without highlighting other factors, it emphasized the market share held by Brunswick in each of the markets in question, after the acquisitions.
The charge was defective in a number of ways. It did not say, for example, that the jury must consider such factors as the relative financial strength of Brunswick, Treadway, and other competitors. This would have been significant, for although Brunswick was many times larger than Treadway, the latter was still a large public company, and in the bowling recreation industry there are practical limitations on the extent to which capital may be utilized for competitive advantage. Nor did the charge say that the jury must find that Brunswick’s position as an equipment manufacturer or equipment financier gave it any retail market advantage. Certainly if the vertical integration forward had this effect the jury could have found a tendency toward monopolization or the potential for a substantial lessening of competition. The jury also was not asked to take into account the historical tendency in the industry toward concentration or lack of such a tendency.
By emphasizing the quantitative substantiality of the market shares held by Brunswick, to the exclusion of other factors, the court failed to draw the jury’s attention to the indicators of qualitative substantiality referred to in Brown Shoe Co. v. United States, supra, Reynolds Metals Co. v. FTC, supra and FTC v. Procter & Gamble Co., supra. While the quantitative substantiality of the market shares is important in a case involving a merger of horizontal competitors, it is far less important here because Brunswick was not previously in any of the three markets. Brunswick’s entry into the picture did not increase concentration, but only acted as a substitution of competitors.
Treadway would have us overlook the deficiencies in the § 7 charge because extensive “deep pocket” evidence was introduced on the Sherman Act § 2 claim and the jury was instructed as to the relevancy of that evidence to that claim. There are two obstacles here. First, the court in its instructions quite clearly treated the two counts separately, and we must assume that the jury understood as much. Second, because of the verdict in Brunswick’s favor on the Sherman Act § 2 count we cannot speculate as to how the jury evaluated the “deep pocket” evidence.
Because the § 7 charge was inappropriate to the only theory upon which a § 7 violation could in the circumstances of this case be predicated, a new trial is required.
B. The commerce requirement.
The district court charged:
“Each of these plaintiffs, to be entitled to prevail on its claim under Section 7 of the Clayton Act, must prove
First, that the assets acquired by the defendant were acquired from a corporation engaged in interstate commerce.” (4 App. at 2342a).
Elsewhere, however, the court had charged:
“The undisputed evidence shows that Brunswick acquired Belmont Lanes in April 1965. As a matter of law this was an acquisition in a line of commerce, the operation of bowling centers, in a section of the country, namely, the Pueblo, Colorado, metropolitan area.” (4 App. at 2317a).
It gave almost the identical instruction with respect to the Poughkeepsie acquisition. (4 App. at 2319a).
Brunswick contends (1) that the charge is internally inconsistent and (2) that the specific reference to the acquisitions being in a line of commerce amounted to a directed verdict on the interstate commerce issue. We think, however, that in the first quotation the court refers to the “engaged in commerce” requirement, while in the second, it refers to the “in any line of commerce in any section of the country” requirement. Certainly bowling centers are in a line of commerce in a section of the country, although arguably they are only engaged in local rather than interstate commerce.
The interstate commerce charge is cryptic but we need not comment on it any further. When the case is retried, the district court will have to apply the new § 7 interstate commerce test laid down in United States v. American Building Maintenance Industries, supra. See Part IV B, supra.
VII. WAS THE JURY PROPERLY INSTRUCTED ON § 4 DAMAGES?
We have already held that a horizontal competitor injured in its business or property by the presence in the market of a § 7 violator can recover under § 4. Treadway had the burden under § 4 of establishing the fact of such injury, the proximate causal relationship of that injury to Brunswick’s presence in the market, and the amount of damage suffered.
To meet this burden the only evidence offered by plaintiffs was the expert opinions of several
Question: Were there cross appeals 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.
SETH, Circuit Judge.
In 1958 the parties entered into a collective bargaining agreement, the National Bituminous Coal Wage Agreement of 1950. Plaintiff is the local representa•tive of the employees, and defendant partners operate a small coal mine in Wyoming. These partners were or are members of plaintiff union. The complaint alleges breach of the collective bargaining agreement by defendants’ failure (1) to pay time and one-half for overtime, (2) to follow contract seniority rules, (3) to furnish employees house ■coal, (4) to recognize the grievance committee, (5) to pay royalty to the United Mine Workers Welfare Fund, and (6) to check off dues for plaintiff union. The complaint also asks for a declaration of the rights and duties of the parties under the contract. The action was filed under 29 U.S.C.A. § 185, Section 301 of the Labor Management Relations Act.
The defendants filed two verified motions to dismiss, one on the ground that plaintiff did not allege compliance with the arbitration provisions of the contract as a condition precedent. The second motion was on the ground that indispensable parties were not joined, these parties being the trustees of the Welfare Fund and the individual employees of defendants. These motions were heard at a time when the depositions of the defendants had been filed, but the depositions of two other persons had been taken but not transcribed. In one of its orders the trial court stated that it had considered the two depositions then filed in disposing of the motions to dismiss. The trial court sustained the motions on the grounds that plaintiff had not sought arbitration, and for lack of jurisdiction as to certain of the breaches of contract alleged in the complaint. The trial court filed an opinion which clearly and concisely sets out the ruling. U. M. W. v. Roncco, D.C., 204 F.Supp. 1. The trial court considered each of the six claimed breaches of contract mentioned above, and decided it had jurisdiction over some and not others. In making this distinction the court relied upon Association of Westinghouse Employees v. Westinghouse Electric Corp., 348 U.S. 437, 75 S.Ct. 489, 99 L.Ed. 510, upon United Steelworkers v. New Park Mining Co., 273 F.2d 352 (10th Cir.), as well as other cases. It decided which of the rights concerned were “uniquely personal” to the individual employees and which were of “peculiar concern” to the plaintiff union as an organization. Having done this, the trial court then examined the contract provision as to arbitration, concluded the disputes alleged were arbitrable, that arbitration had not been sought by plaintiff as required and so dismissed the complaint.
We agree with the trial court that the failure to pay time and one-half, the failure to sell house coal, and the failure to follow seniority rules were all matters “purely personal” to individual employees under the Westinghouse case, supra. Thus these matters were not of peculiar concern to the plaintiff union as an organization to give the district court jurisdiction. 29 U.S.C.A. § 185. On the alleged failure to use a grievance committee, there was not sufficient information provided the trial court or this court to arrive at a decision. As to the alleged failure to check off dues, this is a matter of direct and peculiar concern of the plaintiff as an organization, and as the trial court indicated, this is within its jurisdiction. United Steelworkers v. Pullman, 241 F.2d 547 (3d Cir.). The remaining item is the alleged failure to pay royalties to the Welfare Fund. The trustees of this fund are the proper parties to commence suits to enforce payment to the fund, as the trial court held. This point has been fully discussed in Lewis v. Quality Coal Corp., 243 F.2d 769 (7th Cir.), and National Ladies Garment Workers Union v. Joy-Ann Co., Inc., 228 F.2d 632 (5th Cir.). This question is also determined by the Westinghouse case, supra.
The plaintiff in its complaint alleges generally that defendants stopped operating in compliance with the contract, and specifically mentions the six points considered above. It also alleges that defendants cancelled the contract, and in the prayer asks damages, but more important for present consideration it asks for a declaration of rights of the parties to the contract. It is apparent why this declaratory relief is requested when the depositions of the defendants are read. These contain statements which show that an attempt was made by them to terminate the contract, and also that after a certain date they ignored the contract in operating the mine. More particularly the question is raised as to whether a notice of termination had been sent to the plaintiff as contemplated in the contract. Thus there remains the very real question whether there is any contract at all, and this is a matter plaintiff asked in its pleading to have decided. It would seem advisable under these circumstances that this question be decided by the trial court as this will decide whether there is in existence an agreement to arbitrate. We cannot require the contractual “remedy” to be resorted to until the issue before the court as to its very existence is settled. This situation may very well be peculiar to this case because it appears that defendants have taken both the position that the contract is terminated, and that it is not terminated, and arbitration under it is a condition precedent during the course of this litigation. During oral argument before this court as we understood it, they still reserved the right to take a position that there was no contract, should arbitration be attempted. This question includes the l’eal question of fact as to whether a notice of termination was sent or not. The parties here argue on the theory that the motion to dismiss was treated as a motion for summary judgment. The trial court does not discuss this particular point in its opinion. Of course, if there are genuine issues of fact, the granting of summary judgment is not in order. United States v. Kansas Gas and Electric Co., 287 F.2d 601 (10th Cir.); Hunt v. Pick, 240 F.2d 782 (10th Cir.). Further the pleadings should be construed liberally in favor of the party against whom the motion is made. Bushman Construction Co. v. Conner, 307 F.2d 888 (10th Cir.). These same requirements apply in declaratory judgment actions. 6 Moore, Federal Practice, §§ 56.17-56.19.
The trial court did not express an opinion on the declaratory prayer in the complaint which goes to the existence of the entire contract. Certainly the existence of the contract as to check-off, for example, is of “peculiar concern” to the plaintiff as an organization; and under the peculiar circumstances here present the question whether the entire agreement has been ended by a notice of termination is of like “peculiar concern.”
The case is reversed and remanded to the trial court for proceedings in accordance herewith.
Question: Were there cross appeals 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.
STEWART, District Judge:
This is a patent infringement case in which plaintiff-appellant Warbern Packaging Industries, Inc. (“Warbern”) seeks damages resulting from the alleged infringement of its now expired patent, No. 3,047,-196 (the “Levine patent”), by defendant-ap-pellee Cut Rate Plastic Hangers, Inc. (“Cut Rate”). Plaintiff-appellant appeals from a judgment of the District Court for the Eastern District of New York, Dooling, J., dismissing plaintiff’s action on the ground that its patent was not infringed by Cut Rate and, in any case, the patent is invalid. Cut Rate cross appeals from the judgment of the District Court denying attorneys’ fees under 35 U.S.C. § 285.
I.
Warbern, a manufacturer and seller of plastic garment hangers, is the owner of the patent in suit, which introduced the concept of “ship-on” hangers to the market. Prior to the development of this patent, garments that hung by the waistband were shipped largely on wire hangers and transferred to more expensive hangers in the store, thereby requiring significant expenditures on labor. Although one-piece plastic hangers existed prior to the patent in suit, they lacked the crucial functional element — an effective gripping mechanism. Plaintiff’s patent introduced such a mechanism by employing three plastic fingers with spoon-shaped ends at each end of the hanger web that, when laterally offset, created a shoulder to hold garments securely. (See diagram, appendix 1). These hangers did retain garments throughout the marketing process, enabling the use of the same hanger from the point of origin to the point of sale.
Defendant-appellee Cut Rate manufactures and sells a ship-on hanger that performs the same function as the product set forth in the Levine patent. The Cut Rate hanger, “instead of having distinct fingers surrounding a middle finger at each end of the hanger, presents a U-shaped downward extension of the web of the hanger surrounding a laterally offset finger at each end .... [Ojnly the middle finger at each end of the accused hanger is ‘laterally offset’.” Warbern Packaging Industries, Inc. v. Cut Rate Plastic Hangers, Inc., No. 74-1761, slip op. at 34 (E.D.N.Y. July 25,1978). (See diagrams, appendices 2 and 3).
The circumstances leading up to the instant litigation are as follows. The inventors of the Levine patent, Bernard B. Levine and Robert Phillips, first obtained a design patent which issued on July 4,1961. (See diagram, appendix 4). The design patent introduced a unitary plastic hanger, but did not include a functional gripping mechanism. It proved to be ineffective for securely holding garments with waistbands and was never marketed.
About four months after obtaining the design patent, Levine and Philips filed an application for the Levine patent, which issued on July 31, 1962. The patent contained six claims, four of which are the subject of this litigation. The patented hanger was developed and marketed in 1962.
[F]or a considerable time sales, while not unimpressive, did not reach the scale which they later attained. However, after a sale was made to the manufacturer of a popular and good quality brand named line of clothing, the sales began to increase very rapidly and by the end of 1977, the evidence indicates, between 225 and 250 million of the hangers had been sold. Warbern was not without competition for the ship-on hanger market, but the evidence indicates that the hanger of the patent has established a clear dominance in the market for ship-on hangers for garments which can be hung by the waistband.
Slip op., supra, at 12.
Not unpredictably, other hanger manufacturers began selling products similar to the Levine patent. Since 1965, plaintiff has prosecuted alleged infringers of the Levine patent. Six cases involving claims of infringement of plaintiff-appellant’s patent resulted in consent judgments, most of which included an admission by the accused company that the Levine patent was valid and infringed by the accused hanger. Only one case involving the Levine patent, other than the instant case, was actually litigated. In an action against Huron Machine Products, Inc., which manufactured a product similar to the Cut Rate hanger, a permanent injunction was entered declaring the Levine patent to be valid and finding that Huron Machine Products infringed the patent by manufacturing and selling a hanger like the Cut Rate hanger, with the U-shaped loop. This decision was affirmed in Huron Machine Products, Inc. v. A. & E. Warbern, Inc., 615 F.2d 222 (5th Cir. 1980).
and was an officer of Yankee Plastics. The district court found and appellant does not seriously dispute that Zuckerman is not bound because he was not an employee at the time the judgment against Yankee Plastics was entered.
II.
The court below found that the Levine patent was not infringed by the Cut Rate hanger, and that the Levine patent is invalid. This holding was based substantially on the court’s consideration of the significance of the design patent in determining the obviousness of the Levine patent. After discussing the history of the design patent and the subsequent development of the patent in suit, the court held that the design patent was prior art to be considered in determining obviousness. Plaintiff urged that the reasoning in Illinois Tool Works, Inc. v. Solo Cup Co., 461 F.2d 265 (7th Cir.), cert. denied, 407 U.S. 916, 92 S.Ct. 2441, 32 L.Ed.2d 691 (1972) should be applied. There, the Seventh Circuit relied on 35 U.S.C. § 102(b) to hold that, where one’s own invention is disclosed to the public within one year of a subsequent invention, one’s own prior invention does not bar the subsequent patent.
The district court in the instant case rejected the reasoning of Solo Cup because, in its view, “if each of the patents was not patentable over the other (though one may have dominated the other) the patentee was obtaining a monopoly for longer than the patentable period.” Slip op. at 22. The court instead adopted the reasoning of an older line of cases which held in effect that “[t]o support a separate patent, an improvement must meet all of the statutory requirements of patentability.” Application of Jaeger, 241 F.2d 723, 726 (C.C.P.A.1957). In other cases, courts analyzed the problem in terms of the prohibition against double patenting, which the district court here defined to include obtaining a second patent claiming an invention which differs from an already patented invention only in some unpatentable particular. Application of Or-nitz, 347 F.2d 586 (C.C.P.A.1965). The only limit on double patenting which the district court here was willing to recognize was that set forth in Turzillo v. P & Z Mergen-time, 532 F.2d 1393 (D.C.Cir.), cert. denied, 429 U.S. 897, 97 S.Ct. 260, 50 L.Ed.2d 181 (1976), which held that the later patent need not show an inventive advance over what was disclosed but not claimed in the earlier patent.
The court then went on to hold that: The three figures of the [design] patent clearly reveal the mechanical means by which the device is to function. The ornamental design expresses completely the function of the device. It therefore not only claims against all the world the ornamental design which it displays but discloses and publishes to all the world the hanger function and means expressed in the design.
Slip op., supra, at 30-31.
Although not specifying the scope of the prior art, the court included in its discussion of prior art patents of hangers, clothespins and clipping devices, and found that:
The prior art did not show any adequate retaining means that were wholly integral with a hanger but it was certainly alive with hints and suggestions pointing to the solution that the patentees chose. . . . The significance of the hanger art is not that it, unaided, suggests the device of the patent, but that, addressed to workers who had already come the distance represented by their design patent and who were seeking gripping means, these gripping means used in the hanger art were suggestive of ready adaptation to the patentees’ integrally formed hanger.
Slip op., supra, at 53-54. Thus, the court held that, viewed against the prior art, the Levine patent was not sufficiently distinct from the hanger of the design patent to avoid the claim of obviousness. Although the court recognized the “commercial success and acquiescence in the patent in the face of vigorous enforcement,” it concluded that “the subject matter as a whole would have been obvious at the time of the invention to a person having ordinary skill in the art to which the hanger belongs.”
With respect to infringement, the district court found that:
Despite the differences in construction of the spoonshaped elements in defendant’s accused hangers the elements are those of the patent claims; the tip ends of the fingers of the accused hanger are in the functionally significant respect spoon-shaped; they form a holding shoulder, and the opposed faces of the ends define an inverted V guide for the insertion of a garment between the “fingers”, utilizing the spoonshaped contours of the “ends” to facilitate the insertion of the garment.
Slip op., supra, at 44 — 45. Nevertheless, the court held that the defendant’s hanger does not infringe the Levine patent because it does not have all three fingers laterally offset to an axial plane of the web. The court also held that the offsetting of fingers to opposite sides of the hanger to be so critical that it does not admit of substitution of a functional equivalent. On this basis, the court rejected the application of the doctrine of equivalence and held that plaintiff’s patent was not infringed.
For the reasons set forth below, we hold that the Levine patent was valid and infringed by the Cut Rate hanger and the judgment of the district court must be reversed.
III.
The Validity of the Patent
The district court found that Warbem’s patent is invalid because it is obvious in light of the prior art, under 35 U.S.C. § 103. Section 103 provides:
A patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102 of this title, if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. Patentability shall not be negatived by the manner in which the invention was made.
As the Supreme Court held in Graham v. John Deere Co., 383 U.S. 1, 17-18, 86 S.Ct. 684, 693-694, 15 L.Ed.2d 584 (1966):
[T]he scope and content of the prior art are to be determined; differences between the prior art and the claims at issue are to be ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background, the obviousness or nonobviousness of the subject matter is determined. Such secondary considerations as commercial success, long felt but unsolved needs, failure of others, etc., might be utilized to give light to the circumstances surrounding the origin of the subject matter sought to be patented. As indicia of obviousness or nonobviousness, these inquiries may have relevancy.
A patent is presumed valid, and the burden of establishing invalidity of a patent rests on the party asserting its invalidity. 35 U.S.C. § 282 (1976).
We must first consider the scope and content of the prior art. The district court relied heavily on the design patent to support its conclusion of obviousness, and ap-pellees echo this reliance in distinguishing the instant case from Huron Machine Products, Inc. v. A. & E. Warbern, Inc., supra. The parties vigorously dispute the standard to be applied in determining whether and to what extent an earlier patent is to be considered as prior art in determining the validity of a later patent filed by the same inventor within a year of the earlier patent. We have concluded that appellants’ patent is not obvious under either of the approaches urged by the parties. Therefore, it is not necessary to reach the issue of the extent to which the design patent must be considered as prior art in determining the validity of the Levine patent.
As we discussed earlier, the prior art considered at trial consisted of patents on clothespins, clips and hangers. With respect to the state of the hanger art prior to the design patent and the Levine patent, the prior art consisted of wire, wood or plastic hangers with a separate gripping device consisting of a clip with springs or a clamp that employs the concept of tension. Scurrah, No. 2,408,344 consisted of a clothes hanger the horizontal bottom of which provided a series of four lugs, separately mounted on the hanger which employed pins and springs to provide the gripping means. Bacica, No. 2,522,595, granted over Scurrah, and Colwell, No. 2,401,413, employ hanger clips at each end of the frame which also rely on springs to provide the gripping means. Anderson, No. 2,466,195 and Fort-ner, No. 2,633,277, present clamps to provide tension necessary to retain a garment.
With respect to the clothespin art, the patents included as prior art consist of clamps or finger devices that employ primarily tension produced by insertion of the clothesline as the gripping means. Ryan, No. 1,654,756, Caldwell, No. 2,209,318, Becker, No. 2,600,091, and Atkins, No. 2,452,175, are attached over both the garment and the clothesline, so that the clothesline as well as the clip is employed to suspend the garment. Witt, No. 1,314,998, employs a spring arm as a gripping device; Romano, No. 2,215,336, has a wire clamping means mounted on the hanger. Graham, No. 1,252,262, shows wire clamps with traverse inward hands forming gripping jaws that are opened by the insertion of the clothesline.
Neither party seriously disputes that uniting a holding device to a hanger was well-established in the art. However, we find nothing in the prior art that discloses an effective gripping device that could be incorporated into a unitary plastic hanger that could be used as a ship-on hanger. The design patent, des. 190,843, does not disclose any significant advance in a gripping mechanism, but rather makes use solely of a gripping mechanism based on the resiliency of the material. Although the design patent discloses the concept of a unitary plastic garment hanger, it does not introduce any new functional mechanism to retain garments securely. In fact, the design patent’s apparent incorporation into the integrated structure of the gripping mechanisms disclosed in the prior art failed to achieve an effective gripping mechanism.
The district court found that the design patent displayed the goal of achieving an adequate retaining means that was wholly integral to the hanger, and then concluded in effect that this intention disclosed the most significant element of the patent. In our view, the gap between the goal of an effective gripping mechanism and the actual functioning of the design patent warrants the opposite conclusion. It provides further indication of the failure of past attempts to develop an effective gripping mechanism — the most important functional element of the Levine patent — and supports our conclusion that the creation of the Levine patent required the exercise of inventive skill.
The district court also appears to have held appellant to a higher standard of non-obviousness because of its involvement with the design patent. Slip op. at 53-54. The determination that the design patent required skill to invent does not affect our judgment of the degree of skill necessary to develop the gripping mechanism in the Levine patent.
The evidence establishes that the Levine patent introduced a significant advance in the art of hangers and clipping devices. The hanger simultaneously employed longitudinally spaced fingers that were laterally offset by the garment (rather than an independent supporting line) so as to extend to opposite sides of an axial plane with spoon-shaped ends that overlapped and shoulders at ends of the fingers. The gripping mechanism of the hanger did not rely solely on tension to retain the garments, but introduced the shoulders and the overlapping fingers to perform this function. Neither of these devices is suggested in the prior art. As the district court noted in Huron Machine Products, Inc. v. A. & E. Warbern, Inc., supra, the Warbern patent “represented the first (and only) one piece, integrally formed, disposable, plastic garment hanger which could securely hold a garment with a waistband, such as a skirt, during packing, shipping, display and sale of the garment.” 615 F.2d at 225.
Consideration of secondary factors provides further support for our conclusion that the patent was non-obvious. The record clearly establishes and the district court found that “[t]he secondary factors, commercial success and acquiescence in the patent in the face of vigorous enforcement have been amply made out. The evidence indicates that the need for such an article antedated the invention of the hanger in suit,” slip op. at 51-52. Prior to the introduction of the patented hanger, in shipping the goods, it was necessary to use wire hangers to which garments were pinned. The ship-on hanger introduced a significant savings in time, labor and expense. The record shows that sales of the patented hanger grew from about 30,000 units in 1962 to about 30 million units in 1976.
We conclude that defendant-appellee failed to demonstrate that the Levine patent was obvious, and find that the district court’s decision invalidating the patent is clearly erroneous.
Infringement
We must, then, determine whether the Cut Rate hanger infringes the Levine patent. Infringement is determined by reference to claims construed in light of the specification and drawings with a view to ascertaining the invention. United States v. Adams, 383 U.S. 39, 48-49, 86 S.Ct. 708, 712-713, 15 L.Ed.2d 572 (1966). Under the doctrine of equivalents, there is infringement if the allegedly infringing device “performs substantially the same function in substantially the same way to obtain the same result” as the challenging device. Graver Tank & Manufacturing Co. v. Linde Air Products Co., 339 U.S. 605, 608, 70 S.Ct. 854, 856, 94 L.Ed. 1097 (1950) (on rehearing).
We conclude that the Cut Rate hanger did infringe plaintiff’s patent. The record provides substantial support for the district court’s findings that the U-shaped extension between the outer fingers at the end of the Cut Rate hanger did not “obliterate the existence of the functional fingers.” Slip op., supra, at 42. The district court properly found that the two hangers were similar with respect to the longitudinally spaced fingers, the spoonshaped tip ends, the holding shoulder and the opposed faces of the ends. See slip op., supra, at 44-45. Thus, the Cut Rate hanger incorporates all of the operatively significant elements of the patent in suit: the spoonshaped tips, the extension of the spoonshaped tips across the line where the garment is inserted, thereby forming shoulders, and the supporting shoulders. The patent in suit is thereby infringed.
The district court concluded to the contrary, despite its factual findings, and held that the Cut Rate hanger does not infringe plaintiff’s patent because it does not have all three fingers laterally offset from an axial plane of the web. “Spoonshaped protuberances formed on the web itself simply are not formed on fingers laterally offset from the web.” Slip op., supra, at 38. The trial court concluded that the offsetting of fingers to opposite sides of the hanger to be so critical that it does not admit of substitution of a functional equivalent.
The district court’s emphasis on the locus of the axial plane and the mobility of the fingers in our view was misplaced. First, the language of the patent claims does not necessarily give rise to the interpretation adopted by the trial court. The trial court, noting that an axial plane need not be located within the web, focused on the language in all claims but claim 3 that the fingers be laterally offset from the central axial plane of the web or “the axial plane of the web.” The court inferred from this language that “[t]hroughout the insistence is upon fingers that are laterally offset oppositely to each other and to the web or [sic] the hanger.” Id. at 48.
This inference is not warranted either by the language of each of the claims or by the doctrine of functional equivalents. The language of claim 3 which refers to “an axial plane,” is somewhat ambiguous, and at the very least is not inconsistent with a less restrictive interpretation of the locus of the axial plane. The language could be interpreted to require only that the fingers be displaced from the central line, not necessarily that each finger move. Moreover, plaintiff’s specification includes a directive that “the invention is not to be taken as limited to all of the details thereof as modifications and variations thereof may be made without departing from the spirit or scope of the invention.” This language supports appellant’s arguments that, by locating the axial plane within the web, they were merely disclosing the best method of implementing their invention, which is all they are required to do under 35 U.S.C. § 112. It is not disputed that the locus of the axial plane has no functional significance other than determining whether the garment will hang straight. By providing for displacement of the fingers around a central axial plane, a garment on the Levine hanger does hang straight, while on the Cut Rate hanger it hangs out of plumb.
This leads us to consider the functional significance, if any, of the locus of the axial plane, so that we can determine whether the two hangers “do the same work in substantially the same way, and accomplish the same result.” Graver Tank & Mfg. Co. v. Linde Air Products Co., supra, 339 U.S. at 608, 70 S.Ct. at 856. As the trial court correctly stated, this involves a search for a definition of what the discovery of the pat-entee really was.
The “axial plane” is an imaginary plane located at the effective center line of function. It is, in effect, a concept to aid in understanding the mechanics of the gripping device. Its functional significance is not dependent on whether all the fingers move to either side of it, or whether it is located centrally. Rather, its importance is that, because of the spoonshaped tips, each finger extends across the axial plane, the effective center line of function, thereby providing an effective means of support. This element is clearly present in the Cut Rate hanger.
Therefore, the district court placed undue emphasis on the locus of the axial plane, and failed to recognize the significance of the gripping device introduced by the Levine patent. We hold as did the Fifth Circuit in Huron Machine Products, Inc. v. A. & E. Warbern, Inc., supra, that the accused hanger infringed the Levine patent.
IV.
Cross-Appeal
Defendant-cross-appellant appeals the decision of the district court denying defendant’s request for attorneys’ fees pursuant to 35 U.S.C. § 285 on the ground that this is an “exceptional case.” The judgment denying attorney’s fees is affirmed in light of our decision reversing the judgment in defendant’s favor.
Having found that plaintiff-appellant’s patent is valid and infringed, we reverse the judgment and remand the case to the trial court for further proceedings on the issue of damages.
APPENDIX 1
APPENDIX 2
APPENDIX 3
APPENDIX 4
FIG. 1 is an elevational view of one side of a hanger for a skirt, or the like, showing our new design:
FIG. 2 is a end elevational view thereof: and
FIG. 3 is an elevational view taken from the side opposite that shown in FIG. 1.
We claim:
The ornamental design for a hanger for a skirt, or the like, substantially as shown.
References Cited in the file of this patent
UNITED STATES PATENTS
D. 146.261 Mack_______Jan. 21,1947
648.534 Seger _______May 1,1900
2.515.544 Artley.....- July 18, 1950
. A design patent has been defined to include an article that is ornamental, a product of aesthetic skill and artistic conception. Hygienic Specialties Co. v. H. G. Salzman Inc., 302 F.2d 614, 618 (2d Cir. 1962).
. Plaintiff has stipulated that claims 2 and 5 are not infringed by defendant, and no claim will be made in this action for the infringement of these claims.
The claims that remain in issue are:
1. An integrally formed garment hanger formed of a molded resilient thermoplastic comprising a horizontally extending web, a hook connected to the web intermediate the ends thereof, and a series of depending fingers connected to each end of said web, said series of depending fingers including longitudinally spaced apart inner, outer and middle fingers, each of said fingers being laterally offset with respect to the central axial plane of said web, and each of said fingers having a spoonshaped end whereby the spoonshaped end of adjacent fingers face and extend across said axial plane so that a garment slipped up between said fingers is frictionally retained therebetween.
3. A garment hanger integrally formed from a thermoplastic material comprising a transversely extending web, a hanger means connected to said web adaptable for suspending said garment hanger from a support, and means depending from said web for friction-ally retaining a garment to said hanger, said means including a two point support for said garment, each point of support including at least a pair of depending fingers, each finger being laterally offset so as to extend to opposite sides of an axial plane of said hanger, said fingers having spoonshaped ends, said spoonshaped ends having opposed face portions projecting laterally of their respective fingers to define a shoulder spaced below the offset connection of said fingers to said web, and the faces of said spoonshaped ends extending across the axial plane of said hanger.
4. The invention as defined in claim 3 wherein one of said fingers is longer than the other, and the opposed curvature to define therebetween a path which facilitates the insertion of a garment therebetween.
6. An integrally formed garment hanger formed of a molded resilient thermoplastic material comprising a transversely extending web, a hanger having a hook end and a base end connected to said web midway between the ends thereof, a series of three spaced apart resilient fingers connected to each end of said web, each series of fingers including an outer, middle and inner finger, said inner and outer fingers being laterally offset to one side of the axial plane of said web, and said middle finger being laterally offset to the other side of said axial plane, each of said fingers having an intermediate portion and a spoonshaped tip end, and said spoonshaped tip end of each finger having a contoured face portion extending across the axial plane of said web so that a garment slipped between said fingers is frictionally retained therebetween, and one of said fingers of each series being longer than the other finger of said series, and the opposed face portions of said spoonshaped tip ends having convex curvatures to define therebetween a path which facilitates the insertion of a garment therebetween.
. Plaintiff argued in the district court that the consent judgment entered on February 3, 1970 against Yankee Plastics Inc. is binding as res judicata as to defendant-appellee because its president, Jack Zuckerman, developed the Yankee hanger that was enjoined by the 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 |